money China’s National Blockchain Will Change the World
Professor Michael Sung is founder and chairman of CarbonBlue Innovations, a tech transfer platform for commercializing internationally sourced blockchain, fintech and digital finance innovation in developing countries. He is also co-director of the Fintech Research Center at the Fanhai International School of Finance at Fudan University.
This week, China will officially launch a major new blockchain initiative called the Blockchain-based Services Network (BSN). The BSN is a critical part of China’s national blockchain strategy that was announced by President Xi in late November 2019, but went largely under the radar as the simultaneous announcement of China’s digital RMB currency, called the DCEP, swept the world by storm. Only recently has the Western media recognized the significance of the BSN, which sees its mainland commercial launch April 25. The portal’s global commercial launch is scheduled for June 25.
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Essentially, the BSN will be the backbone infrastructure technology for massive interconnectivity throughout the mainland, from city governments, to companies and individuals alike. The network will also form the backbone to the Digital Silk Road to provide interconnectivity to all of China’s trade partners around the globe. The BSN will be a new internet protocol to allow a more efficient way to share data, value and digital assets in a completely transparent and trusted way between anyone who wants to be a node on the network.
The main BSN founding consortia partners are the State Information Center (China’s top-level government policy and strategy think tank affiliated with the National Development and Reform Commission), China Mobile (China’s largest national telecom with over 900 million subscribers), China Unionpay (the world’s top payment and settlement provider with eight billion issued credit cards), and Red Date Technologies (the main blockchain architect for the BSN). (CoinDesk had a separate article about Red Date here.)
The BSN will catalyze the globalized digital economies of the future.
China Mobile is focused on the IT infrastructure deployment and has been accelerating the rollout of 5G and cloud adoption on the mainland. The BSN has developed cloud management technology that will allow multiplexing compute on top of a flexible multi-cloud architecture in a very resource-efficient way. Cloud providers under BSN’s multi-cloud management services already include AWS, Microsoft Azure, Google Cloud, Baidu Cloud, China Unicom, China Telecom and China Mobile.
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The BSN launch will allow companies to access ultra-low cost blockchain cloud computing services. Target pricing is less than $400 USD/year, which would allow any SME or individual access to the critical tools to participate in the digital economy and drive adoption and financial inclusion opportunities.
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The scale of the BSN is breathtaking, with a hundred city nodes across China at launch and participation by all three major national telecoms and major framework providers on the mainland. The central government has developed a master top-down plan to connect all the major cities in the country, rolling out to 200 cities over the next year and rapidly to all 451 prefecture-level cities thereafter. As I write this article, the world’s largest scaled blockchain testnet is imminently preparing to launch. There are various blockchain-as-a-service applications being developed simultaneously, many of which are already being deployed by city governments to provide services for citizens across the mainland ranging from paying utility bills to registering company credentials. As example, the Hangzhou government has launched a blockchain pilot for unified digital identity, for faster authentication of individuals using government services.
The Chinese central government sees blockchain as the critical next-generation IT infrastructure to build future smart cities, connecting cryptographically secure databases linked by 5G to scalable cloud and data management infrastructure such that big data/AI analytics can efficiently run on top.
China simply can’t implement all of that at scale with a mashup of decentralized systems at the moment. Nor does it want to given the attendant security issues related to sensitive government information and citizen privacy. Thus, a permissioned blockchain ecosystem becomes the key infrastructure-of-infrastructures that allows the vertical integration of cloud computing, 5G communications, industrial IOT, AI and big data, with fintech and other application-level services overlayed on the stack.
The BSN will be the backbone infrastructure technology for massive interconnectivity throughout the mainland, from city governments, to companies and individuals alike.
While the BSN itself is a permissioned chain forked from Hyperledger Fabric, it will allow interoperability with public chains and other decentralized platforms (which will be fully implemented by July 2020). The protocol at launch will already be interoperable with major blockchain platforms and frameworks such as Hyperledger Fabric, Ethereum, EOS as well as most relevant mainland-based blockchain protocols for enterprise, including WeBank’s FISCO BCOS (the Financial Blockchain Shenzhen Consortium, with members such as WeBank, Tencent, Huawei and ZTE) and Baidu’s Xuperchain.
To be clear, the BSN is created to facilitate strong cryptographic security and privacy measures to protect the interests of anyone who will be operating with the protocol. This is analogous to the original TCP/IP internet protocol, which was originally developed by the U.S. Defense Advanced Research Project Agency for military purposes, but now adopted commercially and privately by the entire free world.
See also: Meet Red Date, the Little-Known Tech Firm Behind China’s Big Blockchain Vision
In a similar vein, anyone can now become a node and/or deploy a dapp on the BSN network and share data or conduct business in a completely trusted way. On the mainland, all city governments, state-owned enterprises, and IT framework operators are gearing up to adopt and/or interoperate with the protocol. Because of the scale of the deployment and adoption within China alone, upon launch the BSN ecosystem will instantly become the largest blockchain ecosystem in the world and will become a strong driving force of institutional and government adoption of blockchain around the globe.
The launch of the BSN comes at a critical point in the history of humanity. Modern civilization has never been in a more precarious position, where the beginning of 2020 has witnessed an unprecedented pandemic that is concurrent to the kickoff of perhaps the largest-scale financial crisis the world has ever seen.
This Great Lockdown comes as nations around the world are decoupling from each other, blatant disinformation has been weaponized and nationalism rears its ugly head in ways not seen since the beginning of World War II. One way to solve these systemic challenges is through technology that can enforce trust at all levels of society just as it begins to fray dangerously.
The BSN can facilitate increased global trade and bilateral economic activity to buffer against systemic shocks and great rifts that have been exacerbated by mistrust and differences in ideology. It can connect the world more synergistically together, while democratizing access to the critical tools that will allow more efficient cross-border trade, investment and international collaboration.
This is particularly relevant in a post-COVID-19 world where the ability to digitally conduct business online will be paramount in the new normal. The BSN will catalyze the globalized digital economies of the future through new modes of collaboration and cooperation that are core to the blockchain ethos.
