Blockchain: Let the world bear witness for you

Have you ever thought that there might be a day when real estate transactions are as simple as buying a bottle of mineral water at a convenience store, complex leveraged loan approval cycles are shortened from months to days, companies can get paid as soon as they receive orders, securities trading settlements based on smart contracts can be completed in real time, and you can even issue your own credit-based private currency... It sounds like a fantasy, but leaving aside existing rules and regulations, the technological prototype to realize the above ideas has already appeared, and that is blockchain. Level 39, Europe's largest fintech innovation incubator, is located at 1 Canada Square, Canary Wharf, London. In this incubator, experts from the UBS Innovation Lab are exploring more than 20 application examples of blockchain, and "smart bonds" is one of them. According to the lead researcher on this "Crypto Pathfinder [ 0.23%   funds   [ Research report ] Alex Batlin, senior innovation manager of UBS Technology Department of the "Smart Bond Project", introduced that the "smart bond" model will no longer require the participation of pre- and post-transaction intermediaries, because the software on the blockchain will be specially configured to automatically handle information and capital flows between issuers and buyers. Not only that, the technical team also tried to establish a virtual key in the model, which is linked to the real-world currency and connected to the central bank account, thereby promoting the transfer of value between all parties. "Smart bonds are one of our first experiments in the blockchain field. The goal is to verify the potential application prospects of this technology in securities issuance." Batlin said, "So far, we have not actually issued bonds using blockchain technology, but we have developed and tested applications that can manage the entire life cycle of bonds, including issuance, investment and coupon payments. How does blockchain achieve "self-execution of transactions"? Industry insiders use "ledger" to describe the basic idea of ​​blockchain: In essence, blockchain is a "trust chain" for online transactions. By establishing a "public ledger" that uses encryption technology, all nodes in the blockchain network can participate in bookkeeping and verification, and synchronize data to the "ledgers" of clients distributed in every corner of the world. Information from each node ensures the integrity and authenticity of the "accounts", while thousands of continuously replicated "ledgers" ensure that transaction records cannot be tampered with, so that any fund transfer cannot escape the monitoring of this "distributed ledger".

With such a technical foundation, the core of modern finance - credit - is guaranteed. This means you no longer need to run around various windows and stamp your documents endlessly to get "certification", nor do you need endorsements from banks or intermediaries. Even large loans can be easily obtained with a single click on the computer, because your credit record is there and the whole world can testify to it.

After making Bitcoin popular, blockchain, as the underlying technology foundation, has brought endless imagination to the future financial industry. On Wall Street in the United States, Nasdaq Stock Exchange has taken the lead and become the first large exchange operator to use blockchain technology. At the end of last year, Chain.com used Nasdaq's blockchain product Linq to complete the sale of shares to a private investor. With this technical support, at the moment the transaction is completed, all "ledger" information is updated synchronously, and the clearing and settlement links have actually disappeared. The entire share sale and delivery time is shortened from the usual 3 days to just 10 minutes, perfectly realizing "transaction and settlement". Although it is just a private transaction, Nasdaq believes that blockchain technology has the potential to be applied to the public market.

The Bank of Canada is the latest official institution to join the blockchain exploration. The bank announced last month that it is developing a digital version of the Canadian dollar, CAD-coin, based on blockchain technology. In the project code-named "Jasper", the Bank of Canada is trying to allow participants to deposit central bank-issued banknotes into a special "pool" and then exchange them for CAD-Coin. This project aims to help the central bank issue, transfer or dispose of central bank assets through distributed ledger technology. Compared with paper money, digital currency not only has the property of being unforgeable, but also can provide a direct and clear value transfer mechanism.

"In the next 20 years, the impact of blockchain on the world will be as profound as the impact of the Internet in the past 20 years." UBS experts said that blockchain will open a door to a new financial model, significantly reduce costs, improve efficiency, fundamentally improve the financial system, and subvert many existing business models. No one holds a crystal ball that can predict the future, and it is unknown how many imagined pictures will eventually become reality. But throughout history, all leaps in human development started with technological innovation. Now that the technological foundation is being laid, change will be unstoppable.