In the headlining-grabbing landscape of cryptocurrencies, China has once again entered the spotlight with its renewed commitment to blockchain technology and non-fungible tokens (NFTs). Despite a tumultuous history for the space, including a crypto trading ban in 2021, China is now pushing forward with plans for web 3.0 technological innovation, as revealed in a document published by the country's Ministry of Industry and Information Technology.
The bitcoin price, which has more than doubled to over $45,000 per bitcoin in the last 12 months, finds itself overshadowed by the surging popularity of solana and other smaller coins. China, however, is positioning itself at the forefront of the blockchain revolution, outlining its determination to explore decentralized applications and NFTs, as mentioned in the government document dated August 4, 2023.
Web3, a concept gaining prominence, envisions a decentralized internet built on blockchain, challenging the dominance of Silicon Valley-centric web 2.0 giants like Google and Facebook's Meta. China's tech ministry is not just focusing on blockchain but is delving into the metaverse and NFTs. The exploration includes technologies such as decentralized identity management and virtual digital entities within the context of a shared digital world.
This move comes as China expresses its intention to place "great importance on the development of" the crypto industry, despite the crypto trading ban in 2021 that caused market turmoil. Post-ban, China continued to develop blockchain technology primarily for government surveillance and identification purposes, showcasing its strategic approach to emerging technologies.
China's efforts extend beyond blockchain, with the digital yuan, a central bank digital currency (CBDC), being a testament to its ongoing interest in crypto-inspired innovations. The development of the digital yuan has influenced other countries, including the U.S., the EU, and the U.K., to explore their own CBDCs such as the digital dollar, digital euro, and digital pound, respectively.
As China renews its focus on blockchain amidst the surge in the combined market capitalization of cryptocurrencies, reaching $1.65 trillion, experts note a cyclical trend of profit-taking following significant market rises. Alex Kuptsikevich, FxPro senior market analyst said "The propensity for profit-taking after a surprisingly strong rise in 2023 alternated with FOMO [fear of missing out] momentum. These factors are arguably the only market drivers right now without significant economic and market news."
China's proactive stance on blockchain and NFTs signals a pivotal moment in the evolving crypto landscape, demonstrating the country's determination to stay at the forefront of technological advancements despite past regulatory challenges.