China, is probably the only country that supports blockchain technology but is unwilling to embrace cryptocurrencies. Early this year, this Asian country banned crypto-related activities due including initial coin offerings (ICOs) and trading of cryptocurrencies. This move, alongside crackdowns on cryptocurrency trading were associated with the market crash experienced at the beginning of this year.
As it keeps off cryptocurrencies, China seems keen to tap blockchain, the same technology that underlies cryptocurrencies. Statistics from the World Intellectual Property Organization show that more than half of all blockchain patent applications file have been initiated by Chinese firms. At the same time, the top 6 companies to file patent applications originate from China.
As a matter of fact, Chinese tech giants are now trailblazing blockchain development and application. Retail giant, JD.com set up 'Retail as a Service' (RaaS), a blockchain platform that allows enterprise clients to create applications and smart contract systems. Launching just four months after the Amazon launched its Amazon Web Services (AWS), the entry of RaaS to tighten competition.
Multiple Use Cases
Blockchain has numerous use cases across sectors. In the last 18 months, numerous project ideas aimed at addressing day to day problems have been developed.
In the business space, projects such as BQT and Gath3r that facilitates crypto and hedge fund trading and web mining monetization respectively have been launched. Noizchain which is focused on interactive marketing, IOU on customer satisfaction for e-commerce businesses and Qupon, a marketplace for digital coupons are hanging the marketing landscape. According to Terrence Hooi, CEO of LiveTradr, by recognizing blockchain’s importance in developing new products and services, China could be getting ready become a global leader in blockchain. He says, “There should be a clear separation between cryptocurrencies and blockchain in China, and China has recognized the importance of blockchain technology and will be using blockchain technology as one of the major projects along with AI, autonomous driving technology and quantum communication. After all, blockchain technology can and will be applied to many business areas including government, healthcare, education, manufacturing, energy and supply chain instead of just cryptocurrencies.”
Media reports on the People's Daily show that China continues to develop blockchain projects as part of its 13th Five-Year Plan. With a plan in place, government investment is likely to contribute to the rise of China to global blockchain leadership. According to Maxim Garbuzov, co-founder and CFO of IOU, the Chinese government is prioritizing blockchain technology.
He says, "The largest technology companies in China such as Alibaba, Tencent, and consenSUS are very quick to introduce blockchain technology. This is because the government of China makes these developments priorities in the development of the country. China seeks to take a leading position in speed efficiency and economy within the political and strategic arenas of the world. As such, we believe that with financial capabilities and a huge number of technical specialists, China has many chances to complete this mission."
Agreeing to this, Hooi says, “In the world of blockchain, cryptocurrency is just a buzz, and blockchain will remain as the winner, China wants to be a leader of blockchain technology.”
Already, Chinese authorities are contributing to protection of intellectual property rights in the blockchain space by giving incentives such as subsidies to patent charges and credit rewards on tax with the aim of getting ahead of competitors.
But, even though China seems to be taking the lead in blockchain development, the ban on virtual currencies could hinder it from advancing further in areas such as cross border payments. This may eventually delay its efforts to become a leader in Blockchain.
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.