Blockchain in China: How China could dominate the blockchain space in the next five years

China has had a strange relationship with Bitcoin and blockchain. For many years, the threat of a government ban on Bitcoin has affected the price. There is no doubt that there is an interest in the technology however, with many entrepreneurs in the industry hailing from China. Blockchain in China is expanding, and the country could become world leaders if the government pursues an aggressive strategy.

Entrepreneurs

Some of the biggest names in the crypto industry hail from China. The first to make his mark was Jihan Wu, the founder of Bitmain. Bitmain is the largest Bitcoin mining company in the world. Indeed, the power that Bitmain managed to accumulate was such that Wu became a dangerous element. The relationship between Jihan Wu and the rest of the community soured further during the scaling crisis of 2017. Since then, there have been rumours of severe financial difficulty – Wu allegedly went all in on Bitcoin Cash, and since then the price has collapsed. He has since been ousted from the company he founded.

Jihan Wu wasn’t the only Chinese businessman to focus on mining Bitcoin. The country became a Bitcoin mining hub, although it has since cracked down on many of these companies, allowing for newcomers to challenge its dominance.

Justin Sun and Changpeng ‘CZ’ Zhao are two others making waves in the cryptocurrency industry. CZ is the founder of one of the largest cryptocurrency exchanges in the world – Binance. Justin Sun is the founder of Tron, a top ten cryptocurrency. Both are good friends and partnered together for the recent BitTorrent launch. The token was launched on the Tron blockchain using Binance’s Launchpad service.

Justin Sun is fond of telling people he is the first millennial graduate of Hupan University, the university founded by one of China’s biggest entrepreneurs Jack Ma. The size of Alibaba shouldn’t be underestimated – think of it as China’s Amazon. Jack Ma and Alibaba have also been investigating blockchain technology with many patents filed, highlighting that it isn’t just new and upcoming entrepreneurs on the blockchain scene in China.

People’s Bank of China

Like many banks around the world, the largest Chinese bank – the People’s Bank of China – is also investigating blockchain technology.

The bank recently tested a blockchain-based trade finance and account receivables platform. The test wasn’t just solely completed by PBoC though, with the partnership extending to at least three other Chinese-based banks including the Bank of China.

Blockchain but not cryptocurrency?

As mentioned above, the Chinese government has had a love-hate relationship with Bitcoin. For the Chinese state, there are in fact many advantages of having its citizens use Bitcoin now that there is technology that can trace the blockchain accurately. China is one of the more authoritarian states in the world. This is highlighted by the new social credit system that it has implemented in an attempt to make citizens behave correctly. President Xi has gone as far as to talk about blockchain as a revolutionary technology.

The harsh measures could theoretically be improved through blockchain technology, as the government could keep a ledger on good and bad citizens that cannot be changed. This snooping capability is one way blockchain could be useful.

At the same time, there are cryptocurrencies that could subvert this power. In particular, privacy-based coins such as Monero or Zcash would make it extremely difficult for the Chinese state to trace and follow payments. Herein lies the dilemma for the Chinese government. The technology could theoretically be used for both good and bad, which perhaps shows why the country has had a love-hate relationship with it.

Ambitious government

China as a nation has advanced rapidly since the 1980s. Whilst the nation used to be content with being a powerhouse in Asia, it is now eyeing a bigger prize – that of a global superpower replacing the USA.

One such example of this ambition is the One Belt One Road project. This gigantic infrastructure project aims to reignite the old Silk Road from Europe to Asia. New roads, new bridges, and masses of infrastructure will be built in an attempt to reduce trade frictions between the nations involved.

Conclusion

Whilst Malta is known as the blockchain island, its economic and geopolitical strength is not comparable to China. Once known as the sleeping dragon, under President Xi, the country is rising. As the USA continues to put up barriers, China is attempting to break them down through projects such as One Belt One Road.

Should China invest heavily in the blockchain industry, there would be little doubt about the country’s capabilities. Already the nation has shown its prominence in creating industry leaders in the space. Were it to aggressively pursue a blockchain-based strategy, it could become a world leader in a matter of years.