Blockchain, the most significant technological revolution has taken the world by storm. From being a part of the supply chain to its application is a financial transaction, Blockchain has emerged as a multifaceted technology. It finds use in almost all business niches. Many counties have embraced this technology with open arms. However, there were some nations which were not confident in this technology, but, looking at its increasing pace and applicability, the scenario is changing. I am talking about China here. We all know that in September 2017, China entirely banned cryptocurrencies and considered it illegal. After which the prices of Bitcoin crashed. However, by 2018, the scenario has changed. In this blog, I will be highlighting, how this is happening and why it is happening.
China on Blockchain and Cryptocurrency-
The Blockchain is at a nascent stage. Although there are vulnerabilities associated with it at the same time, it aided the transaction of Bitcoin. Despite the fact that Bitcoin gained growth and rapid popularity, but, the fact of the matter is that it is still considered to be a bubble and doesn’t hold a future. It is the reason China backed off from Blockchain and Bitcoin. Conversely, 2018 has brought forth some new changes which are looking promising.
For any nation to stand in the competitive market and to establish a strong foothold, it is imperative to adopt the most advanced technologies and use it for preparing the solution.
The First Mover Advantage
Although many nations are trying to tap Blockchain and use it for their benefit, we are still not witnessing it be a part of the mainstream economy. China has taken the initiative to make to use Blockchain as a part of the mainstream economy and thus reap benefits out of it.
Let’s understand how it’s going to happen-
A Chinese CBDC
Even though in 2017, China banned cryptocurrency, but in February 2016, Mr Zhou Xiaochun, the president of People’s Bank of China (PBOC) president acknowledged that they are analyzing the implementation of Central Bank-issued Digital Currency (CBDC). Moreover, in January 2017, China successfully tested the digital note exchange platform. As per Tsinghua Financial Review, the commercial banks in China used a digital currency for exchange of notes, some of the prominent banks included names like Bank of China, We Bank, Industrial and Commercial Bank of China, Bank of Hangzhou, and Shanghai Pudong Development Bank
A strategic play
The use of Blockchain is going to be a strategic play for China. The launch of Chinese CBDC in sync with the Belt and Road Initiative is a move in this direction. Belt and Road Initiative is China’s international association with the China-Japan-South Korea Free trade area, Eurasian Ecnci Union. It will help China to get the upper hand over this nation as the CBDC will be a platform for cooperation.
The reason for the emphasis on CBDC is because cryptocurrency exchange is free from processing fees, it is more efficient and convenient, and will have an automated implementation which will save time and also reduce the errors. It will also increase the probability that other countries would pay with RMB thus enhancing the liquidity and internationalizes the RMB.
Business Growth –
In China, many startups like VeChain launched have come up with a commercial Blockchain platform which is managing and tracking the import of red wine from other countries. Consumers can use their mobile phone to scan the IoT tags which are attached to wine bottles, and they can access all the information related to manufacturing, logistics, and distribution.
Many Chinese Internet companies have established a Blockchain laboratory in 2017. The objective of these laboratories is to identify the use of Blockchain and its application in real life. They will try to integrate Blockchain platform inB2B, B2C, and financial business.
The crux of the matter is that China plans to make use of this technology for the benefit of the nation. Whether it is about making it a part of the mainstream financial transaction, retail business or other, if China can establish a seamless and regulated system of the Blockchain platform, the technology will revolutionize the way Chinese economy is running and will help China become a Blockchain based solution provider on the global front.