Blockchain

Few things better illustrate the tensions between China and the USA than the rapid advance of blockchain technology. As both countries race to develop systems, a clash of ideologies looms. Blockchain is an example of disruptive technology. It is, essentially, a data transfer system, originally devised as an automated and safe way to complete a transaction using cryptocurrency. Its main feature is that each blockchain is unique, independently verifiable and unfalsifiable. Blockchain is disruptive because it replaces traditional financial processes and models which would usually charge a small fee for the transaction. As the underlying technology in the world of cryptocurrency, blockchain has established a trusted system whereby peer-to-peer transactions can take place in a trusted environment. In the west, blockchain is seen as an open, liberating force, decentralising the online world, spreading power to individuals. In China, that idea poses a risk to the state. As a consequence, blockchain development in China is leading to state-control – the very opposite of what blockchain’s original creators intended. And China appears to be stealing a march on the rest of the world in the development of blockchain technology. As in domestic internet usage, China’s leaders tend to crack down on anything they can’t control. Cryptocurrencies like Bitcoin, for instance, are outlawed in the country. One of the biggest fears in the USA is that blockchain technology, in the hands of a state like China, could be turned to market disruption, even cyber warfare. But underlying the day-to-day concerns, is the worry that the US is losing its role as a world leader in technological innovation, and with it, potentially, its global influence. This shifting power balance is illustrated by rapid growth in blockchain use in places like India, South Korea and Dubai. And a country’s size is no barrier to profitable adoption of blockchain technology. Malta, for instance, is among the world leaders in blockchain use. But the speed of adoption of blockchain among ordinary people is outpacing any government attempts to control it. A recent survey by Deloitte suggests that blockchain adoption has already achieved a tipping point and is now an essential element of modern business operations.