Rationality or fanaticism, where will blockchain go next?

Editor's note: This article is compiled from the guest dialogue session of the "Blockchain Roundtable Forum" held by Shanghai Shared Finance in 2016. The following interview is a conversation between host Chen Gang (founder and managing director of Gaoronghui Capital and host of this session) and guest Duan Xinxing (senior researcher and brand director of OKCoin, China's largest blockchain technology company).

Chen Gang: First question: Blockchain is so popular in China now, can it succeed? This is a question that all investment institutions are discussing now. Since August last year, when the "cold winter" came, we were particularly afraid, especially the O2O and Internet finance, which made a lot of capital lose everything. Now we all know that blockchain is a very good thing. It has a lot of practice in theory, but we haven't seen many successful cases now, that is, can it continue? Do you think blockchain can be done in this environment in China? Are you optimistic or pessimistic?

Duan Xinxing: From the perspective of a technology company, there are actually two factors that determine whether the investment can be implemented and whether it can last long: one is the maturity of its technology, whether it is constantly changing and developing, or is it just supported by hype. When the hype bubble dissipates, this technology and the corresponding products will capsize and die. The second is the public's expectations. For new things, the public always has high expectations at the beginning, and then if the progress is slow and it decays over time, they will find that "Oh, it's not that good", and then their hearts will slowly break, and they will quit or give up.

The combination of the two forms the famous Gartner Technology Maturity Curve: Gartner's curve predicted the decline of Bitcoin before, but because of the technology of blockchain, it has been pulled up again. The fact that blockchain has this ability is not empty hype or a flash in the pan. Seven years have passed, and from its birth to now, it is still developing, maturing and improving. It is a long-term technology. Just like artificial intelligence, AR and VR technology: artificial intelligence has been developing since the 1960s and 1970s, when Simon and Minsky developed it, and it has gone through twists and turns until now. In the long run, the underlying technology of blockchain is constantly evolving and developing, and its lifespan may be longer than that of each of us present. The second point is what the public expects. I think that now, blockchain has reached a climax where opportunities and hype coexist. The bursting of this bubble will eventually be inevitable, but going down does not mean falling to the bottom, but rebounding to a rational development platform, and some real blockchain companies will survive. Maybe some people will ask which ones? I personally have two kinds of judgments. The first one is consistent with its "essence". When we look at a technology, we first look at the characteristics of the technology itself. You have to observe what blockchain came with when it first appeared. It first came with digital currency. There is a very important judgment. Now we have many applications in authenticating the authenticity of luxury goods or other things, such as fine wine and lottery tickets. By placing a unique ID (identification) on the longest credible blockchain, we are identifying its authenticity. Combined with smart contracts, as well as the year, origin, and quality regulations, we can automatically return it with smart contracts. This is indeed a good business. But blockchain first appeared with digital currency, and many designs were anchored at its birth. It will first explode with huge transformative power in the financial field: clearing, settlement, remittance, payment, value transmission, innovation and inclusiveness of the entire financial network and inclusion of all income groups, connecting regions and people separated by physical borders, and reshaping the entire economy and society. The second direction worth looking forward to is to look at the "broad" and "narrow" blockchains. When a technology gradually develops, some companies are truly engaged in technology, using technology to improve people's services and lives. For example, we make transactions smoother and more convenient, but there are also some companies that claim to be blockchain companies in order to be gilded with the gilded powder of the times and labeled as technology trends. If we have a kind and tolerant attitude, we can include them in the broad sense of blockchain companies. Whether they are or not is still debatable. Some of them are very direct: for example, R3, the CTO of R3 developed a product called Corda, and he said directly in his report that "we are not building a blockchain". He used another word "distributed ledger" and pointed out that compared with blockchain, two of the five features have been completely changed. That is to say, there are some clear-headed people in the financial field who are good at using this technology instead of blindly copying and hyping this technology. I think we need to distinguish these two points. But those companies that truly cultivate blockchain technology and improve and optimize its application scenario experience will also have a brighter future. To sum up, the blockchain companies that I am optimistic about and have bright future prospects need to have at least one of two points: 1. Relevance to financial scenarios, and 2. The ability to use solid technology to bring about real improvements.

Chen Gang: Mr. Duan's company was previously a very famous Bitcoin trading platform. I have also seen the advertisement of Babbitt. Are you going to transform into a blockchain technology company or what? I don't know what actions you will take next, so tell us about it.

Duan Xinxing: I also need to say something here. When people talk about blockchain now, they ignore a fact: the world's largest and most commercially applicable blockchain is actually based on Bitcoin. It is about 10 times the size of the second-ranked Ethereum and is still the mainstream of blockchain technology.
OKCoin started as a blockchain asset exchange and has accumulated solid "internal strength". It naturally developed into a blockchain value transfer network and a blockchain self-financial platform, namely OKLink and Haoyouqian.

Chen Gang: You are about to release a blockchain platform called?

Mr. Duan: OKlink.

Chen Gang: What is this like?

Mr. Duan: At present, I can tell you that this is a value transfer network. That’s all I can say for now. More detailed information will be announced in mid-May.

Chen Gang: Can you tell us more about it or is it inconvenient to tell us now? It would be better to hear something valuable.

Mr. Duan: It’s not convenient to talk about it now.

Chen Gang: Okay, will you talk about it tomorrow? Will you talk about it in your online interview tomorrow?

Mr. Duan: I won’t tell you. I will tell you in mid-May, after the release.

Chen Gang: This is a particularly "annoying" company. The image is very well done and mysterious. Okay, you give the microphone to the next guest.

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Chen Gang: In addition, we are far behind the United States and the West. It is not easy. You said that finance may be a bit far away, but you should also know the R3 organization. You just need to give us an attitude. Do we support it or oppose it? Do you think what it does in China is reliable?

Duan Xinxing: China actually already has a similar alliance organization: ChinaLedger was established, and the current head is Mr. Bai Shuo, the former chief engineer of the Shanghai Stock Exchange. At present, it seems that no particularly heavyweight banks have joined, but there are some institutional members with backgrounds. Its origin is the United States.

For example, DTCC's Hyperledger Project is also very luxurious, with about 24 banks. Its chairman this year is the CTO of IDM. R3 is composed of more than 44 banks: If you have seen some news about their product releases and the information currently published, I personally think that they are different from blockchains. No matter which mainstream public chain we are using, we do not need access. But R3 requires approval and access systems. They said, "We are re-analyzing the problems of the banking industry." For example, when Bank A and Bank B conduct some clearing, A keeps his account book, and B also keeps his account book, but the record forms of each person's and each institution's account books are different. It is very troublesome to verify and trade with each other. Therefore, in the Corda system they built, the specifications are unified, but only the legal participants within the scope of the contract and the parties involved in the transaction are allowed to check, read and write, etc. They have made their own understanding and transformation of the entire system. This is very different from the existing blockchain technology. Their technical team is very luxurious and more aristocratic, but it does not mean that it will definitely succeed in the end without any trouble. This is a good attempt. In the end, I think it depends on how many people's trust they can gain and how many scenarios they can use. As an institution between large banks and giants, it is not a company, but an alliance, similar to the non-profit organization stipulated by the US 501c3 law. At this time, the problem of fund solicitation, source and distribution, and operational efficiency of non-profit organizations also arises: because how to coordinate between various banks and oligopolistic financial institutions? Who is the dominant party? What is the decision-making mechanism? When the final open source consensus agreement is accepted by various large banks, it is necessary to go to each large financial institution for process approval. The processes of each large institution are very complicated. How can it be fast? Efficient? What they have done is of exemplary significance, but they will also face very great challenges in the future, and the road is still tortuous and long.

Conclusion: I support trying, but this is difficult in the United States and it is not easy in China either.

Editor: OKCoin