Juncheng Zhang

@junchengzhang

Making China the Biggest Blockchain Market in the World

In the Chinese culture, both red and gold symbolize prosperity. But will the shiny golden crypto be accepted here still remains a big question.

China, despite being the most censored cryptocurrency region in the world, has given rise to a variety of ‘big names’ in the crypto and blockchain space today. From the world’s largest crpto exchange — Binance — to the fast-growing dark horse — Tron, China has participated firsthand in the blockchain revolution along with its western counterparts, with no less rigor and passion. It seems that just like in the Internet revolution, China is in no way lagging behind in this new wave of change. Undoubtedly, it holds the largest market population in the world with a fast growing Internet user base still. For the many Chinese, they have merely just entering the golden age brought about by the convenience of the Internet, unaware of the impending change just as potent as the on-going one. However, little is known about China’s market due to censorship and an unsupportive government. Today, in this article, we ask the most pressing questions on the Chinese crypto and blockchain space.

Background

Just as I see the great many entrepeuneurs eyeing the biggest market in the world, they often tend to make many mistakes regarding the unique habits of the Chinese user base. The biggest mistake of all has to be the defeat of eBay by Alibaba.com — a more culturally competent native team beats a culturally insensitive foreign invader.

So just as important as the questions we’re asking is the unique cultural background of the Chinese user base. If this article is to make any sense at all it is based on a thorough understanding of where the ordinary Chinese are coming from when it comes to new technologies like blockchain and cryptocurrency. And let’s start with money, for that’s what Chinese people care most about, more than you would think.

“Show me the money”

China has massively different economic realities than most western countries. It is already widely known that since the economic open-up in the 70s, China has enjoyed over four decades of impressive economic growth and increased social prosperity and well-being in general. Although the success of China’s economy has become a cliché in documentaries and the news, many overlook the significant cultural mindset that concurrently happened with the economic change. It is the cultural-spycological change that is much more potent, much more than the superficial economic statistics.

Shenzhen, the flagship city of China’s economic leap, is often the go-to example when it comes to the sheer enormity of China’s change over the past decades.

Given the well-renowned economic growth, it is therefore commonly mistaken that the Chinese have generally evolved from the state of deprivation to the state of prosperity over night. That like western countries, the Chinese people, having enjoyed the benefits of a capitalist society, have adopted a western consumerist mindset as well. Furthermore, that the Chinese culture has shifted from a collectivistic realist mode typical in its communist period, to a more civilized and democratic one typitcal in the West. And when it comes to examples, economic miracles like Shenzhen are then cited.

Well-intended information, profoundly gone wrong. Like what eBay did in China, these misconceptions just fell in the trap of this old saying:

Just as you think you know something, you know nothing.

With this lesson in mind, you’re now ready to step into the mind of a Chinese.

Almost too quick

What most people fail to realize about the Chinese market is its desire for more. This comes in several forms.

If we were to give a short description of the short history of the 40-year growth period, it would very likely to be “Initiation into Capitalist Prosperity”. It’s not like the U.S., which has been industrailized through capitalism since the late 19th century — China has only tasted the sweet fruit of a capitalist market for decades, while its western counterparts for centuries. Imagine the Renaissance and Industrial Revolution happening at the same time, but just in China and just over forty years.

The result of this quick socioeconomic change is massive materialisitc culture combined with fierce competition. Everyone wants to get rich, and get rich quickly during this economic upturn. Many are still just waking up to the enormous capitalistic opportunities in the market. People want to make a quick dime in the Internet space, and welcome every opportunity that makes their new riches possible.

However, this comes with a opposing force from the millenium-long cultural conservatism.

Opportunistic yet Conservative

Unlike the liberals with steadfast beliefs that a decentralized technology is needed for a better world, the Chinese crypto fan base largely comes from a speculative background. They share the common beliefs that “blockchain technology is not necessary in the already mature Internet market”, “cryptocurrency is just a way for me to make a quick dime”, and that “why do I need to care about the development of a new technology as long as there’s profit in it to be made?” All of which justly reflects the above-mentioned economic reality that’s shaped the materialistic cultural mindset underlining the opportunistic society.

If you go out there on the streets in China and really ask people what they think of the decentralized nature of cryptocurrencies such as Bitcoin, the answer would most likely to be “it’s redundant.” However, it is important to note that the reason behind such answer is not that the population has a basic understanding on the nature of money or ecnomics, but that such is also the opinion of the government.

What use if it if it does not get the approval from the authority?

Descendants of the Confucian culture, the Chinese people value “harmony” over “conflict”, “discipline” over “creativity”, and “tradition” over “revolution”. Therefore, it is never a surprise to see that when the “revolution” flag of blockchain technology starts to enter China, suspicion ensues in lieu of diligent research. It is not far-fetched to say that when it comes to new technology, China has traditionally been among the last to enter.

So how to reconcile all this? We have the biggest market in China in the world. We have seen the success of the age of the Internet here. Yet we have a cultural mindset deeply planted in people’s mind that cautions the new but welcomes economic growth. What’s the approach for blockchain to make soemthing out of it?

Don’t revolutionize, just make it better

Based on my experience of attending dozens of blockchain conferences and meetups in China, I have come to the conclusion that the biggest issue of blockchain is its high entry level. When it comes to Bitcoin it’s sort of okay, but when it comes to a something other than money, the technology soon drains out people’s interest.

Back when the Internet and massive adoption of PC first hit China, the ease to use masked out the complicated background work. I think that’s exactly what the Chinese market wants to see. I often use the analogy of a toddler to compare to China’s growing economy — it's growing so fast, it’s got short attention span for anything, so just build something easy to use and see if it likes it.

Have you wondered why we don’t have forums like Bitcointalk.org or Reddit where genuine, meaningful discussion on the development of blockchain takes place? That’s the answer.

So now the big question comes.

Which particular field in the Chinese market could particularly use the help of blockchain?

If the Chinese market understood anything from the complicated technology underlying Bitcoin, it’s the elimination of middlemen. For all we know, that’s the part that’s going to lower costs across the board. And when it comes to saving money, the Chinese market loves it.

So this is my general advice for any blockchain startup trying to enter the Chinese market: find somewhere where the elimination of middlemen saves most money.

I will give one example here. Remember what I said about China’s materialistic culture? It’s incredibly competitive. Usually in the West, there’s one company that dominates a whole field. Facebook, Twitter, and Snapchat all cover different niches. Yet in China, one market is split among many companies. When it comes to blogging, we have Sina Weibo, Tencent Weibo. When it comes to knowledge-sharing site, we have Zhihu and Douban. In some areas, there’s more than a dozen of platforms competing for one market. The way they attract users is, of course, more user benefits. The more benefits the platform gives out, the less they charge as middleman, the more users they acquire.

The result of this bloody competition is that users complain about the middlemen fees that exist regardless of how many choices of platform they have. From my research, most of these social media platforms take 40–60% of the monetary rewards users acquire.

Now I would like to give a particular example to demonstrate what I mean: the mobile streaming service, where users struggle with high transaction fees. In this field, the competition is more heated than most. More than a dozen apps compete for one market niche. The users don’t have much choice since all of them charge riduculous payment fees. With all that’s given, this is the most wonderful opportunity I think there is. If there’s an app based on blockchain that supports no-fee micropayments, with proper marketing, it will dominate the market. Don’t say it’s based on what new technology, just market itself as “commision-free”. The results will show.

This is what I call a constructive approach.

Over the course of the past two years, the crypto price has experienced unbelieveable upticks yet the blockchain community grows slowly. We need more constructive, user-friendly approaches if we want to increase the adoption of what we believe to be the technology that’s going bring us a better future. When it comes to China, I hope this article shines light on how we can still spread the adoption, even with an unsupportive regulatory environment.

More by Juncheng Zhang

Topics of interest

More Related Stories