Chinese blockchain industry fast catching up to the U.S. counterparts

Chinese blockchain industry fast catching up with the U S counterparts

Chinese blockchain investments are on the rise. But are they nearing U.S. blockchain investment figures? A report by CB Insights, a research firm based in New York, suggests that China is reasonably close in this regard. Although the Chinese blockchain industry is multiplying, the United States still represents the pinnacle of blockchain-related investments.

Chinese blockchain investments represent 22 percent of the total global blockchain investments in the year 2019. In comparison, the United States had 31 percent of the worldwide pie. The Chinese influence has risen significantly, considering the country accounted for only 2 percent of the global investment back in 2015. The same year, the United States garnered 51 percent share of global investments.

Chinese blockchain investments on the rise

The U.S.-China trade war intensified in 2019. The CB Insights report mentions that the blockchain industry wasn’t spared either. When two major economies of the world are in loggerheads with each other, it is natural to have negative ramifications. Blockchain companies from both nations compete with each other to secure large projects across the world in a bid to outdo each other.

It is unclear which nation is emerging the winner as a slew of reports paints starkly different pictures. Largely polarising data doesn’t give a clear idea about the proportion of investments. The CB Insights report states that $2.8 Billion worth of investments were made in the global blockchain arena.

According to China’s state-controlled media arm Xinhua, 245 Chinese blockchain investment deals were signed in 2019 and totaled $3.44 Billion. Compared to 2018, this figure represents a 40.8 percent decline in investment. Additionally, most of these deals were local, and domestic demand drives the Chinese blockchain investments.

The CB Insights report doesn’t give much detailed information about the blockchain investments in the United States. It adds that the blockchain sector in China is picking up speed. The future investments will be driven by various factors such as government policies, distribution of talent, and involvement of various enterprises in the research and development initiatives.

Governmental stance to steer future blockchain growth

Last year, Chinese President Xi Jinping advocated the use of blockchain technology to fuel future growth. He even termed it as a core technology and promoted its use vigorously. As per Consensys data, the country now boasts around 500 registered projects.

But perhaps the most ambitious Chinese investment is the digital Yuan, which is currently under development by the People’s Bank of China. The digital part of the project is moving ahead at breakneck speeds, and the legislative portion is being taken care of by the communist party.

The governmental stance of both countries will determine how the future unfolds for the blockchain industry. The authorities must promote not only the technology but also create relevant incubation infrastructure. The U.S. government is taking a cautious stance when it comes to blockchain technology adoption.

In terms of legislative proactiveness, the U.S. cannot compete with China. The Asian country’s communist setup allows it to pursue its legislative goals with clinical precision. On the other hand, the democratic setup in the U.S. is more transparent and trustworthy in terms of accountability, and auditing. From Congress to the SEC, the U.S. certainly has an edge in terms of regulatory provisions that generate investor confidence. That’s a key reason why the CB Insights report puts the U.S. ahead of the Chinese blockchain industry.

Two diverse blockchain evolutionary paths

So, is the race going to remain one-sided, or will China catch up to the U.S.? The answer depends on how blockchain evolves from here on. The Chinese investment comes mainly from the government, while the U.S. growth is spearheaded by corporate giants. Both countries are pursuing starkly different blockchain development paths.

Chinese blockchain developments are more focused on financial, governance, and civilian applications. The projects in the U.S. are geared towards scalability, solving real-world problems, and resolving interoperability concerns.

Thus, there can’t be a clear winner in terms of the sheer size of investments. Monetary benefits alone cannot drive the future of blockchain. Its more about research, patents, community participation, and more. As the blockchain industry progresses, the shared, decentralized future of humankind is going to benefit as a whole.

Gurpreet Thind

Gurpreet Thind

Gurpreet Thind is pursuing Masters in Electrical Engineering at University of Ottawa. His scholarly interests include IT, computer languages and cryptocurrencies. With a special interest in blockchain powered architectures, he seeks to explore the societal impact of digital currencies as finance of the future. He is passionate about learning new languages, cultures and social media.

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