China Has Been Quietly Building a Blockchain Platform. Here’s What We Know
Chinese President Xi Jinping has declared that his country needs to “seize the opportunities” presented by blockchain technology.
In a speech in 2019, the Chinese leader said blockchain was an “important breakthrough in independent innovation of core technologies.” As a result of that speech, blockchain was elevated to a national priority for China, among other technologies — such as semiconductors — that the country is trying to boost its capabilities in.
Since then, without much publicity and fanfare, China has been building a platform that aims to facilitate the deployment of blockchain technology for companies. It’s called Blockchain-based Service Network (BSN).
Here’s what we know so far.
Blockchain first came to prominence as the underlying technology of the cryptocurrency bitcoin. It is a distributed ledger of activity that records transactions on the bitcoin network.
It is decentralized and no single entity owns or runs it. Instead, it’s maintained by a network of participants running specialized computers.
Since then, there have been many different definitions of what a blockchain could look like. Some companies or governments might refer to it as distributed ledger technology. Much of that derives from whether the blockchain is public or private.
Permissionless blockchains — also known as trustless or public blockchains — allow anyone to join and potentially make changes to the blockchain, so long as they are running a particular software or a device.
In contrast, permissioned blockchains are usually private and only allow certain participants to be involved in their use.
Proponents of the technology say that blockchain can help bring transparency and speed to typically slow and expensive processes, such as cross-border money transfers.
Another important aspect of blockchain technology is so-called smart contracts. These are contracts, written in code, that execute automatically if certain conditions are met. Proponents see these as being key in areas such as trade finance.
“We think blockchain technology is so powerful it will change the entire internet and almost all the entire IT system architecture,” Yifan He, CEO of Red Date Technology, told CNBC.
Red Date Technology is one of the founding members of China’s Blockchain-based Service Network.
“Blockchain technology in general is very important for China, as government officials see it as a low barrier to entry technology sector, and want Chinese companies to push the envelope on using blockchain applications to solve real world problems,” Paul Triolo, the technology policy lead at consulting firm Albright Stonebridge, told CNBC.
BSN’s product is aimed at companies, in particular, those operating cloud computing infrastructure. That could be a large public cloud player like Amazon or Microsoft, or it could be a firm that runs its own private cloud or intranet.
BSN bills itself as a “one-stop shop” to deploy these blockchain applications in the cloud, a process that could otherwise be costly and time consuming.
The Chinese firm’s other selling point is that it is trying to solve a difficult problem in the industry: interoperability — or making different blockchains work with each other. For example, if two banks both had applications that were built on different blockchain platforms, they may not be able to work with each other. But applications built via BSN infrastructure would be interoperable as the company bridges different blockchains.
For companies that want to use several blockchain applications in their organization, BSN’s product would allow them to do that via the cloud vendor they use rather than installing a bunch of new servers to build a blockchain product.
