China Embraces Blockchain

The Chinese government is warming to Blockchain. What can the world’s 2nd largest economy learn from early adopters?

By Xische Editorial, November 8, 2019

Source: Hudasaktian/Shutterstock

China, one of the world’s largest technology-driven economies, has had an uncomfortable relationship with blockchain technology. A great deal of innovation comes out of the country regarding blockchain and its various applications. But the Chinese government has a history of extreme measures such as blocking various uses of the technology and black listing blockchain-related companies. Today this all seems to be changing and China’s fresh embrace could push blockchain to a historic crossroads. Before China can fully embrace the power and potential of blockchain, it’s leadership might be wise in consulting other countries that have made blockchain a core part of their government platforms. 

According to the Wall Street Journal, Chinese President Xi Jinping last month elevated blockchain, the encrypted digital ledger technology, to “core” technology status in the country, virtually guaranteeing significant state investment. The price of Bitcoin, the world’s most popular cryptocurrency, surged and blockchain companies saw the potential for fresh investment. 

China’s central bank is also reportedly working on a yuan-based digital currency that would operate on a blockchain similar to the structure of Facebook’s stalled Libra currency. This centralised digital currency would be a major boon for Chinese blockchain companies. According to the New York Times, the Chinese President also expressed a strong desire to encourage further education in blockchain studies. Not only would this lead to new experiments and innovations using blockchain but it would help China create new cryptocurrencies that would likely include tight state controls. 

By investing early, the Chinese want to lead global blockchain innovations. But China is not the first country to invest in blockchain at the state level or elevate the technology to a core status. Estonia and the UAE embraced the power of blockchain in government years ago. 

The Emirati relationship to blockchain began with the desire to seamlessly incorporate technology into government work to ensure the highest levels of security and efficiency. With the Dubai Government at the forefront, the UAE began movingly to blockchain-based systems for government work in 2016. 

The Dubai Blockchain Strategy launched that year with an aim of developing a local blockchain industry with global reach. But that was not enough. The Smart Dubai Office, the government entity charged with overseeing Dubai’s blockchain ambitions, set itself the goal of making Dubai a “Paperless” government, removing all paperwork from government transactions by December 21, 2021.

The UAE Government followed suit nationally and launched the Emirates Blockchain Strategy in April 2018. The goal is to move 50 per cent of government transaction onto a blockchain platform by 2021, which will save an estimated Dh11bn in transaction and document costs, 398mn printed documents annually, and 77mn working hours annually.

Estonia has also incorporated blockchain into the foundations of government. Even state medical records are stored on a blockchain. Nearly all health records are digital and stored on the KSI blockchain. Every Estonian that has ever visited a doctor has an online “e-Health record” that is stored on the blockchain and can easily be tracked. This record is connected to a national electronic ID card, so that it can be accessed by doctors, ambluences, and the individual. Virtually all prescriptions are digital and emergency personnel can access all information simply by entering in the person’s ID code. Estonia has demonstrated how blockchain can meaningful revoluatinse the healthcare sector. 

With China’s warming to blockchain, the full potential of the technology is slowly being realised across business and governments worldwide. The cryptocurrency application remains the technology's most popular asset, which is understandable given the relative immaturity of the tech, but this will also change. By announcing its own state-backed cryptocurrency, China could be signalling the start of a flood of additional coins. While the likes of Venezuela have floated similar ideas in the past, there hasn’t been any powerful state to put forward viable plans for a digital currency. 

The biggest winners in this new currency play could be smaller countries like the UAE and Estonia that have trusted brands and established blockchain pedigrees. In fact, the UAE has been one of the Middle East’s remittance hubs for decades and could thus build on that trust with its own digital currency. Free from some of the associates that plague China, a UAE coin is ideally placed to become a major currency across emerging and remittance markets. China and the UAE have a lot to learn from one another as Beijing continues to integration with blockchain.