How to build an anti-fraud blacklist based on blockchain?

A hot place will become cold!

In China, the background of the hot blockchain is that China lacks a credit system. After the original physical capital market, which was driven by currency and lost liquidity, had to passively establish a credit capital pricing system based on credit. This provides a great opportunity for innovation - to establish a credit capital market based on information exchange through IT/communication/Internet technology.

In addition to standardization, scenario-based application is a prerequisite for the widespread application of blockchain technology. Of course, it also requires the support of various systems such as laws to establish a relatively complete market system with economic value. The capabilities of technology are limited.

At the blockchain technology exchange meeting, I met my former investment friends and felt that I had entered the rhythm of chasing ups and downs again. Some institutions always have no idea of ​​their own positioning, and even openly say incredible things: a third-party service agency under XX!

The application development path of blockchain technology is likely to be similar to the development process of third-party payment in the past. Due to the issue of opportunity cost, banks, securities companies and insurance companies have adopted more defensive strategies for innovation, which has given a glimmer of hope to the popular financial technology companies. Just like the development of third-party payment in the past, what is needed now is to develop various application scenarios of blockchain technology until an application scenario that can quickly dilute the fixed cost investment is found.

The essence of Internet finance is private finance, and the assets involved are mainly off-balance sheet non-standard assets. Generally speaking, from the asset side on the left side of the balance sheet, according to the type of the subject matter, it can be divided into:

1. Personal small-amount credit loans (including consumer credit), with an average of less than 10 WRMB, pure credit without collateral, small and scattered, and the main profit model is overdue penalty interest due to the availability of funds. The core business capabilities are pre-loan anti-fraud, post-loan collection, behavior management and process management, internal control, etc. Traditionally, this type of business mainly relies on high fixed-cost IT systems to generate economical and effective products and services. High-intensity investment needs to be diluted through business scale. The business features are immediacy (5-minute credit approval), floating interest rates, etc. The core technology is big data anti-fraud and collection, and the business has extremely strong externalities. Anti-fraud first solves the problem of excessive borrowing and circular borrowing by financiers, and collection mainly solves the problem of how to increase the cost of default;

2. Small, medium and micro-enterprise operating loans (mostly in the form of movable and immovable property mortgage loans of business owners and related parties). The average size of each loan depends on the collateral and the funding needs of the financier, ranging from 10 WRMB to millions. It is based on non-credit physical objects and often requires guarantees. The main profit model is the interest rate spread. The core capabilities are more about the risk pricing of enterprises and the ability to dispose of assets. Due to the significantly shorter life cycle of China's small, medium and micro-enterprise development environment than that of developed capital environments, the main problem to be solved is the problem of capital availability, so an effective asset pricing market has not yet been formed. It mainly supplements the traditional banking system, and its essence is arbitrage under the dual-track interest rate system;

3. Equity transfer (including factoring, bills, debt transfer, transfer of financial lease income rights, equity pledge financing, etc.), the average size of which is often capped at 200 to 1 million yuan, mainly supplementary shadow banking-like business, which is essentially arbitrage behavior under the dual-track interest rate system;

4. Other assets of derivative products such as online financial management.

Most of the on-balance sheet assets are standard assets, so the main thing to examine from the perspective of suitability is the source of funds. Investors mainly consider two aspects: investment risk preference and risk tolerance. Therefore, there is the concept of so-called "specific" and "compliant" investors. All the off-balance sheet assets involved in private finance are non-standard assets, so there are also suitability requirements for financiers - whether the institution provides appropriate financing methods and products to appropriate financiers. As intermediary institutions, private financial institutions are supplementary channels outside the conventional system of social investment and financing. The pricing mechanism effectiveness and liquidity of non-standard assets are worse than those of standard assets. In other words, the risks faced by private financial institutions are relatively high. At the same time, private financial institutions need to effectively protect investors and financiers, so as to more effectively protect the interests of the institutions themselves.

The media attributes of the Internet determine that the products marketed on it are public, which basically cannot meet the requirements of specific and compliant investors, and need to be screened with relatively high-cost tools. Then, if we examine the four types of private financial assets from the perspective of appropriateness, the third and fourth types of assets are not suitable for public Internet sales to non-specific investors, and should strictly comply with the regulations on compliance and marketing methods for existing related assets to investors.

The difficulty of financing for small and medium-sized enterprises is not unique to China, but also applies to the whole world. Combined with China's current macroeconomic situation, it is only in China's semi-market and semi-administrative financial environment that the excessively high average rate of return caused by the non-market administrative pricing interest rate system is essentially a risk-free rate of return in the rigid redemption environment, resulting in excessively high operating costs for real industries, relatively narrowed rates of return, increased bankruptcy risks, and the phenomenon of universal finance. Small and medium-sized enterprises are originally a way to absorb employment, solve employment problems, and alleviate the gap between the rich and the poor in society. However, due to the high financing costs, the private investment rate of small and medium-sized enterprises cannot outperform the cost of private financial financing, so small and medium-sized enterprises enter a vicious cycle, and the exit of private capital becomes a rational choice. Based on this, the systematic default of the second type of assets has become a high-probability event, not to mention that there are also malicious defaults by some financing parties, which makes Internet private financial institutions face systematic bankruptcy risks due to the existence of externalities. Once such risks occur, the scale of funds will flow out of the market, and liquidity will be in short supply. When everyone needs to clear out, they can't leave, and the market will collapse. Therefore, the proportion of the second type of assets in transaction volume and loan balance should be reduced.

Due to the abundant market liquidity and the long-term room for consumption ratio to increase by nearly ten percentage points, the market size is tens of trillions, so small personal credit loans for consumption are rigid demand. The profit model also determines that the risk resistance is much better than the pure interest rate spread, so the first type of business should be vigorously developed. The core capabilities of personal small credit loans (including consumer credit) are pre-loan anti-fraud, post-loan collection, behavior management and process management, internal control, etc. Traditionally, such businesses mainly rely on high fixed-cost IT systems to be effective, and need to dilute costs through business scale. The business features are immediacy (5-minute credit), floating interest rates, etc. The core technology is big data anti-fraud and collection, and the business has strong externalities. Anti-fraud first solves the problem of excessive borrowing and circular borrowing by financiers, and collection mainly solves the problem of how to increase the cost of default. Compared with the demand for credit by small and medium-sized enterprises, individual credit seems to be more realistic, more rigid, and more certain in space. Therefore, the first type of business should be the current Internet finance, or more accurately, Internet folk finance, or the business development direction of financial technology.

Due to the existence of externalities, problems such as cyclical lending, multiple lending, and excessive lending have become the main problems in anti-fraud. For a single online lending institution, due to externalities, publicly sharing the black, white, and gray lists of lending will lead to the loss of comparative advantages, so the rational choice is not to publicly share the black, white, and gray lists of lending information.

How to build an incentive mechanism among online lending institutions to share information on black, white and gray lists of lenders without creating competitive disadvantages due to externalities? This is where the hot blockchain technology comes into play.

The basic program framework is:

1. Under the premise of complying with the relevant regulations on credit investigation, a hash encryption index blockchain is constructed on a third-party platform. In order to avoid the risk of violations caused by a single factor, it is generally recommended to use the ID number and name as the index. The source provider is clearly marked in the index as the block content.

2. The content data containing the black, white and gray list transaction information of loans is scattered on the blockchain of the online loan transaction institution which serves as a third-party platform.

3. Use password collision to retrieve relevant content. Once a hit is found, you can selectively exchange information for a fee. This will prevent behaviors such as dragging the database, and there is no need for such things to happen.

4. Funds are recorded in the private blockchain ledger of a third-party platform and serve as proof of fund clearing and settlement between institutions.

5. For data with a high collision frequency, the higher the validity, the ranking of related information sources is given accordingly. For redundant or false information, the hit rate is precipitated and gradually filtered out. In this way, the activity of the data is maintained and false and invalid information is filtered out.

In this way, a blockchain-based anti-fraud blacklist is constructed, while at the same time avoiding the problem of lack of incentive mechanism caused by externalities.

Anti-fraud can be used as a to B business scenario, or a scenario that is not the most rigid, or can quickly dilute fixed costs. However, I also firmly believe that blockchain technology can be used for more than just electronic currency.

Let us believe in human wisdom and wait and see!