Today China’s Blockchain-based Service Network (BSN) outlined an audacious plan for a global network that will support future central bank digital currencies (CBDC) from multiple countries.
It aims to build the universal digital payment network (UDPN) in five years, starting with a beta version in the second half of 2021. We note that it does not mention China’s digital yuan or eCNY, although doubtless, this will be one of the first to be used.
In many ways, BSN is trying to create the next generation of the internet, supporting and interconnecting multiple public and private blockchains in its international network. The Chinese version of the network supports only enterprise blockchains. Its original aim was to make blockchain affordable for individuals and SMEs, with pricing and accessibility similar to low-cost cloud hosting.
Given that context, it needs to support payments. And as outlined in its blog post, it envisages a not too distant future where several countries will have digital currencies. It’s not claiming to have government agreements, given most countries have not yet made CBDC decisions. But as many CBDCs are likely to be distributed via banks, it plans to build the UDPN with international banks and technology companies.
So the aim with UDPN is for any business or consumer application that needs to make a payment to call the UDPN via a payments API.
In its blog post, a company not mentioned is Digital Asset, which is working with BSN on blockchain interoperability and has a keen interest in CBDC. And UnionPay, China’s answer to Visa and Mastercard, was one of the BSN’s founders.
The BSN blog post talks about a “standardized digital currency transfer method and payment procedure”. If the BSN manages to fulfill its aim of having its network adopted at scale, it could have a significant role in setting the standards used by others. And not just in China.
The BSN was initiated by China’s State Information Center (SIC), China Mobile, UnionPay, Smart Government, and Red Date Technology, which is spearheading the international rollout.
