For years, China has had a famously tight grasp on the value of its currency. In 1994, the Chinese government pegged the yuan to an $8.28 exchange with the US dollar and have since allowed this fixed exchange rate to appreciate by 2.1% each year. In doing this, China eliminates a variable when conducting its monetary policy and also motivates countries to import Chinese goods.
Thus, it comes as no surprise that China is proceeding cautiously in its adoption of cryptocurrencies and ICOs, or Initial Coin Offerings. Blockchain’s privacy and international fluidity are an understandable cause for concern to countries like China which thrive upon the unified action of its people. It is understandable that the spike in freestanding private cryptocurrencies offer Chinese citizens, and all individuals, a method of operating outside his/her country’s governance.
According to a report titled “Why bitcoin and its digital cousins are under increasing scrutiny” by Phillip Inman, published by The Guardian, even in the United States there has been pressure for regulators to step in and deflate the bubble before it bursts and sends recessive waves throughout the entire world economy. Granted, the Cryptocurrency market share runs in the $100 billion range rather than the $10 trillion tag on the 2001 Internet bubble. Still, ICOs netted roughly $1.6 billion dollars in the last calendar year and have become a popular way for founders in the cryptography sphere to receive funding.
Though not yet quite as significant a number, the rapid growth rate of Blockchain currencies is cause for both nerve and optimism. In a recent conversation with Cointelegraph, the founder and CEO of HyperChain, Stellan Balta, weighed in on the recent ICO fervor and how it could influence the way companies fundraise. On the one hand, the ICO model breathes accessibility into a previously limited investing sphere. However, on the other hand crowdfunding can sometimes be misrepresentative and even fraudulent.
In the interview, Balta elaborates that all industries are filled with “good and bad actors, and I think pragmatism and careful due diligence from users or investors are required. ICOs started as experiments and now are emerging as a standard way for Blockchain-related companies to get funded and I think some standards will emerge for quality projects to differentiate and to protect users.”
On September 2nd, Caixin reported that the DACA Blockchain International Summit was canceled prematurely the day before the event was slated to begin. Unsurprisingly, the September 23 Huobi Global Blockchain Summit was also encouraged to find a site outside of China. Although, at first, China’s anxiety over Blockchain may cast clouds of doubt over the technology, in reality it should not be cause for concern.
In 1994, the Internet arrived in China. Three years later, so too did the Great Firewall, or the “Golden Shield Project.” This firewall is a stringent internet force that censors viewable internet content in China to prohibit: individuals from harming national security, disclosing state secrets, or injuring the interests of the state or society. However, this Asian superpower is not one to give walking papers to technological and economic progress for fear of losing control. Instead, the country often joins in on the march of progress, but with an iron fist. Why should Blockchain and cryptocurrency be any different?
If Blockchain is truly the technology that can disrupt investing, reshape transacting, and spawn a slew of other applications presently unimaginable, China’s actions should not be discouraging. In fact, and according to hostingfacts.com, China has over 731 million Internet users, the most of any country, and 25% of the global number. Even with rigorous censorship, the Chinese love the Internet and they will come to love Blockchain as well, just in their own way.