Analysts Ponder China’s Strategic Use of Blockchain Amid International Development

Blockchain china

One of today’s biggest headlines has more to do with national interests than it does with pure market activity, but it could still be a big indicator for investors.

Deloitte has released a report with hundreds of respondents around the world, and 200 participants in China, that shows a full 73% of these Chinese parties consider blockchain a strategic priority for business.

That’s compared to a rate of 56% in the United States, as reported.

Coverage of the study by Helen Partz in Cointelegraph shows that although China has been very hostile to cryptocurrency asset holdings by its citizens, it has been aggressive on utilizing the underlying blockchain technology, and even hosts most of the world’s Bitcoin mining pools.

Partz points out China leads the world in both patent filings for blockchain, and developed blockchain projects.

Since (March of 2018),” Partz writes, “Blockchain has remained a major focus of the development in China, …. Alongside, China’s tight policies to crypto have not appeared to soften so far, with the country’s social media giant and payment service supplier WeChat having bannedcrypto transactions in its payments policy in May 2019.” (links included)

A story by Stephen Ehrlich in Forbes last year titled “Making Sense of China’s Great Blockchain Strategy” goes into more detail about the dichotomy here, describing Chinese activity as a kind of ‘Jekyll and Hyde’ approach, though it is clearly delineated between crypto assets and blockchain data handling, simplifying China strategy, to many, as “Blockchain, not Bitcoin.”

“For a couple of years now it has appeared as if the Chinese government is seeking to ‘have its cake and eat it too’ when it comes to crypto assets and blockchain technology,” Ehrlich writes. “The simple phrase “Blockchain not Bitcoin” has become the country’s defining strategy when it comes to the space, and the difference in approaches that the government has taken regarding open v. closed ledgers and assets is a study in contrast.”

Elsewhere in the world, national governments are also moving to adopt blockchain technologies, as in Germany’s plan to purchase major amounts of Bitcoin gear from Norway.

Going back to the Chinese mentality, many U.S. experts would agree that blockchain in its raw distributed ledger state is much more useful to a national government than Bitcoin, which is starting to be seen as a type of consumer and institutional asset – both a medium of purchase and a kind of digital equity.

However, as Ehrlich points out in his article, the Chinese have a need to control economic activity within the country, and that may explain their hostility to cryptocurrencies. They need to create a walled garden with their own e-commerce shops and fiat currency, in order to keep the populace happy and maintain a certain quality of life in the Middle Kingdom.

To some, this looks very much like a bubble. Is it sustainable? Does it dovetail with the new protectionism seen in the U.S., and can the global markets withstand these national efforts? All of these are excellent questions for investors to delve into – send us a note and tell us what you think!