Last week our theme was “Legacy Finance, Big Tech and Government move into Blockchain.”
Our theme for this week is “The Action in China“
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In September 2017, the Chinese government banned ICOs, and a year later it banned crypto entirely. Everything related to crypto trading and investment has been banned, including news sites, social media accounts, events, and exchanges. In July, the Central Bank of China reported that the country’s cryptocurrency ban has been very successful, reducing Yuan trading activity to less than 1%, when it once accounted for more than 90% of global trading volume.
But can China continue to innovate in this space, while it has imposed a cryptocurrency ban?
Yes it can and it does.
At the end of March 2018, China had a total of 456 blockchain companies, which included security services, investment and financing, media and human resources services, platform services, hardware manufacturing, and industrial technology application services.
Conflux is a new protocol led by a group of professors, that counts among their ranks Andrew Yao, a recipient of the Turing Award, known as China’s “Godfather of Computer Science.” Conflux raised $35 million from notable investors, that include Sequoia China, Metastable, IMO Ventures, FreesFund, Rong 360, Shunwei Capital, F2Pool, and major crypto exchange Huobi.
Conflux is a fast, scalable and decentralized blockchain protocol that process concurrent blocks, without discarding any as forks. Conflux achieves a transaction throughput of 6,400 transactions per second, for typical Bitcoin transactions.
Conflux’s co-founder Fan Long, a University of Toronto professor, told Fortune: “Conflux’s main idea is how to make the whole blockchain scalable. We’ve changed the structure of the blockchain so that it’s no longer a chain in the sense that it records each block based on what its parent block says.”
Another project out of China is led by Chinese cryptocurrency billionaire Li Xiaolai, known in China as a “Bitcoin evangelist.” He’s developing a new stablecoin that is expected to roll out in 2019. The project will operate within Hong Kong blockchain fund, Grandshores Technology. The upcoming stablecoin won’t be attached to the Chinese Yuan, instead it will follow the Japanese Yen.
Huawei, the Chinese tech giant and the world’s second largest smartphone maker, announced the launch of its Blockchain Service (BCS), in an official press release. Huawei’s new service solves many problems businesses face, when deploying a blockchain. The service allows entrepreneurs and developers around the world to create, deploy and manage blockchain applications on Huawei Cloud, at a blistering pace and cheaper cost.
Chinese mining companies are the undisputed global leaders, controlling more than 74% of the Bitcoin network’s hash rate. According to data from Genome, the PBoC has filed 41 blockchain patents. Chinese companies occupy six of the top ten spots for blockchain patents, with Alibaba filing 90 patents.
China is committed to blockchain innovation, doubling down on its $3 billion investment in the blockchain technology since the second quarter of 2018. Yet it’s ironic that Chinese citizens don’t have direct access to investment. Its decision to ban everything Bitcoin seems odd on the surface, but China wants to assert itself as a technology leader and blockchain, may be one way to do it.