Can you see a pattern? Chain of Chains for South Korea and China
So with the very recent news that China is planning its own cryptocurrency - DCEP. There have been mixed messages whether this is good or bad for the overall cryptocurrency community. To find the pattern, we have to look at the history of action by high-level representatives.
The Chinese Government though appears negative in its stance, it has only been ever about control and not banning technology.
The first positive thing the Chinese government did was 3 years ago when Chinese People's Bank started researching and organizing seminars on digital currencies. Basically exploring the options in detail.
In between though, there was negative press on supposed bans, that turned out to be more about restrictions on ICOs and Fiat to Crypto-Trading.
In addition, during this period, they seemly very quietly also created an official organization. As of June 2017, Ifeng news outlet found out about a building listing "The Central Bank Digital Currency Institute" at the same location as the Chinese Government's Banknote Identification center.
According to the same article Yao Quin, former deputy director of the People's Bank of Science and Technology Division, has served as director of the Institute for Digital Currency. And according to Yicai Global news outlet Di Gang, Information Technology Director of the Silk Road Fund, was appointed as its deputy head.
Reported on 8th January 2018 by Yonhap news outlet Choi Jong-ku, chairman of the FSC in Korea, basically said high-level discussions/ exchange of ideas between Korea, China and Japan have taken place on regulating cryptocurrencies.
A further report on 2nd February 2018 by Yonhap news outlet, mentions remarks made by the South Korean's Finance Minister Kim Dong-yeon, on a further requirement of collaboration between China and South Korea over Blockchain Technology.
Referenced from the Chosun news outlet quoting Kim Dong-yeon "The block chain has potential as one of the core infrastructures of the fourth industrial revolution that should be of interest," said Kim. "There is still more technology to be developed and more security to be secured, The development of the connecting chain of chains can really change the world."
Do you see it? "Chain of Chains. This key indicator within his comments reveals a lot. Why is that?
Without going into the history of blockchains in too much detail, the Chain of Chains is regarded by some as 3rd Generation Blockchains, i.e
1st - Bitcoin (Single Ledger)
2nd - Ethereum (Contract Platform)
3rd - EOS, Lisk, ICON, Plasma etc
Basically looking at solutions, that allow interoperability between multiple blockchains, either stemming from the main branch or utilizing sidechains or automatic swaps. Firstly allowing the scaling of such technology and allowing organizations to create various chains with own sub-set of rules while benefiting from the wider chain infrastructure.
As of the 26th February 2018 People's Paper China reported Wang Yan, chief researcher of the Tencent Financial Science and Technology think tank, said that security is a major feature of blockchain technology. It is mainly reflected in two aspects: First, it is distributed. The more storage architectures, the more nodes, the higher the security of data storage; the second is its clever design of tamper-proof and decentralized, making it difficult for anyone to modify data without rules.
They seem to understand the benefits of the technology well, unlike western banking industry, who fear such transparency.
This article also helps clarifies what they intend to do with such technology, i.e are they just planning a national cryptocurrency or a lot more?
According to a report by Sohu news outlet Zhang Jindong, deputy to the National People's Congress and chairman of Suning Holding Group was quoted "Blockchain technology promotes the integration of new technologies such as big data, artificial intelligence, and blockchain, and improves the ability to sense, predict and prevent risk factors."
An article by Leiphone reports that Wang Pengjie, member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC) proposed:
To carry out the "approval system" supervision of the blockchain digital assets project, implement the "real-name system" certification for individual blockchain accounts
Under the unified cooperation of the central bank and the China Securities Regulatory Commission and other departments, a regulated, efficient and clean blockchain digital asset trading platform was established to provide formal channels for corporate fundraising and investor asset appreciation.
Sounds like KYC implementation and a clear regulatory route for ICOs.
This seems to be a bullish sign, but maybe tougher for Chinese cryptocurrency exchanges. We have all heard the negative press. We know that China clamped down on ICOs and Fiat to Crypto exchanges. It seems likely that existing exchanges will be affected massively - either with closing down or forced regulatory compliance.
The proposal from Wang Pengjie, seems to imply a national registered crypto exchange and not private exchanges like Huboi.
But back to Chain of Chains, if we further examine just the Blockchains coming from China and South Korea, we can see that they appear to be mostly these 3rd Generation Blockchains. i.e
EOS
Dan Larimer has been quoted - "Interchain communication is the highway and in the city there is public transportation and more business opportunities"
According to this EOS Github using Merkle Proofs - EOS.IO software is designed to facilitate inter-blockchain communication.
VeChain
According to VeChain's publication they are mandated to be the blockchain technology partner of the Government of Gui'an to plan, design and implement such processes. Basically bringing the blockchain technology to smart cities first.
Also the same publication quotes The head of Chinese Central Government, Premier Li Keqiang after inspection of the
new plans of Guian, said “In Gui’an, I have seen the hope of Guizhou, the hope of West China.”
Icon
Plan on creating a network of blockchains, to be used by various institutions ranging from:
financial institutions, insurance companies, hospitals, universities.
Yggdrash
A similar project to ICON, with some members having worked at theLoop, ICON and BitHump, plans to launch in 2019, a mainchain for authentication of data on its branch chains.
NEO
Interestingly NEO, has a patent as per Bloomberg Archives and Bitcoin Magazine quotes the founder of NEO - Da Hongfei, has received a patent for cross-chain distributed interoperability.
Summary
As we can see, for some of the examples - BlockChains with cross-chain operability are coming in the East. Supported by the comments from Kim Dong-yeon, "Chain of Chains" and an announcement from China over DCEP, it implies that these governments will bring out Main Country Chains, possibly with permission-based Nodes, that can control access to private sub-chains.
Especially with the likes of VeChain implementing their technology in Smart Cities with the full backing of local and national Chinese Government. It seems likely that they will connect somehow to the officially controlled blockchain.
This report was carried out as of 9th March 2018. We do not endorse any investment and we are not financial advisors. We merely look to research based on the existing available information.
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