“You’ve heard of the great firewall of China when it comes to internet controls, well welcome to the great payment wall of China,” William Quigley.
Bitcoin jumped 30% last month on blockchain news coming from the President of China. So, will China’s recent announcements about its application of blockchain technology ultimately be good or bad for the broader crypto market?
According to WAX Co-founder William E. Quigley, there are two ways this can play out - one good, one not so good. And there’s a pretty strong indicator of which way it’ll go, based on how China recently ruled on video game use in the country.
So why does China love blockchain, how does that compare to the United States’ attitude towards the tech, and how does China’s approach to video gaming offer up a framework for what’s to come? Watch the full episode of WAX ON to find out, and subscribe to the WAX YouTube channel for more episodes of WAX ON with William Quigley each week.
China embraces blockchain but not Bitcoin.
So on October 28 2019, Xi Jinping, the President of China, announced his country would be seizing the opportunity and take a leading position in the development of blockchain technology.
Bitcoin skyrockets on the news, it closes the day up over 30%. Then, a few days later the head of technology for the PBOC, that’s the People's Bank Of China, told banks that they need to start working on blockchain stat. So it's official. China is putting a massive amount of energy into blockchain development.
The Chinese government considers blockchain to be like the internet in terms of its potential impact on the economy.
Now compare that to what's happening in the United States. The US Congress ranges somewhere somewhere between indifference to strongly dislike for blockchain and cryptocurrencies. I mean all you have to do is look at the way congress reacted to Facebook when it said it was going to launch Libra coin, they did not like it.
So China is building the DCEP, the Digital Currency Electronic Payment system and China will probably issue a stable coin as part of that and make its blockchain available to everyone in the country or everyone who follows their rules.
So the plan is to get Chinese banks and giant Chinese payment networks like Alipay or WePay to adopt government-run blockchains and cryptocurrencies.
So here's the question, is this good or bad for the broader crypto market? And I think this plays out in 1 of 2 ways. Scenario 1, China freely allows it’s stable coins to be compared or trade with BTC and other cryptocurrencies. Now that would be huge. It would be great for cryptocurrencies broadly because you’d be giving a billion people access to ultimately a bunch of other cryptos. But the chances of that happening are low.
Scenario number 2, China restricts the use of their government run blockchains and only the vetted Chinese citizens need apply. I think the chances of that are high. China loves the blockchain because controlling your monetary system is hard, but it's not hard to control centralized blockchain.
So how will the central government control Chinachain and Chinacoin? I think we can look at what China has done with their domestic video gaming industry as a potential model.
So China has been worried about video games and their effect on young people for a long time but up until now, they’ve just nicely asked video game publishers to make some voluntary changes. So restricting game play, the problem gamers, gamers that are playing way too much, but now they’re getting serious.
China’s State Administration of Press and Publications, I love that name, just issued a decree and it's a clamp down. A clamp down on video gaming for minors. Basically anyone under 18 no longer can play at will. So in the largest video game market in the world of $40 billion annually, there's a new set of rules. What are these rules?
Okay, first, there's a new real name registration system. All online gaming account have to be KYC, that means know your customer, and those account names in those games, they get referenced against a national database so you can’t lie if you’re under 18.
Second, there are now strict controls over the length of time minors can play. One and a half hours a day on weekdays, three hours on weekends and no playing time between 10:00PM and 8:00AM when lots of the gamers play so that’s a real real limitation.
And third, there’s severe limits on how much money a minor can now spend, around $50 a month. I think these new China video gaming controls are a useful framework for seeing how China will control its government blockchain projects.
You’ve heard of the great firewall of China when it comes to internet controls, well welcome to the great payment wall of China.
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