Update: You can now read my landscape report on China's Blockchain Landscape for free here.
While living in Beijing in 2017 – 2018, I became interested in the growth of China’s blockchain scene and was inspired to carry out an ethnographic study into blockchain entrepreneurs. This was shortly after the bursting of the first-crypto bubble in December 2017, which saw the price of Bitcoin fall sharply from its peak of $19,783 value to below $11,000. Through meetups and WeChat groups, I began to meet developers, founders and traders and hear their thoughts on the future of decentralised platforms and digital currencies.
Initially, these crypto-survivors of the crash were broadly pessimistic about the prospect of a thriving Chinese blockchain sector. Central regulation has restricted the popular ICO (initial coin offering) funding vehicle, which led to one entrepreneur I interviewed to tell me that the creation of Chinese blockchain companies would forever remain a ‘daydream’. Others were starting to explore loopholes whereby they might register companies in Canada and Singapore to continue to raise funds through the direct sale of highly speculative tokens.
As with any much-hyped technology, there was a perception in the blockchain community that the scene was ostensively made up of “projects taking advantage of the name of blockchain to raise funding” and that the few remaining companies were the remnants of a bubble. They drew parallels to the hysteria in valuations of bike-sharing companies in 2016 which saw the streets of large cities littered with bicycles in the orange and yellow livery of Mobike and Ofo.
Rack full of shared bikes in Beijing, China. Photo by Markus Winkler
However, already a narrative was beginning to emerge, which would be central to public policy towards the newly emerging currency. To prevent capital flight and financial risks stemming from digital currency speculation, central authorities made a clear separation between digital currencies (which should always remain under central control) and projects that sought to build innovation platforms on top of the distributed databases central to blockchain technology.
When choosing a dissertation topic, further exploring China’s nascent blockchain scene was a natural choice. Returning to study blockchain, I discovered that the scene had changed beyond recognition. The connection between blockchain and digital currencies/tokens had been neatly severed, as government funding pushed companies towards applying the technology to the ‘real economy’.
Local governments were often spearheading initiatives to test blockchain platforms in the real-world and were competing to attract the most promising blockchain startups and talent. Through partnerships with local governments, technology companies had a route to launching real-world blockchain projects such as the use of blockchain-based subway tickets and e-receipts in Shenzhen.
Local governments compete to achieve central recognition and prestige for regional blockchain initiatives
Blockchain was quietly being transformed as the rest of the world moved its attention elsewhere as a technology closely governed and regulated through a framework which combined local-level innovation with central control and management. This formula has also been used successfully in the growth of China’s artificial intelligence industry and countless other economic development projects.
Blockchain governance is led by the centre through the creation of a framework for incentivising local government innovation, regulating platforms and supporting startups
Over the summer, I was commissioned to write two landscape reports, exploring China’s Artificial Intelligence landscape and China’s Blockchain and Smart Contract ecosystems. I have since been granted the rights to publish the reports through my latest release Silicon Roads. My aim with the site is to document and analyse China’s innovations in creating a digital economy as the country grapples with the challenges of governing technology platforms that only continue to grow in size and influence.