While Mark Zuckerberg was fighting with the United States Congress over Facebook’s Libra, China took another step forward in the global technology race. President Xi Jinping called on his country to “seize the opportunity” in order to become a leader in blockchain technology as it tries to do likewise with artificial intelligence.
This could be an opportunity for China, which has already become the world’s leading trading nation, to stand up to the first economic world power and flex its muscles. But how significant is this move, and what happens if China really wins the blockchain race? “For the Chinese, digitizing the renminbi is a way to get out from under the U.S.’s thumb,” said Eswar Prasad, an economics professor at Cornell University and former head of the IMF’s China Division. China’s goal isn’t necessarily to overthrow the dollar either. Prasad added, “but they want to give their allies an alternative to the dollar and create a system that couldn’t be disrupted by the U.S.”
Blockchain: The technological democracy
Satoshi Nakamoto introduced Bitcoin in October 2008 in response to the financial crisis and as an alternative to banks. As the currency was gaining popularity, the underlying technology quickly became a model for creating the so-called trustless systems. “Blockchain allows the tracking of various transactions ensuring immutability and incorruptibility of such records,” explained Raja Sharif, a qualified U.K. barrister and CEO of FarmaTrust, a company that tracks medical supplies via blockchain, in a private interview. He continued:
“Blockchain can be used for cryptocurrencies such as Bitcoin but can also be used for other purposes e.g. supply chain management, land registries, record keeping, and other transaction management.”
The trustless, almost hackproof and identified transactions that blockchain provides caused many to call it Web 3.0 or “the next internet.” Sharif added:
“China has clearly decided that blockchain and artificial intelligence technologies are important to help her reach a global dominant commercial position. It is easy to see why they would want to focus on these technologies… Once one can ensure data integrity, AI capabilities and results can be much better and trusted. These two advantages can help China accelerate its strategic imperative of trade dominance.”
Of course, China is still far from public, trustless systems. The country has only welcomed private and much more restrictive blockchains while still being at odds with cryptocurrencies. But this move could make China’s renminbi the preferred currency for trading ー cross-border, online and eventually, offline. Since the sham-communist, practically capitalist regime still sticks to centralized methods of ruling, like the iron repression of dissidents and pure censorship, leading a decentralized revolution remains a philosophical question.
Related: 2019 to 2020: The Insiders, Outsiders and Experimenters in Crypto Regulation, Part 2
What’s at stake
Blockchain projects have struggled for real-life use. Other than generating new “overnight millionaires,” they have not offered a service the world could not live without. Bitcoin remains the most popular blockchain tech by market cap, while some projects claim they are two generations more advanced, introducing features like smart contracts and scalability. This underlines the importance of adoption: It’s not necessarily the more advanced tech that wins, but how much people believe in the project and actually use it.
That’s what made Libra an alarming development, and many countries actively opposed it. It has the potential to onboard billions of people and make crypto mainstream overnight ー a dream many crypto enthusiasts have been waiting for. Now, China is in a similar position, but this time it would be China’s yuan and blockchain.
With China taking the lead, the U.S. dollar would be undermined. It will not be as easy for U.S. regulators to halt a Chinese blockchain as it was for them to block Libra or Telegram’s ICO. Just as we saw during the trade war, blocking Huawei from U.S. markets did not stop China’s race for 5G superiority. But more important than losing the dollar’s hegemony is losing the domination of our values.
When it comes to international technological battles, the cold war has taught us a valuable lesson. The space race between the U.S. and the USSR wasn’t about who’s going to land on the moon first. Rather, it was a struggle of values deep down in people’s hearts and minds.
The internet was mainly built on western values: openness and democracy. This allowed the U.S. to take the jump on its competitors and dominate the global market. As China becomes more of an industrial and technological superpower, its influence is forcing western companies to play by its rules.
Google, once loved for advocating open access and fighting censorship, secretly worked on a Chinese version of its search engine called Dragonfly, and thus became a tool of the Chinese government to filter out human rights-related search results and websites. Activision-Blizzard, a popular game development company, punished a gamer who had expressed support for pro-democracy protests in Hong Kong. This makes sense, since the Chinese giant Tencent owns a share of Activision-Blizzard.
While both examples cited above were pulled back to some degree after facing heavy backlash, the worrying trend persists. The NBA felt the pain after Houston Rockets General Manager Daryl Morey tweeted in favor of the Hong Kong protests, which resulted in all 11 of the NBA’s official Chinese partners suspending ties, threatening the league to lose at least 10% of its revenue. Subsequently, LeBron James, who was praised for his advocacy for the Black Lives Matter movement, called Morey misinformed, a position which backfired on the NBA star. As long as short-term gains are favored over strategic benefits, we can expect more decay in western values. So, the question still remains: Are we dealing with a technological race or the balance of power?
For the sake of liberty
It is unrealistic to expect companies, in general, to turn down huge profits. However, better cooperation between the public and private sectors could be a good start. The administration’s inaction and the regulators’ continuous skepticism without any determination to address the inevitable are not stopping the bad actors or our adversaries from taking advantage of the unregulated. Failing to do so, particularly when it comes to blockchain technology, would leave the doors open for China to win the race and not only affect the economy but also our principles.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
First Published at What Happens If the US Loses the Blockchain War? – Cointelegraph