Blockchain, China’s Story

Dissecting the budding ecosystem emerging from the state’s embrace of the new technology.

By Shuhong Chenli Mar 19, 2020 04:05 pm

EqualOcean presents -- 'Blockchain, China’s Story.' Image credit: Shutterstock

As a result of several months of desk research, interviews with insiders and other forms of industry analysis, EqualOcean has completed its report on China’s emerging blockchain sector. This paper unveils the core technologies behind the concept, as well as the maturity of blockchain ecosystem development in the country. We dissect the leading players’ strategies and determine the most promising application scenarios that are likely to play out in the near future.

Background

Blockchain, one of the conceptual novelties of this new century, is a technology that some consider to be the next game-changer across all but a few industries. A decentralized, cryptography-based network mechanism that enables immutable data retention and secure transmission, it might be a panacea for multiple businesses – widespread adoption will reform the relationships among different parties, we hear, controlling costs and elevating efficiency. Or so a good many people – rich and poor, influential or merely aspirational – have insisted.

On the flip side, according to many others, it is arguably just another piece of techno-hype, one with huge projected market size but somehow meagre in its effects on the 'real economy.' Even worse, it may be the dubious object of a 'tulip craze' for the digital era, with Bitcoin representing a colossal bubble or Ponzi scheme that will shake real markets when it inevitably collapses to a valuation of zero. The positions have often seemed so polarized that it has been hard to conceive of a median point between them; yet, drawing clues from some of the key marketplaces, legislatures and actors in the business, there are some creeping signs of stability.

In the meantime, blockchain has become more or less a must-have in the ongoing digital arms race, stirring competitive twitching among global tech giants and governments alike. The zeal to embrace the technology brought just as much pushback. It is true that there has been no shortage of commercial excess, fraudulent chicanery and stupid schemes – all resulting in over-zealous attacks from suspicious policymakers. Whether high or low, many have been guilty of betraying the core value of the newborn 'trust machine.'

China – indisputably now one of the world's innovation hubs – is among those that want the biggest slice of the cake, if possible. While the country's blockchain industry cooled down in 2019, it was acknowledged by much of the Chinese 'digerati' that the transition was necessary to purge the 'fever' of scams and poor investments. It did not kill the enthusiasm of decent players in the field nor the confidence of their stakeholders.

Rather, it created a window of opportunities for those parties to return calmly and reexamine the market seriously. Good news came in the winter: on October 24, 2019, President Xi Jinping called for blockchain to become a focus of national innovation. This pushed the dynamic forces of research and investment towards the next stage. The shot in the arm from Beijing worked. From individuals and investors to state-owned enterprises and government officials, many of those who previously held negative opinions on blockchain – or even regarded the entire industry as a fraud – have more or less started to rediscover the technology and its potential applications in the real world.

We project that the year 2020 will be a turning point for China's blockchain industry, with heavier movements of the technology's developers bringing it from the realm of ideas into reality. Not only the immediate market for blockchain, but a number of related fields are expected to witness acceleration as the real application of blockchain matures.

In this report...

Comprising six sections, the report presents a comprehensive, in-depth overview of the industry.

Chapter 1, ‘Reshuffling the deck,’ explains how the Chinese blockchain business both died and was revived in 2019. Based on the case of the aelf blockchain’s (the firm is often dubbed the ‘Chinese EOS.IO’), we analyze the challenges standing in the way of the local public blockchain players.

Chapter 2, ‘In a nutshell,’ provides a general introduction of blockchain technology and its development path.

Chapter 3, ‘More than feng shui,’ looks into several phases that China’s nascent blockchain ecosystem has gone through, including the regulators’ and the tech giants’ (such as Ant Financial, Baidu, JD.com, Tencent) movements. It also comprises an analysis of venture capital and private equity trends in the emerging domain, with a snapshot of the most important players across 12 verticals in China and abroad.

Chapter 4, ‘Nails for the new hammer,’ dives into the three most feasible real-world scenarios with the highest scalability. It explains the conceptual novelties of the decentralized networks and provides real business application cases.

Chapter 5, ‘Big tech in the big game,’ addresses the key actions of China’s tech juggernauts in developing their blockchain-based businesses. It provides an outlook of their product menus, market strategies and pilot projects.

Chapter 6, ‘Rivers to cross,’ discusses barriers that, at present, restrain blockchain from widespread application.

Key takeaways

► Over 70% of projects that died in 2019 did not survive their first year;

► Most of them were cryptocurrency scams or public blockchains that had insufficient business models;

► Permission blockchain providers were sitting relatively comfortably;

► It took China less than five years to reach the phase of relative maturity in blockchain;

► The country is using a ‘carrot and stick’ approach to develop blockchain capabilities;

► National digital currency, logistics and e-government are the areas where blockchain has the most potential;

► Overall, blockchain is perceived more as an instrument to control costs and improve efficiency than a downright revolutionary concept;

► Alibaba, Tencent and JD.com are among the local blockchain pioneers;

► They are developing the core technology, seeking real applications and looking to increase the market’s recognition of blockchain and to facilitate the construction of a broad and inclusive ecosystem.

Download the sample or directly purchase the report by clicking the button above.

Should you have further inquiries, please contact us at contact@equalocean.com.

*Contributor: Ivan Platonov | Editor: Luke Sheehan