In China, cryptocurrency is ousted, but blockchain lives on- PingWest

In China, cryptocurrency is ousted, but blockchain lives on- PingWest

In China, cryptocurrency is ousted, but blockchain lives on

Aron Chen

posted on 18 hours agoEditor : Wang Boyuan

Despite another wave of crackdown on crypto mining and trading, Beijing is leveraging the underpinning technology to develop its version of the blockchain network.

Empowered by blockchain technology, China is at the forefront of digital fiat currency development. In spite of that, Beijing's ambition goes much more beyond being the first country in the world to implement its Central Bank Digital Currency.

On June 8, the Ministry of Industry and Information Technology (MIIT) released a document that outlines a blueprint for establishing the world's leading blockchain technology. By 2025, at least three domestic blockchain enterprises will gain global competitiveness. And three to five vertical blockchain research and development hubs will come into being in the country.

In addition, Chinese technology giants have been actively responding to a national initiative that called for developing China's version of blockchain networks.

Tencent and Alibaba filed the most blockchain patent applications in 2020, 1273 and 2542, respectively, according to research jointly released by IPR daily and incoPat.

Overall, about 46% of blockchain-related patents were from China. The US follows next with a market share of 24%.

Ant Group's payment platform Alipay has already run a consortium blockchain network called AntChain in April 2020. It enables small and micro enterprises and developers to deploy smart contracts and decentralized apps (DApps) on its network.

The AntChain also catches up with the hype - it recently launched 16,000 pieces of limited-edition non-fungible tokens (NFT) art.

Through the partnership with Dunhuang Research Academy of Gansu Province in northwestern China, a UNESCO world heritage site, the AntChain NFT features digital copies of murals from Mogao Cave of Dunhuang, such as flying apsaras sacred deer.

Alipay launches "Dunhuang" style NFT. Credit: Alipay

Ant's releases of NFTs sparked hot debates on Chinese social media where netizens asked whether it has something to do with cryptocurrencies such as bitcoin, whose trading and mining are cracking down by the Chinese government due to alleged accusation of disrupting the economy.

"Alipay is selling NFT items, which shares the same technology with bitcoin - isn't that illegal transaction? one comment posted on Chinese microblogging site Weibo.

In a swift response, a spokesperson at AntChain said, "NFT is not interchangeable, nor divisible, making it different by nature from cryptocurrencies such as bitcoin."

Another fun use case happened last week. AntChain and the Union of European Football Association (UEFT) announced a five-year partnership to apply blockchain to football games.

Under the agreement, UEFT will use AntChain's blockchain technology during Euro 2020 to record the top scorer at the tournament and upload the result to a blockchain ledger for permanent storage.

Still, the central focus of Chinese policy has been an emphasis on blockchain technology serving the real economy, including its application to supply chain management, product traceability, data sharing, identity documentation, as well as education and health care data management.

In July 2020, Ant teamed up with the Chinese state-run shipping giant COSCO Shipping Corporation to promote blockchain developments in various shipping sectors to connect cargo owners, vessel operators, ports, and logistics companies through AntChain.

As China is rolling out its blockchain network, the government has criticized cryptocurrency for its potential to enable untraceable transactions and illegal activities such as money laundering and tax evasion.

Zhou Xiao Chuan, former head of People's Bank of China, asserted at the Lujiazui Forum on June 11 that some cryptocurrencies lose their opportunities to enter the digital payment field due to scalability issues, noting that people are skeptical about its attributes of being decentralized and deregulated.

"Cryptocurrencies are losing one of its competitive advantages in its concept of decentralization and it far from done deal and people cannot accept it as a payment solution because of its inadequate transaction speeds, Cryptocurrencies are digital assets with high volatility, investors want to make quick bucks and high returns by boosting the bubble, but we should pay attention to its application and whether it can serve the real economy. It is still too early to tell whether concurrencies can solve these issues, we will see how it develop in the future." Zhou said.

Similar to 5G, which has been implemented and marketized under the management of the state, the Chinese government has financed the creation of a nationwide controlled, non-token (cryptocurrency) and permitted blockchain platform called China's Blockchain-based Service Network (BSN).

In September 2019, BSN published a white paper in which the developer of BSN asserted that its blockchain framework does not have the characteristics of being decentralized and transparent. Instead, it is operated by one or multiple stakeholders, and users are required to seek approval from the application owner.

Led by the State Information Center, the network was co-designed by state-backed card payment organization China UnionPay, telecom carrier China Mobile and Beijing-based blockchain startup Red Date Technology.

In China, BSN already has more than 120 city nodes, expanding to more than 200 inside and outside China within 2021.

In February, BSN added Casper Network, a layer-1 proof-of-stake blockchain that forked Ethereum, into its portals. The partnership means developers on BSN can access Casper Network after the Casper mainnet launch in the first quarter of 2021.

BSN has integrated some of the most popular public blockchain networks, including Ethereum, Cosmos, Palkdot, Tezos, NEO, EOS. BSN claimed these integrations form a new global blockchain infrastructure that can solve the most common issues of high gas fees and blockchain network congestion.

In a Q&A section at the annual Ethereum Developers Conference, Vitalik Buterin, the co-founder of Ethereum, see potential in the Chinese government-backed BSN and admitted that consortium chains are more safe and conservative option than public chains in the short term, but he warned that the centralized controls of consortium blockchain might hinder its international expansion.