Chinese Authorities Probably Want to Exploit Blockchain to Secretly Monitor Citizens

By CCN.com: In modern times, China has worked to consolidate state power over individuals. Local authorities are trialing systems to control peoples’ social standing, access to jobs, and even where they can go. Until now, one refuge for its citizens has been in the wooliness of time; not even the all-powerful Communist party can always measure where people go, when, and what they do.

But, with a state-mandated blockchain, this could begin to change.

Those inside China will be aware of the fate that awaits Bitcoin and other major cryptocurrencies; these will not survive if the state is unable to exert control. Types of blockchain adopted by the Chinese will become, like so much else in the country, an instrument of state power.

The National Development and Reform Commission (NDRC) shows open hostility to crypto and moved early last month to eliminate Bitcoin mining under an initiative to stop “wasteful and hazardous activities”. The world’s largest cryptocurrency now risks seeing a widespread shutdown of its biggest mining operations.

China Bitcoin mining, Bitcoin mining, bitcoin
China is discussing a blanket ban on bitcoin mining, a move that could have drastic repercussions for the ongoing rally. | Source: Shutterstock

Dreaming in Bitcoin

The People’s Bank of China holds a tight grip on the yuan and has placed severe restrictions on cross-border transfers. And, unlike similar institutions in other countries, monetary policy is directed by top government officials rather than the bank itself.

Key to state aims is restricting the ability of wealthy Chinese looking to untie themselves in part from the national economy by sending capital abroad. Though a sound move to diversify personal risk, it is not one that the government looks upon favorably: their crackdown on Bitcoin ramped up after it became apparent the coin was being used to circumvent strict controls on the movement of money abroad.

“The NDRC’s move is in line overall with China’s desire to control different layers of the rapidly growing crypto industry,” said Hong Kong-based investor Jehan Chu to Reuters. “I believe China simply wants to ‘reboot’ the crypto industry into one that they have oversight on, the same approach they took with the Internet.”

We Know What You Did

Tying in blockchain trials with social credibility ranking in new internet courts makes sense for Chinese authorities. Here blockchain becomes useful for litigation over the digital lives and dealings of people.

Zhang Wen, president of Beijing Internet Court, told the state owned Global Times that initial tests had been a success:

“Of the 41 cases concluded so far, parties chose to settle out of court rather than litigate in 40 cases with compelling evidence from blockchain,” he said. “This fosters social credibility development in the country.”

The alternative to having a positive social credit score is, of course, to have your undesirable behaviors punished. Bad social credit might place you on a ‘List of Dishonest Persons Subject to Enforcement’ which could disqualify you from buying a plane ticket or even see you publicly shamed at the new Avengers movie premiere.

Right now, this is contingent on the courts proving your poor behavior and blockchain helps by offering a data snapshot of time that can never be altered. As leaders continue to seek more ways to collect data on citizens, blockchain could become another tool in securing state dominance over the lives of its people.

China's surveillance of its citizens is unprecedented and unlike anything in human history. | Source: Shutterstock

Lying at the heart of a recent report by Chinese authorities is the potential for blockchain to settle court cases much more efficiently and it draws a comparison to a similar trial in Vermont, USA.

But there is a key difference... An authoritarian government fascinated with collecting and analyzing data from as many of its 1.3bn citizens as possible does not bode well for improved individual freedoms: blockchain actually opens up avenues for the Chinese government to collect broader categories of data and use that as a way to consolidate political power.

Massive and often crowded urban sprawl has already taken space away from the vast population who moved from the open countryside into China’s megacities.

Blockchain, combined with endless sensors and data points, may just help to keep track of each person so well that – in the future – citizens’ daily actions can too become the property of the state.

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Justin OConnell

Justin is the founder of Cryptographic Asset

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