Crypto Mastermind summary:
With more than 10,000 new startup blockchain-companies from January to July 2020, the total number of 2017 and 2018 has already been exceeded.
In the province Guangdong alone, there are currently over 25,000 companies operating in the blockchain sector.
The Chinese government has founded and supported various projects, that promote research and development of blockchain technology. An important goal for them is a blockchain-based governance system for the capital city Beijing.
In 2017, the Chinese government banned trading of cryptocurrencies and initial coin offerings (ICO’s). But their interest in blockchain technology has apparently never decreased since then. The Chinese central bank was financially supported to develop a blockchain based trading platform and many other blockchain-companies were approved. The corona crisis was obviously no reason for Chinese companies not to expand further. In the third quarter of 2020, the number of blockchain-companies in China is at a new all-time high.
The number of new blockchain-companies in China is constantly increasing
A report published by the crypto-data platform LongHash shows, that more than 10,000 new blockchain-companies were launched between January and July 2020. This means that the number of new start-ups in this area from 2017 and 2018 has already been exceeded and is already close to the 2019 level. In total, more than 91,000 blockchain-companies are currently registered in China. However, only about 30,500 of them are really active. The others have either lost their legal basis or no longer have licenses.
Most of the start-ups are located in the Guangdong province in the southeast of China, where there are over 25,000 blockchain-companies. The city of Shenzhen, a growing pole for companies specializing in new technology, is located there. Second Place is Xinjiang with over 5,400 blockchain startups, where the abundance of coal makes energy for crypto-mining cheap.
However, Bai Liang, the deputy director of the Chinese Institute of Digital Asset noted in 2019:
„The reality is that… 96% of the more than 30,000 blockchain companies in China are not actually operating with blockchain as their core technology.“
Also, according to PAData, many companies that claim blockchain technology as their core business do not use it as their main basis.
It is also remarkable, that according to the LongHash report, most startups in this area start with only about 5,000 yuan (about $720). Some have a starting capital of over 50,000 yuan (about $7.200), which still seems relatively small for a start-up company.
Chinese government is actively promoting the development of blockchain technology
The fact that the interest in blockchain technology in China in general has increased a lot, especially recently, is probably also because of the announcements of the government.
President Xi Jinping praised the advantages of the blockchain in 2019 and encouraged investment in its development and research:
„We must see the blockchain as a major breakthrough for independent innovation of key technologies. We need to increase investment, focus on key technologies and accelerate the development of blockchain and industrial innovations.“
The Chinese Ministry of Human Resources and Social Security put blockchain jobs on its official list. Also, the project ‚Blockchain Service Network‘ was founded, which links national goals in this area with the new companies.
Recently, China also announced plans for a blockchain-based governance system for the capital city Beijing. In Beijing alone, there are now over 140 public service companies based on blockchain technology.
It remains interesting to have a look on which of the start-ups will survive and how China will continue to expand its developments in this area on the part of the government.