The Chinese government announced last Thursday that it will be ramping up efforts to promote the research and development (R&D) of blockchain technology and make it a core focus for innovative endeavors in the future.
Following the conclusion of the 18th collective study conducted by the Chinese government, Chinese president Xi Jinping emphasized that the integrated application of blockchain technology plays an important role in new technological innovation and industrial transformation.
Xi explained that it is crucial to take blockchain as an important breakthrough for independent innovation of core technologies, clarifying that the party must shift its focus to deepen R&D efforts, increase investment and focus on a number of key core technologies to accelerate the development of blockchain and industrial innovation.
Following Xi’s conclusive remarks, Chinese investors and blockchain companies saw a massive boost in stock prices, with most companies involved in blockchain initiatives reaching the daily growth cap of 10%, according to Chinese media.
Aside from Chinese optical product-maker Fujian Forecam Optics who saw a 15.79% rise in stock prices, other companies related to blockchain including Shanghai 2345 Network, Insigma Technology, Brilliance Technology and many more have all hit the daily 10% growth cap.
Although Chinese investors have surely augmented their injection of capital into blockchain-based companies, Chinese media reports have suggested that many have little understanding of how the technology really works.
Terms such as smart contracts, hashing, consensus mechanisms and more have been proving to be more than challenging topics on the subject of blockchain, but they have not deterred nor prevented the substantial investment into the space.
Xunlei, a Nasdaq-listed Chinese multinational technology company, saw its US stock prices boom by an enormous 107.8% overnight, closing at $4.82 per share as of October 25. Bitcoin also saw its price rise more than 30% overnight, breaking the $10,000 mark overnight on Friday.
According to the China Securities Journal, on the interactive platform of the Shenzhen Stock Exchange, over 468 questions were asked in the short span of two days regarding blockchain. The platform had previously recorded roughly 1,000 questions asked with regards to the topic in the past three months.
Yu Pengyi, columnist and writer for Guanchazhe (Social Watch), said in an article previously published on blockchain that he hopes the Chinese government will be able to educate people on the true value and potential that the technology entails.
Yu had previously urged people to not blindly speculate about technology that has not fully matured yet, saying, “The wave of investment in ‘blockchain’ was expected. But for those who really want to invest in new technology, they should not blindly estimate the value of blockchain. The technology can only reach its maximum potential after the corresponding provisions have been made. This is also the key to General Secretary Xi Jinping’s emphasis placed on ‘promoting’ and ‘exploring’ blockchain.”
The potential application for blockchain is vast, Yu explained. He hopes that the government’s effort in popularizing the use of blockchain will eventually “drive out bad money with good money” and “purify” the financial industry.