On April 6, China’s National Development and Reform Commission (NDRC) announced the launch of a national Blockchain Service Network (BSN), which aims to enhance encryption and traceability of internet transactions and democratize access to the technology. According to proponents of the project, it will reduce blockchain application operating costs by as much as 80%. BSN is intended to be a global infrastructure network to help companies produce all kinds of blockchain applications.
Impact on blockchain in China
The BSN’s main function as a public blockchain service would be to allow small and medium-sized firms (SMEs) to operate blockchain applications at an affordable price point currently unavailable via private blockchain networks. Using the new BSN, the cost for operating a Dapp (a decentralized app that guarantees transaction immutability) is estimated to be between RMB 2000 and RMB 3000 per year. The BSN’s founding members, including Red Date, China Mobile, the Chinese National Information Center, and China UnionPay estimated that to build and operate a private blockchain platform for one year would normally cost RMB 100,000 (USD 14,000).
The Dapp industry experienced significant growth in 2019, as the total value of on-chain transactions reached RMB 162.7 billion (USD 23 billion). According to DappReview’s 2020 Q1 Report, the value of transactions during the quarter amounted to USD 7.9 billion, up 82% from the same period last year, despite the economic uncertainty caused by the COVID-19 pandemic.
The BSN is powered by Beijing-based Red Date Technology, and CEO Yifan He told Coindesk that the BSN does not face stiff competition within China, explaining that the private blockchain providers like Ant Financial and Tencent’s WeBank for example, cannot have the same information-sharing abilities as a public network operator.
The BSN project began back in October 2019, just a week before China’s President Xi declared blockchain technology a national focus. China’s private sector has responded to the call to action from the government, as seven of the top 10 firms in terms of blockchain patents in 2019 were Chinese, with Alibaba and Tencent unsurprisingly leading the way.
Overseas ambitions
Espousing the international potential of the BSN, BSN Alliance, a government-led group of advocates for the project, released a white paper that said, “As the BSN takes hold in worldwide countries, it will become the only global infrastructure network that is innovated by China, whose gateway access is controlled by China.”
The network consists of nodes connecting 128 Chinese cities, as well as 7 places internationally including Paris, Sydney, San Paulo, Singapore, Tokyo, Johannesburg, and California. In addition, the BSN is to support interoperability, meaning that it will support as many blockchain protocols as possible from Ethereum and Hyperledger, to ChainSQL in an effort to increase the accessibility of the technology.
While many blockchain applications were launched to enhance the reliability of health data for governments during the coronavirus outbreak, the technology is likely to play an important role in the digital expansion that follows the pandemic.
During the economic strife resulting from the global health crisis, blockchain has been an important technology in providing financial relief to hurting SMEs. The United Nations praised Ant Financial’s partnership with China Everbright Bank that used blockchain technology, specifically Duo-chain, to optimize the efficiency of loan approval processes as many businesses saw their normal revenue streams dry up.
While private blockchain networks are being further integrated into the digitization of supply chains, China’s move to release a public blockchain network further highlights the crucial role the technology plays in the transition to a safer and more secure digital economy. Blockchain’s ability to provide greater transparency uniquely positions it to solve pain points in the current supply chain, especially during the uncertain circumstances of the COVID-19 outbreak.
The BSN will be accessible worldwide, but have a closed membership system, meaning that applicants need to be permitted to join the network.
Red Date CEO Yifan He summed up the purpose of the BSN project, tellingCoindesk, “One of our primary goals is to include as many blockchain frameworks as possible and make them accessible under one uniform standard on the BSN platform. In that way, we can save users overhead costs to build a blockchain while being able to offer more custom services.”