- VeChain has a favorable relationship with the People’s Republic of China despite cryptocurrency fallacies.
- Local media reports VeChain is participating in China’s 5 year national development plan.
- VeChain’s enterprise-grade blockchain solution is resilient to China’s cryptocurrency restrictions because of its part decentralized governance nature.
Technology’s purpose is to create a cohesive global ecosystem fostering faster data and information access. However, regulations and political standing mean nation-states can dictate the role technology plays in their societal spectrum. Blockchain’s anonymity and immutability has been a cause for concern for nations that already control the flow of information. Developing an audited and controllable blockchain solution is a countermeasure that is taking shape, with China already planning a nationwide Blockchain Service Network.
VeChain’s Resilience to Disruptive Decentralization
VeChain was initially developed as a subsidiary of the Chinese blockchain firm, Bites. While decentralized blockchains have garnered a bad reputation in China for their anonymity and lack of traceability by governmental tracking, permissioned enterprise blockchains have gained traction.
China viewed blockchain as a concern before researching new avenues of expanding blockchain into a comprehensive governmental tool to enforce their state laws above anything else. An EU Institute for Securities Studies brief underlines China’s interest in a “highly centralized” blockchain, where the government can guarantee “state-controlled” governance and development.
VeChain, and other enterprise-oriented blockchain solutions, are becoming impervious to the Chinese authorities’ clampdown on cryptocurrencies. VeChain’s proof of authority consensus mechanism and its business clients make it easily auditable, thus meaning it poses minimal concern. Moreover, servicing enterprise clients such as Walmart, and sovereign nations like San Marino, necessitates trust-building through company transparency and examination. As a result, VeChain is becoming a favored blockchain solution in China.
A local media report indicates that VeChain had been included in China’s 5 year national development plan, as the country intensifies its focus on blockchain’s application; specifically their digital e-yuan and their local Blockchain Service Network.
In a tweeted report, VeChain Foundation confirmed a meeting with Chinese government officials from Shanghai, Changing, and Huangpu provinces. In their Singapore held meeting, Deputy Director for the Changing District, Pan Min, “repeatedly” lauded VeChain’s development and integration. Furthermore, the meeting included the scope of explaining how VeChain integration can influence the corporate sector, as it has done both within and without China.
VeChain is thus overcoming governmental bottlenecks by increasing its exposure within China itself, and partaking in China’s 5-year blockchain plan alleviates some of the geopolitical pressure. Additionally, on July 7th, VeChain participated in the Chinese Food Safety Summit as the only enterprise blockchain provider at the conference.
On The Flipside
- The price of VeChain could become more heavily influenced by the global perception of China than by Bitcoin’s volatility.
- VeChain could be susceptible to international embargos if countries were to decide the protocol has stronger ties to China than other countries.
- VeChain could be faced with the difficult choice of deciding where to conduct business.
Geopolitics for Chinese Crypto
Global concerns about a Chinese digital hegemony are growing, as a report from Pew Research Center indicates, China’s public perception is heavily decreasing outside Asia. Martha Bennett has also asserted that there are growing concerns of the number of Chinese state-owned or controlled entities that engage in international activities. Regardless, China is expected to have the highest growth in blockchain adoption as it favors its already digitized infrastructure.
Still, Jim Breyer posits that geopolitical divisions are harmful to the global good. While his statement doesn’t directly refer to blockchain, it could be argued that a worldwide blockchain solution similar to that “applied at scale in China” could help to achieve the “best outcomes.”
China’s attitude so far has been to become the global “rule-maker” in blockchain. The US and other countries have already cautioned against using Chinese blockchain applications such as the e-yuan. In that regard, VeChain has managed to bypass suspicion on both sides.
While VeChain is a stand-alone blockchain service, it services more than one entity and is not solely interested in serving China’s interests, at least not yet. VeChain has implemented its VeTrust solution on a large scale in over “200 public spaces” in China. Additionally, VeChain has also been implemented in San Marino. In that regard, VeChain has avoided the ire of national governments as its driving force is financial.