China is moving quickly to ensure it’s ahead of the curb when it comes to blockchain innovation.
China Is Pushing Its Blockchain Agenda Forward
The country has recently implemented a new law that will promote blockchain as a means of heightening and expanding the nation’s infrastructure. The law will also permit the country to unveil its new digital yuan currency designed to compete with the likes of Libra.
There is both a good side and a bad side to this situation. First off, the addition of a state-issued cryptocurrency is likely to boost the industry to new heights. We may see the price of assets like bitcoin surge in the weeks following the coin’s issuance, and other countries are likely to follow suit should the digital yuan show any sort of promise.
At the same time, the idea of a state-issued digital coin goes against the very notions of cryptocurrency. Digital currency is designed to be private and decentralized. It’s supposed to put monetary power back in the hands of the people, not be utilized to monitor users’ behavior and transactions, which this currency will undoubtedly be tasked with doing.
China has had a very mixed relationship with cryptocurrency in the past. Sure, President Xi Jinping is now crazy about what blockchain can do for the country. He says it can revamp China’s economy and he’s looking to bring as much blockchain business to the country that he can, but in the past, China has undertaken the tasks of banning all foreign exchanges and initial coin offerings (ICOs).
In addition, the future of bitcoin mining is still up in the air. China says that mining crypto is likely to lead to heavy environmental damage. Thus, regulators are considering a permanent ban on the extraction of new coins. However, steps have not been taken to pass this ban at press time.
The new law is set to take effect on the first of January in 2020. Following the news and President Jinping’s words regarding blockchain, the price of bitcoin shot up to about $10,000 over the weekend, though at the time of writing, it has since fallen back down to about $9,000.
Could Blockchain Fix the Effects of the Trade War?
Still, however, many companies and individuals, it seems, decided it was time to buy more units and take part in the growing rally. Li Shiyu, fund manager at Guangdong Xiaoyu Investment Management, explains:
Most of these companies, especially those that are just beginning to state their connection with blockchain today, are trying to take advantage of the hype.
It is also implied that the new digital yuan and blockchain will be utilized to alleviate some of the effects of the trade war, which has brought China’s growth down by roughly six percent – its lowest levels since the 1980s.