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Blockchain China News

State of Blockchain in China – Cautionary Tales and Development Stories

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blockchain in china

On August 27th Hong Kong-listed company Tongcheng Holdings did a deal with Firecoin, transferring 73.73% of their shares to Firecoin’s Chairman in a move signifying that blockchain-powered tech companies are going public in a big way. At the same time, however, Beijing’s Chaoyang District and Guangzhou’s Development Zone have announcedcrackdowns on the promotion of cryptocurrency in a move that suggests the mainland is turning against these new fintech sectors.

What’s clear is that blockchain companies are sailing into stormy waters, and are now shoring up their defenses as much as possible. One option they have is to go public, and in doing so enter the mainstream and accept the supervision and regulation that goes with it. The truth is, though, that cryptocurrency and blockchain have a PR problem. Ordinary members of the public not only don’t fully understand the technology and functions of it all, but also can’t really say what kinds of regulations would be reasonable.

First steps for a new technology

To understand the mystery of blockchain we can look at an overview of its interesting development story. The story comes in three chapters.

  • Blockchain 1.0 – A New Digital Currency
  • Blockchain 2.0 – A Digital Currency with Smart Contracts
  • Blockchain 3.0 – Widespread Application

Blockchain 1.0 — in its earliest stages, blockchain was the key technology behind Nakamoto’s Bitcoin paper, which was applied in monetary transactions, payment and circulation of Bitcoins. At its most lofty, it was envisioned to represent the foundation of a new global currency. A memorable story emerged out of America, where a programmer named Laszlo Hanyecz became the first person to trade Bitcoin for a physical item. It was 10,000 Bitcoins in exchange for two pizzas. He may have proved the potential of the cryptocurrency, but in the months and years that followed, the value of BTC skyrocketed, retrospectively making the $25 worth of pizza seem quite expensive now — about 200 million dollars at the latest exchange.

At these early stages, however, the currency had a dark side — its use on the dark web. In these dark overlays of the online world, Bitcoin and later cryptocurrencies became the illegal tender of those who wished not be deciphered or discovered. And this continues to today, where on August 28th, a pernicious Bitcoin app was used to steal and subsequently sell the details of 130 million people in China, all customers of the Huazhu Hotel Group. Even worse, this information was available for the seemingly paltry sum of just 8 BTC (about 300,000 RMB).

Its early days were certainly difficult.

Unlocking the potential of blockchain with smart contracts

Blockchain 2.0 — July 2015, and the launch of Ethereum, represented a new dawn for blockchain and cryptocurrency technology. It represented a way to securely decentralize and create smart contracts usable in a number of legitimate major industries. It was during this stage that people realized the kind of “Chicken and Egg” relationship that blockchain and cryptocurrency had. While the world speculated on the price of the Bitcoin “egg,” others were quietly realizing that the chicken (blockchain) had far more value and application.

But in China, once again, the foundations of blockchain technology were rocked by scandal, this time from a leading light (and one of the richest members) in currency circles, Li Xiaolai. A 53-minute recording emerged in which Li boasted that so-called currency reforms like Bitcoin and Ethereum are a joke, and revealed himself to be little more than a snake-oil salesman. With this kind of revelation, what else were people in China to think?

The future of blockchain applications

Blockchain 3.0 — May 2018 saw the company 360 revealing a major flaw in blockchain that threatened the security of cryptocurrency transactions. In fact, more than 3,400 bugs were reported even before that discovery. Coupled with issues of processing speed, such as Bitcoin’s unimpressive 7 transactions per second (compared to Visa’s 24,000 per second), all meant that the future didn’t look bright.

Despite these teething problems, however, blockchain has found itself a entering a large scope of application. It can be used to trace the source of food, to integrate hotel data, to trace financial transactions and, as we know, so much more. And even with the current climate of crackdown and suspicion being leveled toward Blockchain and cryptocurrency, there Is still some hope. The programmer community CSDN notes that as discussion of technology grows, there comes a point where official recognition emerges and more focused and dedicated research by recognized authorities and experts take place. Perhaps it is this law that will help carry Blockchain back into the mainstream and back into the confidence of all people.

Jason Lee is a writer for various crypto publications and manages a small team on Medium. His love of technology and inquisitive nature set him up with crypto back in early 2016 and he hasn’t looked back since. In his spare time, Jason enjoys rock climbing and wakeboarding.

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