Blockchain Applications Surge in China
According to official documents and interviews with industry insiders, China’s internet regulator registered 1,821 blockchain-related services in 2022, which suggests that the country’s blockchain business is growing at a rapid pace. Every two to four months, the Cyberspace Administration of China (CAC) will publish fresh listings of recently launched enterprises, up from every six to eight months, from March 2019 through 2021. Toward the conclusion of the previous year, the pace of certification for new blockchain services accelerated.
So far, the agency has published 197 lists of blockchain initiatives in a number of service categories, such as legal and financial as well as agribusiness and intellectual property protection. The rapid release timetable demonstrates Beijing’s commitment to developing blockchain applications that are in accordance with the country’s economic and technical aims, while at the same time keeping tight control over the more decentralized applications for which the technology is renowned.
Using blockchain technology for the first time, the country has put restrictions on the trading of cryptocurrencies in place. On public blockchain platforms like as Ethereum, the trading of non-financial token (NFT) is almost impossible. Distributed ledgers, such as the blockchain, are maintained by numerous computers on a network. As more Chinese companies look for new applications for blockchain, this may potentially open up a large market for blockchain-based services. Chinese blockchain sector may be worth more than $3.2 billion by 2025, according to market research firm IDC, with an annual compound growth rate of 47% between 2020 and 2025.
DataQin, a Hangzhou-headquartered blockchain services company, has three legal and financial solutions licensed with the CAC. “It is not difficult to get registered [with the government], and it is a method to remain close to authorities,” said Jiang Lifeng, DataQin’s vice president.
Baoquan Chain, DataQin’s consortium blockchain venture, has focused on the legal business since it was formed in 2016. In the words of DataQin CEO Jiang, Baoquan Chain has the power to “transmit evidence” through digitizing safe notary services. Mainland China’s severe regulations necessitate the use of consortium blockchains, which have limits on who may participate in the network.
The Hangzhou Internet Court’s order to let proof to be obtained via Baoquan in 2018 marks the first instance of blockchain-based evidence being used in a case in China. Our attentiveness to the law was directly responsible for this choice. According to a statement made in May by the SPC, China plans to “establish a blockchain alliance between the court and all sectors of society by 2025,” recognizing the sector’s potential.
Some of China’s major technology businesses and some of their subsidiaries have registered blockchain services with the CAC. For example, Tencent Holdings, JD.com, Xiaomi and NetEase and Baidu appear on the different rankings. South China Morning Post owner Alibaba Group Holding and its financial technology partner Ant Group will also be in attendance at the event.
There are a large number of services registered for use in the legal and financial sectors, and also Blockchain as a Service, which allows customers to use prevailing blockchain platforms to their respective businesses (such as smart contracts).
According to Catherine Hong, a senior market analyst at the research company IDC who tracks the BaaS sector, “it stands to reason for China’s blockchain advancement and the investment blueprint in latest tech for businesses to move up with basic BaaS platforms as compared to vertical blockchain systems.” Hong is responsible for monitoring the BaaS market.
She went on to remark that during the last two years, the market’s total revenue has grown by approximately 90% every year. Since Beijing is aiming to separate blockchain technology from its top popular application cases happening elsewhere, it has sparked a race to produce blockchain technology with “Chinese characteristics.”
“The majority of China’s blockchain systems will be in the guise of BaaS,” said Bo Zhengyuan, an associate at the research organization Plenum. This is because China has historically rejected other popular ways that are tied to blockchain.
Banking institutions have been exploring the use of blockchain technology in the financial sector while cryptocurrencies are illegal. According to a list from 2019, the China Zheshang Bank has five distinct services registered with the CAC. Personal financial transfers and payments are also included in these services.
There are a few registered services that have branched out into unforeseen areas of operation. According to a company called Blockchain Technology Shenzhen Research Institute, Chinese families are becoming more interested in tracing their roots.
In China, at least five separate services are linked to the leadership and propaganda of the Communist Party. Chongqing, a city in China’s southwest, is home to one of these services. In order to safeguard the local delicacy of Fuling pickled veggies, Chongqing has implemented a blockchain system. It’s for “wishing the Party well on the occasion of its centenary,” which will be honored in a century.
Beijing and Guangdong province’s southern area, which includes the cities of Guangzhou and Shenzhen, are the origins of many of the registered services. Each region has 477 and 352 registered blockchain services, respectively. As a result of the demographics of China’s IT hubs, says Bo, who works at Plenum.
IDC’s Hong believes that the time has come to shift focus from the development of the underlying technology to the standardization of applications and tools. With the advent of metaverse and Web3, there is a vast amount of opportunity for both conventional and forward-thinking scenarios.
Web3 is a common name for a blockchain-based decentralized version of the World Wide Web. Metaverse initiatives often include the selling of virtual commodities in the form of NFTs, which may be thought of as a next-generation internet consisting of shared 3D virtual environments where users interact with one another.
As a catalyst for innovation, the Chinese government sees blockchain as having the potential to digitize the country’s traditional industries. By the end of June 2021, the CAC and the Ministry of Industry and Information Technology had issued a directive calling for “accelerated development of blockchain technology applications and industrial development.” Other cutting-edge technologies, such as industrial internet, big data, cloud computing, and AI, were also called for in the guidelines.
Nevertheless, as per Jiang of DataQin, the blockchain business still need further implementation aid in the form of industry-specific regulations and subsidies. He used a Chinese proverb to define the current scenario, which translates to “strong thunder but small rain.” This proverb explains the phenomenon.
Because of this, the CAC has been able to continuously improve the control it exercises over apps connected to blockchain technology as a consequence of the necessity that they register.
WeChat will require accounts that exhibit digital valuables to have contracts with blockchain enterprises that have been certified by the China Anti-Corruption Commission (CAC), according to a recent announcement made by the company (the phrase used in mainland China to refer to NFTs on domestic blockchains). Alipay, on the other hand, will only do business with companies who have been given permission to accept digital payments by Alipay.