China and blockchain not fully compatible

By November 7, 2019 Bitcoin Business
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While presiding over the Chinese Communist Party Central Committee Political Bureau’s meeting on Oct. 24, Chinese President Xi Jinping (習近平) said that blockchain technology would play a key role in the next phase of China’s technological development, and the nation must be at the forefront of theory and innovation in the industry, building an advantage.

Looking at Xi’s plans, Taiwanese might believe that the next big trend will be blockchain technology, and express disappointment that Taiwan lags behind in this field.

However, it is more important to consider the contradiction between the fundamental nature and spirit of blockchain technology on the one hand and Chinese governance mechanisms on the other. The discrepancy is so obvious that it makes Chinese policymakers appear a bit muddle-headed.

Blockchain technology emphasizes decentralization, as each user can add new content to a chain and is responsible for verifying the accuracy of past data.

In a totalitarian nation like China, the government clings to all the power. If everyone is participating in blockchain technology, how could the government retain centralized control of speech and expression, or disseminate party doctrine and manage online activity? This is the first contradiction.

Blockchain technology is valuable because data on a blockchain cannot be easily falsified and it confirms the integrity of the blocks.

As the data and records cannot be changed, how would the provincial governments forge their economic data, and how would the government remove unfavorable online content or block search results containing certain keywords?

Clearly, blockchain technology is inconvenient for a totalitarian government. This is the second contradiction.

A characteristic of blockchain technology is the anonymity it provides. This is one reason the cryptocurrency bitcoin is almost untraceable, making it a popular tool for money laundering.

However, in China, people have to scan their faces just to be able to log on to the Internet, and all online activity is done under the user’s real name.

How can Beijing possibly tolerate the existence of a technology that protects people’s privacy and their anonymity? This is the third contradiction.

The Chinese government and blockchain technology are clearly incompatible. That being so, what does Xi have up his sleeve?

Perhaps what he really wants to push for is “blockchain with Chinese characteristics.”

For example, when it comes to changing blockchain data, perhaps Beijing would be the only user permitted to do so, allowing it to remain anonymous and untraceable when monitoring other Internet users. Meanwhile all other Internet users would need to fully disclose their identities online and so on.

We need to be cautious with any blockchain applications that the Chinese government might push for.

Beijing would never do anything that diminishes its grip on power.

Chao Shih-wei is an employee of an intellectual property law firm.

Translated by Eddy Chang

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