China says “no” to Bitcoin, “yes” to blockchain technology

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China is determined to push out Bitcoin, the price of which has drastically halved since it once topped $20,000 a coin, but the country has always been a staunch supporter of blockchain, the underlying technology on which the cryptocurrency kingdom was built.

In fact, the nation is taking the lead in blockchain technology development. The whole nation, from small- and medium-sized financial institutes to state-owned bodies, is actively exploring the technology.

Blockchain, an open, distributed ledger that records transactions among parties in a verifiable and permanent way, was first written into China’s 13th Five-Year Plan for the development of information technology in December 2016, as one of the major tasks and projects for the nation, along with other cutting-edge technology including quantum communication, AI, and autonomous driving.

In his new book “Blockchain: Quantum Wealth,” Han Feng, a supervisor at iCenter of Tsinghua University, observed that the new decentralized technology would unveil a new pattern of financial consumption.

IBM estimates that decentralized operations can cut management costs by 99 percent compared with centralized operations. For banks specifically, as much as $20 billion in operation costs could be saved every year, according to Santander Group.

In the latest ranking on blockchain patent rights holders, nearly half of the top 100 international companies are from China, and Jack Ma’s Alibaba sat on top with a total of 49 patents on blockchain technology, while the cryptocurrency research institute from People’s Bank of China ranked third with 33 patents. Bank of America Corporation took second with 44 patents, according to IPR Daily.

In addition to business players, Chinese academics were also highly involved in promoting the technology. China’s first blockchain research center at the university level was set up at Beihang University in Beijing, while Tsinghua University is one of the world’s first universities to set up postgraduate courses on the technology.

Tsinghua University also boasts a student association on blockchain made up of 153 members from computer science and other majors. The association aims to apply the technology to more real-life situations.

“Blockchain will play a key role in physical and virtual worlds. We want to explore and find out how the decentralized technology can best serve us,” said Jia Yinghao, head of the association, at a January summit held at the university.

Thanks to its decentralized peer-to-peer network that adheres to a set protocol, blockchain is also highly-secure and easy to audit, which cuts down on fraud, Han noted in his book.

“Cyberattacks on any single point would be futile. You would have to attack more than 50 percent of the countless blocks, which would cost hundreds of millions of yuan,” wrote Han, who is also the secretary general of Distributed Autonomous Coalition Asia (DACA), a large association initiated by OKCoin, BTCC, Vitalik Buterin (founder of Ethereum), and other important platforms of blockchain and Bitcoin.

The world’s pioneers have been leveraging the new technology to facilitate their operations. In as early as 2015, NASDAQ completed its first transaction based on blockchain technology, which means the stock was sold to an investor without a third-party agent or a stock exchange.

Also in 2015, a coalition called R3 CEV was set up among world’s biggest financial institutes in a bid to build a new operating system for financial markets. China’s Pingan Bank was the first Chinese financial institute to join the consortium, along with international counterparts such as Citibank and JP Morgan.

The Chinese version of R3 was launched in 2016 and it has welcomed at least 25 members since 2017.