In a few weeks, an alliance of Chinese state organizations, tech firms, and banks, are going to launch a Blockchain-based Service Network (BSN) in 100 cities across the network. This is the first time in world history a central government has built and maintained a blockchain network. It is going to operate like an operating system where users will be able to build tools or use existing blockchain programs without having to design the framework themselves.
China Blockchain – Massive Cost Reduction
Some estimates claim that this will cut the cost of doing business using a blockchain by around 80 percent. By the end of 2020, the goal is to have launched in 200 cities across China. Eventually, it could become the global standard for national blockchains.
China is already a world leader when it comes to patents in the blockchain sector. However, the Chinese government is looking beyond cryptocurrencies. They plan to use the technology to verify all types of transactions.
For instance, JD.com, one of the largest eCommerce marketplaces in China is already using the blockchain. It uses the technology in its supply chain to verify the origins of products, which has helped to eliminate the fear that products sold there were cheap imitations. Recently, the firm made its blockchain platform open source. Besides that, the General Administration of Customs is already using blockchain technology at 26 international border points.
China Has Believed in Blockchain Use Cases
During a global blockchain survey conducted by Deloitte in December 2019, China seemed to have a bullish outlook on Blockchain technologies. According to the report,
- 73% of respondents believed “blockchain is a top five strategic priority.”
- 63% of respondents believed “smart contracts are highly important.”
- 47% of respondents believed “blockchain technology is broadly scalable and will eventually achieve mainstream adoption.”
Crypto Still Banned in China
While crypto is still banned in China, digital payments are quite popular. Most citizens currently use Alipay and WeChat. However, the government is aiming to add a digital currency and payment system to BSN, which would be a competitor to those services.
The main hindrance to blockchain adoption is the high costs of setting up a large-scale platform. As a result, some experts believe the launch of BSN was inevitable. According to the BSN whitepaper, the founding members will have to spend at least $14,000 to create, operate and maintain the platform for a year.
Programmers will be able to create blockchain apps without doing most of the heavy lifting. On average, the whitepaper estimates it will cost a company less than $300 to launch an app on the platform. Unlike public blockchains, BSN apps will have permissioned access by default. This is much better for businesses that would not wish to disclose their private data to the public.
The platform was first announced on October 15, 2019. This about a week before China president declared that blockchain would become a national priority. Since then, companies have been conducting beta testing on the network. By the time it launches, the founders hope that it will have 100 nodes running in 100 cities, with each node having thousands of active users.
Criticism Regarding the Platform
Some have criticized the sheer scale of the platform. They claim that it might lead to performance lag due to the many transactions that will need to be verified. Some also note that the technical details of BSN have not been released. As such, there is no telling how the founders intend to deal with the issue.