China and Blockchain
The most patents filed to date related to blockchain in the world have been from China.
China is attracted to the blockchain’s efficiency and ability to generate cost savings in transactions, among other benefits. As a digital ledger, the blockchain records transactions in a way that makes it impossible to change.
Last year, President Xi Jinping said China seeks to lead in innovation worldwide, citing blockchain, AI, the Internet of Things and other technologies as the driving forces.
China’s central bank, the People’s Bank of China, reportedly is testing blockchain-based trade and finance platforms
Compare that to the U.S. where it was only in February that President Trump launched the country’s artificial intelligence initiative. “There’s no U.S. government strategy at all for blockchain,” according to an op-ed in The Washington Post.
“Why do we need a modern Internet? Because the internet now can’t protect everyone’s data and privacy,” says Sunny Feng Han, founder of the MIT IDE Blockchain Pillar and Foundation Beijing City, China and cofounder of Elastos, which is building what it calls a ‘Modern Internet’ that is open source, encrypted end-to-end and powered by the blockchain.
“We need a new internet — a modern internet [to serve as the new] infrastructure, to have peer-to-peer commerce and a trusted environment and, certainly, blockchain to protect everyone’s data rights in the future,”
Although China has banned ICOs, the President, Xi Jinping, supports the underlying technology of blockchain. China has managed to separate altcoins from blockchain technology, thus encouraging a wide range of industry use cases, supported through blockchain hubs
In China, regulators approved 197 blockchain companies while only approving one altcoin project. The companies to be regulated by the Cyberspace Administration of China (CAC) include Alibaba, Tencent, and Baidu. According to EO (a Beijing-based think tank), there are 615 blockchain companies in China with half being focused on fintech.
This is a significant step forward, integrating blockchain right at the heart of large enterprise commerce.
China’s central bank will launch a state-backed cryptocurrency and issue it to seven institutions in the coming months, according to a former employee of one of the institutions who is now an independent researcher.
Chinese government crypto shares similarities with Facebook’s Libra.
Like Facebook’s Libra, China’s new cryptocurrency is designed to bring key financial services to those without bank accounts.
“China’s strategic plan is to integrate more closely with the rest of the world. Cryptocurrency is just one of the means to have a more internationalized renminbi. It’s all strategic,” says Charles Liu, chairman of private equity firm HAO International.
The digital currency would be backed by reserves of traditional currency and would allow people to transfer funds even if they did not have a bank account.
Some setbacks though, to achieve this goal are prevalent.
For it to work on any significant scale, the new currency’s payment infrastructure will need to be able to process in the area of 300,000 transactions per second, though currently no blockchains are capable of supporting such a high volume.
"Digital currencies are coming into the mainstream and international competition is heating up. Economies risk being disadvantaged if they are left behind,” says Don Guo, CEO of Broctagon Fintech Group.
“China’s new currency could even rival Facbook’s notorious proposed cryptocurrency, Libra. This is largely because Facebook is not permitted in China, giving the government a potential monopoly over the market.”
I would expect to see some big changes in the coming years, especially as the trade war with the US continues to barrel on.