In a working paper, “What Can Blockchain Do and What Can it Not?” the Central Bank of China, People’s Bank of China (PBC) advised the government to checkmate the Blockchain industry because of its uncertainties. According to the Bank, there are a lot of bubbles in the industry which could lead to financial risks.
The paper which was released on Tuesday, Nov, 6, describes Blockchain Technology from an economic point of view. It was written by Xu Zhong, Zou Chuanwei, a member of China’s Financial Forty Forum (CF40) and PBoC’s Director of the Research Bureau.
In the paper, the Director stated that;
Speculation, market manipulation and other irregularities in blockchain-related investment and financing are common in the country.
Therefore, the government has been advised to monitor Blockchain investments closely to eliminate any form of irregularities that are usually accompanied by its schemes. On closer inspection of the paper’s content, it further outlined the fact that;
There are few blockchain projects that really land and produce social benefits. In addition to the low physical performance of blockchains, the shortcomings of blockchain economic functions are also important reasons. It should be based on continuous research and experimentation. Rationally objectively assess what the blockchain can and cannot do.
Although the economic analysis of the market’s volatility was what drew the attention of crypto enthusiasts, other issues relating to the industry were addressed in the paper. This were the uses, characteristics, and impacts of tokens on the Blockchain community, function of smart contracts, consensus mechanisms, trust in the blockchain field, and capabilities and limitations of the Blockchain technology.
The paper also reviewed the performance and security of the industry as well as the classification of the current applications of the Blockchain. Nevertheless, there was a disclaimer stating that these were only the opinion of the paper’s authors and not that of the PBC as a whole.
Yesterday, it was reported by BTCNN about the PBC’s position when it came to Airdrops. According to the Bank, these Airdrops were ICOs in disguise which was a going against the financial regulations governing token sale in China. The same view is held by the Chinese government who sees ICOs as a deceptive means of generating revenue.
It can be recalled that ICOs were banned in China as early as September 2017 and as such, the recent developments are not a surprise to the crypto space. Points like these raised by the government and its financial sector make it questionable if cryptocurrencies or the Blockchain technology will ever get full approval in the country.