China’s Decision to Choose Ethereum Over its Own Blockchain NEO is Monumental
The Xiongan government, in charge of building Chinese President Xi Jinping’s dream city the Xiongan New Area, has chosen Ethereum over NEO, a local blockchain network, along with its decision to employ New York-based blockchain studio ConsenSys as the blockchain consultant for the Chinese government.
ConsenSys is a blockchain studio with more than 600 Ethereum developers and in-house entrepreneurs that is operated by Ethereum co-creator Joseph Lubin. Throughout Asia, Europe, and the U.S., the ConsenSys team has cooperated with regulated financial institutions, governments, and businesses to commercialize the blockchain.
Over the next few years, as a part of the agreement, ConsenSys will develop blockchain tools and software solutions built on top of the Ethereum blockchain to be used by the residents and businesses of the Xiongan New Area.
“As one of our first major projects in the People’s Republic of China, we are excited to help define the many ‘use cases’ that could benefit from the trust infrastructure enabled by ethereum technology,” said Lubin.
The appointment of ConsenSys to lead blockchain development by the Xiongan government was unforeseen by local analysts, given the Xiongan government has never brought in a foreign company or contractor in completing the construction the Xiongan New Area.
The government distributed most of the technology development contracts to Tencent, Alibaba’s Ant Financial, and Qihoo 360, local internet conglomerates valued at hundreds of billions of dollars.
Historically, the Chinese government has been reluctant towards offering contracts to foreign companies, primarily to maximize the potential of local companies. In the past decade, the government banned Facebook, Google, and YouTube, to ensure local firms such as WeChat, Qihoo 360, Baidu, and Renren dominate the local technology industry.
China’s preference of local companies was demonstrated in the aftermath of the imposition of a cryptocurrency trading ban in September of last year. After disallowing digital asset trading, the Chinese government has continuously supported local blockchain startups and projects such as NEO, Qtum, and VeChain.
In April 2018, the Chinese government created a $1.6 billion blockchain fund to finance emerging companies in the cryptocurrency and blockchain space., called the Xiongan Global Blockchain Innovation Fund.
It is possible that the Xiongan government allocated some of the capital secured from its Blockchain Innovation Fund to finance the operations of ConsenSys within China and its contributions to constructing the Xiongan New Area.
Optimistic for Ethereum
The Chinese government’s most recent blockchain rankings released this week had EOS and Ethereum at the top of the list, based on two primary criteria: applicability and technology. NEO, a blockchain network developed by Chinese entrepreneurs and developers, ranked fifth behind Nebulas and GXChain.
China Central Television (CCTV), a state-owned television broadcaster, also reported that blockchain technology has the potential to become ten times larger than the internet, echoing the enthusiastic stance of the Chinese government towards the rapidly evolving technology.
The selection of Ethereum over NEO, VeChain, Qtum, and other blockchain networks created by Chinese institutions signifies the seriousness of the Chinese government and its initiative to commercialize the blockchain and to increase the adoption of the new technology.