Please click the link below to listen to the 65th episode of my weekly crypto podcast ‘Two Minute Crypto.’ These are intended to be short, single-topic ramblings on some aspect of the cryptosphere. Consider dropping a like and or a review on iTunes or Podbean if you enjoy the podcast. Comments and critiques welcome.
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Deciphering China’s Blockchain Play – An Inflection Point?
Welcome to Two Minute Crypto. This week focuses on the wider implications for blockchain arising from China’s declared ‘embrace’ of the technology.
To date, this series has repeatedly highlighted the control-centric purpose of adopting blockchain in a Chinese context. Blockchain, as it will be implemented by the Chinese Communist ruling Party, will serve to extend the state’s reach ever further into the daily lives of its citizens.
To summarize – the Beijing blockchain model will be centralized whether presented that way or not. Projects will be state-subservient and their apparent efficiency benefits will simply be an added bonus regardless of the propaganda which promotes their adoption.
In the short-term, there will be a temptation to jettison this whole decentralized thing – bend the knee and make merry in the Chinese market. Let’s not forget other authoritarian states will be following on behind Beijing – so state-sanctioned centralized blockchains will be in a period of rapid expansion. It’s also worth highlighting that most self-declared chains are decentralized in name only. They are dominated by their founders, a core development team, uneven coin distribution and so on. A shift from decentralized to centralized would in most cases be very easily achieved – if the price was right. To date, the cryptosphere has been replete with short-sighted cash grabs. Any opportunity to cash-in has been taken this ‘opportunity’ will be no different.
Of course, there’s Yin to this Yang. Any blockchain system rolled out by the ruling party will clearly operate under direct supervision and control. Independent ‘decentralized’ chains will have a readymade ‘dark’ version of themselves to compare and contrast to.
Immutability, censorship resistance, and permissionless access may shine in this environment. Blockchain implemented as a tool of state repression will likely see a flood of interest into the ‘other’ version’ as over time the realization will dawn that’s it’s one version or the other. Blockchain as big brother or as a vehicle of greater autonomy.
At the moment, it’s all what if’s and potential but that era is coming to an end. Soon, a billion people will live under a darker vision of blockchain. This will clearly offer an opportunity to decentralized projects. In the medium to long-term decentralized iterations of blockchain may organically overtake their lesser brethren. Where choice is possible – individuals will likely veer towards tech that empowers.
In the interim, a ghetto system seems very likely. Nations like China locked behind centralized networks while other states opt for or are over-taken by permissionless chains. Over the next few years, real investment opportunities may lie with projects that bridge the gap between the two. Allowing access to or communication between chains with vastly differing governance models
The centralized/decentralized blockchain development arc will take decades to play out of course. Progress will be uneven and individual jurisdictions will take different roads at different times. Whether one iteration of blockchain comes to dominate the other remains to be seen. What is absolutely clear, however, is that a struggle for the ‘purpose’ of blockchain is about to start in earnest.
Thanks for listening.