As blockchain is still considered a nascent technology, we are currently witnessing the growth of its governance and adoption in the world. Certain countries have boosted the adoption of blockchain technology, including China, as President Xi Jinping has urged the acceleration and development of blockchain.
Other recent notable developments in the country involving blockchain include China’s digital currency electronic payment (DCEP), also known as its digital yuan. The DCEP aims to replace physical cash in the country.
The Blockchain Service Network (BSN) in China has rolled out shortly after the news of the DCEP, which aims to provide small businesses and individuals to operate blockchain applications easily without using a private blockchain network. The Blockchain Services Network is built by a consortium of China’s biggest corporations including telecommunications companies and banks, connecting nodes in 128 cities in the country.
Blockchain.News interviewed Da Hongfei, the founder of the Neo blockchain, to understand more about the development of blockchain in China, as well as Neo’s partnership with the BSN. Da Hongfei, also the Ceo of Onchain, leading blockchain technology firm in China discusses with Blockchain.News more about what is happening in the distributed ledger technology industry.
Q: In your opinion, how will blockchain technology shape the future digital economy?
Da Hongfei: Blockchain is a signature technology for the future of the digital economy. The first industrial revolution was marked by the use of steam engines, the second – by the application of electricity, and the third – by partial automation using computers and the internet. The undergoing fourth industrial revolution is characterized by the application of information and communication technologies to industry and is also known as a transition from the real economy to the digital economy.
The emergence of blockchain could solve the problems such as data trust, confirmation, circulation and pricing in the digital economy, and it is possible to connect the scattered subjects of the world cooperatively and form a huge economic trust network through blockchain technology. Blockchain is a signature technology, and this is a point I want to emphasize, and this is my belief.
Q: As you have mentioned before during the HK Fintech Week, that the regulation surrounding blockchain is more flexible in China than in other countries, how would this benefit blockchain technology innovation in China?
Da Hongfei: In recent years, the Chinese government has emphasized the “four self-confidence” and the “five modernizations.” I believe the government would like to see a new technology or a way to better govern the country and participate in international affairs. We cannot recognize blockchain technology purely as a physical technology, but also a social and institutional enabler that can help us better cooperate with government agencies.
In 2016, I founded Onchain, a top blockchain technology company in China, which has conducted in-depth cooperation with the Guiyang municipal government and the Tongren municipal government to provide digitization solutions through blockchain technology. With blockchain technology, we are seeing a new system – decentralized, automatic and autonomous institutions – for people and institutions around the world to better collaborate. Blockchain is a new system, a new technology, and China hopes to make better use of blockchain to participate in international cooperation, from a follower to a leader of a new order.
Q: Are more flexible regulations better?
Da Hongfei: In Europe and the United States, there are a variety of old regulatory constraints on the development of blockchain technology. The Chinese government emphasized the use of blockchain as an important breakthrough for independent innovation of core technologies and urged to accelerate the development of blockchain and industrial innovation. Therefore, Onchain mainly provides blockchain solutions to local governments and enterprises, and its specific application scenarios covering government digitization, commodity trading, logistics, and so on.
Q: China has become one of the first countries to roll out a central bank digital currency, the DCEP. Do you think this would encourage more adoption of blockchain in the future? If so, how?
Da Hongfei: The DCEP would be enabled partly with blockchain and cryptographic technology. The issuance of DCEP is conducive to promoting the internationalization of the Renminbi and reshaping the current cross-border payment system. The DCEP also supports “double offline payments,” therefore payments can be processed offline. As long as you have a functioning smartphone, even if there is no internet connection, transactions can still be realized.
The issuance and distribution of DCEP will be based on a two-tiered system. The first tier would be transactions between the People’s Bank of China (PBoC) and intermediaries, and the second tier would be between intermediaries and the retail participants. The intermediaries that have received DCEP will then distribute it to the retail participants so that it would circulate through the market.
During this period, the PBoC claims to support various technical options, whether the intermediaries choose blockchain-based distributed ledger technologies or traditional financial systems. The better and more efficient option will eventually win the competition. If blockchain technology finally wins and is applied by the intermediaries on a large scale, of course, it would be a huge boost in adoption to the entire blockchain industry.
Q: With the rollout of the DCEP, would the country likely to see less adoption of other cryptocurrencies?
Da Hongfei: The DCEP is quite different from other cryptocurrencies in terms of its design and purpose. The initial purpose of DCEP is to replace M0, which is the cash in circulation. The rollout of the DCEP will lead to the legalization of DCEP as the only digital version of Yuan, as compared to other yuan-pegged digital currencies, but so far does not have a direct impact on the adoption of other cryptocurrencies.
Q: Could you tell us more about Neo’s partnership with the Blockchain Services Network?
Da Hongfei: Neo partnered with BSN as the first batch of public blockchain partners back in July 2020. Developers can now use BSN international city nodes to develop on Neo with lower cost and deeper service integrations.
Through this partnership, we aim to accelerate the mass adoption of blockchain by lowering barriers to entry and unifying developer experiences. Poly Enterprise has also been integrated to BSN to play an important role in providing connectivity between all networks on BSN. Poly Enterprise is an enterprise-oriented version of the Poly Network which has been launched by Neo, Ontology and Switcheo Network in August 2020.
Q: What milestones are Neo looking forward to reaching in the coming year?
Da Hongfei: The most anticipated milestone is definitely Neo3. We are launching the Neo3 testnet before the end of this year, and target to release the mainnet in the first quarter of 2021. As a total revamp of the current Neo blockchain, Neo3 is a robust implementation towards a digital asset platform that will provide high throughput, enhanced stability and security, an optimized smart contract system, and a feature-packed infrastructure set to empower developer adoption and to accelerate enterprise-grade blockchain innovations.
Neo3 has three important components, including a built-in oracle, a decentralized ID solution known as NeoID, as well as a comprehensive decentralized storage system NeoFS.