China announces the implementation of blockchain technologyRecently, China’s president, Xi Jinping made headlines when he announced that China would be implementing blockchain technology on a large scale. A new law was passed with regards to regulation of cryptography. Jinping called on the country to “seize the opportunity” and to take a “leading position” in the implementation and development of blockchain technology.
Shortly after, head of the technology department of the People’s Bank of China, Li Wei requested commercial banks to join the blockchain party by making use of blockchain tech for financing. The news came at the opportune time and immediately the price of Bitcoin spiked.
China’s long-standing affair with cryptocurrencies and blockchain technologyGoing back in time, China has not always been an advocate for blockchain and Bitcoin. In December 2013, the People’s Bank of China prohibited financial institutions to facilitate Bitcoin transactions. In 2014, Bitcoin trading was banned and in September 2017, cryptocurrency exchanges were forced to shut down. It is said that by July 2018, more than 173 cryptocurrency trading platforms were closed down by Chinese authorities. China hit another blow to the crypto industry when in early 2018, it also cracked down on Bitcoin mining. At that stage it seemed like China was no place for Bitcoin and other cryptocurrencies. It was set in stone, China banned Bitcoin.
However, few people actually know that since 2014, the very same People’s Bank of China has been studying blockchain technology and digital currencies.
Even big tech companies like Alibaba and Tencent have been working on blockchain platforms for some time.
China’s very own cryptocurrencyTo add to President Jinping’s announcement, it was also reported that China launched a blockchain-based smart city identification system. The system has been launched in three districts and will run on blockchain technology. China is not wasting any time!
However, China launching its very own cryptocurrency is the cherry on top of the cake! China’s proposed digital currency is said to be launched quite soon and can be used across major payment platforms such as WeChat and Alipay.
What China’s affair with blockchain tech means for the crypto industry?China implementing blockchain tech has become a hot topic. Some are saying it defeats the purpose of using blockchain tech since it will be used as a form of centralized control. Some believe that China is simply shifting power from users to central authorities like banks and governments.
The People’s Daily publication recently published a very interesting piece on the topic. The article states that even though the future of blockchain is here, China still needs to implement strict regulations. It argues that implementing blockchain tech does not equal an increase in the price of speculative cryptocurrencies.
With regards to regulations, the article states that due to blockchain tech still being the new kid on the block, improved safety, standards and supervision processes are required. This will go a long way towards combating illegal activity being conducted on these networks. Alas, China is in a good position to promote the effective use of blockchain technology.
In conclusion, one can argue that China’s big announcement did indeed have an impact on cryptos as almost all Chinese cryptos gained significantly. For this reason, it is important to distinguish between cryptocurrencies and speculative cryptocurrencies. The People’s Daily reported that only speculative cryptocurrencies are being criticized and not all cryptocurrencies. In the near future we may see China distinguish between the two. Afterall, EOS and Tron have been named as China’s Ministry of Industry’s favourite platforms.
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