U.S. – China relations continue to be strained as trade negotiations are called off for a “phase-one” trade deal, while President Trump continues to push against TikTok, WeChat and other Chinese technologies prevalent among U.S. users. Trump’s “tough on China” platform for the upcoming presidential election is gathering increasing support, but is this technology war in the best interest of the West?

While much of the trade war is playing out publicly, China has been working on a move to knock out American influence on a global stage once and for all. 

Building on the momentum of the DCEP, more publicly known as the Digital Yuan, a new currency poised to take over trade and remittances in emerging markets, China has also been developing a new type of interconnectivity – the Blockchain Services Network (BSN).

What is the BSN?

The BSN is China’s national initiative to integrate adoption of blockchain technology across government, big business and emerging markets. 

The BSN will be the backbone infrastructure of interconnectivity through mainland China, city governments, private businesses, and individuals, in both China and abroad. This network will form a new Digital Silk Road to create a link to China and its trading partners globally. 

Think of the BSN as the new internet – a more efficient way to share data, value and digital assets in a completely transparent and secure way. 

A frequent comparison has been made between BSN and the ‘new internet’:

“The internet we know today, was first operated in local hubs with clusters of private networks. Over time, these clusters got interconnected through a set of protocols which make up the current world wide web. This infrastructure, however, was never designed to transfer valuable data in a trustless environment. The BSN is specifically designed with digital assets in mind,”  says Andrea Castiglione, emerging markets blockchain strategist. 

Today, the internet is universal, akin to a public utility. An interconnected blockchain network offers a similar promise for not just the transfer of information, but of digital goods, services and data. 

China has publicly positioned itself as a leader in blockchain development, with 45% of all blockchain projects coming from China. In particular, Chinese companies have recognized early on the power of blockchain-based enterprise applications as they allows for large scale authentic data tracking. Sources close to the project maintain that this project is not about tracking the data for specific individuals and that all data will be encrypted.

The BSN is a critical part of China’s national blockchain strategy as announced by President Xi in November 2019, which was largely overshadowed by the development of the Digital Yuan. 

How does the BSN work?

The BSN is founded by a consortium of several partners, the main four of which include: 

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

Red Date Technologies – the main blockchain architect for the BSN

The collective initiative’s new website states:

“The BSN is a one-stop shop for DApp developers to deploy and manage any permissioned or permissionless blockchain applications. We have built entire operating environments and shared nodes on BSN’s public city nodes (PCN) around the world. Developers only need to choose which PCN to connect and upload smart contracts. We will do everything else for you!”

BSN presents itself as an interoperability protocol between public, private and government blockchain databases. The network structure makes a particular emphasis on city hubs and smart-city initiatives. 

Public City Nodes (PCNs) are virtual centers installed in different cities and operated by local partners as part of the central government’s top-down plan to connect all major cities within China and internationally. The goal is to roll out 200 city nodes across China over the next year, and dozens more internationally.

BSN is not a blockchain itself. Rather, it opens a new world of possibilities to Small and Medium Enterprises (SMEs) who want to develop blockchain capabilities. BSN democratizes access to blockchain capabilities, which today are only available to the largest and wealthiest companies such as WeChat, Alibaba
BABA
and Tencent. Notably, BSN will also allow for more bite-sized affordable cloud storage solutions for SMEs, creating a competitor to AWS in emerging markets. 

What does the BSN mean for America’s businesses?

“Since the launch of the BSN just a few short months ago, the interoperability network has already become one of the largest and fastest growing enterprise blockchain ecosystems in the world, notably allowing connection to public chains world-wide even though they are currently not technically supported in China. China’s enthusiastic deployment of BSN throughout the mainland also represents a watershed moment for the global adoption of blockchain, as the BSN will drastically lower the costs associated with deploying a blockchain service across different ecosystems. This specifically includes a pathway for international decentralized services to be accessed in China and vice versa, thus catalyzing a truly globally-interconnected world,” says Michael Sung, Professor at Shangai’s Fudan University.

Although given current geopolitical tensions, American businesses and governments are unlikely to participate in the BSN, this new network will unite producers globally, potentially leaving American businesses out in the cold, without access to Chinese and emerging market consumers.