On October 24, 2019, President Xi Jinping gave a major speech about how China is going to make blockchain technology a national priority. He said China would “take the leading position in the emerging field of blockchain” and explore its use “in people’s daily life.” China’s most-watched daily news show covered the speech in primetime, and the next day, the People’s Daily propaganda newspaper ran a front-page story on Xi and blockchain. Searches for “blockchain” on China’s most popular browser Baidu rose 200 percent.
What’s essential to note is that the “blockchain technology” that Xi and his cadre are pushing is a very different type than the one that helps power Bitcoin. The ledger in the Communist Party’s blockchain won’t be updated by proof-of-work and Nakamoto Consensus, but by proof-of-authority. Xi’s blockchains will be highly centralized for maximum control and are meant to be tools for improved surveillance and social engineering. They couldn’t be any farther from Bitcoin, which is open-source, decentralized, censorship-resistant and pseudonymous.
A Blockchain-Based Digital Yuan: ‘Lipstick for a Panoptical Pig’
Unlike the internet — which Beijing can easily manipulate and censor — Communist authorities can’t control the price of bitcoin, and they haven’t been able to effectively stop their citizens from buying and selling the currency. So instead of an outright ban — which would create a huge black market and likely make bitcoin even more intriguing — they have decided to create a competitor. China’s rulers have chosen to try and get out in front of bitcoin and libra by launching a new digital yuan, blockchain only in name and only for marketing purposes, meant to ride the hype of a new technology, but only serve as lipstick for a panoptical pig.