Shanghai has announced plans to spend $19 billion on blockchain-powered technologies. These projects could help transform the city into a centre for innovation and entrepreneurship, but this aggressive investment begs the question of whether China is ready to lead global crypto adoption efforts.
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The most populated city in the most populous nation in the world formally outlined intentions to increase support for metaverse technologies over the next five years. Other technologies like blockchain, NFTs, and Web3 were also addressed, although it is yet unclear what role these would play in the future.
A draft of Shanghai’s “14th Five-Year Plan for the Development of Shanghai’s Digital Economy” was made public on July 13. The administration promised to support “the profound integration of digital technology and the real economy” in the report. The statement continued by saying that “scientists evaluating technological possibilities” and “entrepreneurs identifying market need” will accomplish this.
Focusing on semiconductors, cloud computing, 5G technology, virtual reality headsets, and other channels, Shanghai hopes to “strengthen cutting edge technical advances.”
According to reports, 10 billion Yuan ($1.5 billion) had been set aside to carry out the plan. The government of Shanghai is hoping that the investment would promote economic expansion and recovery.
Ten “leading” businesses that will operate as “chain-owner enterprises” will be created using government-directed investment. These substantial businesses will engage in worldwide competition. The basic metaverse technology will be mastered by around 100 smaller companies.
In a press conference held on July 8th, Wu Jincheng, the chairman of Shanghai’s Economy and Information Technology Committee, said that these businesses will collaborate to accomplish the objective of “benchmarking goods and services.”
Although the strategy included developing NFTs as well as other cryptocurrency projects like blockchain and Web3, the metaverse seemed to be its main emphasis. Shanghai’s regulatory body will hasten the development of the metaverse platform and place a focus on virtual sports, concerts, and other forms of digital entertainment.
The metaverse will “push the change and upgrading of numerous industries in the real economy,” according to Mr. Wu, who made the statement. The metaverse has a “great market value,” he said. By 2025, it is expected that these three industries would generate $224 billion in revenue.
Although the plan states that the government would encourage businesses that “study and promote the digitalization of NFT and other assets” and are creating NFT trading platforms, recent official attitudes toward cryptocurrencies have been conflicted. The recent decline in the cryptocurrency market prompted the government-run tabloid Economic Daily to advise readers against buying cryptocurrencies.
However, research gathered by Statista indicates that China, Hong Kong, and Singapore have the highest levels of interest in NFTs and the metaverse globally. Furthermore, despite a ban on bitcoin mining activities in 2021, China has lately come back to prominence as the second-largest mining center behind the United States.
Building blockchain+ technology is a key component of the strategy, which is backed by a robust ecosystem for blockchain development that operates independently. There are also plans to investigate Web3. The research program for the next five years includes, among other things, work on a decentralized domain name resolution system (DNS), distrusted data storage, and multi-platform OpenID.
The strategy made no mention of the potential for decentralized financing (DeFi). The plan promised to encourage smart contracts and enhance asset trading, payment and settlement, and registration and custody, but it also emphasized “digital finance.”
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