China is the latest of actors on the world stage that is changing opinions on cryptocurrencies and blockchain technology. What has traditionally been considered a decentralized monetary system, free from the scrutiny from governments and banks, is now entering a stage of adoption few saw coming a few years ago. China is now calling for widespread adoption of blockchain technology throughout the ranks of the financial system within China in an effort to remain fiscally competitive into the future.
Directly from the Top
Xi has made his stance very clear on the subject of blockchain. In a recent statement by the Chinese President, Xi said that anyone within China with the capability to do so should seize any and all opportunities that can potentially be derived from blockchain technologies.
According to the Chinese president, there are numerous aspects of current-day China that could be drastically improved upon assuming the right blockchain tech was implemented in the most efficient ways. During his speech, Xi stated that everything from healthcare, to poverty levels, education, housing, financial systems, and transportation can and should utilize the power of blockchain to make the necessary improvements to lead China into a new age.
Xi’s push for blockchain tech everywhere means that anyone capable will now be encouraged to push into the blockchain game. Testing and trials of new blockchain-related approaches to old problems will be a commonplace occurrence within China over the next few months and years. And, we are likely going to see some interesting government-led applications of the technology as a result.
The Central Bank Also Calling for Adoption
The People’s Bank of China’s head, Li Wei, is the latest voice behind the call for other banks to adopt blockchain and find new ways to leverage the technology to China’s benefit. Just days after Xi’s powerful endorsement of blockchain tech came the Central Bank is a perfect example of just how quickly a call from the Chinese president can affect the day to day business of virtually every sector within China.
There are several areas banks in China could utilize blockchain technologies. One is, of course, to come up with a Libra-like digital currency based on a reserve of government-backed fiat currencies. Others involve investments, cross-border transactions, and more.
A Digital Yuan
It will not be long now before we see a digital Yuan which is being touted as being very similar to Facebook’s Libra project. Despite Libra’s seemingly constant hurdles, the idea behind Facebook’s project has been enough to set things in motion on many other fronts: China, for example, saw the potentially destabilizing effects that Libra was set to bring to the stage and decided to fast-track a digital currency project of its own. The purpose of the digital Yuan will not be to compete with the likes of Libra, but to create a buffer which will disallow Libra from shaking the Chinese financial system.
Xi’s recent blockchain endorsement is not very surprising, nor was the expected jump in tech-related stocks in China. What is interesting is just how high the stocks climbed after the announcement that China would be heading in a new direction with blockchain technology at its side. While stocks were being picked up at record speeds, so too was the Bitcoin price. Bitcoin, during the same span of time, rallied past the 30% mark.
It is still too early to tell where China’s foray into blockchain is going to head. Still, it seems very likely that the China is on the eve of dramatic shifts in approach, across a wide range of industries. Each new development and approach to surface now has the government’s blessing to attempt a run for the finish line. In a country where government support is at the center of every operational system, it certainly seems plausible that China’s blockchain ventures will bring something new to the table.