China is '6 years ahead' of US in building blockchain payment system, CEO says

·3-min read

The U.S. has fallen significantly behind China in the race to develop a blockchain-based payment system, Pantera Capital founder and CEO Dan Morehead told Yahoo Finance in a recent interview.

“China’s six years ahead of the United States in building a blockchain-based payment system,” Morehead said in a Friday segment on blockchain technology with Yahoo Finance Live.

China’s dominance in the blockchain space may propel America into action in the near future, according to Morehead, whose company is a hedge fund specializing in cryptocurrencies.

“The former CFTC Chairman Chris Giancarlo wrote a great op-ed in the Journal in 2019, calling it America’s ‘Sputnik’ moment, when China announced their blockchain,” Morehead said. “And there is going be a competition amongst nations to have the payment rail of the future.”

China accounted for 46% of the total bitcoin mining power in the world as of April 2021, according to research from the Cambridge Centre for Alternative Finance (CCAF) released on July 15. Still, this data came out before a bitcoin crackdown in China last month, spurring some miners to decamp for other countries.

Before the recent crackdown on bitcoin, China had already emphasized integrating blockchain technology into its financial system in a variety of ways. Back in 2020, China announced the first blockchain networks to be built and maintained by a central government. The network ran through 100 cities and was supported by both public and private enterprises.

HONG KONG, CHINA - 2021/07/22: Cryptocurrency electronic cash Bitcoin banner advertisement seen in Hong Kong. (Photo by Budrul Chukrut/SOPA Images/LightRocket via Getty Images)
HONG KONG, CHINA - 2021/07/22: Cryptocurrency electronic cash Bitcoin banner advertisement seen in Hong Kong. (Photo by Budrul Chukrut/SOPA Images/LightRocket via Getty Images)

China has also had its own crypto brand in the makings for several years, with this year witnessing the launching of the digital Yuan, China’s own digital currency. The currency operates side-by-side with bills and coins as of now, though it remains unclear whether it will totally replace physical money.

Though China has been one of the first nations to hop on the proverbial blockchain train, other countries have made significant strides, too. El Salvador made waves in crypto news after announcing earlier this summer that bitcoin would be accepted as legal tender, becoming the first country to do so. In Nigeria, crypto trading volumes have been extremely high: A 2020 online survey from Statista found that 32% of Nigerian respondents said they owned or used cryptocurrencies, the highest of any country surveyed.

Moreover, Kazakhstan recently saw a six-fold spike in its bitcoin mining share between September 2019 and April 2021, according to the July 15 research from the CCAF. During that same period, the U.S. saw its share go from 4.1% to 16.8%.

In the U.S., companies like IBM (IBM) have utilized blockchain technology to help support supply chains and construct a digital marketplace for intellectual property through non-fungible tokens (NFTs).

“I think two or three years from now, everyone will realize that blockchain is an asset class by itself and they’ll have a blockchain team and a blockchain allocation,” Morehead said.

Ihsaan Fanusie is a writer at Yahoo Finance. Follow him on Twitter @IFanusie.

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