Despite their global visions and border agnostic designs, public blockchains have taken legal refuge in only a handful of locales

Usually, these are familiar European provinces associated with economic freedom: Portugal, Ireland, the Isle of Man, Cyprus, to name a few. However, one of these areas is unique among the others: Shenzhen, one of China’s Special Economic Zones (SEZ) in the Guangdong Province.

Originally a quiet agricultural province in southern China, Shenzhen’s population erupted in the 80s and 90s as migrant workers came to work in the city’s industrial factories.

Many of the factories were born out of a drastic change in economic policy by party leaders in what is now defined as the ‘Shenzhen special economic zone’.

The Shenzhen special economic zone

Home to some of China’s most successful companies, such as Huawei, ZTE and Tencent, Shenzhen has grown at a breakneck pace over three decades, from a small agri-village to China’s first SEZ and now a prosperous megacity and an emerging centre of innovation. Now it has set its sight on the world of blockchain and cryptocurrency.

While more economically liberal countries in the West may have taken the lead due to their progressive regulatory stances, China has become an important bellwether for cryptocurrency.

Historically, the Chinese government’s strategy towards modern technology was to balance economic modernization and political control. Under Beijing’s guidelines, the central government currently supports all innovative applications such as digital currency research and mobile payments.

As an SEZ, Shenzhen is intended to be a globally facing city with free reign, which is in direct contrast with the scepticism of a major government. In other words, it is an excellent theatre for the conflict between global systems and national ones.

Yet, we are on the cusp of change. Shenzhen will play a leading role in China’s latest round of deepening reform as it is set to be built into a pilot demonstration area of socialism with Chinese characteristics.

Experimenting with socialism, Shenzhen as a fintech hub is somewhat emblematic of China as a whole. From banning initial coin offerings (ICOs) in 2017 to putting a stop to Bitcoin: Yuan trading, citing financial risk, the crypto tides are turning outside of Shenzhen.

Also Read: Plug into the entrepreneurial ecosystem in Shanghai with XNode

As Facebook prepares to launch its ambitious Libra cryptocurrency, China’s experiment with digital currency seems to be gaining momentum. Following the central government’s plan to deploy a cryptocurrency in the metropolis, Shenzhen is being touted as the pilot city in China to launch a national digital currency.

China’s central bank, the People’s Bank of China (PBoC) continues to recruit blockchain engineers and researchers by virtue of its subsidiary – the Shenzhen Financial Technology Co (SFT). In August, the Central Committee of the Communist Party of China revealed plans to increase research and development (R&D) efforts around digital funds to enhance the attractiveness of Shenzhen as an SEZ.

Giving birth to many tech powerhouses, China has exploited Shenzhen as a pilot project for innovation and it appears these innovations are beginning to take form on a national level.

Why Shenzhen makes a great staff-bearer for digital currency

Shenzhen is the Silicon Valley of hardware, the factory of the world, where if you have an idea, you can find someone — or lots of people — to bring it to fruition. For years, Shenzhen has been making all of the Silicon Valley designed hardware.

It is due to its history as the cradle of China’s manufacturing industry that it has become a centre for developers of decentralized ledger technology and created a blueprint for the implementation of white papers.

Shenzhen has a wealth of established brands and start-up accelerators, and stock exchange with a partial focus on attracting innovative companies, which, in turn, attract a plethora of talent from all over Asia.

What’s more, the egalitarian way of working which embodies the collaborative spirit of Shenzhen means that workers are prepared to get their hands dirty and see what works and what doesn’t. The Chinese word “Shanzhai” encapsulates a way of working that’s fast, open and based on the sharing of resources and knowledge; the perfect breeding ground for public blockchain innovation.

The concept of intellectual property doesn’t have the same implications in China as we think of it in the west. Shenzhen natives’ core tenets of sharing intellectual property may enable coordinated efforts needed for the nature and scope of a decentralized revolution.

Also Read: Taiwan wants to challenge Silicon Valley and Shenzhen, but still has a long way to go

Europe was a leader of globalized economic choices in the 20th century because it fostered communication between so many different nations within close proximity. A global vision had been put forward of interconnectedness in trade, communication, and culture, and Europe’s geopolitical situation lent itself to those goals, especially given the technological limits of the last era.

Today, in order to see that vision more fully realized, we need to build our firmest bridges between Asia and the West.

This time around, global means global: our new technologies transcend borders and coordinate information in real time.

The success of this technology must entail meaningful exchange, even entrenchment between two systems that have completely autonomous ideologies and culture, towards a coalition of mutual good.

Shenzhen has quickly emerged as one of the leading nodes in this new network of global technological advancement.

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Image Credit: Hendrik Will

Sky Guo, CEO @ Cypherium, an enterprise-focused blockchain platform that prioritizes scalability and decentralization

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