Crypto News | Blockchain Electrical Grid in China

In spite of the country’s cautious approach to cryptocurrencies, when it comes to blockchain innovation, China is often the forerunner. It has been revealed that in November last year, the China State Grid Corporation filed a patent that details using blockchain technology for tracking and recording how much power users consume. The information from this blockchain electrical grid would also be decentralized, shared, and stored on the blockchain. As you can infer from the name, the State Grid Corporation is owned by the state and is the sole provider of electricity in China, which makes it the largest utility company in the world. The Corporation aims to create the Internet of Energy, speculating that decentralized systems promise lower operational costs and better security. Blockchain electrical grid seems to be just one of many instances of using this technology, which is on the rise in China, with the Sinochem Corporation, the petrochemical giant, and the Bank of China, both testing blockchain technology, one to transport gasoline, the other to tackle scaling issues.

With China, the world’s second largest economy, driving innovation and research, the world is bound to take notice. And opinions will differ. This blockchain electrical grid is just the beginning.

James Surowiecki, financial expert at MIT Technology Review, says that a future where cryptocurrencies replace fiat currencies would resemble hell much more than utopia. He argues that the economy, particularly national economies, were designed around fiat currencies and the central bank’s control over them. Through that control, the government can fight unemployment, moderate the business cycle, and soften the blow of financial crises and recessions. In his view, an economy where cryptocurrencies are the main means of payment would be harsher, more volatile, and more prone to crashes, financial panics, and other disasters that would be hard to stop. Central banks exist first and foremost to provide liquidity. Even cryptocurrency exchanges rely on Tether, whose value is derived from the USD, as an important source of liquidity. Without a central bank, there would be no authority to issue debt and provide stability. Bitcoin is valuable due to its limited supply, but in case of a financial crisis, it would be impossible to print more BTC to save the day. Sounds great if you are dreaming of a debt-free economy, but many fear that such a dream may be impossible. Surowiecki does recognize, however, that there are thousands of cryptocurrencies out there, and he doesn’t rule out the idea that a different cryptocurrency may arise and do all those things that Bitcoin cannot.

A recent study published by researchers at ETH Zurich reveals that Bitcoin is overvalued, although, the paper says, this is not unprecedented. The “true” value of Bitcoin was calculated based on its network value. First Hal Varian suggested that the value of fiat currencies is derived from their network effects rather than government backing. Researchers then used Metcalfe’s law, intended for telecommunication networks, that says that a network’s value is proportional to the number of its users squared. Based on these calculations, they believe that Bitcoin’s market cap should be between 22 and 44 billion USD, compared to more than $115 billion in reality.

It is possible that the researchers’ numbers were incomplete, particularly when it comes to active users. Japan’s Financial Services Agency (FSA) has just released its cryptocurrency statistics for the first time, which means that all previous data was based on rough estimates. According to official figures, at least 3.5 million Japanese are trading cryptocurrencies, with 142,842 investing in crypto margins and futures.

And it doesn’t stop there. Adrian Lai, founding partner of Orichal Partners, a Hong Kong crypto investment company, believes that in 2018, the cryptocurrency market will mature, attracting more and more investments, especially from institutional investors and venture capital firms. We’ve already witnessed that, with George Soros and Venrock joining the party – and that was only this week. 

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Author: Max Rothstein
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