China’s state-sanctioned blockchain infrastructure project is finally bringing public chains to its Chinese users – but with a significant twist.
The Blockchain-Based Service Network (BSN), a standardized internet services provider for decentralized applications (dapp) developers, plans to make 24 public chains available in its network for Chinese users starting from the second half of November, according to an internal memo obtained by CoinDesk.
Developers can use the technical frameworks behind these public chains to build and run dapps that serve a range of purposes such as financing platforms for small and medium enterprises, source tracking for food companies and record-keeping for banks, law firms or government agencies.
These public chains will look quite different after being “localized” for the Chinese market, however. The network will make the decentralized public chains permissioned and replace their tokens with direct payment by the Chinese currency renminbi to cover transaction fees on these chains.
This is part of a much larger story. The Chinese government is an active supporter of blockchain technology – but only on its own terms. Authorities would like to reap the benefits of blockchain tech’s traceability and efficiency, but without the decentralization embraced by public chains like Bitcoin and Ethereum.
BSN’s latest move came one month after the network integrated six major public chains into the global version of its network. This was so that developers outside China could use a standardized development environment to build and run decentralized applications on these public chains. Unlike in the localized version, public decentralized chains are allowed in the global version of BSN.
“There have been few effective ways for public chains to enter the Chinese market and scale up due to legal and regulatory requirements and how these projects position themselves,” the memo, translated by Coindesk from the original Chinese, said of this latest development.
“The public decentralized chains will become public permissioned consortium chains, which can be supervised by regulators, and that is currently the most direct and effective way for the projects to be compliant and reach domestic users within China.”
These new permissioned chains will look very different from the original versions. To make public decentralized chains, such as Ethereum, permissioned, BSN will only allow its designated operators to build and operate nodes, where dapps verify on-chain transactions and store data. The network will block all peer-to-peer fee transactions and require its users to use renminbi instead of Ethereum “gas” to cover fees for building and running dapps on chain.
“BSN has made it technically impossible to do any virtual currency transactions on the public chains,” the memo said. “BSN strictly follows related laws and regulations and will remove any chain that violates them from the network.”
BSN aims to complete all 24 public chains’ integration with the domestic version of the network during the first quarter of 2021 and enable these chains to share data with each other in the first half of the same year.
The networkhas formed Public Permissioned Blockchain, a consortium to govern the services on adapted public chains. Huobi Group, as the only named member of the consortium in the memo, will be in charge of transaction settlement and clearing, marketing for the new services and operating the official portal.
An unnamed cloud services provider will offer the adapted public chains data storage and other basic internet resources. One of BSN’s backers is Chinese tech conglomerate China Mobile, which has an extensive network of data centers across the country. BSN has also worked with the Chinese branch of Amazon Web Service to provide…