Please click the link below to listen to the 62nd episode of my weekly crypto podcast ‘Two Minute Crypto.’ These are intended to be short, single-topic ramblings on some aspect of the cryptosphere. Consider dropping a like and or a review on iTunes or Podbean if you enjoy the podcast. Comments and critiques welcome.
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China’s Blockchain Play – Part 1 of 5
The real division is not between conservatives and revolutionaries but between authoritarians and libertarians.
Welcome to Two Minute Crypto. This instalment sees the
start of a 5-part series examining China’s recent shift in its public stance towards
- Part 1 Focuses on the rationale
driving this apparent change.
- Part 2 Outlines why, in particular,
this is good for Bitcoin.
- Part 3 Examines the long-term outlook
for China-based blockchain projects.
- Part 4 Discusses the wider
implications of China’s involvement in blockchain development and
- Part 5 Outlines the opportunities and
risks that now present themselves to crypto investors.
Why blockchain and Why now?
On October 25TH President Xi publicly
stated China’s desire to lead the world in both blockchain development and
implementation. His endorsement was both broad and enthusiastic. In the following
days and weeks, local authorities and media cemented this embrace of blockchain
with the release of instructional blockchain materials, further endorsement by
central bank officials, the suppression of anti-blockchain threads on social
media, and the removal of crypto mining from the list of activities the ruling
party would like to see eliminated.
In one sense, the move to portraying blockchain in a
more positive light is very easily explained. The Central Bank of China (CBC)
have long announced their plans to roll-out a state-controlled cryptocurrency.
Clearly cleaning up the image of blockchain is an important prerequisite before
introducing this system.
However, at a deeper level, China’s embrace of
blockchain can be understood and summed up with one word – control. Ruling
since 1949 the Communist Party of China (CPC) has but one core principle –
continued hegemony over the Chinese nation. Each and every policy is driven by
this directive. Blockchain is no exception. Indeed, blockchain is a godsend to
this authoritarian regime that already exhibits great control over most aspects
of society whether that be political, financial or social.
A centralized blockchain or series of blockchains will
facilitate the parties’ expansion ever deeper in the lives of its citizens. The
marriage of money to surveillance as facilitated by a unified blockchain
database of transactions will serve to substantially deepen its level of
control over the actions of the Chinese people. A state-issued cryptocurrency
will be monitored and permissioned – dissent already difficult will both be easier
to root out and of course, suppress.
Any domestically derived economic benefits of blockchain
are simply added value – it is first and foremost a tool of control. Doubtless,
China’s pending rollout of its Social Credit System will be intimately
integrated with blockchain. Rewards and penalties will be easy to track, administer
and iterate on. Granular control is the goal of every authoritarian regime and
time and again the CCP has demonstrated its enduring focus on remaining both in
power and in ever greater realized control. China’s homegrown and eminently
successful companies all tow the line. Data is not in any sense private and the
rights of the citizens are entirely subsumed by the ‘needs’ of the party.
We-Chat, Weibo, Tencent and so on serve to prop up the regime as they routinely
hand-over their customer’s data. It’s hard to overstate the extent to which
this data mining has aided the CPC in retaining its reins on power.
Public announcements of economic growth and pushing
the horizon for the sake of science are mere window-dressing to the
identifiable purpose of blockchain in the Chinese context -control and ever
more of it.
An understanding of the core philosophy that drives
the Chinese Communist Party (CPC) removes much of the mystery behind its stance
towards blockchain. Is it really any surprise at all the Bitcoin hasn’t been
similarly embraced and endorsed?
Next week will examine this clear Chinese government distinction
between blockchain and Bitcoin, highlighting the long-term positive this
provides for the distributed, decentralized network this is Bitcoin.
Thanks for listening.