In some ways, China is living the dream that many crypto-enthusiasts only hope will be possible. In this cashless society, mobile apps have taken over, where paper tender was very common before. Merchants and customers seem more connected, and the whole system more seamless. But are they truly living the blockchain dream? And if so, how can the U.S. get there?
China’s popular payment apps are not entirely decentralized
Alipay and WeChat Pay, who together host a billion users, are closer to Venmo or PayPal. In other words, they’re directly linked to a bank. The advantage for Chinese citizens is that their major banks are all state-controlled, and fees are subsidized. So effectively the transactions are cryptocurrency-level cheap.
What’s interesting is that Ant Financial, the company behind Alipay, is very interested in blockchain development, however. They want to implement it more into their payment system and for other Internet of Things applications. In fact, earlier this year, they secured $14 billion for blockchain development.
But what does this mean in terms of Alipay’s connection to banks? Well, one goal apparently is to serve international, bankless transactions. Whether this is the public or private sector is not entirely clear.
Cashless Society: While China has cracked down, the state itself is very pro-blockchain
In August, the government and Alipay actually partnered to halt the practice of selling counterfeit rice. Wuchang is a popular brand that some apparently counterfeit, and a crypto supply chain has helped to better track legitimate shipments. President Xi Jinping even called blockchain a “breakthrough” technology.
The government has also banned the selling of ICOs, but still allow mining. Though earlier this year, Chinese mining pools comprised around 70% of the world’s hash power, many firms have continued to relocate to other parts of Asia. Meanwhile, some research indicates millions of Chinese are defying the law and still retain crypto-investments.
But what about the U.S.?
China is very unique. It is under a more authoritarian rule that unifies the economy. It’s government both funds blockchain projects and has quickly set clear regulations for the technology. What they lack with their current app system is global payment and true decentralization. Perhaps if a true stablecoin or other solution emerges, we can move towards the same in the U.S.
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