Up to now, mainstream Chinese media has primarily focused on blockchain, Bitcoin’s underlying technology, rather than Bitcoin itself. State news outlet the People’s Daily recently called blockchain "a breaking point" for the country to overtake.
Xinhua’s article, which takes the form of an explainer and a critique of Bitcoin, thus marks a significant change in policy towards the cryptocurrency.
China’s ambivalent attitude to Bitcoin
The article’s prominent placement and reference to Bitcoin as “the first successful application of blockchain technology” has led to speculation that China could be considering lifting its controversial ban on Bitcoin trading, imposed back in September 2017.
But despite the upbeat headline, the article chooses to focus largely on the negative aspects of the cryptocurrency: the energy intensive nature of Bitcoin mining; a suggestion that centralization is a problem, and Bitcoin's volatile price. It claims that the key uses for Bitcoin are blackmarket transactions and money laundering.
Because of this, it has the feel of an opening salvo to prepare the ground for China’s imminent crypto currency, dubbed the Digital Currency Electronic Payment (DCEP.)
China reshapes the blockchain narrative
The news was broken on Twitter by Matthew Graham, chief executive of Beijing-based Sino Global Capital, which focuses on blockchain investments. He told Decrypt that the recent China state media content about blockchain, including today’s article, is all part of a top-down effort to “shape the narrative surrounding this powerful and strategic technology.”
Graham pointed out that this is not an easy balancing act.
“They can’t ignore Bitcoin, but they don’t really want to encourage it either,” he said. “They want to slowly push and pull people in the direction of their own vision. What is that vision? State-controlled DCEP in conjunction with blockchain technology throughout the economy.”
Why has China embraced blockchain?
Xinhua’s article follows an avalanche of recent activity in China relating to blockchain, following a groundbreaking speech in which China’s President Xi Jinping endorsed the technology.
Two weeks ago, Xi urged the industry to accelerate the development of blockchain technology; the country duly introduced new measures to advance its adoption, and even began cracking down on any articles daring to tarnish blockchain’s good name.
Significantly, last week, China quietly erased Bitcoin mining from the list of economic activities that were no longer to be encouraged.
That development, together with making Bitcoin front-page news, would point to a thaw in relations between the Chinese state and the cryptocurrency—whatever China’s underlying motivation is.