With United States refocusing attention on controlling the spread of COVID-19, China continues to pursue its goal of global leadership in blockchain technology.
Following on the success of last year’s blockchain initiatives, China successfully moved nearly their entire population off of paper money – a change affecting Chinese citizens of all economic levels. Panhandlers on the streets of Beijing now display QR codes for donations into their digital bank accounts.
As was reported by the Wall Street Journal in April, four large cities in China are piloting full digital currency integration. China’s Central Banked recently completed a “Certification of FinTech Products” program, a year-long public education campaign on blockchain technology. These initiatives, along with President Xi’s open and continued public support of digital currency dominance, have propelled China into a blockchain technology and cryptocurrency leadership position.
Compared to its largest global rival, the United States has not kept pace. Washington’s knowledge gap and financial regulatory ineffectiveness were showcased clearly during the early hearings on Facebook’s proposed cryptocurrency, Libra. The hearings quickly exposed that neither chamber of Congress understands nor appreciates the impact that cryptocurrency and blockchain technology are poised to have on the future of the world’s financial architecture.
So what has been the net effect? Facebook is moving forward with Libra – but they are leaving American investors out and instead partnering with companies and countries outside of Washington’s regulatory reach. More evidence of American crypto-flight came in the form of PayPal’s decision this week to test its new Bitcoin buying feature in Europe instead of its home country, the United States. The United States is increasingly seen as hostile toward digital currency integration and is driving financial innovation offshore in the process .
Fortunately, there is legislation being proposed that will allow for companies in the United States to safely compete for positions in the coming digital economy without the fear of being caught on the wrong side of yet to be written legislation. Voices on both sides of the political aisle seem to understand failing to act is a failure to provide American business with the framework they need to compete on the future global stage.
Blockchain technology stands poised to rebuild the way data, digital assets and currencies move around the globe. The global financial landscape will be restructured to reflect the immutability and instant transferability of blockchain-based assets and currencies. Waiting for third-party transaction validations are becoming a thing of the past. Goldman Sachs, Fidelity, IBM, The Bank of England, The Bank of Japan, the ECB, the Federal Reserve and the IMF have all commented on the inevitability of this changing paradigm.
Without action to support the adoption of cryptocurrency and blockchain technology, it is all but assured that the United States will see a decline in its political and economic influence. The abandonment of the US dollar as the world’s favored “transaction currency” (the currency the world uses to trade international goods like oil and gold) will be the first sign in this decline of US economic hegemony – but it won’t be the last.
Politicians are starting to take notice but are uncertain as to how to proceed. Looking backwards and hanging on to the past is not a winning strategy. The United States must once again embrace its innovative spirit and evolve.
China has taken the first steps toward dominating the future of the internet and of finance. Indeed, the first shots in the coming “Blockchain Wars” have been fired!