A major Blockchain Industry White Paper published by China’s Ministry of Industry and Information Technology reveals that the domestic blockchain industry saw “exponential” growth in 2017, according to a ministry press release today, May 21.
The 157-page report shows that 178 new blockchain startups were launched in China in 2017, bringing the total number to 456. This compares with 136 new startups in 2016, a figure that had already tripled the growth of the preceding two years.
The paper also shows that 2017 saw peak investment in blockchain technology to date, with 100 out of a total 249 equity financing initiatives in blockchain startups reported in 2017, more than all those reported between 2014 and 2016. Notably, 68 new financing initiatives have already been reported within the first quarter of 2018 alone.
The comprehensive report states that “blockchain technology has risen to the level of a national science and technology strategy,” noting that China’s policy and regulatory framework for blockchain has been “gradually improved”. The Ministry’s report also states that the new sector is “boosting” the development of traditional industries by “bringing down costs and improving efficiency.”
The report also reiterates reports that China has filed the most blockchain patents of any country in the world to date, while noting that the country’s outdated 2008 patent law may need to be revised to keep up with innovation in the sector.
The ministry nonetheless reiterates its position regarding “certain risks that cannot be ignored,” particularly in regards to Initial Coin Offerings (ICOs), pyramid schemes and fraudulent behavior. Drawing a parallel with the early internet, the paper advises vigilance against the “excessive speculation” and “false propaganda” that may compromise the blockchain space.
The paper also isolates technical risks – such as “loopholes” in cryptographic security, the potential for 51% attacks, and the new “unproven” consensus mechanisms that have been proposed to replace Proof-of-Work – emphasizing that these all need to be carefully considered in order to prevent the collective loss of digital assets.
Last month, the Chinese government cooperated with a local VC firm to launch the Blockchain Industrial Park in Hangzhou in an effort to spend over $1.6 bln on blockchain projects, over 20 percent of which will be funded by local government. Two weeks later, China’s National Audit Office, which handles all government-related financial transactions, revealed that it is considering a blockchain system to rehaul its unwieldy data storage and management infrastructure.
In March, a Chinese government memo was leaked detailing plans to create an “International Blockchain Investment Development Center,” and in February, news broke of a patent filed by the state-run Bank of China for a solution to scale blockchain technology platforms.