Will China be the driver that takes tokenization mainstream?

Funder One Capital
Nov 5 · 3 min read

Economists and commentators have made much in recent years of the rise of the Asian tigers. The prediction that the balance of economic power is shifting eastwards is nothing new but most analysis tends to focus on a traditional view of trade where Asian nations compete on cheaper manufacture of consumer and electronic goods, having a tech-savvy workforce, cheap service skills and other areas where the region is winning out on price or knowledge. But when it comes to new technologies like blockchain, cryptocurrencies and other frontier technology, the challenge from the East has perhaps been underestimated.

Despite their past hostility to cryptocurrencies like bitcoin and, more broadly, to Initial Coin Offerings (ICOs), China and other Asian countries like Korea and Thailand are currently experiencing a blockchain boom. To many people’s surprise, China’s President Xi Jinping recently delivered a glowing endorsement of distributed ledger technology and on top of that China has also been making hay from a range of new initiatives including moves to create its own national cryptocurrency.

Could it be that China’s rise is the driver for taking blockchain and tokenisation mainstream globally, the one which finally forces the West to sit up and take notice that it could be falling behind in the new economic frontier? Can we win the race for the full digital transformation of society and with it, the need for rapid, secure exchange of digital assets online?

Is the Digital Renmibi coming?

Certainly, as a result of President Xi’s recent announcement, Chinese investors have been hoovering up shares in blockchain-related businesses and the bitcoin price (in tandem with the price of other cryptocurrencies) has also shot up in response to his comments. Many also believe that publicity around Facebook’s Libra project has put pressure on China’s central bank to launch the digital renminbi.

Whoever wins the race will be streets ahead in terms of capturing future economic value. Think of the potential of a market such as security tokens (digital representations of securities), for example, which estimates place at being worth in the trillions of dollars in just 5 years’ time.

Facebook’s Libra vs. China — the race to success

Yet David Marcus, who leads Facebook’s Libra project, has warned that China will create a digital currency system that could be entirely out of reach for U.S. authorities. In an interview with Bloomberg he recently warned that America risks “having a whole part of the world completely blocked from U.S. sanctions and protected from U.S. sanctions and having a new digital reserve currency”. He said: “The future in five years, if we don’t have a good answer, is basically China re-wiring” a large part of the world “with a digital renminbi running on their controlled blockchain”.

Indeed, since Libra was announced, China has made stronger efforts to push forward with its Digital Currency Electronic Payment (DCEP) project due to concerns that Libra that would reinforce the dollar’s dominance in the international financial system.

The West has a huge opportunity to embrace blockchain and tokenization — and an enormous potential to capture value from markets like tokenization of real estate as well as the creation of entirely new business models in crucial areas like healthcare, energy and the overall management of data (the new oil). But with President Trump’s scepticism towards bitcoin and Europe mired in its wrangles over Brexit, will it be brave or forward-looking enough to take the plunge?

To find out more about real-estate tokenization and Satoshi Nakomoto’s vision for a post-financial crisis world visit our website and read our white paper: https://www.funder1.co.uk.

Or check out our introductory video on Linked in: https://www.linkedin.com/feed/update/urn:li:activity:6597813239730581507.

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