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Editor's note: In May, the "currency circle" attracted countless attention. On May 18, the China Internet Finance Association and other three associations issued an announcement stating that the exchange of legal currency and virtual currency and the exchange of virtual currency between virtual currencies violated relevant laws and regulations and was suspected of being a crime. On May 21, the Financial Committee of the State Council made a heavy statement, once again clarifying the strict regulatory attitude of the financial regulatory authorities towards Bitcoin: "Crack down on Bitcoin mining and trading, and resolutely prevent individual risks from being transmitted to the social field."
Where does the cryptocurrency craze come from? What is the chaos in the cryptocurrency circle? How does mining consume energy? How can blockchain develop healthily? With these questions, the "Strong Observation" column of People's Daily Online has launched a series of reports on "Four Questions About Bitcoin". Please pay attention.
When it comes to the "cryptocurrency circle", some people become rich overnight, while others lose everything. In the eyes of some people, on one side is a "rich mine", and on the other side are skyrocketing and plummeting, liquidation, financial fraud, and "cutting leeks"... How do you view the chaos in the "cryptocurrency circle"? The "Strong Observation" column of People's Daily Online interviewed "senior players" and related experts of virtual currency.
"Cryptocurrency speculators" talk about the chaos in the "cryptocurrency circle" "Since entering the 'cryptocurrency circle' in 2017, I have invested nearly 10 million yuan in succession. However, after being harvested by the dealer, the virtual currencies in my hands were 'cut at a loss' or turned into 'air'. In the end, the account figures were less than 1 million." Mr. Xu is a former "senior player" in the "cryptocurrency circle". He shared a typical experience with the "Strong Observation" column.
In June 2017, Mr. Xu bought a virtual currency called "Dogecoin" on a website through a friend's introduction. The number of Dogecoins exceeded 10 million, with a value of about 160,000 yuan. Because the purchase price was low, Mr. Xu thought that this transaction had a promising future, so he decided to hold it for a long time.
The price of Dogecoin was indeed hyped up. At the end of 2020, when it was time to "harvest", Mr. Xu could not only not open the website where he bought Dogecoin, but he could not even search for it. Only then did Mr. Xu realize that he had been "ripped off".
Mr. Xu revealed to the "Strong Observation" column that he was not the only player who was "scammed". During the period of "speculating in cryptocurrencies", most of the virtual currency players he met had experienced "crash" events such as the price of the currency plummeting, the closure of trading channels, etc., and suffered heavy losses.
Virtual currency has been "listed" in the court ruling. In fact, the chaos in the "currency circle" has constituted a crime.
Data from the China Judgments Online website show that since 2011, there have been 2,130 criminal cases involving virtual currencies, with the number increasing year by year, reaching a peak of 595 in 2020. So far this year, 167 verdicts have been related to the "cryptocurrency circle," involving a variety of charges including "fraud," "assisting information network criminal activities," "obstructing credit card management," and "illegally absorbing public deposits."
The "Strong Observation" column found that virtual currencies played different roles in these cases. For example, in some cases, virtual currencies were "financial products" using the latest financial technology; in others, they were "goods" and "points" fabricated by pyramid schemes; and in some cases, virtual currencies were used as tools to pay for drugs, gambling, and money laundering. These cases involved a wide range of people, with the amounts involved often amounting to hundreds of millions, and had a very bad impact on society.
"Judging from the verdicts in China, South Korea, the United States, Japan and other countries, criminal cases related to virtual currency trading speculation are mostly concentrated in the crimes of fraud, illegal fundraising, illegal issuance of securities, etc." Xiao Sa, director of the China Banking Law Research Association, said that in my country's criminal cases related to virtual currency, there have also been a large number of crimes of organizing and leading pyramid schemes, which have seriously affected the social management order, involved a large number of people, and involved extremely huge amounts of money. The social harm is obvious.
As investment becomes a speculative "cryptocurrency speculation" trend, experts remind investors to pay attention to the legal risks involved.
"Trading virtual currencies is an illegal activity. Once risks arise, the virtual currency property of individuals or companies is not protected by law." Zhao Lei, a researcher at the Institute of Law of the Chinese Academy of Social Sciences, said that due to the illegality of virtual currencies themselves, for cases involving virtual currency transactions, local courts can rule that relevant transaction contracts are invalid based on the relevant provisions of the "Announcement on Preventing Risks of Token Issuance and Financing". The consequences and risks caused by the transactions shall be borne by the investors themselves.
Zhao Lei suggested that before investors come into contact with a new investment product, they must first confirm its legality, and secondly, they must complete the relevant professional knowledge to avoid someone using the guise of financial management to commit crimes. In the face of the continuous escalation of our country's supervision in cracking down on virtual currency crimes, some virtual currency players who are walking on the edge of the law have come up with the idea of moving their business overseas, believing that this way they can avoid the supervision of Chinese law. Even if they commit crimes, Chinese criminal law will be "out of reach."
"This is not the case. If the relevant business touches upon the criminal law of our country, the criminal law of our country can also regulate it according to territorial jurisdiction by virtue of the expanded interpretation of 'the place of crime'." Xiao Sa said that activities related to blockchain and virtual currency are often carried out through computer networks. Article 2, Paragraph 2 of the Interpretation of the Criminal Procedure Law of our country expands the concept of "the place of crime" for crimes mainly committed using computer networks. Even if the main body and business of the business institution are transferred to a foreign country, as long as there are Chinese in its market entities and the property of the Chinese suffers losses, our country can be "the location of the information network system used by the victim", "the location of the victim when he was violated" or "the location where the victim's property suffered losses", etc., and our public security and judicial organs can still exercise jurisdiction over the criminal acts of the business institution.
"The supervision of virtual currencies is constantly upgrading, and the purpose is to crack down on illegal and criminal activities." Liu Junhai, a professor at the Law School of Renmin University of China, believes that my country's active construction of effective supervision methods and laws and regulations on virtual currencies is an important measure to return some resource elements to production. At the same time, he also advises all "currency circle" players to correctly view virtual currencies, abandon the mentality of luck, throw away the fantasy of "getting rich overnight", and get rich through legal means and hard work to create a better life.
“Four Questions about Bitcoin” Part Four: How can blockchain develop healthily?
Editor's note: In May, the "currency circle" attracted countless attention. On May 18, the China Internet Finance Association and other three associations issued an announcement stating that the exchange of legal currency and virtual currency and the exchange of virtual currency between virtual currencies violated relevant laws and regulations and was suspected of being a crime. On May 21, the Financial Committee of the State Council made a heavy statement, once again clarifying the strict regulatory attitude of the financial regulatory authorities towards Bitcoin: "Crack down on Bitcoin mining and trading, and resolutely prevent individual risks from being transmitted to the social field."
Where does the cryptocurrency craze come from? What is the chaos in the cryptocurrency circle? How does mining consume energy? How can blockchain develop healthily? With these questions, the "Strong Observation" column of People's Daily Online has launched a series of reports on "Four Questions About Bitcoin". Please pay attention.
Recently, Bitcoin has attracted the attention of the general public due to its sharp rise and fall and the government's strong supervision. How to understand the relationship between virtual currencies such as Bitcoin and blockchain? What role does blockchain play in promoting the development of the real economy? What will my country do to promote the healthy and orderly development of blockchain? In this regard, the "Strong Observation" column of People's Daily invited many experts to interpret.
Is Bitcoin the same as blockchain?
"In fact, Bitcoin is a virtual currency." Zhao Xijun, a professor at the School of Finance and Economics of Renmin University of China, said that virtual currency is like the points launched by some platforms to encourage players to use their systems more. These points are just numbers, not real currency, but can be traded in kind or transferred. "This number generated by the platform according to the rules has no fixed face value and is not a currency issued by the platform in advance. It can be understood as virtual currency."
When talking about Bitcoin, many people will mention blockchain, and some even think that Bitcoin is blockchain. Is Bitcoin equivalent to blockchain?
"Bitcoin is by no means equivalent to blockchain. The essence of blockchain is a decentralized distributed database. It is an innovative Internet application model of multiple technologies such as distributed data storage, multi-center point-to-point transmission and encryption algorithms. It is not a virtual currency." Long Fan, director of the TreeGraph Blockchain Research Institute, said, "In short, blockchain is actually a decentralized and difficult-to-tamper distributed database or ledger that records data, including public chains, private chains, and alliance chains."
Regarding the relationship between Bitcoin and blockchain, Zhao Xijun believes that blockchain is the underlying technology of Bitcoin. Bitcoin can only exist and operate with the technical support provided by blockchain. The relationship between the two is more like a relationship of dependence and dependence. However, the application of blockchain is not limited to the financial field, and its application is very extensive.
How does blockchain help the real economy?
On October 24, 2019, General Secretary Xi Jinping emphasized at the 18th collective study session of the Political Bureau of the CPC Central Committee that it is necessary to promote the deep integration of blockchain and the real economy and solve problems such as difficulties in loan financing for small and medium-sized enterprises, difficulties in bank risk control, and difficulties in departmental supervision.
"Blockchain technology is related to value circulation, trust building, contract compliance and execution. It can play a key role in technical support for the construction of my country's real economy ecological environment, such as reducing transaction costs, improving product quality and credit, eliminating capital friction, building a healthy supply chain relationship, and creating an innovative and creative ecological environment." Zhu Wei, a member of the Beijing Municipal Science and Technology Commission's expert pool, took the manufacturing industry as an example to explain that the market and policies and regulations are regulating the development environment of the manufacturing industry, but there is still a space for the construction of an industry order between the two. "Blockchain plays a supporting role in the construction of the industry order of the manufacturing industry from a technical perspective, and can help the manufacturing industry quickly, spontaneously and purposefully build a healthy order in the industry."
Based on the technical characteristics of blockchain, such as anti-counterfeiting, anti-tampering, and traceability, Zhu Wei believes that this will help solve problems such as equipment management, data sharing, multi-party trust collaboration, and security assurance in the manufacturing industry. It will also play an important role in improving industrial production efficiency, reducing costs, and improving the level of supply chain coordination and efficiency.
In addition, blockchain technology can promote the integration of industry and finance, allowing finance to better promote the development of the real economy. Zhao Xijun said that the combination of blockchain technology and supply chain can greatly alleviate the problem of difficulty in obtaining loans and financing for small and medium-sized enterprises in the supply chain; the immutability of blockchain and the security mechanism of private keys make identity management easier, and no longer need to rely on third-party supervision and credit, greatly improving the credibility of data networks; distributed ledger technology allows non-commercial confidential data to be stored and backed up at participating nodes, solving the problem of information islands in supply chain financial services.
To promote the deep integration of blockchain and the real economy, Tian Shengdi, associate professor at the School of Finance of Southwestern University of Finance and Economics, suggested: First, establish a provincial or even national supply chain tracking system, and establish a traceable, data-complete and reliable logistics system for the flow of materials related to national security and the people's livelihood; second, relevant departments should encourage industry cooperation, develop collaborative procurement and shared supply chain management platforms, and create highly visible upstream and downstream supply relationships through blockchain technology; third, companies should explore ways to expand the application scenarios of blockchain and improve the application efficiency of the technology, such as integrating information flows, replacing the transmission of paper contracts and bills with blockchain, and integrating capital flows and using blockchain for accounts receivable management.
How can blockchain develop in a healthy and orderly manner?
In the chapter "Accelerating Digital Development and Building a Digital China" of the "14th Five-Year Plan", blockchain is listed as one of the seven key digital economy industries of the "14th Five-Year Plan".
Blockchain has been included in the country's five-year development plan for the first time, becoming an important carrier for developing the digital economy and building a digital China. This indicates that the integrated application of blockchain technology will play an increasingly critical role in the process of digital industrialization and industrial digitization.
In this regard, Pan Helin, executive director of the Digital Economy Research Institute of Zhongnan University of Finance and Economics, said that although virtual currency has been subject to strict regulation in my country, blockchain, with the support of a series of policies, is likely to become an important new infrastructure in the digital economy era. It is of great significance to the development of the real economy, modern finance, scientific and technological innovation, and all countries are now vigorously developing it.
In addition to the benefits, blockchain also poses new challenges in terms of supervision. A blockchain research expert from the central bank explained that virtual currency exchanges, ICO (initial coin offering) fundraising, pyramid schemes in the form of tokens and other clearly illegal and irregular quasi-financial behaviors are frequent, and current regulatory technology needs to monitor and analyze the public chain addresses and transaction data of the above behaviors to determine whether they are illegal or criminal. However, the public chain based on blockchain technology has the characteristics of anonymity, and the smart contract has the characteristics of unmanned operation and automatic execution, which makes it impossible for current regulatory technology to implement detection and analysis, and naturally cannot complete the judgment of illegal and criminal behaviors.
Some illegal blockchain applications use the names of points, stored value, equity, bills of lading, sales incentives, coupons, etc. to carry out illegal financial activities such as fundraising and pyramid schemes. "In addition to technical supervision, there should also be legal and regulatory regulations, but there are still no laws and regulations in this regard." The expert added that even for legal and compliant blockchain applications such as supply chain finance, compliant asset registration and transactions, and evidence storage, it is still unclear how to adapt and be compatible with the existing regulatory process, and regulatory authorities need to formulate refined and operational standards and specifications.
To solve the above problems, the expert suggested that a unified data supervision and analysis platform should be built for virtual currency finance based on blockchain technology, which can not only analyze, predict and judge financial risks by combining bank transaction data, but also improve analysis capabilities by applying big data, joint risk control based on privacy computing, knowledge graphs, artificial intelligence and other technologies. At the same time, supervision should be strengthened for illegal activities that use the name of blockchain rather than blockchain technology to increase the cost of violations. |
