There have been 10,000 new Chinese blockchain companies in 2020 already

Blockchain sector balloons, 10 months after Xi Jinping called for China to “seize the opportunities” in growth area

China                                 

China’s blockchain sector has continued to boom in 2020, despite the economic ravages of the Covid-19 crisis.

According to crypto and blockchain analytics firm LongHash, the number of new blockchain companies founded in 2020 is set to outdo 2019. Whereas a total of 13,000 blockchain firms were registered last year, more than 10,000 have already been registered two thirds of the way through 2020.

Guangdong remains the hotbed of the burgeoning technology, with 26,196 of the total 91,373 registered blockchain companies located in the southern Chinese region.

Although the rate of Chinese blockchain company registrations peaked in 2018, propelled by the global cryptocurrency boom, there has been an uptick since late-2019 following comments by President Xi Jinping.

In October last year, the Chinese leader urged the nation to “seize the opportunity” afforded by the new technology, describing it as “an important breakthrough for independent innovation of core technologies.”

While these comments have kept the blockchain boom going, they are also thought to have resulted in a surge in companies bogusly claiming to use the technology, as argued in April in a report by China Finance.

Indeed, LongHash detailed that of the 91,000+ new blockchain firms registered in recent years, 61,282 have either lost their legal status or had their license revoked.

Part of this two-thirds attrition rate can be attributed to the fact that, while blockchain technology requires a fair degree of investment to set up and run efficiently, the majority of Chinese blockchain firms start with relatively little money.

Just over 46 per cent of China’s blockchain firms have registered capital of less than ¥5,000K, while only 9 per cent have registered funds of over ¥50,000k.

Although the license retention rate of Chinese blockchain firms may currently be poor and investment often lagging, per the general trend, the world’s second-largest economy will continue to be at the forefront of this flourishing sector.

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