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Much ado about the hyped technology

By Ren Xiaojin | China Daily | Updated: 2018-03-12 09:58
A picture taken on Feb 6, 2018 shows a person holding a visual representation of the digital cryptocurrency Bitcoin, at the "Bitcoin Change" shop in the Israeli city of Tel Aviv. [Photo/VCG]

Like me, my peers who attended university around 2010 fondly remember Renren, a Chinese social networking website in the mold of Facebook. Back then, if you were a student in China but not on Renren, you didn't exist. And then ... well, WeChat-shall we say-stole Renren's thunder. But I'm not here to reminisce.

Toward the end of 2017, Renren, unfazed by WeChat's dominance, made a bold move. Using blockchain technology, it issued its own cybercurrency RRcoin in the form of private equity or PE in China. Following the move, shares of Renren surged 76 percent to $12.99 on Jan 5, 2018 on the New York Stock Exchange.

But, in September 2017, China had banned initial coin offerings or ICOs, which meant any ICO-related activity, even that which was masked as "PE", would not be legal. It is believed Renren took the message and quickly called off its PE project.

Come to think of it, it has become fashionable to pepper business discussions and media releases with "blockchain". The other day, I heard someone saying blockchain can be used to set up a chicken farm!

There's more gibberish out there. Try this: "Decentralization cloud-computing blockchain network with high performance and development structure"; and, "using traceability nature of blockchain to verify art piece".

Somehow, laypersons, and gullible, reckless or greedy investors, have come to associate blockchain with fool-proof business and sound investment options. That's emboldening fraudsters to bait such unsuspecting people with so-called blockchain projects, which are essentially Ponzi schemes bearing a different label.

"It's an insult for Ponzi if you say ICO is like Ponzi," said Zhu Xiaohu, a seasoned investor who had bought into Ofo and Didi in the past. "Apart from cybercurrency, what else can blockchain do? Ninety-nine percent of the ICO projects are absolute frauds."

Yet, it is believed that some fundraising activities in the PE garb are being launched overseas by some Chinese companies, despite the ban on ICOs. Could we say a blockchain bubble is in the making? Is a cybercurrency crash inevitable?

As Deloitte reported late last year, 92 percent of so-called blockchain-based projects have failed so far for want of clarity on where the technology should be applied.

A social media post by a business insider, who shall remain anonymous here, best sums up the situation. "Blockchain is like a love affair. You want blockchain to change the world, only to find out the best scenario is bitcoin and ICO. You want your love affair to be a passionate and legendary one, but all you ever get is nothing but a quiet and normal life."

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