Pro-crypto calls in China after Xi Jinping blockchain speech

Andrew Munro

Posted: 1 June 2018 6:08 pm

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A growing crowd of voices is making an increasingly compelling pro-crypto argument in China.

China's official thinking on cryptocurrency and blockchain development has always tended to be two-sided. Yes to blockchain, no to cryptocurrency. This opposition towards cryptocurrency has mostly taken the form of crackdowns on exchanges and ICOs, which so far haven't done much to diminish cryptocurrency's popularity in China and elsewhere.

Now China is facing renewed calls for cryptocurrency leniency, in the form of a series of calls on social media and in local press arguing that the time is right for another look at cryptocurrency, and that further hesitation risks seeing China left behind.

The calls come in the wake of a speech by Prime Minister Xi Jinping at the Chinese Academy of Sciences' 19th annual conference on 28 May, in which he held up blockchain technology as one of the new systems that would fundamentally reshape the future.

Blockchain technology, he said, is one of the technologies that's reshaping the global economic structure alongside AI, synthetic biology, the Internet of things and other artefacts of the fourth industrial revolution.

"Science is increasingly showing a trend of cross-convergence," he noted. "Science and technology have never as profoundly affected the country's future and destiny as it has today, and have never as profoundly affected the well-being of the people as it is today."

Cross-convergence of separate systems, it's worth noting, is kind of blockchain's jam.

Its ability to bring finance firmly into the technology sphere, rather than leaving it off to the side in its own vertical, is one of the reasons many regard cryptocurrency to be an essential part of blockchain technology. By deliberately avoiding the potential of distributed ledger technology as a way of moving digitised monetary value, one is ignoring a key use case.

It also inhibits the types of solutions that can be created with blockchain systems, especially open source public chains.

"For open-source blockchain networks, cryptocurrencies are necessary as incentives for individuals to participate in the network," South Korea's Finance Minister Kim Dong-yeon noted on a trip to China.

You can create a lot of fun tools with closed non-token blockchains, but so far there's no real way of divorcing a public network from the need for a medium of value.

In China, many arguments are less-esoterically focused on the fact that you can't really ban bitcoin. By trying to just outright outlaw the stuff you simply leave it beyond the reach of necessary regulation and that is much more dangerous. The reason given for the ban was to protect economic stability, but the biggest threat to economic stability might come from China being left behind in the digital currency revolution, and the global growth of an asset class that's outlawed in China.

Acceptance, deliberate uptake and sensible regulation are the keys to the future, the arguments mostly go.

It's a lesson that many countries are learning in different areas and at different paces. But thanks to its borderless nature, novelty and sheer usefulness, cryptocurrency might be one of the more self-evidently unstoppable forces around.

Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VEN, XLM, BTC, XRB

Picture: Shutterstock