In addition to regulatory challenges from the Chinese government, which have led a multiyear campaign to eliminate the excess, irrational exuberance, and fraud from the nascent cryptocurrency market while still supporting the underlying blockchain technology, several highflying Chinese cryptocurrencies have attracted withering criticism from unlikely sources.
Li Xiaolai, Bitcoin billionaire and founder of BitFund, led his company to become one of the most influential venture capital firms in China focused on cryptocurrency. Some of BitFunds known investments include Bitfoo, Yunbi, Sfards, BitcoinSand, HashRatio, KnewCoin, BitShares, and PEATIO.
Xiaolai surprised many in the blockchain world in late 2018 when he announced via social media, “From this day on, Li Xiaolai personally will not invest in any projects (whether it is blockchain or early stage). So, if you see ‘Li Xiaolai’ associated with any project (I have been associated with countless projects without my knowledge, 99% is not an exaggeration), just ignore it… I plan to spend several years to contemplate on my career change. As for what I’m doing next, I’m not sure just yet.” But this setback, at least from a public relations perspective, has done little to dampen enthusiasm for the nascent technology.
But it’s Xiaolai’s recent outspoken criticism of several Chinese blockchain companies that have really caused a stir, over the course of a 50 minute long leaked conversation, Xiaolai is quoted as saying, “Qtum … is a garbage coin… there …NEO is also a stupid project, worthless… there is a scamming exchange called Binance and there is a scammer called Justin Sun [Founder of TRON].”
Overall, however, the sense among most experts is that China is on the right track and smart money, notwithstanding Li Xiaolai and BitFund, is doubling down on China. 41 percent of new Chinese companies that received funding in the first quarter of 2017 were blockchain-related, according to The China Internet Report. The capital of China’s Jiangsu province, Nanjing, has launched a 10 billion yuan ($1.48 billion) investment fund for blockchain. At the Hangzhou Blockchain Industrial Park in China, the Xiong’An Global Blockchain Innovation Fund has $1.6 billion (10 billion yuan) in funding to support Chinese blockchain ventures.
With companies like Baidu, Alibaba, and Tencent making the news every day, China is brimming with groundbreaking companies advancing blockchain and competing effectively with the likes of Facebook, Apple, Amazon, Netflix and Google. Baidu launched a blockchain platform in early 2019 to simplify commercial deployment of decentralized apps, or dapps. Alibaba announced a venture with the city of Changzhou in August 2017 to develop China’s first application of blockchain technology in the medical sector. In March 2018, Tencent partnered with the China Federation of Logistics & Purchasing to develop an industry application based on the Tencent blockchain — TrustSQL.
In addition to the BAT companies, promising early-stage Chinese companies are also making an impact in the blockchain technology space. For example, privately held MATRIX AI Network, a global open-source, public, intelligent blockchain-based distributed computing platform and operating system is leveraging AI technology to power self-coding smart contracts, gaming, healthcare and medical diagnosis applications, and complex shipping and logistics challenges. The company is now able to support over 5,000 transactions per second using a hybrid PoS and PoW consensus algorithm — exponentially faster and more efficient than Bitcoin and Ethereum, and company executives see much more potential and much faster speeds not so far down the road.
“Aside from Matrix AI Network’s unique AI capabilities, one of our goals is to build a complete hybrid public/private distributed computing ecosystem with high enough security and performance to integrate with enterprise systems,” explains Dr. Steve Deng, Chief AI Scientist for Matrix AI Network, “likewise, we see data privacy currently undergoing a major transformation within governments, and individuals calling for more transparent and secure data management solutions.”
With a wealth of new patents, a strong regulatory framework balanced with government support, and an insatiable appetite for innovation, more and more people are looking to China when thinking about the future of blockchain. “The future of blockchain has to be bright, says Dr. Deng with an optimism shared by many Chinese entrepreneurs and business leaders, “my belief is that the blockchain technology delivers four key advantages. First, blockchain is a trusted network offering a secured digital infrastructure for verifying identity. Second, it is a watchdog network to make sure people do no harm. Third, it is a delivery network, enabling faster and cheaper international payments, and also makes the disbursement more natural and transparent. Fourth, it is a collaboration network providing incentives for mass collaboration.”
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