Blockchain endorsement from China’s Xi Jinping could lead to fraud and speculation, technology analysts warn
- The endorsement from China’s leader prompted a surge in the price of bitcoin, while development companies and institutions celebrated the blessing for the industry
- Analysts, though, are wary that it could lead local officials, tech start-ups and cryptocurrency investors to misuse and distort the technology for their own gains
China’s blockchain technology frenzy following President Xi Jinping's endorsement last week has raised concerns over the potential for fraud as well as duplicate or worthless projects.
The technology, which is virtually unknown to the general public and is in early stages of application in China, underlies bitcoin and other cryptocurrencies, many of which are still banned in China.
However, Xi said China should treat blockchain as a vital technology that would allow the country to master other areas of the digital economy.
Analysts are now wary that Xi’s endorsement could lead to interest groups ranging from local officials to tech start-ups and cryptocurrency investors to misuse and distort the technology to further their own agendas.
“When there is high level political support for a technology, the sceptics who point early to the risks are drowned out by people who fall into the right political line and trumpet the technology,” said Martin Chorzempa, a researcher from the Washington-based Peterson Institute for International Economics.