Professor Chen Zhong of Peking University: Blockchain safeguards the market-oriented allocation of data elements, and real-time supervision is the top priority

On December 26, the 2021CCF China Blockchain Technology Conference was held in Haikou, Hainan. The conference was hosted by the China Computer Federation (CCF), organized by the Blockchain Professional Committee of the China Computer Federation and Hainan University, and co-organized by the China Science and Technology Guoding Data Science Research Institute. Babbitt, a strategic partner of the conference, reported on the scene.

CCF Fellow, Executive Director, Professor of the School of Information Science and Technology, Peking University, Director of the Blockchain Research Center, and Director of the Network and Information Security Laboratory, Chen Zhong, delivered a speech entitled "A Preliminary Study on Blockchain Safeguarding the Market-based Allocation of Data Elements". In his speech, Professor Chen mentioned the important role and status of blockchain in the market-based allocation of data elements, and believed that supervision is the most important part of this process.

The following is the full text of Babbitt's speech:

I mainly talked about the considerations of blockchain for the market-oriented allocation of data elements, which can be roughly divided into four aspects.

First, the analysis of the market-oriented configuration of blockchain elements. What is the technical system like? What is the market-oriented configuration of blockchain data elements like? Professor Jin Hai just gave a very good case in medical treatment. Here we will talk about the relevant practices at the national level.

We have seen that the digital economy has become a very important tool for our future development, and in particular, we have seen that the digital economy has accounted for an average of 31% of GDP. The proportion in each region is different, for example, Beijing is close to 55%, and Chongqing is about 25%. Future development is closely related to data.

We see that when it comes to data production factors, it is still a relatively challenging issue in terms of land, capital, labor, some new technologies, and even management that we are more familiar with.

We have seen in the CPC Central Committee's opinions on accelerating the improvement of the socialist market economic system that it is necessary to accelerate the cultivation and development of the data factor market, establish a data resource list management mechanism, improve data ownership levels, open sharing and other standards and measures, and give full play to the value of social data resources. Today, how we can put such market-oriented suggestions for production factors into practice is a very important aspect.

In contrast to the market-based allocation of factors, we are very familiar with land, which has also been a very important support for our economic development in the past in terms of factor preparation, factor trading and value creation. As for the labor force, we are actually relatively mature, but the challenges of technology and data are still very great. How to prepare and trade data factors, how to use data and how to create value are all things we need to consider. Moreover, data and technology are often closely integrated, so we see that the market-based allocation and role of factors involve four aspects: rules, platforms, pricing and security. Due to time constraints, I will not expand on them one by one.

In fact, we have seen efforts in four aspects: rules, prices, platforms, and security. Supervision is used to ensure a stable and orderly market. In combination with the characteristics of data being replicable, shareable, infinitely growing, and infinitely supplied, breakthroughs must be made in these aspects to ensure the healthy development of data elements and the market. For example, the establishment of unified, standardized, and effective market-based allocation rules for data elements, in which data ownership is a very important factor. The market determines the price of data elements. Such regulations and data trading platforms are very much needed. Therefore, after the Guiyang Big Data Exchange, new data exchanges have been established in Beijing, Shanghai, and Guangzhou.

However, it is very important to know the differences between different pilot exchanges and to find out what new breakthroughs there are in data elements. Therefore, the establishment of data security and institutional systems are great challenges. Several exchanges, including the Chongqing Big Data Exchange, have held exchanges and conducted research on the characteristics of data elements.

From the technical system of data factor marketization, we can see that data factors and technical factors must be integrated and developed. I just talked about digital twins, how to combine computing power. What we actually observe is that the way, method and model of data generation are very different. Entering the Web 3.0 era, thinking with 2.0 thinking and business model, many problems are indeed incomprehensible. Including observing the metaverse now, we must change our perspective. Therefore, the technical structure of the market-oriented allocation of data factors has market infrastructure as the foundation, and must be based on the data life cycle and data supervision as a guarantee to form a factor market.

The data revenue cycle refers to the generation, screening, transmission, cooperation, large-scale calculation, analysis and destruction of data, which involves many specific data integration issues. In fact, all aspects of data preparation involve issues related to the ownership and income rights of data. We just saw that in the context of the hospital, if there is no medical treatment and no integration of data with the doctor's treatment plan, there will be no medical records. Therefore, the entire process of data life needs to be considered.

In addition, how to use incentive mechanisms to increase the enthusiasm of participation? It is not to rely on imagination to decide whether to share data or not to consider its pricing and cost issues, so the establishment of the proportion and data benefits in these links and the specific incentive mechanism are also very important studies. The biggest difference between the establishment of data exchanges now and in the past is data trust. Since the concept of data trust was proposed in 2017 and 2018, two major systems have been formed, one with the United States as the main body and the other with the United Kingdom as the main body.

Therefore, we previously ignored the trust relationship when considering the relationship between the subject of data and the data controller. The idea proposed by the United States does not introduce a third party but confirms the trust relationship of the data controller. In the UK, it is clearly proposed to introduce a third party. Of course, this third party includes our technology. Decentralization itself is also a challenge. How to introduce a third party of trust? I will not elaborate on this due to time constraints, but how to promote data elements, markets, rules, prices, and security based on data trust is an important direction for future development that we need to consider. Another area is the issue of strengthening data protection through privacy computing, which is also a very important aspect of future data sharing.

I am very happy that many experts mentioned supervision just now. In fact, our Blockchain Research Center of Peking University has been committed to solving the supervision issues of blockchain since 2018, and has been at the forefront of regulatory technology. Now it seems that supervision issues will always exist and have received high attention from various countries.

Based on the marketization of data elements in blockchain, you just mentioned some new impacts brought by blockchain, such as value interconnection. How to play the benefits and role of value interconnection? In addition, blockchain itself is a distributed ledger technology. We need to consider how the accounting system as a basic system can play a specific role in the establishment of digital economy, data elements, and trust relationships, rather than just looking at it as a database or data. Therefore, on the basis of the basic concept, we need to play the role of blockchain, including smart contracts, and the final result is to realize the value and transfer of data elements.

We think the most important thing is supervision, because if we don’t introduce supervision, many of our economic operations will have problems. So our idea is to establish supervision on the blockchain architecture, rather than leaving the current supervision outside the chain or between chains. Introducing supervision into the chain will make the ledgers between the regulator and the regulated almost real-time, turning post-event supervision into in-event or even pre-event supervision, and implementing it immediately on demand, and introducing supervision into the process.

So I am very happy that in our practice, not long ago, our two scenarios won the first prize and the technology won the second prize. In this process, we need to include supervision, and the supervisor is not an equivalent node, so the business contract of the computing layer is retained, but a layer is added to the supervision contract. These two layers are very different in China, so they cannot be equated in the same node.

The second feature is that we have established a regulatory language to achieve digitalization, automation, intelligence and inherent security of regulatory rules and make corresponding data elements. So I am very happy to see that in the Central Cyberspace Affairs Office and the blockchain innovation application pilot announced this time, we have a case based on Boya Zhenglian in the 15 comprehensive pilots of the government. In addition, in the characteristic pilots of 16 ministries and commissions, we have the opportunity to participate in education, VGM, the People's Bank of China, the China Securities Regulatory Commission, and the equity market.

Like the registration and listing trading system, there is also the regional equity market trading and national linkage system based on blockchain. The first prize winner will complete the rebound process under a system jointly supervised by the Ministry of Finance and the People's Bank of China.

Why are these things so important for the future allocation of data elements? From the very beginning, data generation has changed the existing ways and their connections, rather than just grabbing data, especially for cross-border trade services. In the process of market-oriented allocation of data elements, we need to pre-place data more, so that we can manage future pricing and ownership in the process of generation.

Finally, and what I think is the most difficult part about blockchain is that it is not technology, it regulates production relations, it must resolve legal relations, and legal relations must be supported by technology. This is the end of my report, thank you everyone.