In a recent broadcast, China Central Television (CCTV), the dominant state-controlled broadcast company announced in an that “the value of blockchain is 10 times that of the internet”, and that blockchain is the next significant global technological revolution, exceeding the importance of the Internet, according to which analyzed the implications for China and beyond.
This groundbreaking newscast included Chinese government officials, as well as Don Tapscott, a well-known Canadian author of the book Blockchain Revolution. China’s position on blockchain may surprise outsiders because the country historically held a very skeptical, if not overtly hostile view of cryptocurrency. In the last year, China banned crypto exchanges and initial coin offerings. They also curtailed crypto mining.
Around the same time, Hong Kong’s Securities and Futures Commission to investors that tokens issued via may be classified as securities, and that the Commission is “concerned about an increase in the use of ICOs to raise funds in Hong Kong and elsewhere.”
However despite proceeding with extreme caution on cryptocurrency, technology experts and cryptocurrency advocates in China were pleased with the country’s pro-blockchain perspective and its potential for the world’s largest country by population, specifically citing the three main points of the televised presentation: “” (Don Tapscott, author of “Blockchain Revolution”), “” (Stanford physics professor and founder of Danhua Capital Zhang Shoucheng), and “.”
Xi Jinping, president of China, about the potential breakthrough technologies that blockchain could produce, including applications in artificial intelligence. “A new generation of technology represented by artificial intelligence, quantum information, mobile communications, internet of things, and blockchain is accelerating breakthrough applications,” Xi said, via a translator.
MATRIX AI Network and Other Chinese Companies Leading the Way
, a company registered in Hong Kong, is launching an intelligent, open-source, new generation blockchain that aims to solve major challenges currently constraining the development and adoption of blockchain technology. MATRIX leverages the latest artificial intelligence (AI) technology to deliver an easier, safer, faster and more flexible blockchain.
“In addition to AI experts, we also gathered experts in distributed computing who understood network architecture, topology, and latency. We wanted the team to bring fresh eyes to how blockchain had developed to date, and innovate from there,” MATRIX AI Network Chief AI Scientist Steve Deng.
The results, to date, have been impressive, with MATRIX AI Network recently confirming that system throughput speeds exceed 50,000 transactions per second (TPS).
In addition to faster and more efficient transaction processing, MATRIX differentiates itself from previous blockchains by offering breakthrough technologies in building AI-enabled autonomous and self-optimizing blockchain networks, featuring multi-chain collaboration and decoupling of data and control blocks. With the successful completion and release of its Testnet in October 2018, the MATRIX Main Network is scheduled to go online on December 30, 2018.
China appears to be lending support to other domestic companies with promising blockchain technology including NEO, a blockchain platform and cryptocurrency designed to build a scalable network of decentralized applications and QTUM, a blockchain technology that bridges Ethereum’s smart contracts on top of bitcoin’s stable blockchain while using proof of stake for verification.
Implications for China
The discussions and presentations made it clear that China is angling to become an epicenter of innovation. Beijing, Shanghai, Shenzhen, Hangzhou, Guangzhou and Hong Kong are all trying to attract blockchain startups and become a laboratory for FinTech innovation.
However, critics are concerned that blockchain technology will still be unable to be used in China for cryptocurrency applications. Critics state that prohibiting and/or regulating the use of cryptocurrencies in China, but embracing blockchain, indicates that the foundation of blockchain technology is being misused; meaning that the fundamental idea behind blockchain encourages a free market without government interference, which may diverge from China’s interests.
Of interest, media outlets are reporting that the People’s Bank of China governor Yi Gang cryptocurrency, which could be a reason for the country’s embrace of blockchain technology. China is ahead the rest of the world when it comes to using digital currency on a daily basis. Even vending machines in China are equipped with the technology to accept a payment from a scanned code on a person’s phone.
In 2017, a conference titled (note, this is translated to English from Chinese) “2017 Trustworthy Blockchain Convention” was held in China, where government officials discussed their plans for instituting a standardized blockchain into the Chinese economy. Also discussed were ideas about effective regulation of the technology.
One trader and technology insider that China is embracing blockchain technology to reap financial rewards. For instance, each cryptocurrency transaction made results in fees generated for any transaction and/or transfer of the currency. If the Chinese government creates its own cryptocurrency, the government itself could potentially benefit tremendously from any fees associated with the transfers and transactions.
China Embarks on Blockchain Technology Research
In January 2018, at the World Economic Forum Annual Meeting, discussions online and in person took place that illuminated the ideas and the future of blockchain in China. One from the Annual Meeting argued that since blockchain technology is difficult to understand, policies are being outlined to provide guidance for industry executives and investors alike.
In September 2017, the Trusted Blockchain Open Lab was launched in China. This research facility was launched by the China Academy of Information and Communications Technology (CAICT), a research arm under the Ministry of Industry and Information Technology umbrella. The purpose of this lab is to and develop blockchain technology in China under general use. It will not address how blockchain is utilized in cryptocurrency, and it will not look at the blockchain uses in the cryptocurrency exchange markets.
Government Regulatory Guidance
Also discussed at the World Economic Forum was the idea that the world is on the brink of a Fourth Industrial Revolution, as evidenced by the work of Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum. His book, details how he believes that “…we are at the beginning of a revolution that is fundamentally changing the way we live, work and relate to one another.”
As China readies itself for the Fourth Industrial Revolution, it appears necessary to utilize blockchain technology to ensure the highest security of digital technology. For example, some believe that China is poised to develop work between blockchain experts and established data and technology companies to integrate blockchain technology into a wider scope. Government regulation is essential to integrating blockchain technology into everyday uses.
As China embarks on its own blockchain technology journey, it will be important to keep an eye on regulations, policies, and general uses for the technology outside of cryptocurrencies.
Paraguay’s Itaipú Dam, one of the largest hydroelectric facilities in the world, is supporting bitcoin and ethereum mining in a city on the country’s border with Brazil and Argentina. These efforts have already spawned a number of new cryptocurrency businesses, creating multiple millionaires, but an ongoing reassessment of the dam’s developmental potential could spell boom or bye for the miners that have been flocking to the city.
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Cheap, Clean Power
Across Ciudad del Este, cheap and abundant electricity from the Itaipú Dam powers about 20,000 cryptocurrency mining rigs, with fortune-seekers converging on the city from other parts of Paraguay, as well as countries such as Brazil, China, Russia, Canada and the U.S. Development experts, however, think that the authorities should raise electricity prices and use the proceeds to tackle widespread poverty.
Itaipu Dam
According to a recent Guardian , politicians and development experts are considering a number of alternative propositions, including redirecting exported electricity to domestic industries, renegotiating fairer prices with project partner Brazil, and tapping companies from Silicon Valley to manufacture with clean energy in Paraguay. It is expected that the proceeds would be sown back into social investment to address economic inequality and provide social welfare services for a population with skewed access to employment, healthcare, education and transport infrastructure.
However, the development narrative does not seem to be mutually exclusive with cryptocurrency mining. Paraguay, which generates more than 103 million megawatt-hours of electricity per year at the , can still take advantage of its status as the world’s biggest exporter of electricity and cash in as a go-to destination for BTC and ETH miners. Miners in the country pay between $0.03 and $0.05 per kilowatt-hour, or about one-third below the prices that they pay in Argentina.
Mining Mecca
Paraguay’s offer of clean and plentiful energy can make it a mecca for digital currency diggers, while securing sustained proceeds for the government, as interest in cryptocurrency only continues to grow. The South American country currently only uses 13 percent of its energy and exports a lot of the surplus to neighboring Brazil.
Tech entrepreneur Gregorio Bareiro thinks Paraguay has more to gain by cutting down energy exports to Brazil and keeping more capacity at home to supply to the cryptocurrency-mining industry, according to the report. Bareiro is only one of a few locals that are capitalizing on the mining boom. He started out providing cryptocurrency investors with DIY cooling systems, but now rents out 750 computers to miners.
“Paraguay today is the only place where there’s abundant energy. We can become the center of global bitcoin mining,” Bareiro said, suggesting that catering to the mining industry could help the country to clear up its debts within a decade.
The best chance we have is not selling our energy to Brazil but investing in cryptocurrency.
Ultimately, bitcoin mining must not be seen as a deviation from Paraguay’s developmental obligations, but as one of the more sustainable options available to meet them.
Should Paraguay prioritize cryptocurrency mining over the developmental use of its surplus electricity? Let us know what you think.
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The People’s Bank of China (PBOC) has discussed the regulation of cryptocurrencies and initial coin offerings (ICOs) in a recently published report that highlights its plan to crack down on “airdrops,” while laying the groundwork to potentially issue its own virtual currency.
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Report Highlights Plan to Clamp Down on Airdrops
In the , the PBOC said that it has noted a growing number of “disguised” ICOs since it first launched a on them last year. It also argued that airdrops are “disguised” ICOs.
“Take airdrops, where tokens are given out for free to participants, rather than raising funds directly in public via ICO, while reserving a portion of the total supply,” the central bank said in the report. “These cryptocurrency startups then try to push tokens’ prices higher in the secondary market in a bid to reap profits.”
Stronger Regulatory Measures for Crypto
The PBOC said that it plans to ramp up its “high pressure” effort to “clean up” the cryptocurrency markets, highlighting four major policy objectives. Firstly, it will seek to maintain a strong regulatory position, while “severely” cracking down on “emerging violations of laws and regulations.” Secondly, the central bank will also “strengthen domestic regulatory coordination” and arrange joint action with multiple regulatory bodies. Thirdly, the PBOC said it will “implement functional supervision requirements.” And lastly, it will “actively promote international cooperation and regulatory coordination” regarding cryptocurrencies.
The report also appears to establish a regulatory basis for the eventual issuance of state-backed cryptocurrencies. “Crypto assets which are not issued by the government do not have legal status equivalent to fiat currencies,” the PBOC said.
Increasing Prevalence of Token Sales
Official show that 65 ICOs had been completed in China before July 18, 2017, but only five of them were held before the start of that year. The token sales are believed to have attracted participation from approximately 105,000 individuals, generating a total of roughly 2.6 billion yuan ($375.6 million). The total raised is estimated to have accounted for over 20 percent of the global sum that was raised through ICOs during the same period.
Do you agree that many airdrops are simply “disguised” ICOs? Share your thoughts in the comments section below.
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