China’s Blockchain rush gathers pace
The country is aiming for a leadership position with the launch of ambitious projects slated for completion this year
It’s no surprise that China is actively developing blockchain technology. The endeavor has gathered pace ever since President Xi Jinping endorsed the technology and reiterated its importance to the country last October. A lot of people think this move is solely aimed at breaking free from its dependence on western technology, China has been quietly researching the blockchain field for the past five years. And while the former might be partially true, it’s also a fact that China has been doing its homework.
The newly found love of the Chinese government in the form of blockchain, however, completely excludes the mainstream cryptocurrencies. The most obvious reason being the decentralization feature of these digital assets. Since the government can’t control them, they have fallen out of favor.
But they haven’t left the field open. A central bank digital currency (CBDC) is expected to be floated sometime this year. Also, last January, China’s internet censorship agency unveiled regulations that required all blockchain-based projects to collect complete information of people using their service — real names, national ID & telephone numbers.
Digital Currency Electronic Payment (DCEP)
Five years in the making, the Chinese central bank PBoC launched pilots for its digital currency in the two major cities of Shenzhen and Suzhou last December, with the four major banks & three biggest telcos joining the endeavor. The pilot called digital currency electronic payment (DCEP) will see the implementation of electronic payments by the partners in different industries like transportation, education & healthcare. The participants can also design their own trial scenarios.
The second pilot which is a large scale effort is slated for launch, later in 2020. The central bank recently issued a statement that everything is progressing smoothly with the development of the Digital Yuan. The proposed CBDC will be centrally controlled by the PBoC and 100% backed by the reserves commercial institutions pay to the institution.
Blockchain Service Network (BSN)
China also rolled out the blockchain-based service network (BSN) last October — a service that would serve as a platform for the development of smart cities and the digital economy. The project as expected is backed by the Chinese government policy think tank the State Information Center (SIC) & state-run companies like China Mobile & China UnionPay, among others.
The BSN will be commercially launched in April of 2020 after an initial beta testing period of six months. This testing period is expected to include a total of 400 enterprises and 600 developers. Piloted in the eastern provincial capital of Hangzhou, the interregional public infrastructure network is intended to reduce the economic costs & streamline the process of blockchain adoption.
The Chinese equivalent of Google — the domestic search engine giant recently launched Xuperchain, a public beta version of its blockchain service for businesses, which includes its own cryptocurrency and a blockchain explorer. The platform would provide small & medium-sized businesses and developers to launch their own Dapps.
Baidu revealed its intention to launch Xuperchain back in Sep. 2018. The white paper of the project touts of innovative design with a scalable network claiming to process 10,000 TPS (transaction per second). The company also made the technology open source last May, however, developers faced a number of technical challenges when they tried to deploy it. The latest version of the project claims to have fixed the issue.
Although it is one of the dozens of other projects in the works in China, Baidu’s involvement gives it a lot of importance. And since nothing works without the government’s approval in China, it most probably has the blessings of the government.
Critics argue that having centralized control of blockchain projects defeats the purpose of the technology as we are seeing in the case of China. The whole point of decentralization is to move the power away from powerful entities like central banks & governments to the users. China, on the other hand, seems comfortable developing enterprise-level centralized blockchain platforms.