Why We Should Look To China To Lead the Way For Bitcoin
February 27, 2020
Bitcoin released its public ledger back in January 2009 and has become one of the highly valued digital assets. Bitcoin has a current value of $8,700 and this value keeps fluctuating. China is the highest populated country in the world, and it is one of the biggest bases for Bitcoin mining.
Bitcoin and its blockchain had quickly become quite popular. It led to the creation of various altcoins and open source blockchains. Newer digital assets started to come up with their initial coin offerings(ICOs) to raise some fundings.
However, China blocked ICOs since 2017 and is now trying to make a comeback into the blockchain. China and its people are not new to Bitcoin, and they are interested to see where Bitcoin will take them. There are multiple patents related to blockchain and is currently at the top of the blockchain technology.
China has made blockchain a national priority and has over 500 projects registered with the government.
China and digital assets
In 2017, the Chinese government banned all ICOs, but not all digital assets was banned. Bitcoin and other digital assets are mainly mined in China, and those who are not mining start digital assets trading or stash digital assets coins in their digital wallets.
Mining is the process of creating new coins for transactions, and this requires special computer systems.
China had no issue with blockchain; it was just wary of new ICOs and wanted to ensure that no fraudulent ICOs would come up. In October 2019, China’s President Xi Jinping decided to work closely with the ever-developing technology ‘blockchain.’
Blockchain is a technology linked with public ledgers and decentralized currency (digital assets). China was aiming to be a leader in Artificial Intelligence, 5G, and much more. But with this decision to lead in blockchain, China will easily rule the digital assets world.
China currently holds 72% of the mining power of the Bitcoin market, and with government support, they might take over the whole digital assets market.
With the new president supporting blockchain, China is aiming to become very tech-friendly.
China’s financial institution is different from other countries, it’s still developing. Newer firms and digital assets banks can quickly come out on top if they plan and strategize well.
Blockchain Activities in China
China has been leading in blockchain activities and has been into it for a long time. Blockchain maintains a record of all the transactions in a public digital ledger, and each user gets a record of these transactions. Various banks are testing blockchain for their transactions.
Blockchain became established enough that there are various incubators to help new firms to build on blockchain. It provides help in start-up, licenses, and various perks.
In a blockchain, there is no middle-man, it is a peer-to-peer network, but in China, there is a need for a middle man to help the firm establish and know the policies and decentralization won’t happen, and they have made that very clear. China believes in keeping blockchain under its control when it’s actually an independent entity.
Blockchain is still hyped and has not lived up to its expectations. The youth know very well about blockchain, whereas the elders are still new to it. Any foreign company that aims to build a company in China required a partner who is well versed in Chinese laws and policies.
The main reason why some people back out from digital assets is the fear that they might lose all their money if they lose their private key. In the real world, banks hold the private key, and there is no way that we lose our account balance.
Though blockchain is beneficial, it does pose a threat to some economies. If all the financial institutions start using blockchain, people also need to adapt. For blockchain to rule the world, it may take another century or more.
One day there might be a blockchain, and the next day, it may collapse. Newer blockchains are not stable, and people want security. No one will give their money to an institution that is not secure enough.
The Chinese government is very strict and could eliminate any exchange or bitcoin mining facility, but they haven’t yet realized Bitcoin as a threat.
A Hong Kong-based company Bitmain is responsible for most of the Bitcoin mining in the world, and they make huge profits from it.
China provides cheap electricity, and it is beneficial for mining. It has led to more and more mining firms in China.
Blockchain is mainly used for various sector, such as business, finance, real estate, and much more. But these sectors are reluctant to change, and it’s human nature to change when highly necessary.
The financial sector is the only sector that can easily incorporate blockchain into their system and make transactions secure and cross-country. The Bitmain CEO was reluctant to Bitcoin initially, but inflation in the Chinese economy led him to explore more about Bitcoin.
A Chinese automotive parts company called Wanxiang Group had set out to find the best blockchain developers to create their own smart city. They offered $15,000 dollars to the best team and around $1M in funding. They explained various ways to incorporate blockchain to the city’s functionalities.
Various such businesses are aiming to improvise and better their system using blockchain. A Chinese E-commerce giant JD is trying to use blockchain for its food supply tracking system. Another conglomerate, Tencent, is partnering up with Intel to come with new blockchain architecture.
Both new and old businesses are exploring blockchain and trying to use it to their benefit. Blockchain could revolutionize the world just like mobile phones did. With more and more financial institutions adopting blockchain frameworks, users experience a hassle-free financial network.
Even though China was reluctant to ICOs, it has paved the way for blockchain to become more successful than before. With the second-largest economy shifting to blockchain technology in every sector, others may follow.
With the passing years, more firms will incorporate blockchain into their system, and more users will benefit from it.