Right now, the United States and China are dancing around the declaration of an all-out trade war, driven by everything from tariffs to sanctions to international corporate espionage. But even as Western news obsesses about new Chinese trade restrictions, another narrative is emerging to differentiate the Eastern and Western approaches to cultural management: their approach to fintech, and to blockchain in particular.
It make sense that the treatment of wealth would be a major point of contention between capitalist and socialist systems, but the Chinese have still stunned many with recent moves against the blockchain ecosystem as a whole. Not only is the People’s Republic hostile to the initial coin offering (ICO) and other fundraising efforts, but it also recently outlawed the security token offering (STO) as well.
The Chinese Bureau of Financial Work phrased it this way: “I want to warn those who are promoting STO fundraising in Beijing. Don’t do it in Beijing. You will be kicked out if you do it.”
Yet, predictable though it may be for an authoritarian government to oppose technology that can help users avoid government oversight, blockchain in general does have a bright future in the East. As Vanbex CEO Kevin Hobbs recently told Entrepreneur.com, “I was recently in China at multiple conferences and visiting with multiple blockchain companies and heard nothing but good things about the support the government is giving them. Their work ethic was incredible to see and their belief that blockchain is the future was very evident.”
That’s because blockchain is a uniquely powerful tool for automation and control. Where blockchain can be deployed by a crowd of individuals to decentralize and potentially anonymize information and communication, it can also be deployed by a large power to have the exact opposite effect. The Chinese government has never made any secret of its wish to micro-manage the country to create the best society it can -- and blockchain could allow a level of micro-management that has never been dreamed of before.
That is a fundamentally different approach to blockchain than that found in the West, which remains open to its continuing evolution as a platform for financial services. Blockchain is being embraced by Western governments, investment banks, and even stock exchanges -- it’s making its way into the West’s most important institutions. While China is explicitly moving toward a sort of smart contract socialism, the United States could well use blockchain to make its markets more open and its financial products more widely and more deeply tradable.
To an extent, this is simply a technological continuation of the trajectories these countries have been on since their inceptions, but it could also represent a dramatic acceleration of their respective evolutions. The People’s Republic has always lacked the ability to fully implement its vision of total government oversight, and the blockchain could allow that; likewise, America has always struggled to fully demolish all barriers to the movement and manipulation of capital, and blockchain could allow that quest to come to fruition, as well.
All this has the potential to make the economies of these two nations increasingly incompatible, and this could well draw their respective corners of the world apart, right along with them. A blockchain-based China could much more effectively prevent the movement of money beyond its borders, slowing the country’s infamous level of embezzlement. But blockchain could simultaneously undermine that sort of control over capital in the US, making the country more of a financial Wild West full of amazing opportunity but also all-new kinds of misconduct.
Two such radically diverging economic and social imperatives may be hard-pressed to maintain their existing economic and social ties, even without the high-level feuding between politicians. The economic interdependence of the world’s two greatest military powers could very well be weakened over the coming decade -- and if nothing else, such a global schism could be disastrous for blockchain development. It could lead blockchain in two very distinct directions, and undermine the collaborative approach it has enjoyed thus-far.
In terms of pure blockchain advancement, and the development of forward-thinking, progressive applications, what the world needs is a major economy that hews a line between the current American and Chinese approaches -- a nation that will provide significant support to the development of the technology, that will accept blockchain into its own internal processes, but that will also avoid restricting access to the new abilities this technology provides.
Being so disruptive a tool, blockchain could easily reenforce or destabilize existing structures of power -- but probably the worst outcome is if it does both, simultaneously, in different parts of the world. Blockchain is coming to be an expression of a nation’s overall approach to economic innovation and the free movement of capital; if great powers can’t come to an agreement on blockchain, it portends much more dangerous clashes over much the same issues in the future.