Blockchain without cryptocurrencies: How might China’s BSN change Web3?

Blockchain without cryptocurrencies: How might China’s BSN change Web3?

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vAngie Lau: 2019, the year blockchain technology  got the green light from China's top boss,   Xi Jinping, that set into motion a juggernaut with  far reaching impact. It was no longer just about   the Chinese crypto exchanges or crypto miners. It  kickstarted conversations about a Chinese central   bank backed digital currency powering Chinese  cities into the metaverse and so much more. Well,   none of this would be possible without the  digital architecture this ecosystem needs.  

And we're going to talk to someone who's very  closely involved in building just this in China. Welcome to Word on the Block, the series  that takes a deeper dive into blockchain   and all the emerging technologies that shape  our world at the intersection of business,   politics and economy. It's what we cover  right here on. I'm Editor-in-Chief Angie   Lau. And today we are in conversation with  Yifan He, he's founder and CEO of Red Date   Technology, that's backing BSN, or  blockchain based service network in China.

Yifan, thanks for joining us. It's  great to have you on the show. Yifan He: Thank you, Angie. Thank you for having. Angie Lau: Start from the very beginning   for the audience, not too familiar. What are  you and your firm helping build BSN and what   is BSN? And let's start with the basics.  What is the blockchain services network  

that you're building out and what is Red Date  technology your firm's role in its development? Yifan He: Okay. BSN Basically, it's a project that  we started in China with some local partners from   the state owned enterprise and some government  agencies. The purpose of BSN basically is because   we believe the blockchain technology is so  powerful issue far beyond the only use cases   of cryptocurrency. So it should benefit all  the I.T systems in the world. But by keeping,   you know, 2018, everything about blockchain is  cryptocurrency. So that's why we want to build a   new infrastructure, but to actually integrate all  kind of technology, including public chains. But,  

you know, somehow, you know, just getting rid  of cryptocurrency and to make that into appeal   IT infrastructure, then all the business in  the world, all the families, individuals,   high school students can use this infrastructure  to easily to build a decentralized application   and the benefits their own matters. No matter  is opinions matter business person you know   all just high school students project. So  that's basically what we're trying to do. So but this is a massive project because, you  know, we want to enable all the cloud services to   easily to adopt BSN infrastructure. So we need to  integrate all the APIs from major cloud services   like AWS, Google, Microsoft, Ali Cloud in China,  Huawei Cloud and also at same time, just like I   said, we don't want to just like build one chain,  you know, like public chains of fabric, you know,   everybody kind of we want to integrate as many  technologies, blockchain technology as possible. That's why we integrate almost all of  the permissioned framework in the world.   You know as long as you know a name,  we already integrate. Also,we integrate  

all the major public chains also into  the infrastructure. So because what we   really, really think is it doesn't matter what you  want, you know, it's just infrastructure. You can,   you know, build whatever you want. But as a public  chain, we actually put it into two categories.

One type of public chain we call crypto based,  which is the regular Ethereum, and regular   Algorand, regular Tezos. So it's a still for the  crypto industry so people can easily access nodes   of those public chains. The second category we  build actually, we call non-cryptocurrency public   chains. They are still public chains based on the  popular framework, like Ethereum, like Polygon,   like Cosmos. But for those type of public chains,  we actually take out the cryptocurrency from Layer  

1, so when people access those public chains,  they pay gas with fiat money at a fixed rate. So which means it's still a public  chain for structure, but the people can,   you know, spend like $0.02 fixed rates to  mint NFTs for their traditional business.   So that's basically what we're trying to  do is basically if you need permission,   you have it if you need the regular public chains,  you have it. And if you need some public chain,   but without crypto, we also have that, so just  just a global infrastructure for everybody to use Angie Lau: That's actually fascinating because  as we know right now, cryptocurrency is really   what incentivizes a lot of these blockchain  layer ones. And that's the ecosystem. Right.  

But what you're saying is that you can actually  still use the public blockchains by removing   the cryptocurrency and then just adding a  fiat label to it. Isn't that kind of like a   stablecoin using some sort of a stablecoin?  Like how does that actually function and is   that what BSN - have you created some sort  of payment layer that allows you to be the   intermediary between the fiat, the person  playing fiat, and then you delivering the   crypto payments to an Ethereum or to a Cosmos  or to other layer ones, how does that work? Yifan He: Yeah, it's a very good question. It's  actually how we built the – basically first, the   non cryptocurrency version of public chain. It's  basically a new chain. It's a three new chain. We  

build three new chain basins, existing framework,  not just part of the agreement. We basically hard   fork turn into a new chain, but we actually only  what we only did is take out the cryptocurrency.   So, the way people use those three non we  call them non cryptocurrency public chains   they actually use fiat money. Okay. We can  accept credit card and we can also accept   USDC anonymously, so we want people  use those technologies anonymously.

You know, we don't even collect anything. So the  people actually use USDC to purchase a new token,   and you know, our BSN Spartan network  is called NTT. Why is NTT it stands for   non-tradable token. So which means, you know,  when you purchase the NTT with the rates one,   two, pack the way – so one at 1 USD,  so one NTT equals one US dollar,   but as an NTT stays in your wallet, it cannot  be transferred then because we have three public   chains right now. I think in one year it will  go to like 20 public chains on the network. Yifan He: Then you can actually  choose to convert the NTT into any   you know, we call that a wallet. Inside the  wallet, it's no longer the cryptocurrency,   it called gas credits. So you can actually use  the NTT only to convert them into gas credits.  

Because for each chains the units, it's different.  You know, it could be, you know, 20,000 on the gas   credit on this chain, you know, 200 gas credit in  other chain. It doesn't matter, but it always is   a $1. Then you use those gas credits to consume  those gas credits to execute transactions. You   know, deploy your smart contract, call any smart  contract energy. It consumes the gas credit.   And also the gas credits are not transferable. So  then you basically use fiat money to purchase NTT,  

to purchase gas credit and to consume them though  after consumption, so those gas credit actually   get destroyed. So then it basically is a way  how the regular people with us to all credit   card if you don't care so it will actually  use credit card to purchase NTTs and so on. Angie L au: Because what you're actually doing  is fundamentally reducing it back to the utility   of the layer. Actual blockchain protocol, rather  than what we're seeing right now in the space,  

is very speculative. There's there's a lot of  back and forth. We're watching price movements   go up and down. What you're saying is that there's  actually a utility layer here. And and we all know   China's stance on crypto, right? So it's very in  keeping with policy, internal domestic policy,   but at the same time recognizing and not  ignoring the utility of that blockchain protocol.   That's that's interesting. Yifan He: Yes, but because BSN we try  to build into a global infrastructure,   actually it's the BSN Spartan network with  the three non cryptocurrency public chains,   they are for outside China. Because  they are still public chains, public   chain with all the cryptocurrencies still inside,  China is against the regulation because the KYC,   there's no KYC, there's, you know, there's  no content control. There's, you know,  

many so they actually if we run the Spartan  Network inside China, it's still illegal. So that's why we don't allow anyone from  China to set up the data centers of the   Spartan Network. So it's only for global  market. So the Hong Kong is the home base   of the Spartan network and also because  it's for outside China and the target   customer is traditional IT industries is not the  crypto industry. So we work with almost 2000s of  

very famous Hong Kong companies. You know, the  first time when we talked to the IT department,   you know, they understand what  we're trying to do immediately. You know, it's always be hard to talk with my  crypto friends, you know, why you even do this,   you know? But for the traditional IT department,  they actually immediately understand this,   you know, because the way we positioned is  first as a BSN Spartan network is basically   a decentralized cloud services network. So  it's not even about blockchain. Blockchain   we consider them as operating system within  this decentralized cloud. Then then it become,  

you know, a new choice for those traditional  I.T industry. You know, it's a largest bank   in Hong Kong, the largest land developers, the  largest hotel chain in Hong Kong, They say, okay,   now I can actually put some data not only in my  back end system, but in a public environment. So,   for example, my customer can have much, much  better privacy there. They can control some   of their data. Not everything in my back end  system, you know, my customer couldn't even  

say so. So then for I.T department, there's  two choices right now. One is backend system,   one is a public system. They can choose how they  can build their part of their IT infrastructure Angie Lau: But why wouldn't they choose Angie Lau: Just you know the original  layer one protocol Ethereum, pay with   crypto do all of those functionalities  why wouldn't those firms do just that.

Yifan He: Okay. The first the many, many  firms, for example, the bank. Okay, actually,   they actually presented their user case.  They actually of them is building user cases   on Spartan right now. So the bank actually is  HSBC. So by their internal regulation policy,   they cannot touch cryptocurrency.  You know, even they say - okay,  

we just need a little bit cryptocurrency just  as, you know, pay for the gas – they can't, okay. And also for those large traditional companies,  they don't want to touch cryptocurrency also,   because what they do is like when they use ETFs,  they just pay the fees. You know, it's fixed.   They know what's our cost next year. It's very  easy for them, IT department to put a project   plan together. I mean, with cryptocurrency, they  have no idea how much money they will pay next   year. You know, it's for the 99% of the IT  system in the world, they just want to pay  

for what they use. You know, they don't want to  get involved into, you know, speculative trading,   you know, kind of business holding those assets.  It's too risky for them and they don't care. You   say, okay, holding them, you'll probably make some  mone, they don't care. That's not their business. Angie Lau: And you've you've forked away to allow  to allow this to happen. You're still using you're   still using the the the basic protocol. But  the fork is that you're not using crypto.

Yifan He: Yes, exactly. So so when you  really understand how the wallet got the   gas credit and the when you connect to the non  cryptocurrency, you know, Ethereum, Polygon,   Cosmos, when you connect to those chains it's  exactly the same when you using those public   chains, you call the APIs how to deploy smart  contract, how to call them and how to execute   transactions. There is exactly the same.  So if you go through our user manual when   you reach that how to use those chains,  they go back to Ethereum user manual. Angie Lau: Well, how does the ethereum  community think about this? I mean,   all your friends, your all your crypto friends  are probably looking at you Yifan and saying,   are you saying that this is the death of crypto? Yifan He: No. Actually, first, you know, what  we're trying to do, actually, is to bring  

blockchain technology to other industries,  not only stay within the crypto industry,   because right now the cryptocurrency is only one  that cause the blockchain technology actually very   hard for blockchain technology to penetrate  traditional I.T. industries. So right now,   when we take out the cryptocurrency, it's  very easy for them to accept. So we actually,   you know, because we personally I still think a  cryptocurrency just with one type of application   built with blockchain technology, there  should be many, many, many applications   out there. And and also on Spartan Network we  are not even against the for people to build a   layer two cryptocurrency on Spartan network. You know personally I don't like cryptocurrency   okay everybody knows that. But it's like AWS they  don't like a gambling website, but, you know,  

if it's legal they run a gambling website that  they're very good customers, they welcome them   with open arms. We also welcome crypto industry  to build layer two crypto on Spartan Network so   they can whatever. Just imagine if that happens  on Spartan Network, the crypto application and   the traditional applications, they actually  coexist. So by any chance they can actually   call each other. I mean, this is could be a  very good opportunity even for cryptocurrency   industry to actually linked to the traditional  IT industry. You know, this could be the one one   of the ways to make a cryptocurrency to massive  adoption, you know, like we always talk about.

Angie Lau: We've talked before and, you  know, in the early days of BSN, you know,   we had a lengthy discussion. And I remember that,  you know, one of the things that was critical for   for you and building out BSN was really how do  you allow enterprise to accelerate using this   technology to find the efficiencies internally  snd and engage that way? It was it was very   much built from an enterprise perspective. And I  note that today, y ou know, in 2022, you reached   a significant milestone at the end of July of  this year, transactions on the BSN Distributed   Digital Certificate Network surpassed the global  transaction volume on the Ethereum network. That's a pretty big deal. You've got partners  now like Hyperledger, Consensys, Polkadots,  

Tezos and BSN is is really growing into the that  global scale that in the early days you were   talking about. Where are you in the lifecycle of  the BSN ecosystem? We're starting to see traction.   Are we going to continue to see you expand  partnerships with other protocols and chains? Yifan He: Yeah, of course. It's a first. You  just mentioned BSN-DDC now it's actually the   equivalent of the BSN Spartan inside China. So we  don't actually promote the BSN DDC outside China   because there's no public chain on that. There's a  six we call open permission chain. So we actually   convert the public chain into a, you know, a  also fork of the public chain inside China,   but it's fully in compliance with  Chinese regulations. There's KYC,  

there's you know, if someone does something  bad as wallet can be disabled. Okay. So,   so we have to do that in order to run that  business. So only in China, so we have like   one 1,300 business platforms connecting to the DDC  network and under there's 20 million NFT minted. We have like 20 million wallets right now on DDC  network and data transaction, every single day is   beyond 1 million transactions. So it's that's  why it actually gave us a lot of confidence,   you know, for the BSN Spartan Network outside  China, because everybody inside China is now   related to the cryptocurrency industry. All  traditional businesses, you know, 60% of them  

is NFT related, 40% just using the DDC network as  a decentralized database, you know, technology. So that's but we are going to expand DDC  Network and Spartan Network, you know,   all the time because we plan to have you know,  there are six open permission blockchain on DDC,   seven new chains is under development  right now including Casper, Everscale   you know and on the first Spartan network  we will also increase from three chains   to, you know, probably 20 by end of next year. So because we really, really want to integrate  also major public chain framework on Spartan   network. So for developers, they have a lot  of choices. And also between all those chains,   they actually competing with each other because on  Spartan now, each chain has their own operators.  

Not only we operate everything, it's we  actually have a bunch of partners working   with us on those so they actually can set a  different price for the NTT convert to the   gas credit. So which means with this type of  competition, the price will continue to drop. Right now, yeah. Yeah, the right now the  benchmark is like you meaning standard   GRC 721 it cost you $0.03 USD, you know  fixed, but we expect the end of next year   it dropped to the $0.01. Eventually it's  less than one cent to to 721 transaction.  

So it becomes then the NFT technology and the  public chain technology become available to   everybody. I mean, high school students can run up  NFT business with like a $10 spending each month. Angie Lau: Affordable, but it's the technology  that allows for it. But what is so notable here   is that within China, you're doing more. But  transaction volumes than the rest of the world   combined on the Ethereum network. That is pretty  incredible. And it shows the acceleration in the   adoption of the 1,300 firms that are currently  under this network. Right now, that's 1,300. This  

is a country of 1.4 billion. The 1,300 firms that  you're working with, that's just really, you know,   pebbles in the ocean of opportunity here. And  already with the 1,300, that's incredible to me. I mean, it shows really the possibility of of of  blockchain technology. And what does this actually   mean on on a global stage when these firms are  competing with other enterprise firms around   the world at efficiency levels, that that would  definitely be higher than if you weren't working   on a blockchain network. And it not necessarily  yours, but, you know, working with blockchain. Yifan He: Yes. Actually, that's actually  how we say this. China really could be   a leading force in the you know, in the  enterprise blockchain industry because,   you know, most of the firms outside China  still focus on, you know, DeFi, GameFi,   you know, cryptocurrency related scenarios,  which actually is a simple scenario.

I mean, the 1 million transaction on the  DDC network are actually more complicated   than the 1 million transaction  on Ethereum because on Ethereum   almost all the transaction is the transfers,  you know, the Bitcoin wallets. You know,   we as a technical person, I consider that kind  of execution of data operation is very simple,   you know, as simple as possible, you know. But  there are a lot of transactions on the DDC now,   it becomes so complicated. We say the smart  contract with like 100 methods, you know,   it's very complicated – it actually caused  a lot of trouble on the DDC, it breaks down   the chain sometimes. We need working with the  chain operator, you know, 24 hours, you know,   teams together to fix them. That's why the Cosmos  Framework entities become so improved, you know,  

because they never see that kind of volume  with that kind of complicated transaction. So we actually helping those frameworks to  improve even more than public chains because,   you know, the operator actually from the Cosmos  community, you know, the CEO is sitting on Comos   board of directors, you know, basically say,  okay, this is we never see this kind of traffic   under this this complicated transaction.  Then they actually spend like two months   to fix that. Then it make the entire C osmos,  you know, framework become much much powerful. So that's actually, you know, we say, yeah,   we say this kind of thing happens  in China because there's no crypto. Angie Lau: And you're actually stress  testing a lot of these protocols in real   life on an enterprise leve, beven  before they are technically ready. Angie Lau: You find that there's so much to unpack  here. But folks, you're just going to have to wait  

just a tiny bit longer. This conversation  with Red Date Technology founder and CEO   Yifan He that is building out BSN went just a  little bit longer than our usual 30 minutes. In fact, it stretched on for close to  an hour. So we've decided to turn this   into a special part one , t his was  just part one. You got to wait for  

part two because what we talk about  is how do non crypto blockchain work,   what's the future for non crypto blockchains  and why it's important to boost the use of non   crypto public chains from his perspective, what  is actually happening in China and so much more,   you're going to have to wait for part two of this  conversation of Word on the Block with Yifan He. So for now, we thank you for  your patience, but I promise you,   it's going to be worth the wait. Im Angie Lau  Editor-in-Chief of Forkast, until the next time.

2022-11-09 03:22

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