The factors that permit new trends and innovations to thrive in particular regions cut cross both social, political and economic structures. Until these factors are in tandem and support the particular trend, it will continue to struggle. As it stands, China appears to be on the right track in sustaining its role as a leader in the sector of emerging technologies.
Adoption level of blockchain, cryptocurrency and newer technology varies from one region of the world to another. The technologies are the same everywhere, and their deliverables remain constant. The reason why their popularity level differs across the regions revolve around the factors mentioned above. While countries like China and other nations within its surrounding adopt an open-minded approach towards emerging technologies, many other nations across the globe choose to be more pragmatic.
As it stands, China is one of the main engines of the cryptocurrency market. This is according to Sergei Khitrov, Founder & CEО at Listing.Help. In his opinion, these factors can further be broken down into public interest, human potential, and time.
Public And State Interest
One major factor that is speeding up the adoption of emerging technologies in China is government backing. This is evident in the continued adjustment in the regulatory measures coming out of the state. Apparently, such measures are geared towards keeping up with the changes that are taking place in the rapidly evolving ecosystem of blockchain, cryptocurrency and other emerging technologies. Clearly, there is significant state interest in whatever is happening in the industry.
In the words of Khitrov, the state backing is expressed in significant interest in blockchain technology’s possible use in its functioning and geopolitical influence. In June 2020, the Chinese authorities published the “Beijing Municipal Blockchain Innovation Development Action Plan (2020 – 2022)“, which implies Beijing’s transformation into a blockchain hub. Little wonder why the next phase of the digital Yuan implementation is directed towards Beijing.
Khitrov notes that within the next two years, China plans to integrate into the city economy and infrastructure dozens of blockchain innovations. Now 140 state and municipal services are using the blockchain in the city. In the future, the technology will be used for real estate registration, taxation, processing of medical data, social payments, securitization of assets, cross-border payments, and so on. A fund to support blockchain-startups, a system of training, and special blockchain centers throughout the city will be created.
In addition to Beijing, more than ten other cities in China have released their own strategies to integrate blockchain start-ups into everyday life. These two projects stand out for their scale and potential impact on the global crypto markets – Digital Currency Electronic Payment (DCEP) and The Blockchain-Based Service Network (BSN).
Khitrov identifies China to be significantly ahead of other countries in launching digital central bank currencies (CBDC). He explains that the People’s Bank of China (PBoC) was one of the first among monetary regulators to engage in active CBDC research in 2014. The digital Yuan has a classic two-level system – the NRC issues DCEP for banks or other financial institutions. Then they distribute digital currency to users. DCEP is expected to increase the efficiency of the payment system and the convenience of payments in RMB.
This spring, the Chinese authorities launched another large-scale project – the National Blockchain-based Service Network (BSN). The project is held under the authorities’ auspices with the participation of telecom companies China Telecom, China Mobile, China Unicom, China Union Pay payment system and Huobi exchange, blockchain companies Chainlink and Cosmos.
According to Khitrov, BSN’s main task is to build the “Internet for Blockchains,” as said in the project’s whitepaper. The platform allows developers worldwide to connect to the BSN and create applications based on the blockchain, choosing corporate protocols or public blockchains. Now BSN supports several corporate blockchains – Hyperledger Fabric, Fisco BCOS, Baidu Xuperchain, and CITA – and public blockchains Ethereum, EOS, Tezos, NEO, Nervos, and IRISnet.
Therefore, the second important factor is human potential. Khitrov explains that on the one hand, this is expressed in a broad interest in buying and working with the cryptographic currency itself. He notes that the country’s residents are widely interested in buying cryptocurrencies and stablecoins, as they help avoid volatility. Thus, according to Chainalysis, China is the largest cryptocurrency market in the world.
On the other hand, it is an interest in the development of the technology itself, as China is leading in the number of patents for blockchain technology – there are ten times more than in the U.S. According to the calculations of the international rating agency Fitch Ratings, the country is also a leader in the use of blockchain in the digitalization of securities.
Moreover, many crypto companies are being created as the blockchain is being tested in the economy’s real sectors. According to August 2020 data of LongHash Company, more than 10,000 blockchain companies were created in China for the first six months of 2020. Most of them are small enterprises. The main regions where the sector is developing are Beijing, Hebei, Guizhou, Hunan, and Hainan.
Khitrov also notes that major banks, courts, tax authorities, telecommunications, and internet giants research and develop their own blockchain solutions. Industrial and Commercial Bank of China (ICBC), UnionPay, Baidu, Alibaba Group, Tencent, Huawei, and others are developing their blockchain projects.
China’s early entry into the blockchain and cryptocurrency industry appears to be working in its favour. Khitrov notes that the work under blockchain as a technology started in China earlier than in many other countries. This applies to both mining, the creation of new blockchains, and public awareness of the technology. It is the time that has contributed to the formation of public interest in technology and legislative practice, as well. “Over the years, the world’s largest technology companies have developed their business in China, he says. “So, that helped to expand China’s human potential as a nation of high-tech professionals.
The combination of the above factors has allowed China to become the leader of the innovation blockchains. However, the implementation of DCEP and BSN, legal issues, mining issues, and competitors’ success from other countries is crucial to maintain this position in the future.
Iyke Aru is a seasoned author and educator in the blockchain and cryptocurrency industry. He has been in the business of crypto content writing for many years with thousands of his articles across several platforms on the internet. Iyke is based in Nigeria where he stands out as one of the most informed and credible figures in the cryptocurrency industry. Outside blockchain and crypto, you will most likely catch Iyke playing or discussing football with friends and family.