China proposes to bring its social credit system to the metaverse: Report

August 21, 2023 Coin Telegraph

Beijing

Proposals to a United Nations group reportedly show China wants digital IDs and real-world punishments for actions that occur in the Metaverse.

China is reportedly looking to implement a system akin to its social credit system, but in the Metaverse and other online virtual worlds.

Proposals viewed by POLITICO and reported on Aug. 20 show the state-owned telco China Mobile proposed a digital ID for all metaverse and online virtual world users that work with “natural characteristics" and "social characteristics."

The proposals say “to keep the order and safety of the virtual world” the ID would harbor a slew of personal information and identifiable signs including a person’s job and suggested such data be permanently stored and shared with authorities.

An example of the benefits of the system was provided with a problem user that “spreads rumors and makes chaos in the metaverse” — with the digital ID allowing police to quickly find and punish the person.

The proposal mirrors China’s social credit system — an in-development infrastructure designed to improve behavior that scores and ranks citizens across various metrics which has also been an enforcement tool.

In 2019, the Associated Press reported that authorities blocked social offenders from purchasing plane tickets 17.5 million times in 2018. Other social offenders were punished by being barred from purchasing train tickets 5.5 million times.

On July 5, China Mobile put forward the proposals as part of discussions with a focus group on the Metaverse put together by the United Nations’ communications technology agency the International Telecommunication Union (ITU).

Join us in Shanghai July 4-6 for our #metaverse focus group, followed by a forum on July 7 and be part of key pre-standardization effort.
With int'l #standards we can create global access to knowledge & tech for #metaverse to benefit everyone, everywhere.https://t.co/4IrlYExOjW pic.twitter.com/3XAiCu90zz
— Int’l Telecommunication Union (@ITU) July 3, 2023

The Metaverse focus group meets again in October where the proposals could be voted on.

If passed they could majorly influence telcos and tech firms as the ITU’s Metaverse group is aiming to develop new standards for metaverse services.

Chinese firms taking part in the focus group are purportedly firing off many more metaverse proposals compared to those from the United States and Europe according to one group contributor that spoke to POLITICO.

They said China is “trying to play the long game” so that its proposals are the standard for the metaverse if its use becomes widespread.

"Imagine a metaverse where your identity protocols are set and monitored by Chinese authorities. Every government must ask themselves: ‘Is that the kind of immersive world we want to live in?’” the person said.

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Beijing releases white paper for Web3 innovation and development

May 28, 2023 Coin Telegraph

Beijing

The release of the white paper coincides with new digital asset regulations in Hong Kong, raising further interest in China’s stance toward the crypto industry.

Beijing’s municipal government has unveiled a white paper to foster innovation and advance the Web3 industry.

The Zhongguancun Forum witnessed the release of the "Web3 Innovation and Development White Paper" by the Beijing Municipal Science and Technology Commission, also known as the Administrative Commission of Zhongguancun Science Park. According to the local news outlet, The Paper, the document recognizes Web3 technology as an "inevitable trend for future Internet industry development."

With the goal of establishing Beijing as a prominent global innovation hub for the digital economy, the commission plans to allocate a minimum of $14 million (100 million yuan) annually until 2025. Yang Hongfu, the director of the Zhongguancun Chaoyang Park management committee, revealed this during the forum, highlighting that Zhongguancun is commonly recognized as China's Silicon Valley.

According to reports, the white paper emphasizes Beijing's intention to enhance policy support and expedite technological advancements in order to foster the growth of the web3 industry.

Binance CEO Changpeng Zhao finds the timing of the white paper release "noteworthy" as he highlights that Hong Kong's cryptocurrency regulations are set to commence on June 1.

Last week, the Securities and Futures Commission of Hong Kong unveiled a new rulebook for the cryptocurrency industry, announcing that retail investors will be able to engage in crypto trading starting from June 1, coinciding with the implementation of a new licensing framework for crypto platforms.

While the United States is currently undergoing a regulatory crackdown on cryptocurrencies, Hong Kong's efforts to attract crypto companies coincide with this development. In contrast, China had banned the use of cryptocurrencies in 2021. However, with the release of the web3 white paper, it seems that China is showing signs of opening up to the industry in certain capacities.

On May 23, a segment on cryptocurrencies was aired by China Central Television (CCTV), prominently featuring the Bitcoin logo and a Bitcoin ATM in Hong Kong. Binance's Zhao noted the significance of this coverage, as it historically correlated with market upswings. The segment also highlighted NFTs but has since been removed.

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Beijing announces two-year Metaverse innovation and development plan

August 24, 2022 Coin Telegraph

Beijing

The Metaverse development plan requires various municipalities to track NFT technology trends and integrate metaverse into education and tourism.

The Beijing municipal government on Aug. 23 announced a two-year (2022-2024) metaverse innovation and development plan that would require all districts to adhere to the newly released Web3 innovation plan.

The development action plan refers to the Metaverse as a new generation of information technology integration and innovation that would drive the growth of the internet towards Web3. The innovation plan focuses on promoting the development of metaverse-related industries and helping Beijing build a benchmark city for the digital economy.

The action plan demands that various districts build technological infrastructure at a city level and promote its use in various fields, including education and tourism. The development program would see the Integration of technical means such as 3D visualization and GIS (Geographic Information System) to build a visual urban space digital platform and appropriately advance the layout of digital native intelligent infrastructure.

A Google Translate transcript of the official document read:

“Promote digital education scenarios, support in-depth cooperation between Metaverse-related technology companies and educational institutions, expand intelligent and interactive online education models, and develop industry-wide digital teaching platforms."

The Metaverse development action plan has also instructed districts and municipalities to offer financial and human resource support to build a virtual reality. The Beijing municipal government also demanded tracking nonfungible token (NFT) technology trends and exploring regulatory sandbox programs to support innovation.

While China is known for its anti-crypto stance, the government has shown interest in the metaverse concept from early 2021. Before Beijing, Shanghai also included metaverse in the five-year development plan. However, the government’s interest in nascent tech hasn’t resulted in any favorable regulations for tech companies exploring the same idea.

As Cointelegraph reported in July, Tencent had to shut down one of the two NFT platforms owing to declining sales aided by the regressive monetary policies of the Chinese government. Similarly, Alibaba had to hide all mentions of its NFT marketplace just hours after its launch.

Over the past couple of months, two major cities in China have announced multi-year action plans with the Metaverse and NFTs in focus. The rising interest of the Chinese government towards leading Web3 technologies could lead to wider adoption in the country, quite similar to its central bank digital currency (CBDC), which is used by millions in the pilot phase itself.

Tencent shuts down NFT platform as gov policy makes it impossible to thrive

July 14, 2022 Coin Telegraph

Beijing

While NFTs are not banned in China like cryptocurrencies, the government has warned against fraud risks associated with the nascent sector.

China’s internet giant Tencent has reportedly shut down one of the two nonfungible token (NFT) platforms owing to declining sales aided by the regressive monetary policies of the Chinese government.

Tencent shut down one of its NFT platforms on July 1 while the other one is struggling to remain afloat. A report from a local daily indicates that the wind-down process for the same began in May. The tech giant transferred key executives responsible for managing the NFT platform in the last week of May and completely removed the digital collectible section from its Tencent News app by July's first week.

The primary reason for the slow down in sales and ultimate closure of Tencent’s digital collectible platform is being blamed on flawed government policy that prohibits buyers from selling their NFTs in private transactions after purchase, which makes these NFTS not so lucrative. The lack of a secondary market kills any chance of making a profit on these digital collectibles.

NFTs gained a lot of traction in China earlier this year with several tech giants such as Tencent and Alibaba showing interest and even launching their own digital collectible platforms. However, with the rise in popularity, it also got attention from the government which has warned investors to be wary of frauds associated with these NFTs.

In March, several Chinese social media giants such as Weibo and WeChat started removing accounts associated with digital collectible platforms fearing a government crackdown. In June, Alibaba launched an NFT platform but soon deleted all mentions of it from the internet.

While the Chinese government is known for its anti-crypto stance where it has banned all types of cryptocurrency transactions in the country, there is no such outright ban against NFTs. However, big businesses and tech giants still dwell with caution, fearing strict actions from the Beijing government.

Wu Blockchain, a China-focused Twitter handle, told Cointelegraph that citizens still sell their NFTs in the underground secondary markets but large tech firms such as Alibaba and Tencent can’t afford to do so.

Tencent, China's largest internet company, has shut down one of its digital collection (NFT) platforms, and another platform is not doing well. The reason is that the Chinese government does not allow users to conduct private transactions after purchasing.https://t.co/VYWS3TxKUF
— Wu Blockchain (@WuBlockchain) July 14, 2022

Despite a ban on crypto trading, mining, and subsequent warning against NFTs, Chinese traders have always found a way to bypass strict regulatory crackdowns. For example, after the crypto mining ban in the country last year, China’s share of Bitcoin miners dropped to zero from 60%. However, recent data suggest that China has climbed back to the second spot again, indicating miners found a way despite strict measures taken by the government. Similarly, the number of NFT platforms in the country grew 5X in four months.

Chinese police busts illegal crypto mining farm, seizes 190 miners

March 8, 2022 Coin Telegraph

Beijing

Guangdong province’s Development and Reform Commission confiscated 190 crypto mining machines estimated to be worth 5 million yuan.

The Guangdong province’s Development and Reform Commission has reportedly busted an illegal crypto mining farm secretly operating in an electric vehicle charging station.

The secret crypto mining farm was busted in the city of Guangzhou, where law enforcement agencies have constantly been making inspections around cities to enforce and eradicate any form of mining operations in the region, reported a local publication.

The covert mining operation used over 190 crypto mining machines estimated to be worth 5 million yuan ($7,91,450), which were seized on the spot. The authorities claimed that even though mining operations consume a lot of energy, they remained hidden from the authorities because of the high power consumption of the charging station they were operating in.

The mining operations were reportedly being carried out in a closed-door location with a guard at the gate along with fences and walls to hide it from plain sight. The mining farm was operational for over 1,000 hours and consumed more than 90,000 kilowatt-hours of electricity.

The authorities busted the crypto mining operations after examining the energy consumption of the charging station which revealed discrepancies in the electricity consumption. Similarly, Jieyang City seized 916 mining machines in February.

The Beijing government issued an outright ban on crypto mining operations throughout the country last year, citing their carbon emission goals and high electricity consumption by the crypto mining operations. The decision led to the majority of mining farms and industrial crypto mining operations to either shut or migrate to other nations.

The authorities in various provinces of China have since then carried out state and city level inspections to wipe out even the smallest, including home-based mining operations. China, which contributed more than 60% of the Bitcoin (BTC) network hash power prior to the crackdown, currently has nearly zero shares in the global Bitcoin mining operations.

China’s share in Bitcoin transactions declined 80% post crackdown: PBoC

March 3, 2022 Coin Telegraph

Beijing

China has carried out multiple crypto crackdowns and enforced numerous bans on crypto markets since 2013, however, Chinese traders have always found a way to bypass these bans.

People’s Bank of China, the central bank of the country, claimed in a recent note that China's share in the global Bitcoin (BTC) transactions has rapidly dropped from over 90% to 10%.

The Financial Stability Bureau of the Chinese central bank released a comprehensive note on Wednesday discussing the impact of the crypto crackdown on the financial markets. The official notice claimed that all peer-to-peer exchanges in the country had been eradicated, which eventually curbed the hype around digital currency transactions.

A Google translated version of the note read:

“The global proportion of Bitcoin transactions in China dropped rapidly from more than 90% to 10%. Severely cracked down on illegal financial activities such as disorderly handling of finance and crackdown on illegal fund-raising crimes.”

China is among the few nations that have maintained an outright passive stance against crypto use since the beginning. The country’s first ban came in 2013 when it prohibited banks from handling Bitcoin transactions.

This was followed by a ban on local cryptocurrency exchanges in 2017, forcing them to shut their operations completely. The country later ramped up its crypto crackdown efforts in 2021, where it carried out multiple regulatory operations to eradicate Bitcoin mining from the country and by September 2021, it had deemed all crypto transactions illegal.

According to data from Statista, the annual share of Bitcoin trading volume in digital yuan has dropped to near zero by 2018, post a ban on cryptocurrency exchanges.

*Share of Chinese yuan in BTC transaction volume. Source: Statista*

The trading volume of BTC in the Chinese yuan might have dropped down to near zero, but the decentralized nature of Bitcoin makes it impossible to ban.

After a ban on local crypto exchanges in 2017, many Chinese traders turned to foreign crypto exchanges via VPN. When the Beijing government banned foreign crypto exchanges from offering any services in mainland China, as well, the Chinese traders flocked to decentralized finance (DeFi) for trading anonymously.

Bitcoin network’s carbon emission jumped 17% after China ban: Report

February 28, 2022 Coin Telegraph

Ban

The research report blamed the increase of Bitcoin's carbon footprint on the China mining ban and claimed Chinese miners were more renewable energy focused.

Bitcoin network’s proof-of-work mining consensus has been a topic of evironmental, social and governance (ESG) debates for a long time and a new study may only add to the growing controversy around BTC's carbon footprint.

A new research report titled “Revisiting Bitcoin’s carbon footprint” published in the peer-reviewed scientific journal Joules has highlighted that the Chinese crypto mining ban might not have contributed to the reduction in the carbon footprint of the Bitcoin network as propagated by many Bitcoiners, on the contrary, it has increased by 17%.

China was the primary hub for Bitcoin miners before May 2021 and accounted for more than 60% of the total Bitcoin network hashpower. However, the blanket ban imposed by the government led to the migration of most of the mining farms out of the country. China’s BTC mining hashpower share fell from over 60% in May to near zero in August, with miners moving to the United States, Russia and Kazakhstan.

Crypto pundits predicted that the migration of miners out of China would not only make BTC mining more decentralized as well as greener but, the new Joule report shows otherwise. The new research report highlighted that the amount of renewable energy used to power BTC mining has declined from 42% to around 25% since last August.

*Top Electricity Sources for Bitcoin Mining Source: Joule*

The study tracked the source of electricity powering mining operations to calculate the carbon emissions of the BTC network and found that the top crypto blockchain emits 65 megatons of carbon dioxide annually. The study concluded that miners in China were more renewable energy-focused than most of the top mining countries today.

Alex de Vries, one of the authors of the report, told Cointelegraph:

“The study in general highlights how Bitcoin mining got even dirtier after the Chinese mining crackdown of last year. A lot of the hydropower miners previously had access to here have now been replaced by natural gas (in the U.S.). On top of that, the coal-based electricity in Kazakhstan is also dirtier than Chinese coal-based electricity. Altogether, that makes proof of work mining even more carbon-intensive than it already was.”

The Joule journal study further contradicts a report pushed by the Bitcoin Mining Council led by MicroStrategy CEO Michael Saylor, which claimed that the Bitcoin network utilizes up to 66% sustainable energy.

Beijing

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