Decentralization Under Centralization

'Decentralization Under Centralization': How Chinese Universities Teach Blockchain

Oct. 24, 2019, marked the beginning of a tectonic change for blockchain education in China.

Speaking before the politburo of the Communist Party of China in Beijing on that day, President Xi Jinping said the country needs to "seize the opportunity" afforded by blockchain technology. These words would set forth China’s ambitious agenda to take a leading role in the global development of this emerging technology.

The universities of China received the message loud and clear. In 2020, 14 Chinese colleges established blockchain technology undergraduate degree programs, following Chengdu University of Information Technology, which had established the country’s first College of Blockchain Technology months before Xi’s speech.

But Xi’s ambition had and continues to have an inherent contradiction. While blockchain technology is admired by the Chinese, its most popular application, cryptocurrencies, is now illegal. In the past decade, China has banned crypto transactions (2013), initial coin offerings (2017), crypto mining (incrementally from 2019-2021) and – the final blow – cryptocurrency trading, in 2021. As a result, the very idea of blockchain is different in China than anywhere else in the world.

"When discussing blockchain, we cannot see it from a cryptocurrency perspective," said Jianhai Chen, associate professor in the ​​College of Computer Science at Zhejiang University. It is ranked 24th in CoinDesk’s 2022 Best Universities for Blockchain. Instead, he threads a needle to teach blockchain for legally approved uses only. “What we want to do is to use blockchain technology to empower industries and solve existing problems,” Chen said.

How do Chinese universities educate students in blockchain and conform to the government’s wishes? Faculty, students and employers describe a push for massive technical proficiency that leaves those excited by the transformative potential of blockchain technology frustrated, ignored and forging their own path outside of institutionalized education.

Government encouragement

The most populous nation in the world with 1.4 billion people, China counts roughly 40 million civil servants in its vast government as of December 2021, according to the National Bureau of Statistics in China. Xi’s 2019 declaration unleashed a top-down approach that led to masses of civil servants learning about blockchain all at once.

"[Xi’s blockchain imperative] is a policy direction. Whether people understand it or not, they have started to pay high attention to it," said Jie Hu, professor of fintech and blockchain at the Shanghai Advanced Institute of Finance (SAIF), part of the esteemed Shanghai Jiao Tong University, ranked 12th in CoinDesk’s 2022 Best Universities for Blockchain.

Over the past three years Chen said he has given hundreds of three-hour lectures about blockchain to leaders in various areas, including local governments, bank governors and faculty members in other colleges. He said the lectures have covered mostly basic themes including what is blockchain technology, why do we need blockchain technology and what are the use cases of blockchain technology.

Even as this mass education effort has progressed, government ministries have added blockchain jobs to the nation’s recognized job titles and blockchain as an elective to the computer skills expected from college graduates.

In 2020, the Ministry of Human Resources and Social Security announced two new blockchain occupations – blockchain technology technician and blockchain application operator – that establish criteria for what kind of blockchain skills China needs. Technicians are engaged in blockchain architecture design, working on the back end with the underlying technology, system applications, testing, deployment, operation and maintenance. Operators use blockchain technology and tools to run system applications in government, finance, medicine, education and other scenarios.

According to local news media outlet Guangzhou Daily, the government of Shenzhen in Guangdong Province held its first Blockchain Application Operator (Level 4) vocational skill level recognition exam this past July. Anyone who passed the exam received a certificate from the government as well as an education certificate issued by Tencent, the China-based multinational technology and entertainment company that distributed study materials for the exam. Certificate holders are eligible to receive government subsidies from Guangdong.

These certificates can give a leg up to residents seeking a designation called a hukou. A hukou provides access to public services such as schools, health insurance and social security. Such status can be especially difficult to attain in the densely populated major cities. But without a hukou in Shanghai, for example, a resident could live there and work for years and might not be eligible to purchase a home.

All college students in Shanghai must take a computer skills exam that includes blockchain technology and application as an elective subject. The certificates awarded to passing students give them points when applying for a hukou.

“After President Xi’s speech, local governments have introduced lots of incentive policies to encourage the development of blockchain technology,” said Hu.

Classrooms without soul

Blockchain is a technology that records data permanently, like an immutable receipt that is resistant to alteration or government interference.

There are permissionless blockchains and permissioned blockchains. The most common blockchains are permissionless, without any centralized control or gatekeeper, that records data publicly and immutably. But in China only permissioned blockchains are allowed, which means if the government does not want certain data in the public record, it cannot change it but has the right to delete the whole chain.

"Blockchain in China is decentralization under centralization,” said Zhejiang University’s Chen. “This is blockchain with Chinese characteristics.”

Rather than debate permissioned versus permissionless blockchains, however, most educators focus on the technical aspects, the programming itself, which professors and students alike see as limiting and counterproductive.

"If blockchain education in China only focuses on technical talents, you are training outsourced talents for the U.S.," said Han Tang, a recent dropout from a master’s program in fintech. Under this constraint, Tang added, China “will not cultivate any leading figures in Web3."

As the co-founder of Tanlianjiazhi, a news organization focused on blockchain and fintech, Tang claims to be the first person to have introduced the wildly popular non-fungible token (NFT) collection CryptoPunks to China. Wanting to be a creator rather than an observer and reporter on the crypto scene, however, she applied for and was accepted into a two-year master’s program in fintech at Peking University, one of China’s premier universities. (Peking University was ranked 13th in CoinDesk’s Best Universities for Blockchain 2022.)

In mainland China, passing a standardized Postgraduate Admission Test is an admission requirement for all graduate schools. When Tang took the exam in 2020, she was among 3.41 million people registered. It was a huge effort to get into the program, but Tang dropped out after just six months because she said she found the curriculum and teaching out-of-touch with current trends.

"The content taught in school was still about peer-to-peer (P2P) lending, while the fintech industry is already in the era of decentralized finance” (or DeFi), Tang said. Worse than being outdated, however, Tang also took issue with the narrow approach to blockchain education.

“In any top universities in China someone must be doing research on blockchain, but [in the classroom] we focus on introducing the basics to students in all majors,” said Baixiang Liu, chief technical specialist at Shanghai Blockchain Engineering Technology Research Center and a co-author of “Blockchain Technology Fundamentals and Practice.” Lui, who also works as a researcher at Fudan University, added, “We will introduce tokens to the students but at the same time make it clear that certain operations are not allowed in China.” (Fudan was ranked 28th in CoinDesk’s Best Universities for Blockchain 2022.)

In fact, there is a joke in the Chinese Web3 community that is engaged in popular blockchain applications, legal or not, such as gaming, the metaverse, non-fungible tokens and crypto: If you ask students majoring in blockchain technology what MetaMask is, they don’t recognize the name of the most popular crypto wallet.

Ignoring popular applications like crypto and transformative ideas like decentralization that were inspired by blockchain is too severe a classroom handicap to overcome, said Tang. "For various reasons, the education in China cannot talk about the aspect of culture in Web3. Blockchain education in China pretends to cut the cultural part and only keep the technical aspect.”

She cited Vitalik Buterin's co-written research paper "Decentralized Society: Finding Web3's Soul," where he proposed the concept of "Soulbound" tokens and argued they would form the foundations of the Web3 decentralized future.

"Vitalik is talking about how people can live better and in what way people can organize to live better. It is discussing humanistic things, not technical things," Tang said.

Tang opted to learn by doing. She dropped out in March 2021 to start SeeDAO, a decentralized autonomous organization (DAO) dedicated to cultivating DAO talent for the Chinese-speaking world. Her startup has also completed a $30 million Series A funding round with investors including Hong Kong's HashKey Capital.

Tang’s opinion is shared by other students. “For current blockchain education in China, at least, the soil of gaining knowledge is not in colleges,” said 0xaA, a fourth-year neuroscience Ph.D student and the president of the Peking University Blockchain Association.

Jobs for the masses

Several months before President Xi declared China leading the world in blockchain technology as a national goal, Chengdu University of Information Technology in Sichuan province established the College of Blockchain Technology. Unlike a top academic university such as Tsinghua University or Peking University, Chengdu University of Information Technology is considered closer to what in the U.S. would be a vocational college. The following year, 14 other schools in China similar to Chengdu announced blockchain technology undergraduate degree programs.

More than 700 freshmen started their undergraduate program in Chengdu’s brand-new college, the first of its kind in the country, and possibly the world. According to the college, its curriculum covers basic computer programming courses, blockchain-related professional courses, such as cryptography and distributed systems, and the development of consortium chains, which are permissioned blockchains, and smart contract deployment. This is blockchain education focused solely on the technical aspects for the masses.

"In 2019, there were over 1,000 blockchain companies. Seeing the increasing demand for talents, we decided to establish this new undergraduate degree," said Fei Li, a professor who specializes in security of the internet of things at the college.

Indeed, the outlook for technical blockchain jobs is bright in China. As of the end of July 2022, there were more than 2,100 blockchain information services registered entities in mainland China, according to the data from the Cyberspace Administration of China. The five-year compound annual growth rate (2020-2024) of China's blockchain market is expected to reach 54.6% – fastest in the world – International Data Corporation data shows. There will be a surplus demand for blockchain talent in China, forecasts international consulting firm Gartner, which projects China's blockchain talent gap will reach more than 750,000 people.

Yifan He, CEO of Red Date Technology and the technical architect of China's state-backed Blockchain Service Network, said the demand for blockchain talent today in China is relatively small compared with its potential.

"The current blockchain in China is like the internet in 1992, when people only thought that the internet could only be used to send emails," He said, "while people's understanding of blockchain still focuses on cryptocurrency." He predicts clear demand for permissioned, non-crypto blockchain talent in five years.

But much can change in five years, especially in the emerging tech space where one day is like a week and one week is like a year. Others in the industry question whether the growth can continue in this vein despite the legal restrictions on blockchain.

“Sometimes we have a mindset of cutting corners to catch up with the west,” said Xiao Zhang, a computer science teacher from Shandong Technology and Business University. “However, in Web3, there is no shortcut."

Having worked as a Polkadot ambassador in China in 2020 – contributing to the blockchain’s interoperability protocol community – Zhang established the zCloak Network, a privacy-preserving computing platform. His perspective is rare, as a higher education teacher who also works on Web3 projects. "It seems almost impossible that we will reap a harvest if we stand outside of the Web3 world only," Zhang said.

University students are finding ways to get inside the world of Web3 and crypto, despite the bans. Though language barriers are difficult to overcome, the students can be found engaging in western social and messaging apps such as Twitter, Discord and Telegram.

Informally, students also are reaching out to alumni and private enterprise to get a handle on what blockchain technology is in the real world. THUBA DAO, a DAO initiated by students of the Tsinghua University Student Blockchain Association, held its first Twitter ask-me-anything event in August with Uniswap Labs, the company behind Ethereum-based decentralized exchange Uniswap. That same month, THUBA DAO held a global hackathon, open to all university students, that received over 60 projects. (Tsinghua was ranked 6th in Best Universities for Blockchain 2022.)

"Policy [in China] has an impact on the whole industry. If we can't understand tokens objectively and make proper regulation, it will actually become a bottleneck for blockchain development in China," said SAIF’s Hu, who also is a cofounder of an early-stage metaverse startup. But he is taking a long view of progress.

“There may still be some years to go before we see significant results, after all these resources have been rushed in,” Hu said.