Most of the blockchain firms that closed in 2019 were cryptocurrency scams or had deficient business models, according to recent research.
Research sent to Cointelegraph by Chinese think tank EqualOcean on March 26 suggests that most blockchain-backed Chinese businesses that halted their activity last year had major flaws.
The report found over 70 blockchain projects that shut their doors last year. Among them over 70% of the projects reportedly did not survive their first year and 30% did not last 6 months. The research reads:
“A considerable number of which were crypto exchanges that involved scams, digital wallets and decentralized applications that used multiple-level marketing, and public blockchains that did not have a defined business model.”
Per the report, “China's blockchain scene in 2019 was more or less like a slow recovery after a high fever.” Overall, last year China’s blockchain space reportedly got rid of the scams and turned to real-world applications of distributed ledger technology.
The researchers behind the report said that during 2019 blockchain awareness in China increased among state bodies and state-owned enterprises. The researchers also point out that in October China’s president Xi Jinping called for the country to accelerate blockchain adoption. An EqualOcean spokesperson told Cointelegraph:
“With support from the public sector, the scope of real-world business scenarios is likely to be boosted considerably this year. Especially in areas adjacent to the DCEP, supply chain and e-government. This imposes feel-good factors for permission blockchain players in particular.”
Furthermore, the firm’s representative said that public blockchains — on the other hand — have still a long way to go. Still, the researchers “project changes in side-chain and cross-chain areas, stirred by the expanding DeFi ecosystem.” They also told Cointelegraph:
“A crypto market, as it’s known in most of the western countries, can’t appear in China in the near future due to the specific regulatory environment: we don’t see how decentralized currencies can avoid possible clashes with the local financial watchdogs. Nonetheless, the country’s enterprises will continue to dominate in several essential subsectors. An epitome of such a company is ASIC giant Bitmain, a monopolist in the global mining hardware market.”
China’s blockchain developments
Chinese officials see great potential in blockchain technology and its digitization potential. As Cointelegraph recently reported, the country is stepping ever-closer to releasing its central bank digital currency.
Still, after hype tapered off, salaries for blockchain-related jobs decreased by 37% in China.