Next month, an alliance of Chinese government groups, banks and technology companies will publicly launch the Blockchain-based Service Network (BSN). The BSN’s proponents say it will reduce the cost of doing blockchain-based business by 80 percent. It will be one of the first blockchain networks to be created and maintained by a central government. Think of it as an operating system, where participants can use existing blockchain programs, or create their own custom tools, without having to design a framework from scratch.
By the end of 2020, they hope to have nodes in 200 cities in China. Ultimately, they believe it could become a global standard. China is leading the world in blockchain-related patents, according to the World Intellectual Property Organization. And blockchain goes far beyond Bitcoin; the technology can be used to verify all sorts of transactions. For example, JD.com—one of China’s largest online stores—uses blockchain tech to verify its supply chain to customers and business partners who were concerned that the retailer was selling knockout versions of luxury brands. The company made its platform open source. China’s General Administration of Customs is using blockchain to monitor 26 international border crossings.
Though China has effectively banned cryptocurrencies such as Bitcoin, digital payments are wildly popular. “Most people prefer to use WeChat or Alipay,” says Hong Wan, a blockchain expert from North Carolina State University. The government may want BSN to become central to a digital currency and payment system that would rival those services. The biggest roadblock to blockchain technology was that creating a platform is expensive and difficult, says Yang Xiang, dean of the Digital Research Innovation Capability Platform at Swinburne University in Australia. “When we look back at the development of blockchain technology, the emergence of BSN or similar solutions is inevitable,” he says.
The plan isn’t without its critics, though. North Carolina State’s Wan, for one, fears that the platform will experience performance lag due to verification of so many trades. The BSN has not yet released detailed technical specifications on the platform, so she does not know how its creators will overcome this problem. “I think we’re skeptical about what’s happening in technology. The BSN Alliance hopes that the platform will someday become the global standard for blockchain operations. But, China’s international partners may hesitate to join due to privacy concerns: The Chinese government will hold the BSN’s root key, which will allow it to monitor all transactions carried out through the platform.
China isn’t the only country to bet on blockchain. In 2016, Australia took the lead to create global blockchain standards through the International Organization for Standardization. The European Union has been fighting for an exclusion platform for years.
