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