Tokenization Innovation Momentum in 2024 / 2025: City-Level Blockchain Infrastructure | Shanghai Leading The Way

2 min read

  • Shanghai’s foray into blockchain highlights the city’s quest for innovation in multichain communication, quantum-proof security and monitoring illegal on-chain content.
  • Pre-deployment testing includes diverse scenarios encompassing government affairs, cross-border trade, and supply chains, with an extension into the metaverse.
  • This pivot could potentially drive the US to rethink its tokenization strategies, else risk being overshadowed in the global race for blockchain innovation.

By David Thomas

In Brief

  • Shanghai’s government has floated plans to develop multi-chain blockchain infrastructure to virtualize government processes.
  • Shanghai released plans in June to develop new infrastructure as part of a broader push toward blockchain adoption in China.
  • Chinese efforts to virtualize processes could see advancements in tokenization, a promising but still-developing technology.

The government of the city of Shanghai wants to research new technologies to move the city’s infrastructure to the blockchain. Research initiatives will involve multichain communication, quantum-proof security, and processes to monitor and censor illegal on-chain content.

To fulfill its blockchain ambitions, the city will first develop basic hardware, including computer processors and high-bandwidth wireless electronics. Then, it will develop container technology to sandbox different applications on multiple chains, secured by novel encryption and zero-knowledge proofs.

Shanghai Blockchain Will Monitor Visible Information

On the governance side, Shanghai will use economic penalties to discourage bad behavior it detects through behavioral analysis. The system will use on-chain keyword and image filtering to control content and understand how often users access it.

Before deploying the new systems, the government will test the technology in different scenarios, including government affairs, cross-border trade, and supply chains. Shanghai will also explore the potential of blockchain in the metaverse.

The alpha city first signaled its intention to explore blockchain technology in June. Chinese conglomerates Alibaba and WeChat maker Tencent have already developed private networks, while Shandong and Sichuan province have signaled their own intentions to develop city-level blockchain infrastructure.

Shanghai’s Efforts Could Speed up Tokenization Developments

The move from the Chinese economic hub means that the US could fall behind in the race toward tokenization innovation. While several banks, including Citi, JPMorgan, and DBS, have tested transfers of tokenized money, the technology’s potential remains largely untapped.

Speaking with BeInCrypto recently, Tether co-founder William Quigley, an early investor in blockchain technology, expects tokenization businesses to gather momentum in 2024 and 2025. Tokenization, essentially a way to immutably assign ownership of a digital or physical asset on the blockchain, has not standardized a method to quickly transfer physical items to the token owner after the token transfer has been settled on the blockchain.

Use case for tokenization | Source: Citi

Other technologies, like being able to interact with digital twins of physical items in the metaverse, are still technically far away, Quigley added. Meta, the company formerly known as Facebook, abandoned its commercial metaverse plans for a pivot to artificial intelligence.

Learn more about the developing tokenization industry here.

David Thomas

David Thomas is a seasoned electronic engineer with nine years of expertise, has built a distinguished career by combining his passion for writing with an in-depth understanding of… READ FULL BIO

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