Sheila Lam is the contributing editor of CDOTrends. Covering IT for 20 years as a journalist, she has witnessed the emergence, hype, and maturity of different technologies but is always excited about what’s next. You can reach her at [email protected]A fluctuating cryptocurrency market has made traditional enterprise chief digital officers (CDOs) skeptical about public blockchain, despite its wide use in the financial services industry.
In fact, it is a major reason why many enterprises, along with some Fintechs, are turning to private blockchains. The advantages of restricting the participants, better performance, and stable pricing are attractive. But private blockchains, like Corda from R3, are built for specific industries or purposes. Besides their high cost to build, and the need for complex skillsets put many off.
China-based The Blockchain-based Service Network (BSN) is taking a different route. It is looking to bring public blockchains back to spotlight and make it palatable for traditional enterprise CDOs.
Let’s take out cryptocurrency
The BSN launched its first public blockchain network for the international market BSN Spartan Network last month. It allows traditional enterprises to take advantage of the public blockchains while bypassing the volatile cryptocurrency market.
“Businesses value stability,” said Tim Bailey, vice president of global sales, Red Date Technology, developer of BSN Spartan Network. “We allow enterprises to participate in public chains easier by removing cryptocurrency in the formula.”
BSN Spartan Network eliminates cryptocurrency by creating three public chains that are hard forks of three original public chain frameworks, Ethereum, Cosmos, and PolygonEdge. These chains use Spartan’s non-transferable token (NTT) as a universal utility token, which can be purchased using fiat money paid through credit cards or PayPal.
Baily added that these public chains are open and permissionless, meaning any enterprises and developers can participate and build different digital services. All transaction records in public chains are also fully immutable, meaning that all changes can be traced.
Not-so-complete blockchain
Despite the excitement and accessibility that BSN Spartan Network brings to the enterprises, blockchain expert Christophe Uzureau, vice president analyst at Gartner said CDOs should also understand the maturity of blockchain solutions.
“At Gartner, BSN is considered more a blockchain-inspired, rather than a blockchain-complete solution,” said Uzureau. He added Gartner defines a blockchain-complete solution with all five key elements — distribution, encryption, immutability, tokenization, and decentralization.
One reason why BSN remains a blockchain-inspired solution, according to Uzureau, is that it uses distributed governance, not decentralized governance. While participation in the BSN Spartan public chains is permissionless, the governance of these chains is still controlled by a single body: the BSN Foundation.
According to BSN, the Singapore-registered BSN Foundation consists of three committees — technical committee, governance committee, and business committee — to oversee issues like R&D activities, distribution rule of NTT income, and upgrading existing chain.
Bailey said BSN Foundation was expected to eventually consist of 40 members, with equal voting rights on significant matters related to the BSN Spartan Network and the public chains. He expects to announce the first 10 initial members by the end of October and the potential members include major cloud providers, global tech firms, law firms, financial institutions, system integrators, and software developers.
Calling BSN Spartan as “public blockchains with Chinese characteristics,” Uzureau said BSN is a cornerstone in China’s digital enablement. Its connection with the country’s digital silk road suggests a game-changing model for global technology players and businesses to participate in the Chinese market.
“The BSN’s connection to the digital silk road and thence supply chain partners offers potential for efficiency gains. However, the architectural design has implications for data oversight and thus the terms and conditions of doing business in a Chinese context,” stated the Gartner report that Uzureau co-authored.
Beta and POCs
Hong Kong enterprises see potential in BSN Spartan Network. Emperor Group, Prenetics, Lan Kwai Fong Group, Maxim’s, HSBC, and Fujifilm Business Innovation Hong Kong are taking part in the beta program to explore building digital services through its public chains.
“We are always on the lookout for new ways to help our clients in business transformation,” said Alan Chan, director of marketing & supply chain management at Fujifilm Business Innovation Hong Kong (FBHK). “Despite being far from mature, Web3 and blockchain are the future for transformation. We are keen to participate early and take part in this transformation journey.”
Currently at POC stage, FBHK aims to securely store and tokenize digitally signed documents using the BSN Spartan Network and is Semi-Fungible Tokens (SFTs) to authenticate them. The next stage is to work with HSBC for testing the payment-triggering process of these blockchain-authenticated documents.
Upon successful testing, Chan said FBHK plans to invite its customers in Q1 2023 to take part in the POC of using blockchain for authenticating signed documents and using the payment process.
“We are the first IT services company in Hong Kong to involve in this public blockchain,” said Chan. “This is a great education and learning exercise for us to prepare for a mass-scale application of blockchain technologies in the enterprise space.”
Despite recognizing its great potential, Chan has some concerns. He noted the scalability and inter-blockchain communications at the BSN Spartan Network would be crucial for the blockhain network’s success. Another concern for enterprises to take part in these public blockchains is the total cost of ownership (TCO), which includes not only the rising gas fee (mandatory blockchain transaction fee) but also other infrastructure and processes associated with the project.
“We are courageous to take part in the POCs, but also cautious with bringing them into production,” Chan added.
Many CDOs will likely share Chan’s concerns as the market environment shifts and companies prepare for economic hardships.
Gartner’s Uzureau added that CDOs looking to participate in BSN Spartan Network should also be aware of the latest developments in different public chains.
One such development is the upgrade of Ethereum, called “the Merge.” It significantly increased the performance from 15 transactions per second to 10,000 transactions per second. Uzureau said the upgrade set the stage for Ethereum to be more energy efficient. This can make it more attractive for companies looking at environmental impact and cost of operations.
A growing community
Bailey believes the BSN Spartan Network is a game-changing model for enterprises to take part in public blockchains. It is certainly raising a lot of attention as well as questions.
To help drive the momentum of its adoption, BSN offers incentive programs for new users to set up virtual data centers with up to 100% monthly NTT rewards, allowing enterprises to learn and explore the potential at a lower cost. Red Date Technology’s Bailey said his company was planning to work with universities to encourage students and researchers to build applications with the BSN public chains.
BSN is also planning to establish a partnership program. The company recently partnered with Saudi Arabia-based Virtual Vision to offer blockchain-as-a-Service. Bailey added that they will announce more partners in Asia and Europe, including consultants, data center operators and cloud platform providers soon. The consultants can help enterprises to build business cases, while data centers or cloud providers can help BSN customers to operate and host virtual data centers.
Will BSN Spartan Network change the minds of enterprise CDOs and see them jump onto the bandwagon? That remains to be seen but at least they’ve had a good start.
Sheila Lam is the contributing editor of CDOTrends. Covering IT for 20 years as a journalist, she has witnessed the emergence, hype, and maturity of different technologies but is always excited about what’s next. You can reach her at [email protected]
Image credit: iStockphoto/lerbank