China President, Xi Jinping, wants to seize the opportunity to use the blockchain which seems both exciting and confusing to crypto advocates. The thought isn’t from technical site of the President, rather than he is actually in a different mindset entirely: somewhere between corporate blockchain consultant and ICO scammer. Blockchains are attractive for many reasons like no need of third party, low cost, space to rely at the time of tradeoffs. Blockchain belongs to an impact that it shortly convinced traditional banks that back-office functions were trendy and worthy investing in and blockchain is known to be a social technology.
Chinese Communist Party officials can redirect the hype towards other goals knowing blockchain to be a popular technology. There are two reasons for the president to care about using blockchain, one is a blockchain-based title system could solve a major problem in Chinese lending and another one is a new digital currency would give China a head start in escaping dollar hegemony, tying China’s economy more closely with Belt and Road Initiative investment receipts and Russia.
But currently dollar is dominating all around the world followed by euros and Yen and it’s the latter scenario that represents the most interesting blockchain application. US has a superior and dominating foreign policy tool that America even has gone after French banks for breaching US sanctions even their transactions were legal. US enforce policy goals and their dollar is globally accepted and that’s they belong to the place of complying.
As a number of companies do business in dollars and have dollar-dominated liabilities, the US can unilaterally cripple any major global financial institution. De-dollarizing the economy of China would be very tough and inconvenient. If China is thinking about this, it will raise panic and it is because staying on a dollar-based system is scarier than risking a crisis. On the other hand, there will be openness and progress, if China comes up with a cool new technology, a modern and decentralized system. It seems that China is thinking to come up with a new anonymous digital currency. Xi Jinping’s comment about blockchain skepticism and a nose for hype is more interesting that average.