China seems to be going all-in with the mission to integrate blockchain technology into the state machinery and the world probably shouldn’t ignore the possible ramifications. Especially not now — after President Xi Jinping’s open and substantiated endorsement of the technology a few days ago.

No doubt, the Chinese President’s speech was bullish for the still-nascent-but-promising technology and highlighted its potential in various walks of life. However, beneath the surface, there was enough substance to cause worry among the proponents of a free and democratic Chinese society.

These worries are perhaps justified too considering the communist regime’s questionable reputation with human rights in Tibet, Hong Kong, and even in Mainland China.

A Blockchain-Powered Orwellian Dystopia

For those out of the loop, Xi has made it abundantly clear during his iconic speech that the Chinese blockchain community should rule the roost by setting policies and conventions globally, as BeInCrypto had reported previously.

Of course, there’s nothing wrong with wanting to see your country spearheading the development and adoption of potentially revolutionary technology.

However, the Chinese government is notorious for blatantly misusing technology to suppress dissent and infringe on the civil rights of nearly 1.5 billion people. Case in point — the mass surveillance system with highly sophisticated facial recognition, the Great Firewall, and the truly Orwellian social credit scoring system.

Going by these past trends, it would be too presumptuous to think that President Xi’s government will refrain from reinforcing these draconian systems with blockchain technology and its offshoots. The likelihood of just the opposite unfolding is going stronger by the day with the government being ever so close to releasing its own digital currency.

Potential Danger From China’s Digital Currency

Despite all the obvious benefits, a cashless economy also has its fair share of drawbacks — especially when an authoritarian regime controls all facets of the digital monetary system. In the case of China, it’s soon-to-be-released will be a yuan-pegged digital currency built atop a permissioned ledger. That is quite unlike any blockchain-powered digital asset such as Bitcoin or Ethereum.

Because the underlying ledger itself is permissioned and issued by a centralized authority, the Chinese government will enjoy total control over the network. Furthermore, the digital wallets required to store this digital currency will also be issued by the central bank, giving the government unrestricted access to all transaction data.

Once the government has total command over this enforced-cashless economy, the use of blockchain for tightening its grip over the population becomes even easier.

Blockchain for Social Credit and Digital Tracking

The government in China already controls the country’s cyberspace with an iron fist. State-sponsored censorship of content critical of the government is rampant and so is the unapologetic monitoring of online traffic.

A blockchain-based system in the disguise of social welfare schemes can further add to these diabolical practices. For example, any such system can allow the government to store digital identities of citizens on a blockchain and then use the same system to conduct real-time monitoring of their movement, financial transactions, social media accounts, and other digital footprints.

With a whole range of interconnected databases, any such network is likely to be a lot more comprehensive as compared to even the most intrusive surveillance programs in Western democracies, or for that matter, in most parts of the world.

Worse even, a blockchain network capable of tracking citizens in real-time will add more to teeth to the Chinese government’s social credit score system, which basically ranks citizens based on their ‘social value’ and loyalty to the government.

A lower-score on this draconian credit score system can have far-reaching consequences that go far beyond the realm of personal finances. For example, a low social credit score can render citizens unable to find good employment or even send their children to good public schools.


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Shilpa Lama

Shilpa is a network engineer and management graduate who is deeply passionate about artificial intelligence and blockchain technology. She has been associated with several leading science & tech publications throughout her career as a journalist and columnist. Full-time foodie, semi-skilled musician, wannabe novelist.

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