Boao Observation Summit: OKCoin's Xu Mingxing said that virtual currency and cryptocurrency need to be distinguished

On September 23, the 2016 Boao Observation Financial Innovation Summit hosted by Boao Observation was held in Beijing Financial Street. In the afternoon, Xu Mingxing of OKCoin, a Chinese Bitcoin trading platform, was invited to participate in the forum "Beyond Virtual Currency, How Blockchain Changes Finance".

Xu Mingxing said in the forum that the concepts of virtual currency and cryptocurrency need to be distinguished. Cryptocurrency represented by Bitcoin has the characteristics of decentralization and anonymity. It is a currency that can circulate globally beyond any legal currency, but the central banks of various countries are basically neutral about this cryptocurrency based on mathematical algorithms. In China, in 2013, the five ministries and commissions defined Bitcoin as a "virtual commodity". Citizens can buy and sell it freely and bear their own risks, while Bitcoin trading platforms such as OKCoin need to fulfill their obligations of anti-money laundering and anti-terrorist financing. In the United States, Bitcoin is defined as a taxable asset, "securities", "commodities", etc., and is subject to supervision by multiple relevant departments.

Virtual currency is a different concept. Central banks of various countries are discussing issuing virtual currencies. Major financial institutions, including Citi and Goldman Sachs, have also proposed issuing their own virtual currencies. This type of virtual currency can be issued based on blockchain technology, endorsed by the issuer, who will formulate the rules and be subject to supervision. This type of virtual currency is also a great technological innovation, another upgrade of the currency carrier, and reshapes the financial network.

Xu Mingxing gave an example:

OKCoin has issued OK Dollar on its other blockchain product OKLink. This virtual currency is designed to help small and medium-sized remittance companies on the OKLink network to clear and settle more quickly, thereby improving the efficiency of international remittances and reducing costs.

On the question of how blockchain will change finance, Xu Mingxing said that the essence of blockchain technology is a distributed ledger that solves the trust problem between the two parties in a transaction. With this feature, many areas with weak credit will first need the support of blockchain, such as the P2P platform that was once criticized in China. Using blockchain technology, borrowers and investors jointly write transactions into a public blockchain.

In addition, in terms of international remittances, the party with strong credit is undoubtedly the established mature banking system, but in terms of private remittance companies, blockchain can help them establish a credit network, saving private remittance companies the compliance costs of conducting "due diligence" on their partners or setting up companies in other countries.

Xu Mingxing finally emphasized that blockchain is not applicable to all industries. When enterprises consider whether they need to adopt blockchain technology to upgrade their products or services, they need to consider whether the characteristics of blockchain are applicable to solving their own business pain points, such as credit issues, such as clearing and settlement issues. Startups can also consider whether there is a new business model to solve existing social and financial pain points based on the characteristics of blockchain itself.