Sunday, October 1

Bitcoin no, NFT yes: China strikes back with platform for non-fungible tokens


Key facts:
  • In China, all decentralized and private networks are considered illegal.

  • Using bitcoin in China is an illegal activity.

China has just launched its own centralized non-fungible token (NFT) platform directly controlled by the Chinese government. Its use will require each user to verify their identity.

The announcement of this release was published recently by the South China Morning Post portal. As detailed by the media, it was a soft launch (for a limited audience.

The platform was put into operation within the Chinese Government blockchain: the Blockchain Services Network. This network that works centrally and under state control.

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It should be remembered that public and decentralized cryptocurrency networks are prohibited in this Asian country (this includes Bitcoin). The ban is based on they offer a certain level of anonymity and privacy, which the State cannot monitor. Because of this, NFTs, as they are known today, minted on networks like Ethereum, cannot circulate within the country.

The launch already has several promoters within the nation, including telecom giant China Mobile and state-owned payment processor China Union Pay.

This non-fungible token platform is available for use only by residents of China. Users will be able to mint their own NFTs with commissions that will be around USD 0.007. Payments will be made through traditional means with fiat money or through the Central Bank’s state cryptocurrency, the digital yuan.

NFTs do not circulate in China

NFTs are tokens that live on top of a cryptocurrency network. It can be, among others, Ethereum, Terra, Solana, or even Bitcoin. Because all of these networks are open, they do not have government permission to operate within China. Transactions in Bitcoin are considered illegal by the Central Bank of China, which has intensified controls since last September.

2021 was a year of much Chinese crackdown on Bitcoin, which included both miners and users of the cryptocurrency. Source: Andrea Nicolini/stock.adobe.com

Because of these repressions by the Chinese government, companies that had already launched NFTs had to find a solution. In this case, companies like AntChain and Tencent, leaders in the Chinese technology market, made the decision to call NFTs “collectible tokens”.

Under the concept of “collectible token” some NFTs were able to continue to circulate in the Chinese market, albeit under strict regulations. One of these is that those who buy a token of this type must keep it for a minimum period of 180 days. The token cannot be transferred from one wallet to another in this period, as this would lead to fines.

Blockchain centralized and controlled by the State, nothing to do with Bitcoin

China has tried, on multiple occasions, to ban Bitcoin and cryptocurrencies in its territory. Although any transaction with this cryptoactive is currently considered “illegal”, China has already tried to close the doors to bitcoin 8 times, without any success.

Although it seems that China “hates” Bitcoin, it gives the impression that it does not hate its technology. The centralized blockchain on which the NFT platform is built is nothing more than a copy of the original technology used by Satoshi Nakamoto: Bitcoin.

The allegations of prohibiting the use of bitcoin and other cryptocurrencies in the country are based, among other things, on the possible “money laundering” that could exist with its use. This argument is usually based on the fact that it is not possible to know which person is behind each transaction (unless this person leaves “footprints” that give them away). However, In the China Blockchain Services Network, each user must verify their identity.

For now the platform is starting to see its first customers. As detailed by the South China Morning Post, the use of NFT technology would be oriented to very specific use cases such as the registration of car plates, which gives its owner the authenticity of its possession.



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