China's President Embraces Blockchain Technology
China's President Embraces Blockchain Technology
🎃VeradiVerdict - Issue #57🎃
Last week, the price of Bitcoin briefly eclipsed $10,000/BTC. The driver behind this was the news that China’s President Xi Jinping stated that blockchain would be important for the next round of technological innovation and industrial transformation. He mentioned that the blockchain can be disruptive in fields such as finance, education, employment, elderly care, poverty alleviation, health care and food security, infrastructure management, and public services. Entrepreneurial push of blockchain in China is not new, and I’ve previously mentioned that China has been pretty positive on the use of distributed ledger technology for commercial enterprise projects.
Two projects that have taken an active role in enterprise blockchain in China include VeChain and PlatOn. VeChain provides a Blockchain-as-a-Service platform for use-cases such as supply-chain finance and IOT, while PlatOn is working on a smart cities initiative for Hangzhou, the tech city that is home to Alibaba.
As you can see from the graphic below, the news contributed to a growth of search for both Blockchain and Bitcoin on both WeChat and Baidu, and a correlated increase in the price of BTC when China woke up on 10/26/2019.
What's interesting is that the President of China was talking about Blockchain and not Bitcoin, yet there is high correlation between Blockchain and Bitcoin in the media and it was reflected in price. A day later, there was an announcement of a new law to be passed on January 1, 2020 that will help tackle some of the regulatory and legal issues of commercial cryptography use-cases. The new law will also promote educational efforts for blockchain onto government officials. Cryptocurrencies are still banned in China and likely won’t change as China plans to launch its own nationwide digital currency soon. Huang Qifan, Vice Chairman of China Center for Economic Exchanges (CCIEE), stated that China will be the first central bank to offer its own sovereign digital currency and has been working on it for the last 5-6 years.
On Oct 24th, the PBCC of China held a collective study that emphasized on the directory and regulation of the blockchain technology and its related security risks. One potential implementation within the party is a registration platform for all party members. There are over 80 million CPC members in China as of 2015. The data of party members are previously stored in local databases across the country. Because of the fluidity of party members today, there are errors and lags in the data gathering process of local bureaus.
If all the members have their information registered on a blockchain, data accuracy and authenticity can be ensured nationwide. The platform can service as a convenient tool for member identification or regional transfer.
Each provincial or district Party organization can serve as a node of the blockchain system. With hybridchain technology, each node has different clearances and can participate in the maintenance of the local database.
What is the significance of this news?
President Xi Jinping’s statement is very positive for blockchain in China and a strong chess move in the race between US and China for blockchain innovation. China’s development of its own digital currency and push for more education and commercial use-cases of blockchain across different enterprise verticals are significant and should be interesting to compare against public blockchain (open financial system) use-cases like decentralized finance. Nevertheless, it would be great to see some additional progress from the US around legal and education for blockchain and cryptocurrency.
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ADDITIONAL INFO
Hi, I’m Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. The firm invests in equity, pre-sales/IEO rounds, and cryptocurrencies on the secondary markets. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.
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