How an Open Blockchain project got rare support from China

Conflux, a Beijing-based startup, has achieved a rare feat: gaining official support from the Chinese government for a public blockchain without authorization.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "When President Xi Jinping urged his compatriots to seize the opportunity enabled by blockchain technology last year, it did not encourage them to trade cryptocurrencies or launch Initial Coin Offerings (ICOs). On the contrary, the government has been crack down on ICOs and exchanges since the salad days of 2017. "data-reactid =" 20 "> When President Xi Jinping urged his compatriots to seize the opportunity enabled by blockchain technology last year, it did not encourage them to trade cryptocurrencies or launch Initial Coin Offerings (ICOs). On the contrary, the government has been crack down on ICOs and exchanges since the salads of 2017.

While China tolerates crypto mining and public network development projects like NEO, Qtum and VeChain, Xi was talking about authorized blockchains, a variety preferred by companies, where only approved parties can participate.

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In this context, Conflux has established important relationships with the authorities despite its open network projects. In December, it received an unusual approval from the Shanghai government, which plans to provide Conflux with grants and research offices.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Fan Long, co-founder of Conflux, credits large investors and the academic pedigree of the company. Founded in 2018, the company has raised 35 million contributors including Sequoia China and Huobi Group via a private token sale in 2018. "data-reactid =" 24 "> Fan Long, co-founder of Conflux, attributes the companies to large investors and academic pedigree. Formed in 2018, the firm raised $ 35 million contributors including Sequoia China and Huobi Group via a sale of private tokens in 2018.

At least 10 of the 18 members of the Conflux development team, including founders Fan Long and David Chow, have graduated from Tsinghua University's Best Computer Science Program.

The investment of serious support and the training of the company's core engineering teams make us trustworthy of the Shanghai government, which ultimately leads to its official public support, Long said. .

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Beyond the identification information, the company adapts the public blockchain model to the Chinese regulatory framework. He pledged never to launch an ICO or get involved in public sales of tokens in any form whatsoever, with the caveat that if a stock exchange were to list Conflux tokens for secondary trade, it would escape the control of the enterprise.

The Shanghai government will write research grants and has built a research institute for the company. He also plans to create an incubation center for Conflux from June. Among the projects of public channels, few have won such a imprimatur; a similar example would be Nervos, who works with the public bank CMBI.

Conflux plans to launch its main network in the next two months with the possibility of another sale of private tokens. The firm aims to attract strategic investors who could bring their decentralized applications (dapps) to the main network, said Long.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Like many Chinese companies, Conflux has been affected by coronavirus trigger. Everyone at Conflux works remotely from their home. The health of everyone in the business should not be endangered, said Christian Oertel, director of marketing at Conflux. "Data-reactid =" 31 "> Like many Chinese companies, Conflux has been affected by coronavirus trigger. Everyone at Conflux works remotely from their home. Everyone's health in the business should not be put in jeopardy, said Christian Oertel, marketing director at Conflux.

Blockchains without crypto

For many engineers, starting a symbolic project in China is a gamble on reputation. Developers see the stigma of cryptocurrency as more of a concern than technical challenges. Often the risk is not worth the potential reward.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Canceling the rise of blockchain scams, China see crypto as a threat financial stability. Money without borders could allow Chinese investors to bypass the tightening of capital controls. It can also make financial transactions more difficult to trace and weaken the ability of central banks to conduct effective monetary policies. "data-reactid =" 34 "> Putting aside the rise of blockchain scams, China sees crypto as a threat financial stability. Money without borders could allow Chinese investors to bypass the tightening of capital controls. It can also make financial transactions more difficult to trace and weaken the ability of central banks to conduct effective monetary policies.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "In the two lists released by the chinese government last year, the vast majority of blockchain projects that aimed to register with authorities have been cleared. "data-reactid =" 35 "> In the two lists released by the chinese government last year, the vast majority of blockchain projects that aimed to register with authorities have been cleared.

Almost all of the existing investments in decentralized public blockchain projects in mainland China come from the private sector, said Omer Ozden, CEO of the investment banking firm RockTree Capital, which invests in Chinese blockchain companies. It is rare to see a public channel with its own token gain official government support, he said.

But tokens are an integral part of these projects, he said. According to Ozden, the key issue is the value of tokens for non-crypto funds. Can traditional exchanges in mainland China list them?

If you look at investing in blockchain space, investors are more interested in finding use cases in different industries for corporate blockchain projects or blockchain platforms as service compared to public channels, said Chen Zhao, a CMCC partner based in Hong Kong Capital, which oversees blockchain equity investments in mainland China.

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