China aims to become the world's dominant blockchain power - with the help of Google, Amazon and Microsoft

@ET-DC@eyJkeW5hbWljIjp0cnVlLCJjb250ZW50IjoicG9zdF90aXRsZSIsInNldHRpbmdzIjp7ImJlZm9yZSI6IiIsImFmdGVyIjoiIn19@ Summary: A blockchain infrastructure service network in China is set to provide global access to its services this month Next. The network's reliance on cloud providers in the United States makes it vulnerable to geopolitical risks. Escalating tensions between the United States and China over the past several months may increase these risks.

Indeed, Chinese developments in other areas of technology have been met with resistance from the US government. Details of the Chinese Blockchain Project The Chinese state-backed blockchain infrastructure project aims to be the dominant Internet service provider for decentralized applications (dapps). Being the first engine of its kind is a serious advantage, as are the geopolitical risks.

The project, called Blockchain-Based Service Network (BSN), is expanding globally. While relations between the United States and China have become increasingly tense. BSN is a Chinese state-certified blockchain project.

But only few realize that the network is powered by American technology companies. “Amazon Web Services” (AWS), Microsoft, and Google.

They are among the main cloud service providers for BSN's offshore data centers. This agreement is noteworthy, particularly to US government hawks about Chinese technology. The Trump administration is considering banning Chinese social media app Tik Tok.

Congress approved $1 billion for rural telecommunications companies to divest from Huawei. The US Commerce Department has restricted semiconductor companies from supplying chips to Huawei. At the House antitrust hearing on Wednesday, Facebook CEO 

Facebook, Mark Zuckerberg. Chinese-American painting in technical competition is a zero-sum game. According to Zuckerberg, “China is building its own version of the Internet focused on very different ideas, and is exporting its vision to other countries.”

This fraught environment could spell trouble for the BSN project. said Paul Triolo, Head of Geotechnology at Eurasia Group. “China is trying to seize the leadership of blockchain and dominate this field.

This BSN project may end up being put in the spotlight within the technology competition between the United States and China,” he added. “That is what the perception will be in places like Washington.” “The technology competition between the United States and China has been going on for decades,” Triolo said.

But the focus is shifting from search engines and social media to more basic levels of technology such as telecom equipment provided by Huawei.” Tensions between the US and China reached a peak earlier this month as the US closed the Chinese consulate in Houston and China seized the US consulate in Chengdu in response. In a recent speech, US Secretary of State Mike Pompeo criticized the US-China clashes as a failure.

It is unclear whether these tensions will subside in the near future, even if a new US president is elected. “Even if we get a new administration in the United States, for example, under [former Vice President and Democratic nominee Joseph Biden], there will still be a lot of scrutiny on China on the technology front,” Triolo said. said Graham Webster, China digital economy fellow at New America.

It is a think tank focusing on public policy issues. There is a real risk that technology that does not pose a national security risk will nonetheless be blocked because of politics. Amazon, Google and Microsoft did not respond to requests for comment by press time.

Content One way to limit the growth and development of Chinese technology companies' global services is to pressure their suppliers to cut ties with them. The US has banned Huawei's main supplier. Taiwan Semiconductor Manufacturing Company (TSMC) – from using US tools to make chips if it produces any product for Huawei.

The Chinese company denounced this step, describing it as a “malicious decision.” BSN (Blockchain Project) may end up in a similar situation, given the emergence of US companies as hosts of offshore data centers. The Chinese network does not build or own any of the data centers where it operates its technical infrastructure.

90% of BSN's domestic data centers are provided by telecommunications company China Mobile. Most of the external data centers will be provided by Amazon's AWS. This is due to the scale of the cloud service provider's operations around the world, according to BSN.

BSN pays these cloud providers to use their servers and integrates the servers with their software. The network contains two data centers hosted by AWS in China. It also uses a few global data centers built on Microsoft's Arm cloud computing operating system and Google's cloud computing platform.

BSN has one Google Cloud data center headquartered in Tokyo. One from Microsoft in Johannesburg and two from AWS in Paris and California. Dapp developers can more quickly access services from a BSN if they use a data center that is physically close to them.

This is why offshore data centers are important in terms of providing internet services to the global blockchain community. “If I were a Chinese company, I would be careful about creating a system that was completely dependent on ongoing services in the United States,” Webster said. “Anyone who wants to use the global version of this Chinese network must take into account the risk that a data center in the United States may be taken off the network due to geopolitics.” One motivation to limit the global expansion of Chinese technology companies is concerns about data security.

It is clear that blockchain technology provides a structurally extraordinary level of security and integrity. But there is a battle going on over data localization and cloud services. said James Mulnevon, director of intelligence integration at SOS International, a defense and intelligence firm based in Washington, D.C.

Supports US government agencies. “It is clear that the world has become a ‘network,’ with national borders and local regulations upending the previous idea of ​​‘technical globalization,’” Mulnevon said. “US cloud providers provide services to a wide range of customers and it is difficult to pinpoint what specific cybersecurity concerns might exist if they allowed Chinese companies to use their services,” Webster said.

There is no immediate threat from Chinese blockchain. So far, BSN's global expansion has not faced challenges from US regulators, perhaps because it is relatively new. Or perhaps few lawmakers in Washington can actually understand why. “Part of the reason BSN has not faced challenges from U.S. policymakers like other emerging technologies like 5G and artificial intelligence is that blockchain technology is not well understood,” Triolo said.

The US government is considering restricting Chinese cloud services companies from operating in the United States. But it has not yet addressed the issue of US companies hosting apps with a connection to China. Last May, the Federal Communications Commission (FCC) rejected China Mobile's application to operate telecom services in the United States.

This may mean that Chinese companies trying to build cloud networks in the United States need to be aware of geopolitical risks. said James Mulvenon, Director. Intelligence integration at SOS International, a defense and intelligence firm based in Washington, D.C.

“I would be cautious about big investments in these types of transnational cloud networks because regulators seem very angry about them now,” Mulvenon said. Lawmakers with concerns may take comfort in knowing the fact that even if the Chinese government requests data from BSN nodes hosted abroad, it may not be able to obtain it. The Chinese government has a very broad view of extraterritoriality, Mulnevon said.

“The Chinese government certainly believes that Chinese companies operating abroad (even when incorporated outside China) are subject to Chinese law,” he said. In theory, the Chinese government would request data from a Chinese company like the one behind BSN regardless of where it operates. Which means it may request data stored in data centers external to the network.

However, Red Date, the technology company that designed the technical framework for BSN, claimed. The network cannot access user data, due to its technical structure. Red Date CEO Yifan previously told the website 

CoinDesk. BSN's technical framework fully protects users' data privacy and functions like a switch that better connects developers to data centers where they can run nodes and build applications. He even invited skeptics to examine the netcode themselves.

China Connection The BSN project development association is led by the State Information Center of China (SIC). It is a public enterprise under the National Development and Reform Commission (NDRC), China's top economic planning commission. State-owned technology conglomerates China Mobile and China UnionPay are also deeply involved in building the network.

It is certainly rare to have a government company endorse and lead efforts for a large-scale blockchain infrastructure. And to support two of the largest Chinese technology giants to support the network. However, unlike China's national digital currency, it does not appear to be high-level government agencies.

Such as the Central Bank of China and the Ministry of Industry and Information Technology of China (MIIT) have participated in BSN so far. The exact nature of the relationship between the Chinese government and BSN is unclear. But given BSN's government connection, its reliance on major U.S. cloud providers could be a point of contention on the Chinese side as well.

“There are no foreign companies on any leadership committees for the BSN project. As stated in official documents, Beijing intends the BSN to be a ‘global infrastructure network independently devised by Chinese entities,’” according to a May report from the Eurasia Group.

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