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China is attacking blockchains.

In a recent decision, the Chinese government has said blockchain-based services must require users to use their real names, register their national identification card numbers, censor certain content, and store user data which authorities would have access to. These requirements are not only harsh, but they attack the core thesis of a blockchain.

The move by the Cyberspace Administration of China is not a complete surprise though. China already banned all cryptocurrency trading, any fundraising activities involving a digital token, and requires users to use their real identities/names on any non-blockchain social media service. If that wasn’t bad enough, the government also created new rules that allow it to show up to any business and review/take their data.

This entire situation sounds like a nightmare but we have come to expect it from the Chinese. Rather than get caught up in the dealings of the communist country, this recent move highlights a few things:

1. Non-democratic governments fear what they can’t control. Bitcoin, and blockchain more broadly, are built on the premise of decentralization, anonymity, immutability, and censorship resistance. These aspects of technology are in direct conflict with some governments and make the technology an easy target for regulation/enforcement.

2. Blockchain technology is working. Many people believe the Chinese government has quickly become interested in regulating non-currency blockchains because earlier this year a Chinese citizen posted an uncensored message to the Ethereum blockchain. The message described a sexual assault from many years ago. The anonymity and immutability of a message like this is hard to comprehend or accept for the communist party.

3. Blockchains will change the course of history. Before the internet, we all lived in silos and received all of our information from newspapers, radio and television. These large media companies told one side of stories. Now we have cell phones, user-generated videos, self-publishing platforms, Twitter, etc. People around the world are now empowered to tell the stories they want to tell, from their perspective. Imagine how powerful it will be to tell stories or send messages for a citizen living in a country where your government censors your access to information or your ability to tell your story.

Moving forward sovereign nations will have a choice — embrace blockchain technology or fight it. Some will choose to accept and encourage all blockchains and all applications (including Bitcoin). Others will decide to pick-and-choose which blockchains and applications they would like to encourage. And some small subset of governments will vehemently fight the transparency and empowerment of citizens that blockchains bring.

While China has been creating these absurd rules, the US’s SEC created a division to help crypto startups navigate securities law and Singapore’s sovereign wealth fund invested in Binance to help the company open an exchange in their country — very different approaches compared to the Communist Party of China.

In my opinion, history will be unkind to those that fight technological evolutions.

-Pomp

The “Off The Chain” podcast has been downloaded 120,000+ times in 120 countries. You can listen to the latest episode with Edward Woodford, CEO of SeedCX now: Click here for Off The Chain podcast

THE RUNDOWN:

Pantera Capital backs blockchain security startup's $5.5 million round: San Francisco-based smart contract security startup Synthetic Minds has raised $5.5 million for its bid to roll out a technology that analyses blockchain networks for coding bugs. Synthetic Minds said the round was backed by blockchain investment firm Pantera Capital and Khosla Ventures, a California-based venture capital firm focusing on internet startups. Read more.

Crypto lender Genesis reports robust institutional borrowing activity: Genesis Capital, the lending arm of over-the-counter cryptocurrency broker Genesis Global Trading, has recorded robust digital asset lending activity from institutional borrowers. The spin-off said that since launching in March, it had facilitated $553 million in digital currency loans. Read more.

Demand for blockchain engineers has grown 400% since end of 2017: The value of cryptocurrencies might be down in the dumps, but demand for blockchain engineers has never been higher. Blockchain engineers are making between $150,000 and $175,000 on average. That's quite a premium over the $135,000 salaries that typical software engineers earn on average, according to Hired, which uses data from its service to compile the stats. Read more.

Bakkt will start trading bitcoin futures on Dec. 12: The Intercontinental Exchange's upcoming cryptocurrency trading platform Bakkt will officially launch on December 12, pending regulatory approval. ICE announced Monday that Bakkt could begin offering physically settled bitcoin futures contracts in December, marking the first cryptocurrency-related offering provided through the new platform. Read more.

Crypto payments startup uphold launches lending products: Digital payments startup Uphold is launching new lending and earning products in partnership with crypto lending platform Cred. Uphold Earn and Uphold Borrow are designed to help customers earn interest from stablecoin holdings and borrow money against the cryptocurrencies they own, respectively. Read more.

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