The technology has become a primary area for several nations to the extent of being used in the fight against deadly diseases such as coronavirus. The present international blockchain network and sector are still in the early phases of development, presenting better development scenes and facing many problems here and there, as listed below.
Chinese President Xi Jinping recently revealed that companies should focus more on innovative technologies such as blockchain. However, while the government presents the prospects for the development of DLT, there are many problems.
Friendly to DLT but Hostile to Cryptocurrency
According to reports, the problem is that the development of technology is not yet mature: safety management; supervision is not easy; there is no relevant law; there is a lack of public awareness, and so on, there are four things in total as explained below. Due to specific technical issues, China still has problems such as privacy exposure and smart contract defects.
Inapplicability of Laws and Regulations
Since the technology is still immature, it has the dual snags of differing with prevailing laws and legal gaps in its state-of-the-art attributes.
Technological Development is Not Yet Mature
The technology has problems like low physical performance, slow transaction speed, poor scalability, high consumption of resources, and discrepancies in standards between various chains, a thing that makes it hard to be well-matched.
Misunderstandings in Social Cognition
Contrarily, there is an absence of cognition, with users not managing to differentiate between high-tech innovation and conceptual hype, equating blockchain with cryptocurrency, and even the event of illegitimate financing and pyramid scheme scam has all happened in presence of blockchain.
Supervision Faces New Challenges
If DLT is poorly handled, it can cause new risks to national information security, ideological security, financial security and other major facets.
As a matter of oversight, blockchain is characterized by decentralization, making it difficult to manage and supervise supervisory bodies. In addition, because DLT is a new tool, there is no law that can be applied in China, and it is disadvantageous to protect the technology. Actually, most people cannot distinguish between blockchain and cryptocurrency, or that DLT is not recognized.
To solve these problems, the government will actively identify international trends and lead to accelerate the development of distributed ledger technology.
Last year, the Chinese government came out clearly and stated its negative stance on cryptocurrencies including Bitcoin, Libra and other digital currencies. Nevertheless, the government is supporting blockchain, the underlying technology behind cryptocurrency. To show that it is serious on this matter, Hunan Province recently established the first blockchain district.