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Report on China’s Blockchain Industry Weathering the Storm of COVID-19

The COVID-19 pandemic is threatening to plunge the world into the deepest disaster for the reason that Nice Melancholy and will deprive world economies of $5.5 trillion over the following two years. China’s financial system shrank for the primary time in 44 years. China’s gross home product fell by 6.8% within the first quarter in contrast with final 12 months. The pandemic was, naturally, responsible. Extra worryingly, year-on-year retail gross sales fell drastically in March. Outlets, workplaces and factories are actually beginning to reopen, however folks stay anxious and motion is restricted. 

Nonetheless, China’s enterprise is at present recovering from the horrible monetary hangover attributable to the virus. On this report, Cointelegraph Consulting talks to the main gamers within the Chinese language blockchain business to search out out whether or not the surge is related for them or not.

Digital currencies

Bitcoin (BTC) and different currencies have bounced up and down for the reason that pandemic began, but it is perhaps white noise hiding the true change within the crypto panorama: surging curiosity each from the plenty and governments. 

The pandemic has highlighted the fragilities within the conventional monetary market, so customers might shift their attitudes towards cryptocurrencies. Quite than being alarmed by the crypto market, folks can anticipate it. There are three most important causes for wider crypto adoption: inflation of conventional cash, lower of the rates of interest of conventional belongings and higher management of the levers of the financial system by authorities. 

As governments pump billions of {dollars} into their economies, inflationary strain will develop within the subsequent few months. For the inhabitants, it means their cash will progressively depreciate. “Naturally the query arises, how do I keep the worth of my belongings?” mentioned Josh Goodbody, the director of progress and institutional enterprise for the European and Latin America areas at Binance. He added that “folks will begin seeing crypto as a viable resolution to this drawback.”

Many governments have eased their financial insurance policies in response to the coronavirus disaster. Central banks have reduce rates of interest to zero or near-zero charges, and buyers who eke out higher returns may flip to the world of crypto. “Extra belongings will shift from low interest-bearing conventional funding automobiles to crypto ones for greater returns potential,” mentioned Alysa Xu, the chief technique officer of OKEx. 

The necessity for critical authorities intervention within the financial system is at present justified by the situations the disaster dictates. Governments all around the world have taken management of areas which have been liberalized, from costs of particular merchandise to the choice of industries which are allowed to proceed working throughout quarantine. Nonetheless, the reverse measures may not be that fast. Cryptocurrencies could also be a silver lining to this. 

As for the authorities, the continued coronavirus pandemic has accelerated the event of central financial institution digital currencies. Whereas money and ATM use is plunging as a result of potential an infection danger issue, authorities stimulus packages indicate money giveaways. On the lookout for the choice to money, authorities have been reevaluating their methods in favor of CBDCs. “Politicians within the U.S. and Europe take into consideration how a central financial institution digital foreign money might work in follow — that is massively encouraging for the crypto business,” mentioned Goodboy.


Blockchain has been part of Chinese language information protection since October 2019, when President Xi Jinping backed the know-how and set a course for the nation to “seize the chance” introduced. The virus has did not gradual this notion down, with main nationwide initiatives concerning consortium chains and a central bank-issued digital foreign money persevering with the passion.

One main announcement got here within the type of a nationwide blockchain community set to launch in April, because it was initially scheduled. The Blockchain-based Service Community was backed by an alliance of Chinese language state-owned firms, authorities businesses, banks and know-how firms. The BSN is anticipated to cut back the prices of doing blockchain-based enterprise in China by 80%. By the tip of 2020, the venture might cowl greater than 200 cities and turn into an instance for a worldwide normal.

Chinese language authorities are additionally steaming forward with their plans to launch their very own digital foreign money. The Folks’s Financial institution of China has already accomplished primary perform improvement for a digital yuan. This previous week, photos of its new digital foreign money/digital fee pockets leaked on social media, indicating that it has each intention of pushing the digital foreign money into institutional and shopper markets.

Regardless of the financial fallout, China has additionally been persevering with the mental race. Whereas main multinational firms together with Microsoft, Walmart, Mastercard, Sony and Intel had utilized for a complete of 212 blockchain patents as of the tip of March, their variety of patents was inferior to the quantity from Chinese language firms in 2019, and it’s anticipated that this pattern will proceed. The general variety of blockchain patent purposes may not exceed final 12 months’s results of 5,800 filings, but getting near that determine in such a turbulent 12 months would testify to the wholesome improvement of the know-how.

Alibaba subsidiary Ant Monetary additionally grabbed the highlight by asserting its new consortium chain referred to as OpenChain. It’s concentrating on the extremely aggressive consortium chain market, which incorporates almost all the main tech firms on the earth. Ant Monetary’s platform Alipay is likely one of the largest cell fee processors on the earth, with a well-established providing of economic companies.

Total, the pandemic hasn’t hindered the event of the Chinese language blockchain business severely, so a fast restoration will occur simpler than for different industries. Nonetheless, a deeper dive into the sectors can reveal the consequences and responses of companies there. 

Business segments, blockchain platforms

The COVID-19 disaster gave platforms a robust get up name concerning danger and finances administration. For those who fail to adequately handle the scenario, the specter of insolvency is a robust chance. In early April, the general public blockchain platform Factom did not obtain extra funding and was transferring towards a potential liquidation of belongings. 

For different platforms with better-managed money flows, the COVID-19 disaster has been much less detrimental. Right here’s a better take a look at how 4 platforms with workplaces in China have managed the disaster:


With a give attention to enterprise use circumstances, VeChain has acknowledged the problem that COVID-19 is posing to a lot of its shoppers. The virus had an unavoidable impression on consumer improvement, permitting groups to show assets towards different areas of progress. VeChain took the chance to give attention to its core software program providing, corresponding to a brand new model of its ToolChain blockchain-as-a-service platform, which helps shoppers confirm merchandise and grant perception right into a product’s information, manufacturing and provide chain processes. VeChain’s chief working officer, Kevin Feng, instructed Cointelegraph that: 

“The COVID-19 outbreak has raised public consciousness on product authentication and transparency of the availability chain administration particularly on these merchandise which are associated to shopper every day life. We’ve got noticed a major shift in shopper habits, and other people now have a higher urge for food for getting merchandise on-line and cell purposes.” 

Feng additionally acknowledged that the COVID-19 disaster was exposing ache factors in industries all around the world, particularly in areas like administration, digitalization and implementation. Even with the rising consciousness of blockchain adoption, Feng believes that the monetary challenges of the pandemic will make pouring extra funding into new applied sciences a tricky choice for companies to make. This operational freeze offers VeChain extra time to safe its place available in the market and put together for when companies determine to maneuver on innovation. Feng concluded: 

“Underneath the unprecedented demand for cloud-based companies and IT companies, the blockchain know-how that serves because the underlying infrastructure powering digital transition has emerged as a complicated possibility for enterprise decision-makers.”


Ontology is one other main platform tackling enterprise blockchain use circumstances. Through the preliminary outbreak in China, the corporate swiftly adopted a work-from-home technique and relied on its world community of workplaces and companions to proceed operations with minimal disruption. Its decentralized venture construction meant employees had been already accustomed to working remotely, which helped keep stability. Like most of China, Ontology’s workers are at present required to disinfect workplaces, put on face masks and report temperatures every day.

From an operations perspective, Ontology is dedicated to finishing its 2020 technical roadmap. Named “Aristotle,” it contains many necessary milestones corresponding to cross-chain performance with Ether (ETH) and Bitcoin, distributed identification options and ensuring its blockchain digital machine is appropriate with the newest sensible contract frameworks, corresponding to Wasmjit.

Ontology’s co-founder Andy Ji believes that the lockdown in China might have created bodily distance in comparison with workplace work, however however it surprisingly has introduced extra motivation, effectivity and vitality to its every day operations and has allowed the corporate to be extra targeted on reaching its targets. 

Ontology took up the battle towards COVID-19 by sending masks to blockchain charities in China and becoming a member of the #cryptoCOVID19 marketing campaign by donating funds to carry the disaster to an finish. As well as, the corporate has continued to supply on-line programs to builders and college students worldwide and even partnered with freelance work platform Microworkers to hurry up employees’ funds. 


PlatON is a public blockchain platform with a give attention to information trade and privateness. Through the preliminary outbreak in Wuhan, round 5% of its group was locked down with out entry to correct working services. The group developed a web based management system to ensure it was on monitor whereas working remotely. It additionally acknowledged that numerous neighborhood and freelance builders had been out there, so it aggressively adjusted its improvement grants. 

The corporate’s chief know-how officer, James Qu, believes that the decentralized tradition of blockchain helped make the transition clean. The corporate targeted on stability and technical upgrades early on, serving to to get its operations in control. It has additionally been eyeing the profitable consortium market now that authorities and enterprise demand in China is constant to rise. Its know-how has already been utilized in a lot of profitable consortium chain tasks within the nation.


QuarkChain gives an underlying technical resolution for blockchains primarily based on sharding know-how. As a technology-driven firm, it has managed to take care of operations whereas its 40 workers unfold all over the world have continued to work on an infrastructure that connects each consortium and public chain know-how. QuarkChain’s chief advertising and marketing officer, Anthurine Xiang, reported that regardless of some client-side delays, it has had extra time to spend money on analysis and improvement.

Xiang mentioned that following the outbreak, nations like China started to rethink learn how to construct up extra superior infrastructure to higher reply to massive scale occasions like a public well being disaster, including: “We’re offering the federal government with a number of venture options for the general public well being system, corresponding to blockchain options, useful resource administration, and buying and selling platforms.” 

Crypto exchanges

The pandemic threatens the sustainability of many bodily enterprise fashions, however for on-line fashions it has been a chance to attach with their consumer base and broaden. Given the worldwide lockdowns, buyer demand has been pushed from offline to on-line. OKEx’s chief technique officer, Alyssa Xu, believes this may result in wider acceptance of digitalization and in the end profit the popularization of the blockchain-driven financial system. She acknowledged in a dialog with Cointelegraph:

“Because the virus outbreak in January, the trade has a gentle progress in fixed, whereas it estimated a 19% enhance by way of buying and selling quantity throughout early March.”


Xu believes that the pandemic is a take a look at of how urgently an organization can reply and adapt to adjustments available in the market situations of its prospects. She was more than happy with how OKEx’s platform responded to the “Black Thursday” market crash on March 12. Regardless of an enormous decline within the costs of crypto, the buying and selling system maintained zero clawback and withstood the volatility and chaos. Xu now needs to make the most of elevated consumer quantity to widen the corporate’s vary of companies, together with crypto derivatives merchandise and public chain-based decentralized finance purposes.


Binance reported a sturdy first quarter efficiency, attributing it to the report excessive quantity throughout its platform and the crypto market on the whole. With the robust consumer exercise, Binance has responded by rising its group throughout all areas by 100 workers. 

Goodbody, Binance’s director of progress and institutional enterprise, felt that the quantitative easing and stimulus packages from central banks might result in financial instability. Politicians and world governments might flip to CBDCs as a technique of distributing stimulus packages, which he believes is an encouraging signal for the business.

With every thing working easily, Binance was capable of flip to philanthropy. Binance Charity launched the Binance for Wuhan initiative and donated $1.5 million price of medical provides to hospitals, medical facilities, and so on. In March, Binance Charity launched the Crypto Towards COVID initiative, aiming to boost $5 million for nations worst affected by the virus.

Enterprise capital corporations and incubators

As the worldwide lockdown continues to final, firm revenues might be undermined or reduce off completely. That is the place enterprise capital corporations and incubators turn into extra necessary than ever, as entry to money and investments might be the distinction between insolvency and survival. 

Shanghai-based enterprise capital agency Hashkey Capital noticed that many enterprises are struggling to boost capital, forcing them to decrease fundraising targets. Its funding director Yu Zongmin famous that: “It’s a nice alternative for us to search out higher worth within the present market. For the operational technique, we might increase the bar greater for latest investments and focus extra on the industrial maturity and money movement of the tasks.” He went on so as to add that: 

“A constructive end result from the disaster is the rising participation and connectivity of individuals within the digital world. Individuals are minimizing in-person contact by way of mediums corresponding to e-commerce, e-school, e-clinic and e-cash. This has performed a pivotal position in containing the virus unfold. The blockchain sector might drastically profit from the booming improvement of the worldwide e-cash ecosystem. We’re very optimistic about this business as all the time, and can proceed to actively search for prime quality and worth pushed tasks to spend money on.”

China-based know-how incubator New Chainbase was working to accommodate a lot of its tasks. Its operations ranges have returned to regular, however it’s providing a reduction plan for start-ups renting workplace house from it. New Chainbase has a long-term monetary curiosity within the blockchain house and has remained optimistic that industries will see the belief that blockchain gives as a vital know-how transferring ahead.

Fenbushi Capital, one other large business participant with workplaces in Shanghai, New York and Silicon Valley, is not any stranger to working in a decentralized method. Its operations have remained fairly steady, however it has noticed that firms in its portfolio have been performing sure price controls, together with employees discount and decreasing their working prices. Fenbushi Capital accomplice Rin Huang attributes this to 2 elements: First, the disaster has pressured a discount in enterprise quantity and the businesses don’t want so many individuals. Second, the general financial scenario is unsure as a result of disaster and firms want to take care of enough money movement.

Huang famous that for her every day position, the disaster has had little impression. With visitors jams already again within the streets of Shanghai, her routine has returned, with the exception that many processes are actually performed on-line. She sees blockchain having extra alternatives in enterprise conditions corresponding to traceability of medical provides: “With a view to stop potential counterfeit medical gadget merchandise, the federal government started to vigorously promote the availability chain of medical gadget merchandise to be traceable on the blockchain.” Moreover, the know-how may also help in digitizing the industries:

“The digitization of the buyer business in China has been properly developed, and the emergence of the disaster has additional promoted the digital communication system throughout the administration strategy of the enterprises. The principle position of the blockchain at this stage is to hash the necessary data for inner communication on the chain.“


The Bitcoin mining hash charge has been climbing persistently, however the upcoming halving occasion and macroeconomic instability has led to uncertainty within the mining neighborhood. Nathaniel Yu, the worldwide advertising and marketing supervisor of mining chief Bitmain, understands the significance of normalizing operations proper now. He acknowledged that whereas Bitmain is following skilled recommendation for coping with the pandemic, it is usually exploring alternate strategies of working with the intention to meet demand for its Antminer merchandise. In a dialog with Cointelegraph, Yu acknowledged:

“Throughout these unsure occasions, one of the best ways forward for the mining business is to proceed to adapt their operations to make sure the protection of all workers comes first. Miners can even must assess their operations to make sure they’re working as effectively and successfully as potential throughout this time.”


Like different on-line enterprise fashions, many media websites are reporting a bounce in viewers as folks usually have extra free time on their fingers. Two main Chinese language blockchain media websites, 8btc and Odaily, confirmed in interviews that they’re each optimistic in regards to the business transferring ahead. 

Gavin Qu, a accomplice of 8btc and the CEO of ChainNode, believes that the present scenario might be advantageous for on-line firms with a wholesome money movement. Qu defined how ChainNode moved shortly to develop a web based product launch convention service to assist enterprise companions carry their offline conferences and product bulletins on-line by way of dwell video on the platform. He believes that the significance of on-line occasions will turn into higher even after the pandemic, as China’s cell web infrastructure continues to maneuver towards 5G know-how. 

Mandy Wang, the CEO and co-founder of Odaily, talked about how the corporate has shifted a lot of its operations to a web based mannequin for the reason that pandemic started. Considered one of her editors was initially locked down in Hubei province, unable to return to the corporate’s Beijing workplaces. She spoke in regards to the challenges of conducting all interviews over the cellphone and transferring all offline occasions on-line. On April 10, Odaily held an all-day convention with over 30 friends in a web based streaming format. 

With chaos gripping the worldwide markets, she reported a rise in views by round 20%. She accredited a part of that success to rising the corporate’s working effectivity and danger management administration insurance policies, which she believes will turn into a higher topic of focus for enterprises in China transferring ahead.

The following steps

For an business constructed on a decentralized rising know-how, it’s no shock that the blockchain world has embraced the distant working and video conferencing actuality. Know-how and agile administration has managed to normalize many enterprise processes, however disruption to different industries has made it tough to boost funds, develop new shoppers and oversee bodily implementation of enterprise companies. 

Excellent points within the aforementioned areas ought to be addressed as quickly as potential to forestall the lack of shoppers and guarantee budgets can face up to an prolonged interval of lowered income and third-party funding. 

With the majority of main offline occasions in quarters one by way of three worn out or moved to a web based format, it’s as much as advertising and marketing groups to search out new methods to advertise their companies. After the preliminary shock and subsequent organizational restructuring, there’s been heavy interindustry collaboration in China, with platforms, media and exchanges organizing on-line occasions to attach with new customers and their present communities. R&D and technical improvement groups have remained principally unaffected by the virus, needing solely minor changes to organizational processes.

Quite than panicking on the considered a possible financial recession, most business gamers are optimistic in regards to the long-term outlook, particularly contemplating the reactionary fiscal stimulus insurance policies which are being put in place by almost each main authorities. 

The businesses see digital currencies as each a possible resolution to financial distribution in addition to a sanctuary from inflationary foreign money insurance policies. Lastly, with China’s central financial institution and authorities businesses persevering with to restate their dedication to blockchain know-how and a nationwide digital foreign money, there’s little or no doubt that the businesses that adapt and survive will discover themselves in a really energetic and wholesome business sooner or later.

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