DigiChina Knowledge Base entries provide background on key entities and concepts in Chinese technology policy. They may be revised from time to time, and comments or inquiries may be directed to email@example.com. This entry was published July 2, 2021.
In April 2020, the Chinese government launched the Blockchain-based Service Network (BSN – 区块链服务网络), which is defined on its website as “common infrastructure for the deployment and operation of blockchain applications globally.”
The BSN is governed by the BSN Development Association (区块链服务网络发展联盟), which is led by the State Information Center (国家信息中心, SIC), a government think tank under the National Development and Reform Commission. Other key associated entities include the state-owned China Mobile telecommunications firm and the payments firm China UnionPay, both of which are listed as launch organizations on the BSN’s homepage. Red Date Technology, a Chinese start-up headquartered in Hong Kong, is the BSN’s technical architect. The three companies reportedly drafted the plan to build the BSN as early as September 2018 before reaching out to the SIC for collaboration.
Blockchain technologies have been an area of official focus in Chinese technology strategy. President Xi Jinping in October 2019 declared at a Politburo study session that blockchain technology would be regarded as an “important breakthrough point for indigenous innovation in core technologies.” Earlier, in January 2019, the Cyberspace Administration of China released the Blockchain Information Management Regulations, which lay out basic content and registration rules for entities offering blockchain functionality as a service.
According to the BSN User Manual the BSN is a worldwide infrastructure network that provides developers and companies a “one-stop-shop solution for blockchain and distributed ledger technology (DLT) applications (DApp),” interoperable within one uniform environment. The manual also describes the BSN as a complex system that involves programming, software development, resource and environment configurations, application deployment, gateway APIs, local SDKs, key certificates, etc.
In an early commentary for Coindesk, Fudan University Professor Michael Sung framed BSN as infrastructure for interconnectivity throughout the country and along the “Digital Silk Road,” offering inexpensive access to blockchain connections. Center for a New American Security scholar Yaya Fanusie argued in testimony before the U.S.–China Economic and Security Review Commission (USCC) that BSN sought to provide infrastructure for new internet applications that would operate on data shared by various parties in real time. He Yifan, the Executive Director of the BSN and the CEO of Red Date Technology said (see 1 hr. 41 min.-mark) in November 2020 he believed that “after 20 to 30 years, all information systems will basically adopt blockchain-based transmission technology.” Similarly, Fanusie said in a forthcoming DigiChina interview he believes BSN is a long-term, generational project with a timeline of 10-plus years. Indeed, Coindesk analyst David Pan has dubbed the BSN an e-commerce equivalent of the Belt and Road Initiative, reflecting a large scale of ambition.
Fudan’s Sung argued that as envisioned, blockchain infrastructure would feed other widely promoted efforts to build a “smart” society through smart cities, connecting encrypted databases linked by 5G to scalable cloud and data management infrastructure in a way that is framed as not feasible with the current decentralized and insufficiently secure systems. The BSN’s permissioned blockchain ecosystem, Sung wrote, is imagined to become the key “infrastructure-of-infrastructures” allowing the vertical integration of cloud computing, 5G communications, industrial internet-of-things (IoT), artificial intelligence (AI), and big data, with fintech and other application-level services on top of the stack.
The BSN relies on the first Chinese-developed open-source consortium blockchain platform, known as FISCO BCOS—a collaborative project developed by Beyondsoft, Digital China, Forms Syntron, Huawei, Shenzhen Securities Communications, Tencent, WeBank, YIBI Technology, Yuexiu Financial Holdings, and others.
As explained in the BSN Introductory White Paper, a consortium blockchain model is also known as a permissioned blockchain, where all business attributes are formulated by the application owner, and users are required to gain approval from the application owner before they can use the application. This contrasts with a permissionless blockchain framework, where any user may anonymously write to or read from a blockchain application. The BSN initially also integrated six public, permissionless blockchains: Tezos, NEO, Nervos, EOS, IRISnet and Ethereum, but has subsequently developed the number of partnerships with other public blockchain providers to a total of 15.
As of the time of publication, the BSN is divided into two different platforms: one for domestic users and one for those outside China, offering two distinct sets of blockchain options, which are physically separated. The BSN has partnered with Google Cloud and Amazon Web Services (AWS), relying on AWS data centers in Hong Kong, California, and Paris to enable its international services, He Yifan said according to CoinDesk, while the domestic BSN relies on cloud services from China Mobile, China Telecom, and Baidu AI Cloud.
From a user’s perspective, developers will be able to create decentralized applications (DApps) using the facilities, such as bandwidth and data centers that the BSN provides, the consultancy Fidinam has observed. According to the BSN Introductory White Paper, the BSN relies on public city nodes provided by data centers and cloud resource providers that have installed the public city node software and are then linked to the BSN network. DApp publishers, then, can deploy the application to multiple city nodes in the BSN, after which participants can enter at low cost through the city node gateway. Fidinam’s analysis suggests that external participants can see live node status and deploy their blockchain solutions via the official BSN website, relying on a pre-built code. As of July 2021, the BSN website listed more than 100 nodes in China and 7 in international cities, including Paris, Sydney, and Tokyo.
BSN is designed to compete on price, in addition to the efficiencies of the interconnected network. He Yifan told CoinDesk the BSN would charge in the hundreds of U.S. dollars per year to maintain a node, which He said compares to hundreds of thousands if purchased in fees and maintenance costs if built directly with cloud providers. The BSN Introductory White Paper explains the low price through efficient resource sharing. Namely, for high-frequency applications, city nodes would reportedly be able to intelligently and automatically allocate node capacity. For low-frequency applications, the white paper notes that multiple applications would be able to share a single node.
Future of the BSN
The “BSN 2021 Outlook,” published on the BSN Medium page, provides an insight into how the actors behind the BSN envision its further development. The post says China will “keep investing heavily on R&D, enabling new features and functions on BSN products, and launch several critical projects and partnerships to accelerate the mass adoption of blockchain technology worldwide.” Additionally, it puts forward several key aspects that set the intended roadmap for the BSN in 2021:
- A universal digital payments network (UDPN) “enabling a standardized digital currency transfer method and payment procedure for any information system.” China is planning to launch a beta version of that payment network by the second half of 2021. Currently, since the BSN does not allow operating with independent cryptocurrencies like Bitcoin, it may rely on the central bank’s digital currency project to power the digital economy built on the BSN.
- More public city nodes (PCNs). The project targets 150 nodes in second- and third-tier cities in China, and approximately 50 abroad, covering most developed countries and high-growth developing countries, integrating more blockchain frameworks, and building more BSN portals worldwide.
- Expand the Private BSN from six Chinese provinces to all 31 provinces by the end of 2021. “BSN is a public infrastructure (like the internet) and does not belong to any single organization, while Private BSN is built on intranets or Local Area Networks (LANs), which are private networks used by organizations to communicate exclusively within their workforces,” according to a post on BSN’s Medium channel.
Observers have expressed concern that the BSN will develop in the context of the Chinese government’s comprehensive surveillance and censorship apparatus and its regulations granting security services broad access to data. Indeed, the BSN is designed in such a way that Red Date Technology can censor or entirely delete blockchains that violate regulations. This is made possible by the so-called Open Permissioned service, which obligates users to pass a know-your-customer (KYC) process, so their identities are known to the BSN operator at all times, according to Anna Baydakova’s reporting at Coindesk.
This appears to be in tension with an unpublished white paper obtained by Coindesk which claims that “absolutely no private user data is stored on the BSN or within the platform,” adding that “there is no API to personal private data on the empowerment platform used within portals, and personal information of all developers and DApp users is managed independently by each BSN portal.” The white paper further states that within the BSN platform, there is no detailed information about the DApp’s developer and no detailed information about the DApp users, and one can only track which portals have distributed any given DApp and how many users are using this DApp. The exact privacy and data security implications of using the BSN therefore remain to be seen.
In his USCC testimony, Fanusie also cited a broader threat to the global internet arising from the BSN. He noted that the Chinese government aims for the BSN to give China strategic global leverage through building a global infrastructure with data centers on every continent except Antarctica, while still owning the network. Fanusie also points to the ambitions voiced by the BSN secretary general Tan Min, who expressed (see 24-minute mark) that BSN would build an internet where China has “independent intellectual property rights and China controls the rights to internet access.” Fanusie concludes with a stark warning: if blockchain developers in democratic countries help build the BSN, they are constructing the Chinese Communist Party’s new internet ecosystem.”
- “BSN Information Package,” Medium, last modified Nov 25, 2020, https://medium.com/bsnbase/bsn-information-package-b631be479e4. References multiple relevant sources and reporting on the BSN in addition to those provided below.
- “Blockchain-based Service Network,” BSN, accessed May 22, 2021, https://bsnbase.com/p/main/index. Official website of the BSN.
- “Blockchain-based Service Network,” BSN, accessed May 22, 2021, https://bsnbase.io/g/main/index. Official website of BSN International.
- “Blockchain-based Service Network User Manual,” BSN Foundation, 2020, https://bsnbase.io/static/tmpFile/BSNUserManual.pdf. Detailed 149-page User Manual for BSN.
- “An Introduction to the BSN (Blockchain-based Service Network),” BSN Foundation, 2020, https://bsnbase.io/static/tmpFile/An_Introduction_to_the_BSN.pdf. Comprehensive slide deck on the BSN and the corresponding architecture.
- “Blockchain-based Service Network. Introductory White Paper,” BSN Development Association, September 2019, https://bsnbase.io/static/tmpFile/BSNIntroductionWhitepaper.pdf. White paper explaining the objectives and technology of the BSN.
- “Blockchain-based Service Network. Technical White Paper,” BSN Development Association, April 25, 2020, https://bsnbase.io/static/tmpFile/BSNTechnicalWhitePaper.pdf. White paper explaining the BSN from a more technical standpoint.
Mikk Raud is a student editor of DigiChina and a master’s in international policy student at Stanford University.