Wang Zhongmin: Blockchain will be applied to social security fund investment management

Sina Finance News: On August 21, the "China Blockchain Industry Conference" co-organized by the Global Shared Finance 100 Forum and Contemporary Financier magazine was held at the Beijing National Convention Center. Pictured is Wang Zhongmin, Vice Chairman of the National Social Security Fund Council.

Sina Finance News: On August 21, the "China Blockchain Industry Conference" co-organized by the Global Shared Finance 100 Forum and Contemporary Financier magazine was held at the Beijing National Convention Center. Wang Zhongmin, Vice Chairman of the National Social Security Fund Council, attended and delivered a speech.

The following is the full text of the speech:

Wang Zhongmin: There is no doubt that blockchain will have extremely valuable applications in the social security system itself, as well as in the investment and management of social security funds. But how to define it? How to use it effectively? We need to have a fundamental definition of blockchain. At present, all the definitions of blockchain we see are given from the perspective of technology, microscopic perspective, operability, and experimentality, or even from a point or a line.

After we discovered Bitcoin, we said that blockchain is the underlying design and architecture of Bitcoin. For example, when we found that blockchain can record all accounts, we regarded it as a whole network ledger. When we found that blockchain can be peer-to-peer, we regarded it as a mutual accounting logic. We can also regard it as something that cannot be changed, tampered with, or avoided, and it can be regarded as an effective way of supervision. All of these are just one aspect of blockchain, one logic.

To truly understand, experiment with, and apply blockchain, we must know that blockchain is a system, a transaction system, and an Internet-based brake that reproduces the relationship between all personalities, economies, societies, laws, and properties.

In the Internet field, if we boil it down to one point, we find that the Internet-based things, point-to-point, person-to-person, of course, can also be a person to a certain property, or a virtual person to a certain virtual financial relationship, is a point-to-point logical relationship. If all people can be connected point-to-point and networked in a three-dimensional manner through the Internet, the future Internet of Things can also connect people and things, and things and things. We need to find out how to establish these relationships. This is the most fundamental point in the human system.

When did human wealth change significantly? When did human lifestyle change dramatically? What was the system that induced and gave birth to the self-growing change? Trading, when everything, especially economic benefits, can be traded, and when this trading system came into being, it brought about major changes in life, history, and the world. This is the market economy system. The market economy system says that if I can find a demander in the market to sell my products and surplus products to, then point-to-point relationships begin to emerge. If a country, a nation, or an individual wants to be rich, they must exchange their products with other people's products. Once there is a division of labor, there can be specialization. Once there is an exchange, the scale of batch products can be infinitely magnified. The tiny amount of integral basis for your benefits can be infinitely magnified. Since then, mankind has begun industrialization and urbanization, and has infinitely traded and magnified all trading relationships, and the world has changed. When the world began to trade, credit, mutual benefit, growth, and all logic were generated. Today, when we say that the Internet is based on it and that we can have a blockchain, we are transforming all the exchange relationships we have shown into transactions using a certain logic based on the Internet. This is the blockchain.

So I believe that blockchain is a system, a system established on the Internet, which is based on the historical logic of transactions and free transactions. If we look at blockchain from this perspective, we can understand blockchain in a relatively three-dimensional way.

If we understand blockchain in this way, what kind of internal logic is behind it?

First, free and autonomous transactions and exchanges. In the economic field, we will have point-to-point economic transactions. In the financial field, we can generate all financial transactions based on point-to-point currency. When we look at humans today, when objects can be traded and any financial products are generated for financial transactions, this is the latter part of history. But today, from the perspective of blockchain, all things that humans can trade can be traded point-to-point in a timely manner, and across time and space. If you only see economic relations and finance, and see natural persons with property rights and legal persons with property rights definitions, this kind of transaction is point-to-point and not integrated. Blockchain allows your daily actions and everything you send out to have a 360-degree connection with all other people, just like God. When you use blockchain to determine the relationship, we can say that this is a social contract, and all your social contracts have taken place.

The second point is low transaction costs. The earliest things in human history were things with very high transaction costs. Our main goal is to reduce production costs. We have regulatory systems, bills, custody, and clearing. We have currency swaps. Everything we have is to solve the problem of transaction costs. When humans enter the market economy with many tradable and interactive items, the biggest problem is to solve the problem of low transaction costs and who will occupy a larger proportion in the new industry. In the real economy, finance has reduced transaction costs. Why is it said that blockchain can solve financial problems? Because today blockchain can solve the problem of high financial transaction costs.

The third point is the decentralization of logical relationships. Today, all blockchains solve production and exchange problems, and when they are finally solved through transaction fees, all transaction fees are nothing more than a center. Currency is the best tool to solve transaction tools, but in order for currency to reflect the credit of all traders and for currency not to inflate, we must have a central system to manage currency, which is the central bank of each country . How much currency is issued reflects the trust of the times. Too much currency reflects the trust of the times, which is inflation. Therefore, we have established a system for currency. When currency is in circulation, you need to exchange, trade, and reimburse. Whether the bill is real or not, you will extend all the problems. As we see today, all of these can constitute the centralization and organization of transaction fees. If you want to organize something, you need to centralize it and refine its logic. This is the biggest problem of transaction fees. If you can decentralize and save transaction fees, this is the most fundamental problem.

Let's look at it again. If we look at the decentralization of transactions and the minimization of transaction costs, we will find the most fundamental problem in transactions. Point-to-point, bottom-up, what kind of wisdom do humans have? It is individual wisdom. Humans have individual interests. When you exchange your wisdom and interests with others, you are pursuing the maximization of your interests. Only by satisfying the maximization of others' interests can you maximize your interests. This is achieved through transactions. When rational things are achieved through transactions, as long as the transaction products are large enough, the assets are large enough, and the social behavior regulations under the transaction regulations are large enough, the GDP of mankind will increase, and the real welfare will increase.

When we see this logic today, we find that the following premise must be met behind the transaction. It starts with the individual owners of basic property rights. Individuals are rational, and the collective is not just the high transaction cost mentioned earlier. Moreover, the collective is not the sum of individual rationality, nor is it the increment of individual rational chemical reaction. Due to its high transaction cost and high organizational cost, it will reduce rational interests. Why can blockchain be completed? Blockchain is the bottom-level design. Since the market economy is the accumulation of one design after another, it is a collective wisdom, not a centralized command. Centralization is irrational. Centralization must hurt the interests of some individuals, while satisfying the interests of other individuals, and the overall decline is. The collection is based on the bottom-up collection, which produces effective interest expansion and fair sharing of interests. In the process of distribution, such a logic is satisfied. This is my understanding of the institutionalization of blockchain, and a series of its characteristics generated by the understanding of institutionalization of blockchain.

What we want to further answer today is that in China, today's meeting has reflected the excitement generated by blockchain in our minds. In our behavior, we are already pursuing to understand it, apply it, and expand it. When it becomes a logic in our own entrepreneurship and the behavior of our own institutions, what kind of logic will we see in the application of blockchain in China? If we look at the application of blockchain in China based on what I just said, it will definitely meet two conditions, which will be the ecological requirements of blockchain applications.

First, the point-to-point design of the underlying architecture, whether it is a natural person or a legal person, must have its own internal blockchain, accumulate everything it has, apply everything it has, and maximize the value of all its behaviors. Interestingly, China has been carrying out market economic reforms for decades, and has produced private enterprises, and a legal framework, institutional framework, and transaction framework for independent natural persons to pursue their own interests. However, if this is only applied in a small range, you will not have economies of scale and cannot maximize value and benefits. Therefore, when it can be rapidly expanded to large-scale transactions and large-scale applications within a region, it is the most effective process to reduce its organizational costs and transaction costs based on the Internet, and to make wealth self-accumulated.

We have found a boundary, a bottom-up point-to-point accumulation logic, and in a relatively independent closed system, which is a relatively simple system, it will be the best ecological law for blockchain applications. Looking at the practitioners present today, we will find that the most impulsive to blockchain are today's BAT, because it has formed a huge application space. If blockchain is used in this application space, it will generate its own currency, its own electronic bills, and everything else, which will bring it profit growth and reduce transaction costs.

Let's go back to regulation. If blockchain is used in China's regulatory logic today, we say that all information cannot be changed. Only from the perspective of behavioral regulation can the most basic changes occur. We are considering whether to merge the three commissions into one bank and three sentences for financial regulation. When we talk about the reform of China's market economic system, it is actually a historical application in blockchain. We have a comparison of local market economies, mutual competition, and different departments. This is a design of chains and blocks. If simple logic is systematized, we can promote it, expand it, and cover it comprehensively.

We can predict that if blockchain adheres to its true institutional connotation, it will be rapidly approaching us under the new competitive landscape and the impulse of the historical power of new institutions and individuals. Thank you!