How did CBDCs drive blockchain adoption in 2020

2020 has been a year of challenges for the world, but for a country like China with such a large population base and rapid development, it has also been a year of opportunity.

On October 24, 2019, China officially upgraded its blockchain technology to become a national strategic priority. A year later, the development of China’s blockchain industry has been at the forefront of many ways.

The number of blockchain projects unveiled in China ranks highest

According to a research report by Gyro Research, a Chinese blockchain media company, from October 24, 2019 to September 1, 2020, the number of global blockchain projects was on a downward trend. Around 345 new blockchain projects were unveiled worldwide – a decrease of 163 compared to the same period the previous year. China is ranked first with 252 projects, which is about 73% of the world and a 12% increase year-on-year, and its use cases far exceed the United States, which ranks second with 27 .

In the meantime, it is clear that China’s blockchain policy plays a significant role in this area. The growing number of projects peaked after the release of the policy. Among the 252 projects, 56 were added in November 2019 after the release of the policy, and 48 were revealed in December 2019, after which the number of projects steadily flattened.

From a regional distribution perspective, Beijing, Shanghai, Shenzhen, Zhejiang and Guangdong are the five major Chinese provinces actively promoting blockchain implementation. According to the incomplete statistics from Gyro Research, technology projects are concentrated in the areas of government affairs, public services and finance.

In addition, local governments, some publicly listed companies – such as Tencent,, Xiaomi, Huawei, Baidu, etc. – also actively promote the design and adoption of blockchain technology. Speaking on this year’s blockchain adoption status and plan for next year, Claude Jiang, general manager of Xiaomi Digital Fintech, told Cointelegraph:

“This year, we have already launched industry and government finance platforms in Tianjin, Chongqing, Guangzhou, Ningbo, etc., and made a range of innovative industry-based financing products based on blockchain technology. Next year, based on these products, industry support will be provided to the industrial structure to help the industry use blockchain and other technical capabilities to complete digital and intelligent upgrades. “

Blockchain-based Service Network promotes blockchain adoption in China

On April 25, the blockchain platform at the national level “Blockchain Based Service Network,” or BSN, was used for commercial use worldwide by the State Information Center, a Chinese government organization.

According to its official introduction, the BSN is a cross-cloud, cross-gateway, cross-framework global infrastructure network used to deploy and implement all types of decentralized blockchain-based applications. It is to become the only global infrastructure network independently innovated and managed by China.

One of the biggest obstacles to implementing blockchain technology is the cost to build a platform. There are many blockchain platforms, and in the future, the same data island problem as seen with the traditional internet may also arise. Currently, the BSN ecosystem encompasses the basic architects, developers, cloud service providers, gateway providers, and implementation and maintenance parties, and the ultimate goal of the BSN is to become an internet that weaves the fragmented blockchain market .

To date, 136 public city nodes have been used on the BSN. Among them, 98 are already Chinese nodes connected, 30 are under construction and 8 are overseas. In terms of the network framework, there are four alliance chains, 12 public chains and two cross chains. The cloud service providers include China Mobile, China Telecom, China Unicom, Baidu Cloud and Microsoft Azure. Twelve well-known public chains have been integrated, including Ethereum, Tezos, EOS, Solana, Algorand, Polkadot, Nervos, Neo, IRISnet, ShareRing, Bityuan and Oasis.

Reviewing BSN’s achievements in 2020, Yifan He, CEO of Red Date Technology – the BSN’s executive entity – told Cointelegraph:

“Next year, China’s blockchain industry will prosper. However, because blockchain technology is still in its early stages, as well as vigorously promoting the potential applications, we also hope to see more companies pursuing and participating in infrastructure and the underlying technology. Next year will be the first year of the central bank’s digital currency, which will be one of the major forces in advancing the development of the blockchain industry. I also hope that companies in the industry pay more attention and have discussions. ”

DCEP China: From theory to practice

On December 12, Suzhou, one of the four pilot cities for China’s Digital Money Electronic Payment, or DCEP – also known as the digital yuan – officially launched the project by giving digital yuan “red envelopes”. Four payment scenarios were implemented, including dual offline payment, offline payment, online payment and cash on delivery.

It was 2014, when Zhou Xiaochuan, then governor of the People’s Bank of China, proposed the idea of ​​building a digital currency. The central bank also established the world’s first official organization involved in legal digital money research and development, the Digital Currency Research Institute.

After six years of repeated research and practice, on August 14, the Ministry of Commerce announced that the digital yuan would be trialled in 28 provinces and cities.

Because the vast majority of Chinese residents are already familiar with electronic payments through Alipay and WeChat, large-scale promotion of the DCEP could be quite easy in the future. However, the introduction of the DCEP is unlikely to cause any disruption in China’s current electronic payment system; it will allow Chinese residents one more option. The DCEP offline payment experience could make Chinese people and companies pay more attention to blockchain technology, promote more corporate research and blockchain adoption, and accelerate the development of the industry as a whole.

On the development of China’s DCEP in 2021 and in the future, Huobi University president Jianing Yu said:

“We can see from the current pilots that the E-CNY payment function has been relatively complete. It can support both online and offline payment scenarios, and can even finish transactions without internet. But the true meaning of E-CNY is more than that. In the future, the use of E-CNY will extend to more retail scenarios, and may embrace the challenges of high technology. In the 5G age, driverless cars, Internet of Things equipment, Industrial Internet will be widely used, and transaction demand will continue to rise, but the current currency and financial system cannot meeting those needs in the future. In this situation, RMB must update to meet those potential requirements for trade and finance. “

He also said: “E-CNY is a kind of future-facing currency. Digital is the future, all assets including personal ID will be digitized. E-CNY popularization will speed up the process of identity digitization and asset digitization, which will further expand the digital economy sphere. E-CNY will bring a brand new business opportunity and empowerment for the future transformation of ‘Smart New Business’. “

Stronger regulation by the Chinese government

On October 23, the People’s Bank of China publicly sought views on a revised version of the People’s Republic of China’s Law on the People’s Bank of China. It is worth noting that there are some provisions relating to digital currency in the new “draft for comment”.

This may be the first time that China has included relevant provisions relating to digital currency in the scope of the law. On the one hand, making it appear in the public eye in draft for comment confirms the legal status of the DCEP; but on the other hand, it suggests that digital currency in any other shape or form is not legal in China.

As the US Justice Department and the Commodity Futures Trading Commission intensify regulation of the crypto market, global regulation is also being strengthened, and China is no exception. For some digital currency exchanges registered abroad while having physical operations in China, relevant regulation has been further developed.

China is one of the fastest countries in adopting new technologies. Chinese consumers are more likely to embrace new technologies, and this willingness can give China an advantage. The significant population base and the “netizens” base, the popularity of mobile internet and payments, a large number of talented developers, and government support for the adoption of technology are all factors that could contribute to the rise of China’s blockchain industry.

Especially in 2020 while the pandemic is ongoing, the government’s demand for the adoption of blockchain technology in public services such as medical care, charity, epidemic prevention and tracking is much more urgent, which has to some extent fueled the development of China’s blockchain industry.