No country has shown more interest in blockchain technology than China. The Chinese government and private technology companies have dramatically increased their investments in the crypto and blockchain industry.
Cointelegraph reported on June 22 that the Chinese government had completed the development of the digital Yuan’s architecture. The testing phase of the Central Bank Digital Currency (CBDC) has already started, as well as the drafting of laws to allow the launch and implementation.
This comes at a time when the European Union has only started showing an interest in a CBDC of their own, as well as the United States. The clear advantage of China over western countries is a reason for worry, according to Chris Larsen.
Blockchain Might Be the Next Space Race
Comparing the race for blockchain supremacy to the space race of the cold war era might seem a bit exaggerated. But with the increasing adoption of blockchain in different industries, it is clear that the country who gets an edge regarding regulations and development will decide the shape of tomorrow’s blockchain.
Governments, media, and people who were skeptic and even openly-critical to this technology were proven wrong in the early stages of blockchain, and with the booming of bitcoin and altcoins, they continue to be silent as new applications appear every day.
The United States has been slow to the game, and therefore assisted China by “officially giving clarity to the two protocols effectively controlled by Chinese miners: Bitcoin and Ethereum.”, according to Mr. Larsen.
The United States Approach is not Enough
The United States government has been focusing its resources on regulating blockchain instead of researching and developing it. While this has been beneficial, such as in the case of shutting down some initial coin offerings, the US has not actively participated in shaping how the technology will be developed.
The development and growing interest in Decentralized Finances have shown the potential that blockchain-backed platforms have to shape markets. While it is highly unlikely that a government will be using a decentralized system in the future, they have applied their teachings to the development of their digital currencies.
The results from the United States and allied countries not playing an active role in this race creates a potential risk to them. In the words of Mr. Larsen: “There is a meaningful probability that if China were to get control over the next-generation financial system, they would be able to be devastating to American power and its allies’ ability to make payments.”
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