“The industry has grown rapidly with government support since then,” Luo said.
Yin Keting, deputy head of Zhejiang University School of Software Technology Blockchain Research Centre, expects the guidelines to expedite the implementation of more blockchain innovation applications, which will help to refine policy and improve healthy development of the industry.
Zhang Shuai, vice-president of Hangzhou-based blockchain start-up Hyperchain, said that the guidelines are very “forward-looking”. Hyperchain, which develops the infrastructure for smart contracts, announced in April a new round of financing that pushed them into unicorn status – a start-up valued at more than US$1 billion.
While blockchain is being used in China in a wide variety of fields, such as smart city and government initiatives, the technology remains challenging to commercialise.
“On the one hand, the technology itself isn’t mature enough,” Zhang said. “On the other, it needs deeper integration into current applications.”
Blockchain is a permanent, tamper-resistant distributed ledger of transactions that is best known as the technology behind bitcoin. While Beijing has a complicated relationship with cryptocurrencies, the nature of blockchain technology makes it ideal for other use cases, such as tracing documents and tracking ownership of digital goods – something that has aided the recent boom in non-fungible tokens (NFTs).
The Chinese government has never stood against blockchain. The technology was named in Beijing’s 14th five-year plan as one of the digital sectors that needs to be “cultivated and strengthened” and Xi Jinping’s endorsement two years ago signalled backing at the highest level.
“China has started setting standards for blockchain. For example, last year the central bank issued one on distributed ledger security, and local governments are working on some regional standards,” said Gao Chengshi, a cryptography expert and founding partner of blockchain developer Shanghai Hashvalue Information Technology.
Blockchain is already being used in certain administrative applications, such as Shenzhen’s blockchain-based invoice system adopted last year to track tax payments. Last year, the governments of Macau and the neighbouring southern Guangdong province launched a mutually recognised QR health code system, supported by blockchain and making travel between the two areas much easier.
Alibaba Group Holding and its fintech affiliate Ant Group have the most blockchain-related patents in the world. Alibaba, owner of the South China Morning Post, held 212 out of 3,924 blockchain-related patents in the world as of May 2020, with applications ranging from supply chain tracking to financial services.
Internet giant Tencent Holdings announced last May that it would invest US$70 billion into developing the technology and is on a national standards-setting committee, along with Huawei Technologies Co and Baidu, organised by the MIIT.
Earlier this year, online audio community Lizhi Inc. partnered with AntChain to facilitate copyright protection of podcasts.
“Blockchain ensures that records are real and tamper-resistant, and it can be used for legal actions if needed, which makes the process more reliable and efficient,” said Effy Kang, Lizhi’s head of capital markets.
Unlike most blockchain start-ups that focus on software alone, VastChain develops hardware. Its flagship product, named “Master Trust”, is a device embedded with a blockchain chip, which can be widely used for routine on-site inspections, for example in kitchens and warehouses.
Once attached to a location, the device gives it an exclusive and tamper-resistant code so that it can’t be moved to other locations, according to Luo.
“Other companies are trying to develop software-only technology, such as blockchain for governance, but there are too many competitors with similar solutions,” Luo said.