by David Drake
China has become one of the largest supporter of blockchain technology. Even so, it is well known for steering clear of cryptocurrency trading and mining. According to information provided by the World Intellectual Property Organization (WIPO), China holds 50 percent of all blockchain related patents. Two-thirds of the most influential companies globally within this sphere are from China.
If this pattern holds, China could easily become a leader in blockchain technology without embracing cryptocurrencies. The country has banned all crypto exchanges in light of recent scams that have robbed investors of millions.
China’s approach sheds light on the diversity of blockchain technology. Many startups and investors are intrigued by the investment and potential payload that could come from investing in digital coins. In many countries, the technology underpinning cryptocurrencies has taken a back banner. However, China has filed over 550 patents since 2008, placing it ahead of the US and South Korea.
Globally, blockchain is playing host to innovative solutions across sectors. Some interesting projects that are backed by blockchain include BlockVest, the digital asset portfolio management platform, family smart contracts platform, URAllowance, portfolio optimization project, LiveTradr, digital coupon marketplace, Qupon and web mining monetization platform, Gath3r.
With the US still knee-deep in research before getting an official backing from the government, China is pulling ahead as it offers tax-credits and subsidizes patent fees. Overall, this indicates the support the Chinese government is providing the blockchain industry.
But it is not just the government that is supporting blockchain industry growth in China. The bid to become the global leader and gain a competitive advantage is being aided by local Chinese retail giant, JD.com. The company has launched a program called Retail-as-a-Service (RaaS) that is similar to Amazon’s Amazon Web Services (AWS) launched in April of this year.
RaaS will serve as an educational tool for interested clients to get information about the detailed use of blockchain and ways of maximizing it to its full potential. At the same time, Alibaba, a global retail giant, has infused blockchain technology into its daily operations. The company has filed 43 patents in the fields of design, invention and utility, placing it second to the People’s Bank of China, which holds 68 patents.
The company believes it can use the technology to sniff out counterfeit products and offer better healthcare facilities locally. Currently, blockchain is backing projects such as NoizChain in interactive marketing, ONe Network in social media security and IOU in e-commerce customer satisfaction in the marketing space.
China is attempting what some may consider impossible, but with a just cause. Despite gargantuan steps taken in relation to blockchain development and application, critics feel that the country’s operations may be stifled by its cryptocurrency intolerance.
Terrence Hooi, CEO of LiveTradr says, “Although China has surpassed the US and South Korea to become the world’s largest blockchain patent applicant according to Sina.com, China is still not leading in terms of regulation and recognition of these crypto assets. There is a gap between adoption of blockchain technology by Chinese tech giants like Baidu, Alibaba, Tencent’s, and Chinese regulators. As a result, China has ordered closure of all crypto exchanges to protect investors from speculating in these highly volatile markets.”
Despite the negative stance that China has towards digital assets and initial coin offerings, a study conducted by PwC showed that 30 percent of respondents believe China will be the new blockchain superpower in the next five years. Though the US is utilizing all aspects of the blockchain system and components, only 18 percent of respondents in the study believe it will remain on top because more can be done with blockchain without integrating with cryptocurrencies.
Beyond short-term investment needs, blockchain has numerous benefits and can simply be an investment tool for the different digital coins it facilitates. China is tapping into the inner core of cryptocurrencies, and is likely to strengthen its hold on the market while avoiding cryptocurrencies.
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.