China Hates Crypto? Think Again!
Why the world must pay attention
China, the country that banned bitcoin in 2021, has now established the National Blockchain Technology Innovation Center. Created by the Chinese Ministry of Science and Technology, the center will develop both software and hardware, focusing on commercial applications to benefit China’s economy.
According to the official Chinese announcement, the goal is to help China achieve core technological breakthroughs related to blockchain to improve the national economy and personal livelihoods. This makes blockchain an important part of China’s new digital infrastructure. Already, the Ministry of Industry and Information Technology and the Cyberspace Administration of China have published guidelines to use blockchain broadly across a range of industries, all by the end of the decade.
This announcement, with the blessing of Chinese President Xi Jinping, is now serving as a call to action. Get ready: this will result in a flood of new investment into blockchain technology. Already, 2,000 blockchain companies are registered in China, working on legal, financial, agricultural and intellectual property projects. China says they have 84% of the world’s blockchain patents.
Why would a government that has banned bitcoin do this Simple: China fears bitcoin because it threatens the communist government’s control. But even China can’t deny that the underlying technology is impossible to ignore.
China has been banning bitcoin since its invention. Bitcoin debuted in January 2009, and China banned it just six months later. China banned banks from handling bitcoin transactions in 2013, when bitcoin’s price was $900. Four years later, China banned the creation of new coins (when bitcoin was under $4,000). In 2019, when bitcoin was trading for about $5,200, China threatened to ban bitcoin mining. And in 2021, China banned bitcoin three times. First, on May 18, banks were barred from all bitcoin transactions; on June 18, bitcoin mining was banned, and then on, September 24, all bitcoin activity was banned.
Nobody outside the country cared about any of these bans, and none of the bans affected the price of Bitcoin. It obviously hasn’t even affected China’s own attitude about blockchain technology!
But if a country whose government hates Bitcoin can establish a National Blockchain Technology Innovation Center, just imagine what the rest of the world will be doing with the technology.
And frankly, what the world needs to be doing regarding crypto. China’s engagement with crypto is existential threat to democracy. So says the Hoover Institution, which last year published The Growing Threat of China in our Digital Economy, a 227-page report. The report shows that China’s crypto activities puts at risk our nation’s leadership in digital technology.
“The United States…should move quickly to determine the … role of digital currencies within the U.S. economy [to] prevent the Chinese from undermining U.S. geoeconomics and strategic influence, and prevent China from threatening individual freedoms and human rights,” the report says, adding that “The United States should position itself as a global leader in the digital currency space.”
Read this report – and encourage your representatives in Congress to read it, too. We must not allow the Chinese government to become the dominant force behind this new technology.