What is conflux? The crypto linked to China’s blockchain ambitions
Conflux has emerged as one of the top crypto assets of 2023 and is riding a wave of newfound enthusiasm for crypto in China, as Beijing shows signs of softening its stance on the emerging sector.
Conflux blockchain claims to be the only crypto company with approval to operate in China after the government banned all crypto products in 2021.
Since the beginning of 2023, Conflux’s associated cryptocurrency CFX (CFX-USD) has seen an almost parabolic rise in price, skyrocketing 1,300% through January and February.
Read more: Crypto live prices
On Wednesday, conflux surged 10% on the day following news of a $10 million investment from DWF Labs, a digital asset market maker and investment firm.
As the only approved blockchain in China, Conflux has also recently benefited from a partnership with China Telecom to issue blockchain-enabled SIM cards in Hong Kong.
“Conflux’s recent partnership with China Telecom is an important milestone for the blockchain industry, and we believe it demonstrates the potential for Conflux’s technology to revolutionize how we think about blockchain-enabled products and services,” DWF Labs managing partner Andrei Grachev said in a statement.
Read more: What is the digital pound and when can you expect it?
Healthy PMI data coming out of China and stimulus injections from the nation’s central bank have encouraged an appetite for higher-risk investments, and the crypto market has let up some of the increased liquidity, sparking a recent crypto rally. Conflux has led the charge with the recent influx of capital coming from China.
Other cryptocurrencies with strong links to China, such as NEO (NEO-USD), VeChain (VET-USD) and Phoenix Chain (PHB-USD) are also rising in tandem with Chinese stocks.
The rally in the East has been noted by Gemini co-founder Cameron Winklevoss, who took to Twitter on February 19 to declare “the next bull run is going to start in the East and it will be a humbling reminder that crypto is a global asset class and that The West, indeed the United States, always had only two options: embrace it or be left behind”.
Another thing that has fueled Conflux’s recent green shoots is the network’s partnership with Little Red Book, a China-based social media platform, to offer NFTs (non-fungible token services) for Chinese users.
Conflux has also been the recipient of endorsements from the Chinese authorities. One of them was by the Hunan Regional Government to develop blockchain infrastructure to enhance the region’s GovTech initiatives.
These government endorsements allow companies to gain access to lucrative contracts in the public sector.
Within China, there is still significant interest in all things crypto. But with Beijing’s Politburo’s strict ban on most crypto entities, Conflux has become the recipient of a large share of this interest.
Internet search metrics also show a growing awareness and interest in Conflux, with the worldwide Google Trend Score for the keyword “Conflux Network” ranking as the 100th most searched phrase in mid-February.
Read more: NoiseGPT: AI app that turns text into celebrity voices raises concerns of ‘deep fake mayhem’
The rise in interest in the Conflux Network has coincided with the sighting of representatives from the China Liaison Office at recent crypto gatherings in Hong Kong, which has been interpreted as a signal that Beijing is subtly supporting the idea of Hong Kong becoming a crypto hub.
According to last week’s Bloomberg report, Hong Kong’s Securities and Futures Commission (SFC) plans to allow retail crypto trading within the financial hub.
The SFC said it would launch a consultation process for Virtual Asset Service Providers (VASPs) seeking a license to provide trading services for retail clients in Hong Kong.
The move will lead to a process of registering tokens before they are listed on exchanges, so that only pre-approved tokens will be available to retail customers.
Analysts see the opening of Hong Kong to cryptocurrency firms giving China the opportunity to study Hong Kong’s approach to digital assets, much in the same way it learned from Hong Kong about open markets.
What is Conflux?
Conflux is a public blockchain platform that was developed in China by a team of researchers from Tsinghua University.
It claims to be China’s only government-sanctioned blockchain, and to be used in conjunction with the country’s Blockchain Service Network (BSN), China’s enterprise blockchain technology platform.
With the ability to deploy “smart contracts”, decentralized applications, Conflux is similar in design to Cardano (ADA-GBP), Solana (SOL-USD) or Ethereum network (ETH-USD).
Like Ethereum and other blockchains, it also runs on “gas fees” that allow transactions, denominated in conflux cryptocurrency.
One of the notable features of Conflux is its ability to support interoperability between different blockchain networks. This means that Conflux can connect and communicate with other blockchain platforms, enabling seamless data and asset transfers across different networks.
China’s Blockchain Ambitions
The Chinese government has identified blockchain as a strategic technology and has launched several initiatives to promote its development and adoption.
China has launched several blockchain-based projects, including the development of a digital currency and a national blockchain network called the Blockchain-Based Service Network (BSN).
BSN is designed to provide a standardized and secure infrastructure for blockchain applications in China.
Beijing has also recently established a blockchain research department, called the National Blockchain Technology Innovation Centre.
The center will reportedly focus on developing software and hardware for blockchain-based use cases that benefit the country’s economy.
Read more: Crypto: Stablecoins Will Not Meet Global Standards, Financial Stability Board Warns
Chinese technology companies such as Huawei and Tencent have made significant inroads into the web3 space.
Huawei Cloud has entered into partnerships with several blockchain companies with the launch of Huwei’s metaverse and Web3 Alliance project.
The project aims to encourage mass adoption of web3-based innovations in the East Asia region and beyond. Polygon (MATIC-USD) is one of the web3 companies that will partner with Huawei Cloud.
Volatility in the crypto market
The value of conflux is still dependent on the volatile conditions of the macro crypto market, and it is also vulnerable to the whims of the Beijing Politburo that may suddenly decide that the blockchain has become too decentralized, and beyond its grasp.
Crypto in general still has significant problems of its own with critics pointing out that despite claims to be decentralized, it is heavily concentrated in the hands of a few large crypto exchanges, often with opaque transaction rules and inherently speculative with millions of people losing money when they crypto . companies go wild with FTX, the most spectacular of recent collapses.
See: Web3 Sectors to Watch in 2023 | Crypto Mile
Download the Yahoo Finance app, available for apple and Android.
