The most influential media organization in China, Xinhua News, ran an article on Bitcoin — introducing the technology to millions. The reporting follows what appears to be a thaw in China’s authoritarian stance toward cryptocurrency.
Crucially, Xinhua News Agency is the official state-run press agency for the People’s Republic of China. It is the sole channel for the distribution of important news related to the Communist Party and Chinese central government. Given the importance of the publication it may indicate the government in China is warming to Bitcoin and blockchain.
This is consistent with Xi Jinping’s recent comments about blockchain. He recently stated:
“[China] must take blockchain as an important breakthrough for independent innovation of core technologies” and “accelerate the development of blockchain.”
Bitcoin’s Usefulness and Ingenuity Outlined
The article, which mostly sheds a positive light on Bitcoin, outlines the characteristics, functions, and usefulness of the technology. Undoubtedly, this format would seem natural as this is one of the first state-sanctioned introductions to Bitcoin — and blockchain in general. The article lists the basic requirements for a “currency” and demonstrates how this revolutionary technology fits the bill:
“The transaction records of the traditional financial system are kept in the database of the bank center, and the blockchain is the book of Bitcoin. The ownership of the Bitcoin generated at any time and the transaction record are recorded in the blockchain book. Anyone who downloads the client can receive the relevant information.”
In addition to a limited supply, subsequent halving, and anonymity, Bitcoin’s use of blockchain paints a prosperous future for the “new” technology.
Interestingly, a very pragmatic view of the cost of decentralization is explained:
“The total computing power of the top 10 mining pools in the world accounted for 75% of the Bitcoin computing power. The computing power is highly concentrated and maintains distribution. Decentralized accounts require a lot of energy.”
Report Concluded With Caveat
The negative aspect of high energy cost and price fluctuation are overshadowed by illegal activity, cited as the main problem of Bitcoin and similar anonymous digital assets:
“This feature also makes Bitcoin widely used in illegal transactions such as money laundering. Currently, the most important uses of Bitcoin payments are black market transactions and ‘dark net’ transactions.”
This warning, however, is merely stated as a fact, and does not comment on possible regulatory measures or planned legal action.
Other Optimistic Measures
Earlier this month, Bitcoin mining was reportedly removed from a list of business practices that would prevent companies from receiving government subsidies and assistance. This reversal could be a telling sign that China is slowly accepting the implications and possibilities of blockchain technology.
Additionally, China has long been considering its own digital currency. A Washington Post report outlined the motivation behind a Libra-like digital version of the yuan being China’s need for control in a rapidly growing digital economy. Although not a cryptocurrency per se, it would be a sign that one of the largest obstacles to blockchain implementation — China — may be the catalyst necessary for the next step towards adoption.
Perhaps these concessions are China’s way of maintaining control of blockchain technology within its borders and beyond. This could also be yet another sign that the train has departed and China does not want to be left behind.