The People’s Daily has once again reassured readers that China is not only pro blockchain technology with an almost full page spread (in Chinese), but should also create “an invincible position in the future international blockchain battle.” While the technology is still immature, the paper says that government policy will continue to help the technology to develop in China. Blockchain, contrary to some opinions, is in fact highly suited to regulatory oversight meaning information held in it is more easily supervised in real time.
The first two questions—“What is blockchain?” and “How can blockchain be used?”—are a little unhelpful. The third question—“Is blockchain the new panacea?” (区块链会成新风口吗?)—reveals much of how policymakers are probably thinking about blockchain.
“The technology is not yet mature and we must be wary of speculation. We must be particularly careful to distinguish between technological innovation and fund-raising innovation and must not [pursue] blockchain for the sake of blockchain,” runs the editorial.
The experts quoted agree. Hu Danqing, senior product expert at Ant Financial’s Technology Laboratory, is quoted as saying, “Although blockchain is now hot, we think it’s still at a very early stage.” Hu goes on to say blockchain is currently experiencing a “virtual heat:” it isn’t focused on solving real-world problems, but in money raising. ICOs are financial tool innovation, and have nothing to do with technological innovation.
He Fei, senior researcher at the Financial Research Center of the Bank of Communications, is quoted as saying: “Blockchain technology is not yet mature, application use cases are limited, and we should be alert to the concept of market speculation.” He Fei said some are only interested in fishing for money in the markets and we must guard against the emergence of “bad money driving out good money”, which could lead to the exiting of legitimate blockchain businesses from the market.
Wang Jun, chief researcher at Tencent’s fintech think tank, tells the paper that the current mainstream blockchain technology platforms all originated abroad and domestic blockchain technology service providers should patiently start from the ground up. This will make their technologies independent and controllable, and allow them to strive to lead global blockchain development.
He Fei also believes that government leadership will help the sector in the form of implementing policies and outlining usage cases for the technology.
Dou Jiali of the Guanghua School states that while blockchain technology is not yet mature, it offers ways to reduce the costs of transmitting information and makes the regulation and real-time supervision of data easier.
She states that “the rapid development of blockchain is inevitable. Since the birth of the internet, the cost of information dissemination has fallen sharply, and the leap in the efficiency of information dissemination has lead to a great liberation of productive forces” but that certain types of information such as remittance transfers rely on a select few third party companies and so those costs remain high.
Blockchain can tackle this but the technology is not yet mature, she claims, and the likes of Bitcoin and Ethereum cannot handle worldwide use in real business situations, nor are they compatible. This means they’re creating isolated networks, which goes against the idea of the internet.
Also talking about the need for a bottom-up approach to developing the technology in China, Dou says, “We should dive deep into technology in the hope that through technological superiority we will be in an invincible position in the future international blockchain battle. If you rush to build a castle on a not-so-strong foundation, it is quite possible that you will save a little only to lose a lot”.
Dou refutes the idea that blockchain’s anonymous and decentralized nature put it in conflict with current regulatory frameworks. She believes that regulation is in fact built into the technology and its tamper-proof transparency: “Putting the supervisory body itself into the technology, undergoing the technology’s innate supervision of technology means the conflict between blockchain and supervision will finally be resolved”.