Why can the Open-Permissioned Blockchain Initiative Successfully Bring Together Global Developers and the Chinese Market?
BSN LONG STORY SHORT SERIES #6
In a recent webinar, blockchain industry experts virtually met to discuss the prospects for one of BSN’s most ambitious projects, the Open-Permissioned Blockchain (OPB) Initiative. This article will re-cap and summarise the key points of the discussion and will outline the central importance of the OPB for allowing global developers to successfully access the Chinese market.
Why do international developers struggle to launch their dapps in China and what are the challenges for them?
Brian Xin, founder of NFT platform Uptick, explained the main difficulties international developers currently face when trying to provide their services within China. He argued that whilst the sheer scale of the Chinese domestic market makes it a very attractive prospect for international developers, the quantity and complexity of local regulation present a significant barrier to entry. The most well-known of these regulations is the total ban on all cryptocurrencies. Xin’s view is that so long as developers can demonstrate some real business uses for their dapps, they should be able to meet the legal requirements to operate in China. The key is to avoid any involvement of digital monetary tokens in the application and ensure the affiliated company can meet all the standard business registration requirements. If these conditions are met, then accessing the Chinese market is possible, although this is a time-consuming and potentially expensive endeavour.
What is the BSN open permissioned blockchain initiative and how it can make a difference for developers keen to launch in China?
Jeffrey Hu, Director of Research at Shanghai Bianjie AI Technology, added that regulatory expertise is in fact one of the BSN’s less well-known advantages. Due to the BSN’s unique combination of knowledge and experience relating to both international and local Chinese markets, BSN is able to offer advice and guidance to developers to ensure they comply with all relevant regulations.
Hu described that Bianjie opted to join the BSN’s OPB Initiative because the project will facilitate the large-scale development and application of blockchain technology to solve real business problems, both in China and internationally. Without projects with the OPB’s grand vision, the pace of development in this new field will remain much slower, and Hu urged all ambitious developers to take advantage of the possibility of being involved in a large-scale project like the OPB.
Tim Bailey from BSN elaborated that the OPB vision allows the benefits of public chains for both developers and customers in China, while remaining compliant with the Chinese governments relatively strict set of rules for operating in this space. Specifically, by simply substituting fiat currencies instead of virtual tokens and by making all nodes permissioned, the key strengths of public chains can be retained and harnessed in China through the OPB framework.
For developers, this means they can build and deploy their applications in a way that is regulatory compliant, as well as at a significantly lower cost. The OPB network already benefits from considerable economies of scale, and as the network expands these potential cost savings are set to increase further. Furthermore, the OPB was designed with interoperability as a key objective, and this means developers can be confident that their applications will be able to access and work with as large a section of the market as possible.
Essentially, for these reasons BSN’s OPB is uniquely situated to be the ideal gateway for international developers to access the Chinese market and its tremendous growth potential.
Where will the blockchain market be in 5 years’ time?
Xin draws an interesting comparison between the blockchain world today, and Silicon Valley in 1996. Today blockchain is a new technology, although one that already feels as though it has been around for a relatively long stretch of time, and one with enormous potential to transform all sorts of business processes. He states that although NFTs are still viewed with some scepticism right now, the digitization of ownership rights will soon have penetrated numerous areas of ordinary life (digital deeds for assets including houses have been proposed and trailed, as well as the more well-known examples of tokens symbolizing ownership over music or art).
As such, the focus right now has to be on building applications that can actually improve real-world business operations, and in so doing to educate both the business community and the general public about the benefits for them of blockchain technology. Xin concludes his thoughts on this topic by stating that blockchain in China and internationally is really just getting started, and the next 5 years should really be thought of as preparation for the next 20 years — the period of time over which the next generation of information and communication technologies will be developed and refined.
Ethan Frey, founder of Confio, responds to the same question slightly differently. Frey is currently working on Tgrade, a regulatory-friendly DeFi chain similar to the BSN´s OPB, but aimed primarily at the European market. He sees the ability to use closed, permissioned groups to solve Know-Your-Customer (KYC) issues in finance as one of the most significant break-throughs blockchain has offered so far, and is optimistic that much more can and will be done in this space in the next few years.
Finally, Hu approaches the question by acknowledging that 5 years is in fact quite a long time when assessing a rapidly developing technology such as blockchain. Hu points about that 5 years ago, many currently used dapps had not even been envisioned, so 5 years hence it is hard to over-estimate how far things may have progressed. Hu agrees with Frey that one of the most exciting areas where blockchain still has room to make a sizeable impact is traditional finance, where security and traceability concerns are so central.
What key advice can be offered to global developers eager to enter the Chinese market?
Xin makes several key points on this topic. He emphasized that developers need to understand the local market in depth — what is missing, what do local businesses or consumers they need, and what can you as a developer offer? He gives the example of NFTs and their application to the creative economy as an example of a gap in coverage where dapps could offer a needed service to an underserved section of the Chinese economy. By staking unambiguous ownership over non-tangible assets like art, music, or other cultural products, NFTs can help those employed in the creative industries to monetize their output and solve the ‘free-rider’ problem. Xin endedd by noting that BSN’s extensive infrastructure enormously simplifies the process of entering the Chinese market for international developers, and urges any developers thinking of entering the space to consider the OPB as a path to do so.
Frey agrees that knowing the market well has to be the first step for any entrepreneur keen to enter the Chinese blockchain market. He cautions that the globally diverse and often regularly updated nature of regulation for blockchain apps means the task of staying compliant can seem daunting, but the best approach is to select which markets you aim to operate in and focus on getting to know the local regulations and the needs of local customers in detail.
Based on his own experience, Hu’s advice is to concentrate on bringing more open-source technology into the Chinese blockchain ecosystem. This should force developers to focus on what works and what enterprises actually need, and so to avoid the possibility of building something that may be technically valid and interesting, but has no real-world business application.
Finally, Xin added that the best route to success in the Chinese market is ultimately to show proven success elsewhere. If a developer has a system that works somewhere else and can be shown to provide genuine value to their customers, Chinese enterprises will be pleased to listen and to learn how they could also benefit. Xin underlines how fluid the blockchain world is, and that a creative spirit and willingness to listen to new approaches often characterizes the attitude of Chinese business leaders to the blockchain.