China is the most populated state in the world is known for its massive workforce as well as a technically lenient society. China is the go-to location for almost all large technology companies for its manufacturing needs because of which within a very short period of time the country has evolved as the leading contender to become the next superpower state.
Currently, the United States is considered a thin superpower, mainly because of its dominance in the international trade market since the US Dollar is the default currency for international trade. However, that supremacy might be under threat due to the emergence of blockchain technology which promises censor resistant cross-border remittance system which can be built on top of DLT.
While many countries have remained skeptical of digital currencies as it might threaten the financial sovereignty of their state, most of these countries have bet big on the underlying technology of blockchain. Among all these countries China has an unprecedented advantage not just in terms of human resource, but also in terms of governance.
China is an authoritarian state where the government has all the powers which are not so good for human rights, but extremely helpful in streamlining any project. Thus, China even though has banned the use of Bitcoin or any other cryptocurrencies, started studying and researching blockchain as early as 2014. The research team was tasked to create a national digital currency issued by the central bank.
After almost 6 years China is ready to launch its national digital Fiat by the end of 2019 or early 2020. However, right before the launch of the digital currency, Chinese President Xi Jiping has come out to ask for accelerated adoption of Blockchain and become a world leader in the technology.
China is Planning something Big, but it does not Involve Bitcoin
The call made by the president was followed by a long list of developments in the country surrounding blockchain and digital currency. All the state forces started to push out news and information regarding the benefits of decentralized technology.
Earlier it was rumored that China was thinking of banning Bitcoin mining as well, which would have been catastrophic given more than 60% of Bitcoin mining operations are conducted in China. However, Bitcoin mining was removed from the list of industries that the authorities were planning to abolish.
The state propaganda outlet, People’s Daily started churning out a ton of propaganda material to support blockchain while dissing cryptocurrencies. One such post called Bitcoin the first successful use case of blockchain technology, however, it also mentioned that Bitcoin is flawed at present and all those flaws will be removed from the national digital Fiat. One of the messages read,
“officials and party cadres must understand that the top leadership attaches high importance to blockchain technology due to the prospects of its application in the real economy, people’s livelihood and the state governance”
The Crackdown on Crypto Use
When the Chinese President called for accelerated adoption of Blockchain and decided not to ban Bitcoin mining, many in the West interpreted as a change of heart and we're hopeful that China might legalize the use of crypto after all. However, they could not have been further from the truth as the Chinese State started a crackdown on crypto offering services which many believed was the cause behind a massive market drop last month.
It would not be wise in the first place to think that China is an authoritarian state where everything is monitored by the state would allow a decentralized currency to be regulated. In fact, many believe all this promotion is a farce and the main reason to launch a digital national currency is to have more control over the flow of money in the country.
The theory might be right given the national digital currency is not entirely based on blockchain technology. It is rumored that China is going to use its digital Yuan to avoid trade sanctions by the US and might even nationalize Bitcoin mining to have better control over it.