China: ban on Bitcoin but state support for NFTs

China, which has banned Bitcoin and mining since last year, has announced that it will launch its own Non-Fungible Token (NFT) industry by the end of the month. The new infrastructure supported and funded by the Chinese state is the Blockchain Service Network or BSN. 

China ambiguous: no to Bitcoin but yes to NFTs

The Blockchain Services Network or BSN reportedly plans to launch the Chinese state-funded infrastructure to support NFT distribution by the end of this month. 

Specifically, this is the BSN-Distributed Digital Certificate (BSN-DDC) which will offer application programming interfaces for enterprises or individuals so that they can build their own user portals or apps to manage NFTs. 

We are far from the world of decentralized Non-Fungible Tokens on public blockchains, precisely because in China, Bitcoin, Ethereum and cryptocurrencies are “illegal blockchains”. 

In this regard, He Yifan, CEO of Red Date Technology, which provides technical support to BSN explicitly said:

“NFTs have no legal problem in China, as long as they distance themselves from cryptocurrencies like Bitcoin.” 

How the Blockchain Service Network (BSN) works 

The Blockchain Service Network or BSN has already been a reality since 2018, backed by Chinese state-owned companies such as China Mobile, China UnionPay and State Information Centre, and has already “localised” more than 20 public blockchains since its debut. The BSN is a solution called open chain with permission. 

In the specific case of the BSN-DDC dedicated to NFTs, there are already 10 integrated blockchains, including the adapted version of Ethereum and Corda, plus national ones such as Fisco Bcos started by WeBank and backed by Tencent. 

In contrast to public blockchains that also use their own crypto to buy NFTs, such as the case of Ethereum (ETH), with the BSN only the Chinese yuan will be allowed, both for purchases and service fees.

In terms of costs, issuing an NFT on BSN-DDC can be really cheap, with a price like 0.05 yuan (0.7 cents). Again, Yifan stressed that it will only be possible to make a profit if 10 million NFTs are generated in a year.  

Digital yuan sets download records

China has its own way of approaching the crypto world by adopting an anti-cryptocurrency stance in 2021, issuing several bans on the use and purchase of Bitcoin and crypto, as well as a ban on mining activities. 

Yet, like other states around the world, it seems that China has since worked on its CBDC by launching the wallet earlier this month and year.

A few days ago, the wallet for e-CNY (the digital Yuan) posted record downloads, topping the app store charts for Apple and Xiaomi, despite still being limited to certain cities only. 

The digital yuan can already be used on other mobile payment apps, such as Alipay and WeChat Pay, while the dedicated app is a full-fledged official wallet that gives everyone certain benefits such as discounts and promotions.