Experts Expect “Multi-Billion-Dollar Support” From China in Blockchain & Crypto Companies
- A Bitcoin-like but Chinese-led and more highly controlled platform to emerge
- If China wins this race, it will “build in all the default features into the platform”
- Any initiatives or standards that emerge in China gets the front foot
China’s President Xi Jinping’s latest remarks on the country embracing blockchain technology and taking a leadership position in the space will give Beijing an edge in the global race to lead in the nascent technology said, analysts and investors.
Since last week, there have been several positive reports from China regarding blockchain.
A Bitcoin-like Chinese Controlled Platform
It all started with Xi talking about accelerating the development of blockchain that has the related stocks surging and Bitcoin and crypto market registering significant gains.
“The significance of the Xi announcement should not be underestimated at all,” said Garrick Hileman, head of research at crypto firm Blockchain and author of a University of Cambridge study on the tech.
“You could see a Chinese-led, and more tightly controlled, platform emerge that’s certainly different to some of the open networks that have dominated the space, like bitcoin.”
On Monday, a Chinese central bank official asked commercial banks to prioritize their application blockchain for digital finance.
On Oct. 28, Huang Qifan, Vice President of the China International Economic Exchange Centre said at the Bund Summit that after five years of studying, the country is “likely to be the first central bank in the world to launch a digital currency.”
“If China wins the race to have the world’s largest business blockchains actually transacting real-world financial activity, it will be the first-mover and thereby build in all the default features into the platform,”
Lex Sokolin, global financial-technology co-head at ConsenSys told Reuters.
Any initiatives that emerge in China gets the front foot
Attracted by the promise of lower cost, tech companies, banks, and retailers in the West have spent billions just testing blockchain. But a Reuters analysis found earlier this year that only a couple have been executed and adopted.
The US led the venture capital investment in blockchain and crypto firms for three years straight from 2015 to 2017. In 2018, Chinese blockchain and crypto firms soared, registering an investment of over $3 billion in comparison to $2.6 billion in the US.
However, regulatory uncertainty has dampened the commercial adoption of blockchain, found a survey by PricewaterhouseCoopers last year.
Now, Xi’s backing is a rare example when as Windsor Holden, an independent telecoms and payments consultant who tracks blockchain said, “most governments in the West have been far more cautious.”
“The sheer fact that there is so much support for the project in China clearly puts any initiatives or standards that emerge on the front foot.”
In 2019, China invested just $36.6 million while the US invested $1.1 billion in blockchain and crypto firms.
Now, with Beijing’s support, we might see even more investment in related companies and also hasten the mainstream use and application of the technology.
“I do expect to see multi-billion-dollar support for core Chinese tech companies,”
said ConsenSys’s Sokolin.