This Saturday, April 25th, will see the launch of China’s Blockchain-based Service Network (BSN). Spearheaded by government groups, banks, and technology companies, the service aims to help Chinese companies adopt blockchain faster and for less cost. Where it would usually cost approx. $14,000 USD to build a consortium blockchain network, companies utilizing the BSN could do so for approx. $300 USD.
While having positive implications for blockchain adoption in Chinese enterprises, what does the launch of BSN mean for the global blockchain industry? What are the primary problems with the service? Is this a stepping stone to the Chinese Central Bank Digital Currency, and does this make China a leader in the international race for blockchain innovation?
Please find below a selection of commentary from a number of experts in the space, each of whom has a unique take on the development.
Jason Wu, CEO of DeFiner.org:
“The launch of China’s Blockchain-based Service Network (BSN) will increase the blockchain adoption competition between countries. Soon after the advance announcement of the BSN, the Facebook blockchain project Libra settled with the U.S. Congress to move forward and launch a U.S. dollar-pegged stablecoin. This will have a long term educational impact, helping people become more familiar with digital assets and growing the industry. As for the short term, the impact is limited, as the subsequent Chinese blockchain projects on BSN will all be led by a centralized organization and not be wholly supported by the current blockchain consumers-based community.
Looking at this international competition for blockchain adoption — China’s leadership is still in question. In China, Government related R&D, think tanks, and stated owned companies are leaders in the field of blockchain. However, the general public or private sector is not as advanced as the U.S. The fundamental principle of blockchain is about decentralization to achieve standardization and to become a public commodity like oil or coal. This usually fails if the project is led by a big organization, as the fundamental consensus is different. BSN will be like a traditional IT platform — it can’t solve the trust issue as there is still a centralized organization to manage the network. For this reason, it is not a blockchain breakthrough nor will it bring fundamental change to society. Decentralized Finance (DeFi), on the other hand, is a true fundamental change, as it will have a big impact on people’s financial transactions.”
Nick Cowan, CEO of the GSX Group:
“China’s increased appetite for blockchain exploration is a further signal of recognition of the tremendous value this nascent technology can bring to practically every industry. Any entity that can accelerate the growth of breakthrough companies, by producing new and innovative solutions to legacy issues, should be welcomed and encouraged. The creation of the BSN indicates the importance China has put on taking a leading role in the development of blockchain, at a time when swift, decisive action will be key to making a large impact in the future digital global economy.
To be clear, blockchain is still very much in the early stages of development, despite a plethora of exciting solutions that have already come to fruition. Many have predicted that blockchain will become as much an aspect of everyday life as the internet, with vast swathes of citizens owning a wallet for digital assets, or having their documentation and bills handled on the blockchain. At GSX Group we’re using blockchain to transform the capital markets legacy systems, driving efficiencies, removing counterparty risk and lowering costs, from a T+2 model to T Instant. Our work is but one area of blockchain-powered innovation, and if more countries lend their support to bespoke blockchain programmes we could see more innovations like our own across a range of sectors, empowering companies to improve the lives of millions of people around the world.”
Ashish Singhal, CEO of Coinswitch.co and CRUXPay, said:
“The BSN is probably not the first attempt, but may be the largest attempt at blockchain adoption by the government of a powerful nation. This move might set off other governments in similar directions, which is a good thing. Another positive thing coming out of BSN is its acceptance of public blockchain. At first, it was widely believed that BSN would only incorporate permissioned blockchain, but it now seems that they will integrate the Ethereum and EOS blockchain too. This is a considerable move and may act as a catalyst for mass adoption.
China, although opposed to cryptocurrency, can undoubtedly be considered as a leader in blockchain space. They have filed the highest number of blockchain patents in the world. For a while now, they have been trying to launch a blockchain-based national currency and have roped in all major sectors including payments, telecom, internet giants etc. to work on BSN. With the launch of BSN, the Chinese government is taking a huge leap in offering a positive environment for the development of an innovative solution. They have made it extremely easy for anyone to plug into their system and use their infrastructure to build through the multiple permissioned and open blockchain incorporated into it. And all of these at a minimal cost of $300.
Despite this, it must be acknowledged that there are concerns that BSN is highly centralised and maybe an attempt by the Chinese government to control this new industry. There aren’t many details around this concern available right now. We will have more information when it makes its public launch.”