Behind China’s blockchain mania
Eager to make quick money, a growing number of fraudsters misuse budding technology, in some rather imaginative ways
At a time when everyone in China is talking about blockchain, it seems that only a few really understand how the technology truly works and how it can change people’s lives. Still, forums and events about blockchain are attracting a lot of attention.
One example is the so-called Boao Asia Blockchain Forum that was held in South China’s Hainan Province from Monday to Tuesday. It sparked harsh criticism online after it invited a Mao Zedong impersonator to give a speech at the event’s opening ceremony.
“I thank you all in the name of Mao Zedong,” said Xu Guoxiang, the impersonator, who sparked anger among some online users.
China’s laws forbid the use of deceased Chinese leaders for the purpose of commercial activities such as advertising and marketing campaigns.
Later, the forum’s organizing committee apologized for the negative impact caused by the speech, with one netizen commenting that the forum was “sensational without a bottom line, which is shameful.”
Surprisingly, some of the forum’s so-called sponsors claimed shortly after the incident that they in fact had nothing to do with the event. The official Boao Forum for Asia (BFA), where government officials and business representatives gather every year, issued an announcement later that day, strongly condemning the illegal use of its name and logo and assuring the event had nothing to do with BFA.
Why did so many legitimate organizations and companies hastily announce that they were not involved in the activity and that the forum had embezzled their logos amid online outcry?
The reason on everyone’s lips is that the event was undoubtedly a sham, intentionally attracting lots of public attention for the sake of the host’s promotional purposes, without even mentioning a word about blockchain technology.
However, this is not the only fake activity that reflects China’s blockchain mania. Recently, a photo went viral showing a group of middle-aged Chinese women posing in front of another so-called blockchain forum backdrop. And since the beginning of this year, fraudsters have been using blockchain in pyramid schemes to lure investors. For example, police in Xi’an, capital of Northwest China’s Shaanxi Province, have been cracking down on one particular purported blockchain pyramid scheme project, which accumulated 86 million yuan ($13.38 million) in 15 days.
Blockchain is a decentralized ledger of all transactions across a peer-topeer network. Using this technology, participants can confirm transactions without the help of a central clearing authority, and this technology can be widely applied in sectors such as logistics and finance, which can increase the transparency of transactions and help make tracking more accurate.
Furthermore, this is the technology that enables the existence of crypto- currencies. Bitcoin, the most famous cryptocurrency in the world, is forbidden in China in order to prevent speculative activities. As such, not all Chinese investors understand the true meaning behind blockchain. Some of them are simply attracted to high yields promised by some blockchain projects, without even asking how they actually function.
Stories of those who became rich overnight are always inspiring, said an employee of a blockchain project called “Beauty Blockchain” on her Weibo account. “After I joined the project, I met many pretty women in this business and we travel around the world. What I can say is that blockchain is really magical.”
In the case busted by Xi’an police, one fraudster surnamed Zheng, who used the concept of blockchain to sell tokens worth 3 yuan (47 cents) each on his online platform, claimed that the yield could be between 1 and 3 percent. One online user even spent 3,000 yuan, hoping to make fast, easy money.
China, also a hub of fintech, saw its blockchain patent applications surge in 2017, despite an increase in fraudulent cases where the concept is misused.
An engineer who works on applying blockchain in the insurance sector has harshly criticized those cases of fraud, which are likely to have a negative impact on the overall development of blockchain technology in China.