The Chinese blockchain industry is considered one of the main ones in the world, and in size it can hardly compete with any particular country. So, several years ago with the advent of ASIC-miners, the whole world learned about the mining industry of the Middle Kingdom - there are located both the production of miners and the largest mining pools. However, recently it became known that this industry may be banned. But in this situation, it is noteworthy that the Chinese blockchain industry has long gone beyond mining: local business is actively developing and using solutions based on a distributed registry. According to the latest data, it is Chinese entrepreneurs who are responsible for a quarter of all blockchain projects implemented in the world. How blockchain industry of China is organized and who are the main players in it - DeCenter understands.
Business and blockchain: from small to large
The numbers show that China is the leader in the use of blockchain technology in business. As of November last year, this country accounted for 263 new blockchain projects — a quarter of the global total. The same data with reference to the analytical service Blockdata in early April of this year led edition China Daily.
It also referred to information from the research firm EO Intelligence that 615 blockchain companies or specialized units are currently registered in China. Most of them were launched in the last two years. This list contains China's largest Internet companies: Baidu, Alibaba, Tencent.
Blockchain development is also a technology leader, Huawei. Moreover, according to the publication of the South China Morning Post newspaper, there are between 4,000 and 16,000 companies in China whose activities are somehow related to the DLT. About 3,800 of these firms had a registered capital of more than $ 1.5 million.
To confirm this data, in 2018, the consulting firm Deloitte conducted a survey of businessmen in several countries, including China. According to the survey, every second Chinese entrepreneur reported that his company uses distributed registry technology. At the same time in the US, only 14% of enterprises use the blockchain. Chinese business uses a new technology primarily in the financial industry, but also in other areas, such as public services, healthcare, and logistics, according to the Deloitte analysis. Another consulting company, Ernst & Young, has issued a rating of countries that most successfully implement financial technologies (unifying blockchain, artificial intelligence and cryptocurrency). At the top of the list, with some exceptions, were developing countries: China, India, Brazil.
China is the first in blockchain patents.
According to the Financial Times, China is also the leader in the number of patents related to blockchain-based solutions. In 2017, representatives of the Middle Kingdom received more than half of all patents registered in the World Intellectual Property Organization ( WIPO).
Additional analysis was conducted by the portal Hard Fork. They also studied patents registered with WIPO and containing key terms related to blockchain and bitcoin. It turned out that the majority of patents related to this technology were obtained in 2017–2018. China and the United States proved to be the undisputed leaders, having received 790 and 762 patents, respectively. In third place with a huge margin is South Korea (161 patents).
Among the top 15 blockchain patent recipients, 6 organizations were from China. The top line is occupied by the company nChain (the one where Craig Wright is a senior researcher). The company, which is based in London, owns more than 200 registered inventions based on a distributed registry. And among the Chinese representatives, Alibaba, which owns 60 patents, became the leader.
State money for blockchain innovations The
second after Alibaba, the largest recipient of blockchain patents in China has become the central bank - the People's Bank of China. In the field of development, state research organizations are also actively involved.
In 2017, along with the online marketplace, JD.com became a partner of the world's largest company, the American retailer Walmart, in promotion of Chinese blockchain-based product tracking platforms developed by IBM. It was the first truly large-scale project to introduce the blockchain into the real economy. And in February of this year, a separate center for technology research blockchain opened another prestigious university - Fudan.
At the same time, state structures are engaged not only in researching new technologies, but also in direct investments in blockchain companies. The important news in this direction was the launch by the administration of the city of Nanjing of a fund of $ 1.5 billion in July 2018. For comparison: the government of the capital of South Korea, Seoul, recently announced its intention to spend just over $ 1 billion on seed investment blockchain startups, but only until 2022.
Nanjing is far from the only example. Many Chinese cities in one form or another already support a business that uses DLT technology: Guangzhou, Hangzhou, Shenzhen, Shanghai, Suzhou, Xiong. As of August 2018, the total amount of funds invested in the blockchain industry by only the municipal authorities of China was estimated at more than $ 3.5 billion.
Communists in business
Although local administrations in the Middle Kingdom have a certain degree of autonomy, at the top of the Chinese economy - both private and state - the Communist Party (CCP) reigns. It determines the political course, legislation and "works with personnel". For example, in August 2018, the CCP issued official guidelines on the nature and application of the DLT for Chinese officials.
Last November, the Communist Party cell opened in Huobi’s Beijing office (headquartered in Singapore). The presence of Leon Lee, the founder and CEO of the Exchange, emphasized the level of the event. He called the opening of the PDA cell an important milestone in the development of the company.
In addition to Huobi, two other leading trading platforms were established in China - Binance and OKEx. More precisely, they were founded in Hong Kong - a city-state controlled by Beijing, although it has different legislation, including in terms of cryptocurrency.
This is an amazing paradox, given that cryptocurrency exchanges were banned directly in China in 2017, and free circulation of cryptocurrencies (at least between individual users) was prohibited. The same Huobi office in Beijing is not engaged in trade operations, but only in the development of tools for the exchange.
Most likely, this approach is associated with the desire of the authorities to eliminate the threat of the emergence of an uncontrolled system of economic relations. In the end, it was for this purpose that cryptocurrencies were created - for an alternative economy without the participation of the state and other official intermediaries. In addition, this approach allowed us to avoid a wave of fraud at the end of 2017 due to ICO-HYIP.
Without permission to decentralize
The attitude of Chinese officials to all sorts of independent public relations on the basis of the blockchain is indicated by the actions of the PRC's cyberspace office, which many people call the state Internet censor.
In January, the department issued new rules for blockchain services, which prohibit serving anonymous users and oblige service administrations to provide access to the system to authorities and continue to report to government agencies on all instances of the dissemination of “illegal” information.
Internet censorship for China is not a hyperbole, but a real practice. In July 2018, Chinese users used the Ethereum blockchain to spread information about a batch of defective children's diphtheria vaccines - they passed this news to each other in the transaction metadata. At the same time, censors successfully blocked such messages on the Internet.
What do we get in the end? The Chinese authorities, through both laws and investments, encourage any blockchain-based development that promotes business and the work of the public sector. And the companies readily accept this support. But at the same time, the country has a complete ban on free circulation of cryptocurrencies and does not allow independent activities based on blockchain networks.
Generous investments have paid off, and decisions based on a distributed registry are already spreading in China’s economy and business. But whether these decisions will prove to be profitable and competitive in the conditions of government restrictions, time will tell.
Fedor Anashchenkov