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China has fallen back in love with blockchain, with the China Communications Industry Association proposing that October 24 be immortalized as “Blockchain Day” to commemorate President Xi Jinping’s impassioned plea for the nation to “take the leading position” on the technology.
In a speech last Thursday, Xi singled out blockchain as “a key breakthrough that can facilitate China’s progress in core technologies.” He reiterated how China needs to lead the way on building out blockchain technology, in order to benefit economically and socially.
However, not everyone in China is fully sold on the idea. Some analysts are concerned that the ramped up interest could lead to a replay of the situation in 2017, when investment in bitcoin and other cryptocurrencies reached fever pitch. That was what originally drove China to take a hardline stance on crypto speculation. So, while Xi is extolling blockchain’s virtues, others are warning of its dangers.
The dragon could be accused of schizophrenia.
It’s not hard to see why some are worried that boosting blockchain will lead to more speculation. When the news of Xi’s speech spread, stocks in blockchain-related companies went through the roof. And the price of Bitcoin soared 20 percent, taking the entire crypto market with it.
On top of this, local governments in China are already competing to show that they are jumping on the blockchain bandwagon. On Wednesday, Chinese officials from Guangzhou unveiled a $150 million scheme to fund blockchain projects in the region—something that could fuel further speculation.
China finds itself in a tricky situation. On the one hand it's advocating for blockchain technology but on the other, it doesn't want to go too far and cause another bubble. In the interim, it knows how to control at least one side of the equation; it has been censoring social media, removing posts criticising blockchain, according to CNLedger, a cryptocurrency news resource that focuses on developments in China. And China’s taking care to emphasise that blockchain doesn’t necessarily mean crypto, with state paper the People’s Daily commenting that, “The rise of blockchain technology was accompanied by that of cryptocurrencies, but innovation in blockchain technology does not mean we should speculate in virtual currencies,” according to Reuters.
But, while China has some sway over the sentiment in the market, it can’t necessarily stop the music if another crypto craze gets into full swing. What’s it going to do, ban Bitcoin again?