Blockchain: The “Guardian” of Bill Management?

The returns don’t have to be high, as long as they are safe; the model doesn’t have to be new, as long as it operates normally. This seems to have become the frustration of investors in financial management.  

With the stock market and funds all green, bank wealth management in a slump, equity crowdfunding slow to heat up, and P2P in a mixed bag, bill wealth management, which has always set a benchmark for "safety", has also been badly hurt recently.  

On January 22 , 2016 , the Agricultural Bank of China issued an announcement stating that a major risk event had occurred in the bill purchase and resale business of its Beijing branch. After verification, the amount involved in the risk was 3.915 billion yuan. Less than a week later, on January 28 , the Lanzhou branch of CITIC Bank also broke out a bill fraud incident of 900-1000 million yuan.  

Although bill financial management uses bank acceptance bills as a security weight, bill identification, opaque guarantee information, high risks, and poor bill quality are still threats to bill financial management, and whether it is Zhonghui Online, Agricultural Bank of China, or CITIC Bank, they are all victims of these threats. With the rise of blockchain, more people are placing their hopes on it for security, but can it really become the "guardian" of bill financial management?  

Bills must be digitized

As for bills financial management, it accounts for an increasing proportion of investors' financial management, and it has also attracted more and more financial institutions to enter. According to the data report of Zero One Finance, as of October 15 , 2015 , among the 1,990 P2P lending platforms in normal operation, about 80 are involved in bill business, mainly bank acceptance bills, with a cumulative scale of 18-20 billion yuan.  

In the bill management business, although there is bank acceptance bill as a guarantee, its biggest risk exposure still lies in the authenticity of the bill and the asymmetry of transaction information.  

As a distributed database that is almost impossible to change, a large number of computer nodes maintain the same blockchain, and participants can clearly view all operation information on the blockchain.  

"Once blockchain technology is applied to bill management, it will completely put an end to bill fraud and multiple sales in bill management transactions. At the same time, it can track the bill redemption time and subject to ensure the interests of all parties." said Ge Lei, operations director of Jinyinmao.  

According to the reporter, when blockchain is applied to the transaction of bill financial management, the key information of all links from bill application, issuance, transaction to acceptance will be recorded truthfully and cannot be tampered with, which is very convenient for regulatory authorities to query. If the bill is illegally occupied, the transfer path of the bill on the blockchain is very clear and can be easily retrieved.  

"In the future, blockchain technology will be able to prevent risks in bills at low cost and high efficiency," said Yang Lingchi, head of the data group at Yingcan Consulting.  

However, to realize the above-mentioned bill chain, the first prerequisite is that a "digital bill pool" formed by digital bills must be established, and all parties involved in the bills, including issuers, circulators, etc., must register and back up the bills on a specific code block in accordance with the rules of the smart contract.  

In the view of industry insiders, the biggest role of blockchain in bill management is credit decentralization. Bills carry the circulation of credit, and blockchain bills transform bill credit into digital credit. It does not subvert the financial attributes of bills, but reshapes another digital new transaction ecosystem, thereby making the risk exposure of bill management transparent and clearly visible to investors and regulators. However, the information data of bills also needs to be correctly screened and judged.  

The road ahead is long and arduous

From the outside, it seems that the risk exposure of bill management can be solved by blockchain technology, but is this really the case?  

In fact, blockchain is essentially just an Internet technology. In the final analysis, it only converts the credit of bills into digital credit, and does not subvert the financial attributes of bills. Using blockchain technology can reduce risks, but it cannot eliminate risk control, which is still the core of finance.  

"Currently, blockchain technology is just a new financial project. We can imagine it as a public ledger that has the characteristics of providing a reliable architecture for system data and establishing trust relationships for Internet finance. This can improve credit problems to a large extent, but it still cannot replace risk control, at least it is not achievable at present, and there is still a long way to go in the future," Yang Lingchi believes.  

In addition, when blockchain technology is used in bill financial transactions, all kinds of data will be reflected in everyone's account books, which is the core of this technology. But in actual bills, which party would want the bill information of their transactions to be reflected in other people's accounts at the same time? In actual operations or operations, the data upload on the blockchain is still in the hands of the participants, so the authenticity and effectiveness of the data are difficult to guarantee. At the same time, it cannot solve the asset credit problem of the party selling the bill in the transaction, that is, whether the face amount can be paid on time.  

Li Huajun, CEO of Piyoubao, pointed out more directly that it is impossible to apply blockchain to bill financial management transactions at present. "Blockchain technology has no application in the domestic financial system. Paper commercial bills are still the main form of payment in China. Electronic commercial bills are only circulated in the People's Bank of China's large-value payment and clearing system, and the data is completely closed to the outside world."