Decrypt’s Art, Fashion, and Entertainment Hub.
China’s recent blockchain development bonanza shows no sign of abatement. Business leaders and investors seized on President Xi Jinping’s first-ever endorsement of blockchain as an underpinning technology, and new initiatives sprung up almost overnight. But Chinese firms, investors and universities have been working quietly on blockchain projects since 2014.
From pledging loyalty to the Communist Party and identifying smart city citizens to verifying pigs and tracking liquor shipments, here’s how China’s gone all-in on blockchain.
1. An identification system for cities
China’s wasting no time with this one. Since Sunday, city authorities across China have been eligible to apply for a city identification code to link them into a blockchain network developed by three institutes in Shijiazhuang city.
The network aims to enable data sharing and interconnectivity between provinces.
2. An authentication method for everything from liquor to pig meat
Prized by international dignitaries (one bottle is a staggering $450,) Moutai liquor is blended from up to 200 spirits and is manufactured by only one company, Kweichow Moutai Co., a partially state-owned Chinese enterprise. The company has been working with Ant Financial (an affiliate of China's internet behemoth Alibaba) since March 2018, to develop a blockchain-based anti-counterfeiting system for its premium hooch.
The country that’s famous for its copies of everything from Louis Vuitton bags to WAL-MART (China’s version is WU-MART), has embraced blockchain’s authentication talents like no other. It’s using them for everything from verifying pigs to “information asymmetry" in trade finance.
3. A national digital currency
Many of China’s applications are a far cry from the vision of the technology’s creator Satoshi Nakamoto. One example is China’s plan for a national digital currency. It won’t be decentralized—one of the main factors ensuring that a blockchain is tamper-proof. That’s why some are calling the technology’s renaissance in China, “blockchain with Chinese characteristics.”
Decentralized or not, China’s national digital currency is still likely to get off the starting blocks before Facebook’s Libra—the project that’s rumored to have precipitated its speedy rollout.
4. A highway to innovation for Big Tech and banks
China’s Big Tech players, such as Jack Ma’s Ant Financial, have long been experimenting with blockchain for financial applications, such as cross-border micro-transaction payments, as well as medical reimbursement and leasing contracts.
Things are going well. The People’s Bank of China, Shenzhen branch, reported, in October, that its blockchain-based trade finance platform has processed $10.7 billion in transactions in the past year.
5. A hallowed technology worthy of government investment
Local government officials have begun to provide funding for "outstanding blockchain projects.”—a step up from more stealthy governmental funding of the technology through its “key pillar” projects, such tech giant, Tencent.
The city of Guangzhou, a blockchain innovation hub since at least 2017, last week introduced a $150 million initiative to support two public or private-based blockchain projects per year. There’s no reason to think that other regions won’t follow suit. And standardized regulations for the industry are also in the works.
For good measure—irony of ironies, considering its prohibitive stance on cryptocurrencies—China has begun cracking down on any articles daring to tarnish blockchain.
6. A breeding ground for tech unicorns
The prospect of billions of dollars in cheap government financing and subsidies, has led to Chinese investors snapping up shares in blockchain-related businesses. More than 85 stocks surged by 10 percent—the daily limit on trading in Shanghai and Shenzhen— the Financial Times reported last week.
But China is also home to three of the world’s top Bitcoin mining companies. Last week Chinese Bitcoin miner Bitmain bested all other crypto startups on this year’s “Global Unicorn List,” published by the Shanghai-based Hurun Report. And, on Wednesday, China finally put an end to speculation that bitcoin mining would be phased out, ensuring a more certain future for Canaan and Ebang, and Bitmain too, if it can sort its civil war.
7. A tool for party loyalty
The study of blockchain has become a national movement in China—from civil servants, to stay-at-home moms, the public has been encouraged to study Introduction to Blockchain, on “Xuexi Qiangguo,” an app designed to teach President Xi’s thoughts. A national “Blockchain Day” is even under consideration.
And to provide indisputable evidence of loyalty to the Communist Party, a news publication operated by the People’s Daily newspaper has asked Party members to stamp their declarations of fealty directly onto a blockchain.