Although China Snubs Cryptocurrency, It Still Spearheads Blockchain Innovation

China is said to be developing most of the projects on private blockchain network with some centralized controlling authority.

Photo: Pixabay

Photo: Pixabay

China is the country which has been consistent in its efforts to close all doors to digital currencies. China’s crackdown on cryptocurrencies started in September 2017 when it announced an outright ban on ICOs and cryptocurrency trading platforms. This came as a major setback to Chinese investors who were ones of the most dominant players of the crypto market before the crackdown.

Last month, China seems to have hit the final nail in the coffin. China’s regulatory authorities started targetting all crypto-related communication channels operating in the country. Moreover, the authorities also brought down 124 oversees exchanges who were trying to sway Chinese investors.

China’s Pursuit of Blockchain Development

Although China has been taking down every crypto-related activity, it hasn’t stopped them from emerging out as a leader in the blockchain space. The Chinese government, led by President Xi Jinping, has been pouring billions of dollars over the last year in blockchain-related developments in the country. In just the last three months, the Chinese government is said to have invested $3 billion in blockchain-related funds.

Additionally, China ranks number one, globally, in the total number of blockchain patents with the Chinese Central Bank PBoC (People’s Bank of China) alone having 41 patents to its name. The government is also seen incentivizing local firms and technology companies to push the commercialization of blockchain on a large scale.

BlockVC, a Beijing-based investment firm told CNBC that they will be investing in nearly 40-50 blockchain-based projects by the end of this year. However, it turns out to be that China – a somewhat authoritarian nation – is working on the private blockchain network development which has a central control authority.

This is opposed to the public blockchain network wherein the participants of the network take every decision for all the operations taking place on the distributed ledger. A public blockchain network usually has its own native digital currency that is used to incentivize all the participants of the network including miners, developers, and traders present on the mainnet.

This decentralized incentivization system ensures that all decisions are taken with a majority consensus and to satisfy any individual’s financial interests. However, China’s blockchain development model doesn’t involve token-based incentivization, but rather has a centralized system which gives a certain group of people more authority over the others.

Moreover, with the penetration of the blockchain technology in the commercial space, it has to be seen if companies adopt transparent blockchain systems in fields like finance, insurance and supply chain management. Analysts have long argued that one of the major reasons for using blockchain technology is its high-end security offering that keeps bad actors away from all the malicious activities.

However, not every development China is working on is behind the curtains. The country’s local Xiongan government has partnered with ConsenSys, a New York-based blockchain studio, for developing decentralized applications (dApps) within the region.

All in all, it remains to be seen that how many such global blockchain companies with get an entry into China’s booming blockchain sector.

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