The Blockchain-Based Services Network (BSN) has partnered with the government of China to launch an infrastructure supporting the creation of non-fungible tokens (NFTs) by the end of this month. The idea is to strengthen the Chinese NFT market that is not tied to cryptocurrencies, such as artists, musicians and other categories.
The chief executive of Red Data Technology, the company responsible for technical support for BSN, told the South China Morning Post that NFTs are well accepted by Chinese politicians, as long as they distance themselves from cryptocurrencies such as Bitcoin and Ethereum. He Yifan clarified that a new protocol would help decouple digital arts from coins.
The BSN-Distributed Digital Certificate (BSN-DDC) will provide application programming interfaces for companies or individuals interested in building their own NFT management solutions. To market the creations, you will need to use the local currency, the Chinese yuan.
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Even with the restriction, Red Data is very optimistic about the market. “NFTs in China will have an annual production of billions in the future,” Yifan said in the interview. The “new blockchain” would be fully managed by a group designated by the Chinese government as a way of tracking transactions.
The creation and maintenance costs must be fully absorbed by three state agencies: China Mobile, China UnionPay and State Information Center. When fully functional, the expectation is that token movements will leave the more than 20 current public networks to be centralized in the BSN-DDC.
Another supposed advantage of BSN-DDC would be interoperability between systems and reduced rates. To mint an NFT, for example, the gas on the Ethereum network can reach hundreds of dollars at peak times, while on the Chinese network it would be something close to $0.07.
NFTs centralized in China
One of the most basic premises of the world of cryptocurrencies and NFTs is something completely opposite to the idea of Beijing: the decentralization of services. Digital arts can be released and traded on public blockchains from anywhere in the world, without bank interference or state regulation.
China, however, considers this practice illegal, because all local internet systems need to identify each user. The rationale is that regulatory bodies can act when they notice illegal activities, criminal activities or money laundering. Opponents say, however, it is just an excuse to monitor citizens and undermine any attempt at rebellion against the Communist Party of China.
Although the local authorities turn their nose up at cryptos, it is clear that the country is eager to raise more funds and, most importantly, monitor the country’s NFT activity. The e-commerce of tokens has already proved to be highly profitable and has attracted the attention of the entire world, including Chinese millionaires in recent years.
NFTs are not illegal there and several Chinese Big Techs already have solutions aimed at this market, such as the commerce giant Alibaba and its marketplace. Rival Tencent has also adopted the term and launched a dozen collections since last year, a path also followed by JD.com and Baidu.