A look at China’s position on web3

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Web3 has become known as the internet built on decentralized blockchains that power applications such as cryptocurrencies and NFTs. The term catch-all is sometimes used interchangeably with crypto, but in China the government is pursuing its own path in the web3 which has so far excluded everything related to cryptocurrencies.

Earlier this week, the Beijing Municipal Science and Technology Commission, Administrative Commission of Zhongguancun Science Park released a white paper on the so-called Internet 3.0 that offered a glimpse into China’s position on the web3. The document caught the attention of Binance founder Changpeng Zhao, who stated in a viral tweet that web3 [is] anywhere in the document.

It is worth noting that the white paper comes from Zhongguancun, the Chinese government-designated high-tech industrial zone that is home to some of the country’s best-known tech companies, and may not necessarily reflect the official stance of the Beijing municipal government, let alone of the nations. top politicians. Zhao also appears to have merged what the Commission calls Internet 3.0 with web3.

However, the document hints that some Chinese officials are discussing terms such as Internet 3.0 and web3.

The white paper defines Internet 3.0 as a three-dimensional space that combines virtual and real realms with a highly immersive interactive experience. It will greatly improve the interaction between people and information and the efficiency of economic activities. It is characterized by a high level of intelligence and the progress of virtual-real integration.

Web3 is just one element within this new immersive world. The paper goes on to explain that Internet 3.0 includes the essence of the metaverse and the web3. Its concept embodies the transition of human society and economy from reality to virtuality, from virtuality to reality, and virtual-real integration.

In other words, Internet 3.0 is not just web3 but encompasses AR/VR, the metaverse (however you define it), and other concepts that highlight the integration of the virtual and real worlds.

Changes in Hong Kong

The white paper comes at a particularly interesting time given that Hong Kong recently implemented its new regulatory regime for cryptocurrencies, allowing licensed exchanges to serve retail investors, a departure from mainland China’s crackdown on all forms of cryptocurrency trading. cryptocurrencies.

The new crypto-friendly regulation, however, only applies to people in Hong Kong and remains off-limits for users in mainland China. King Leung, head of the fintech sector of InvestHK, the city’s foreign direct investment department, explained in a interview with Coindesk that the exchanges authorized in the city are obliged to follow the rules of the different jurisdictions around the world. This includes banning users in mainland China, where cryptocurrencies are banned, from accessing their services via IP address blocking. This practice has become the standard for major exchanges since China banned crypto transactions in 2021.

However, the changes in Hong Kong are boosting confidence among cryptocurrency investors and developers in mainland China, who see it as a sign of the country’s weakening stance on digital assets. As one Chinese founder of a decentralized identity startup told me: Hong Kong has historically been the testing ground for mainland China. THE [new regulatory regime] it shows that the government is watching and experimenting.

The reality on land

The white paper signals that China is open to incorporating Web3 into its future Internet in some way. Impressively, he mentions Gavin Wood, a co-founder of Ethereum, and how he was the first to expound the concept of web3, a set of inclusive protocols that provide building blocks for application developers, enabling them to build applications in new ways. The document also references how the record-breaking Christie’s auction of artist Beeples helped bring NFT into mainstream consciousness.

As for how web3 could manifest itself in China in a tangible way, the paper echoes Western technologists in arguing that web3 enables read-write, allowing users not only to consume and create information, but also to own their own data. The paper argues that in the new world where reality and virtuality merge, a new economic system will emerge and the Web3 will serve as a crucial foundation for identity verification, data authentication, asset trading and regulation in the metaverse.

The statement looks like a good sign for blockchain adoption in China. Indeed, the country’s public and private sectors have cautiously explored blockchain in a number of fields that don’t involve cryptocurrencies, which regulators fear could trigger speculation and market volatility. Also, instead of censorship-resistant public blockchains, China encourages the use of consortium blockchains that are governed only by select participants rather than anyone in public.

Ant Group, the fintech affiliate of Alibaba, for example, has launched a blockchain consortium for small businesses and developers to build trust in multi-party collaborations, including in areas such as supply chain finance, product sourcing, invoices digital and charitable donations.