China hates cryptos. But loves a good ol’ blockchain.

China Hates Crypto But Loves Good ol’ Blockchain.

Many of the readers and investors interested in cryptocurrencies and blockchain do the common mistake of picturing them as the same blur, undefined, structural trading system.

However, the reality of facts is quite different: blockchain is a system, a model, consisting in a growing list of records (called blocks), while cryptocurrencies are only one of the uses you can have of a blockchain-based ledger. Blockchain-based apps and technologies can exist for other purposes than merely virtual currencies and trade.

Now, the reader may be thinking: “I clicked on here ’cause I saw ‘China’ in the title, what’s with this lecture-like intro?”. Well, ’cause to actually understand the Chinese strategy on the implementation of blockchain-based technologies — and its openness (and closure) to a brand-new wave of young, digitally native entrepreneurs — one needs to bear in mind such misconception.

Photo by zhang kaiyv on Unsplash

Let’s start with this: everyone slightly interested in cryptos knows that the main goal of the first traded coin, the Bitcoin, and it’s anonymous creator, Satoshi Nakamoto, was to create a ‘decentralised’ currency.

Namely, that he/she/they wanted to get rid of the centre, embodied in huge banking institutions and leviathanic states. And when we talk of huge leviathanic states China is a rather perfect example, ça va sans dire.

The main agenda of Bitcoin, Ethereum, and other cryptocurrencies, hence, clashes against the very totalitarian and centralising nature of the Chinese state. Whether such ‘cryptoagenda’ will be successful or not China’s not willing to take the risk. Because nothing, not even a virtual coin should compete with the almighty power of the state and its Communist Party. But it can be subdued.

This is what Hu Xao, standing member of the municipal committee of Guiyang, meant on an hour-long talk on China Central Television when he said that:

“Blockchain in China is not about decentralization but ‘de-intermediarization’. There is no way to get rid of the center.”

Italics by me, I find that to be the very core of his statement.

The importance of regulating the implementation (or, rather, the integration) of blockchain-based technologies has become a priority, so much that it was included in the 13th Five-Year Plan of the Party — yes, China is still a fan of the old-fashioned, vintage, Soviet five-year plans. Also, China is currently the country with the highest number of blockchain-related patents and licenses issued, positioning the country as the leader of the industry at a global level.

China is not willing to take the risk. Nothing, not even a virtual coin should compete with the almighty power of the state and its Communist Party. But it can be subdued.

Photo by Denny Ryanto on Unsplash

At the same time, however, it has banned every form of cryptotrading — with the last move being banning the exchange of cryptocurrency on WeChat, the widest used multi-purpose app in the country — and it’s planning to shut down the country’s network of mining computers, which is the widest in the entire world.

I cannot say whether the Party’s environmental reasons are a disguise for much more totalitarian control of the country’s technological landscape, but it is true that China committed to becoming a greener country in the following years and mining blocks demands an outstanding consumption of energy and resources.

Nonetheless, it is safe to say one thing for sure: China is not going to let go of the blockchain since the feature of undeletable and unhackable chains of records gives the government a new tool to ascertain its central power on the country’s social life.

Photo by Chastagner Thierry on Unsplash

Sure, this also means that it will have to deal with equally powerful blockchains which might store thorny data for the regime. In April, a student at the Peking University, a top-tier academic institution, Yue Xin, attached a letter to an Ethereum transaction denouncing the university’s behaviour on her investigation about a case of sexual harassment dating back to the ’90s — but still very actual in a country with a compulsive inclination to censorship.

However, it is worth to note that this — ‘accident’ would say the Party — happened on the blockchain of a virtual coin, Ethereum. Money trading blockchains are the ones the public opinion is more concerned about, aside from being, for their very nature, spread all throughout the globe, out of the Chinese borders.

“Blockchain in China is not about decentralization but ‘de-intermediarization’. There is no way to get rid of the center.”

As for now, though, China is willing to explore blockchain-based technologies. The dystopian, new app to rate citizens’ civic sense and social attitude is a clear example of this. The government might get the chance of having unchangeable blocks of data on the performance of each citizen of the People’s Republic.

As well as having the chance of forcing other countries to deal with a blockchain-based logistics for the One Belt One Road gigantic, infrastructural project.

The Chinese government knows that ‘decentralisation’, ‘individual financial freedom’, or only ‘freedom’ are bourgeois, Western concepts the Party has fought off for almost a century now, even before the establishment of the People’s Republic.

If it’s going to use blockchain, that would be solely on Chinese terms — or rather, on Party’s terms. And, apparently, it is going to.

China hates cryptos. But loves a good ol’ blockchain. was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.

Publication date: 
05/16/2019 - 20:34
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