24 July 2018
On July 23rd CCN, ZDnet.com and others reported that the City of Nanjing, Jiangsu’s capital, announced, it will start a $1.5 billion USD fund to advance Chinese public blockchain projects. The fact that Nanjing City partnered with ‘Zhongguancun Blockchain Industry Alliance’ to create this fund in China is well worth the time to hit ‘stop’ and think about what this means. Wasn’t China the country that had a draconian crypto block in place? How is this relevant for NEO and the NEO Smart Economy in some way, shape or form?
The fund which was announced at the ‘Industrial Public Chain Summit'(IPCS), was attended by high ranking Chinese officials, amongst them, Luo Qun. He is the deputy secretary of the Communist Party of China in Nanjing. In the West, we don’t give too much importance to the presence of government officials, however, in China, this seems to be a telltale sign when trying to understand the latest ‘political current’ that is flowing through the country.
While last year, the crypto market got plagued by a series of violent attacks against cryptocurrencies during the ‘Bull’ market, the opposite seems to happen this year during this market slump. Sure, the crypto ban in China is still in place, but this news is signaling something entirely different!
While some Chinese officials kept up the harsh public rhetoric regarding the topic, it seems that China is softening its stance considerably and if we go back to president XI’s speech not so long ago on May 30th, we might have witnessed the definite turning point and return of China to the cryptocurrency main stage.
The Chinese president said the following:
“A new generation of technology represented by artificial intelligence, quantum information, mobile communications, internet of things and blockchain is accelerating breakthrough applications.”
Now, fast forward less than 2 months and this 1.5 billion USD fund is launched with the obvious approval of Beijing. One of the curious facts in this story is that it was also disclosed that UDAP Foundation and TokenX are supposed to be the first two fund beneficiaries. Let’s think about this! The Chinese citizen is not allowed to participate in ICO’s but here we have this fund which clearly participated in the ‘private sale’. Take a look at the illustration hereunder and form your own opinion about this, but it seems that someone is about to attract ‘foreign’ funds to finance this China-backed project as Chinese citizens are not allowed to participate. The other option would be that there’s a ‘partial lift’ of the ban on the way, allowing investment in selected ICO’s. Now, admittedly, there is some speculation here on our part, but it seems that China has understood that it cannot afford to have the ‘blockchain development’ train leave without them.
The ‘untold truth’ here is that major technological advances in the crypto space are mainly financed by ‘funny money’. Thousands of developers, marketers, software engineers, CEO’s, CTO’s and so on are being offered tokens as part of their compensation and although the market value is supporting this at this time, the truth is that much of this is actually ‘perceived value’.
In other words, people did not invest 300 billion USD of actual dollars into the crypto ecosystem (Coinmarketcap’s total market cap). It’s the perception of future value that is boosting valuations and creating this potential for heavy investments.
Now if you’re China, and you see that those countries who are not opposing this exciting technological breakthrough, are actually benefitting from this newfound wealth and attracting new ‘real’ investments, you understand that you cannot stay on the sidelines.
In my humble opinion, the tide seems to be turning for the reasons mentioned above. It seems that Chinese authorities are starting to see that the cryptocurrency ban is leading towards a massive ‘brain-drain’. A transfer of economic and intellectual wealth from a protective society towards a progressive one.
NEO’s Da Hongfei has never been shy to point out that the immense appreciation in the token value of NEO has given the blockchain project significant resources and leverage to actually build out this dream of an ‘NEO Smart Economy’. So, it’s hard to imagine that China would just give up the NEO, Ontology, ONCHAIN ecosystem which is packed with smart developers and business leaders who are building tomorrow’s economy. They have no other choice than to embrace the future!
Finally, I’d like to end this article with a quote from THEKEY’s CEO, Catherine Li. She wrote the following words on a Reddit AMA session regarding the cryptocurrency ban situation in China.
This is also a fundamental issue for all ico projects in China that by law institutions and individuals are banned to acquire TKY or any other cryptocurrency in the open market. Currently we are in discussion with Chinese government incl. the Central Bank regarding this issue. I am pretty sure we are able to work out a solution with the government in the not so distant future. And Chinese government is positively promoting the R&D of blockchain technology. And I believe the high quality cryptocurrencies will be utilized in China, which includes TKY. Please stay tuned.
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