Be­hind China’s blockchain mania

Eager to make quick money, a grow­ing num­ber of fraud­sters mis­use bud­ding tech­nol­ogy, in some rather imag­i­na­tive ways

Global Times - Weekend - - TECH - By Chen Qingqing

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.

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