China Is Taking Its Social Credit System to the Metaverse: Report

By Pedro Solimano

China is looking to bring its highly-controversial social credit system to the metaverse.

Per Politico, a set of proposals issued by one of China’s state-owned telecom firms China Mobile aims to create a “Digital Identity System” for any and all users of online virtual worlds.

China has been slowly but surely implementing its controversial social credit score system—a scheme to assess a citizen’s trustworthiness across a variety of metrics—since 2014. Now, it appears they want to apply it to virtual worlds too.

The suggestions indicate that the country is bidding to link a person’s “natural” and “social” characteristics to their digital ID, as well as establishing ways to permanently store the information.

These reports come amid recent research on blockchain patent filings published by Coincub, a startup that specializes in off-chain market data.

The research indicated that China was leading the way on patents by an ample margin, with an astounding 90% of all blockchain patents worldwide.

“China has completely taken over the blockchain patent filing space in 2023,” especially due to their “advancements in the CBDC area and using blockchains for ‘social’ good,” said Coincub CEO Sergiu Hamza.

He told Decrypt, that likely means “mingling social aspects into blockchains.”

Social credit score, so what?

A key concern surrounding the country’s social scoring scheme is that it may result in banning individuals from using certain services when their behavior is deemed inappropriate.

The Guardian reported on these dangers back in 2018, claiming such a system in the hands of China could “interfere in other nation’s sovereignty.” That same year, Canadian media outlet The Globe and Mail also cast a dubious eye on the system, and Wired compared the scheme “dystopian future only sci-fi writers can think of,” in 2019.

China’s pursuit of the metaverse, for Hamza, is a “low-hanging fruit.”

He pointed out to Decrypt that the nation’s blockchain endeavors are “not exclusively” for a social credit system, though.

“Social tracking is part of the trifecta of Industry 4.0, the future of finance and social scoring,” said Hamza, referring to the simultaneous advance of AI, blockchain, machine learning, and cloud technology.

The latest proposals to implement social scoring in digital worlds were made during the second meeting of the International Telecommunication Union (ITU), the United Nations telecoms agency that sets global rules for how technology works in a metaverse focus group.

“By entangling these technologies and owning the critical know-how early,” said Hamza, “they can start offering it as a service when the West starts demanding it.”

The latest set of proposals also seems to set the stage for one of China’s most important technological advancements: the digital yuan, or its Central Bank Digital Currency (CBDC). The project's pilot program kicked off in July 2020 and made news recently as the summer months kicked in, and China began targeting tourists to use its CBDC.

This could lead to two possible scenarios, argued Hamza.

“Either a Metaverse dominated by China with the coolest features available that puts forward sweet yuan advantages in the space of microtransactions” or “countries looking to ‘optimize’ their social scoring might be looking to China for help in the future.”

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