How Blockchains Could Do to China What Tiananmen Couldn’t

Jeremy Epstein Business 3 Comments

The crypto world had a major seizure last Monday when the news got out that the Chinese regulators were banning its citizens from running ICOs. Some labeled it as “Crypto Carnage.” Speculation ran rampant that this was the end of the ICO boom.

And just this week, there were reports (still unconfirmed) that China is banning Bitcoin exchanges.

Though it seems like ancient history right now, it is worth going back to late December and early January—just 9 months ago.  Bitcoin had just passed the $1,000 mark, a major psychological barrier at the time, much of it fueled by Chinese citizens seeking to get their money out of Yuan and into something they considered more reliable. Then, the Chinese regulators struck back, forcing Chinese exchanges to halt withdrawals.

A similar carnage ensued, with speculation that the Bitcoin boom was over, and the usual pronouncements that Bitcoin is a pyramid scheme.

Maybe 9 months is considered ancient history in the world of instantaneous verification and transaction times?

Amidst all of the excitement of ICOs, record-breaking funding becoming commonplace, and talk of a “Bitcoin bubble,” there’s a much larger, macro force underway and it is the true story here.

That force is decentralization.

It’s a really tough concept to get our heads around the ideas that world history had a “hard fork” on January 3, 2009 when Satoshi Nakamoto put the genesis block of the Bitcoin blockchain into the wild.  Prior to that date, a global, distributed ledger outside the power of any one controlling, centralized authority was a nice concept, but very difficult to put in place in practice.

To have such a network, you would require

  • High-speed broadband service in most of the world
  • A large number of people connected to a global network
  • Very fast, relatively inexpensive computers to process the transacations

Before 2009, none of these were a given. Now they are and they represent the necessary global infrastructure for a powerful decentralized network.

So the reason to watch the reaction by the Chinese government to blockchains and cryptocurrencies is not so that we can all make bearish predictions about short-term price fluctuations or to time the market.

The reason to watch China is because you get to see, in near real-time, an epic battle between one of the ultimate powers of centralization (the Chinese government) go up against the greatest weapon for decentralization and democratization that has ever been created.  [After all, an ICO that you run -or owning Bitcoin- in China means you don’t rely on the banks in China, which is a weapon of state control. Don’t confuse this with a Chinese government run blockchain-based digital currency– that is just a means of excessive state control so that every purchase can be tracked, since cash can’t be.]

Blockchains and the decentralization they enable are the ultimate ‘non-state’ actor and the challenge for the Chinese government is going to be, almost continually, a “whack-a-mole” type game that, to mix metaphors, will be based on their ‘fighting the last war.’

At some point, the ICO craze will slow down and we’ll get down to “business as usual.” That will mean the tokenization of pretty much everything that can be tokenized, replete with the new Tokenization Consultant businesses. It will also be the creation of interconnected, global networks where the safety of our assets is intertwined with the safety of our neighbors’ assets. These are forces for peace and security…and ultimately democracy.

Decentralization is an unstoppable force.

China vs. Blockchain/Decentralization is a bigger fight than Mayweather vs. McGregor or Rocky vs. Apollo (for the purists out there).