The truth behind the process of “decentralization”

Author: HedyBi

Generally speaking, the development of industries in history follows technology closely, from the first industrial revolution that replaced manual labor with machines, the second industrial revolution that changed the electrical age, and the third industrial revolution marked by the invention and application of atomic energy, electronic computers, space technology, and bioengineering. The great progress of mankind and the huge increase in the efficiency of production labor have brought huge profits that benefited capitalists and workers of all generations.

Why can't the financial industry develop rapidly along with technological advancement?

Because the financial industry involves money, and the military and economy are the foundation of politics, they are things that need to be regulated. Of course, in addition to the central bank, we also have various laws and regulations, and have established various decentralized regulatory agencies, such as the China Securities Regulatory Commission, the China Banking Regulatory Commission, and other non-governmental organizations and committees to check and balance power.

Therefore, unlike other industries, the development of the financial industry is generally from top to bottom. It can be simply understood that there are policies from above and then actions are taken from below.

What is the true meaning of decentralization?

For example, in the beginning, when there was no taxation, everyone used the market to decide, and prices were relatively fair. Since everyone wanted to get rich, they would raise prices accordingly. If prices and wages increased, the standard of living would remain the same. However, when there is a tax, wages and prices increase, and the government takes a portion of the increase in taxes. This will always lead to unfairness in money.

Because the rich always find ways to reasonably avoid taxes, the poor get poorer and the rich get richer. This phenomenon is particularly evident in the United States, where various taxes and fees are about 50%.

Decentralization is about reducing these commissions in the process.

How does decentralized blockchain technology penetrate?

According to the development process of the financial industry: from the most traditional financial industry - banking to various industries such as securities and insurance, these are traditional financial industries; financial instruments have also gradually developed from government bonds to complex financial derivative instruments; these, in my personal opinion, are called traditional financial industries.

The next step is Internet finance in the Internet+ model. This is not the case in developed countries. Since the commercial and service industries in developed countries are better than ours, there is no specific time cutoff for Internet services when fighting against the financial industry. It is just that there will be a starting time for the two innovative parts of Internet finance: crowdfunding and P2P. But for China, the Internet finance that is now being hyped is just the segmentation of foreign service objects in the past, or the innovation of business, but it is all based on traditional finance. The essence has not changed. It is just that the industry model has been upgraded for the consumer group.

When the stability or even decline of the banking industry has been confirmed. From the only available information, the "trigger" of blockchain technology is the Chinese economy. The 2008 US subprime mortgage crisis was caused by "excessive liquidity", and the victims were Southeast Asia. This financial crisis is the Chinese economy, which is also the fourth issue that everyone in the G20 is discussing and worrying about.

People are looking for a more "intelligent", fairer and more cost-saving technology upgrade to solve the drawbacks of the financial industry - information asymmetry and too much commission in the middle. But how can the bigwigs in the financial industry let go of their "commission"?

This requires the use of a technology that does not harm one's own profits - blockchain technology.

Blockchain technology reduces labor costs and increases transaction frequency. Although it reduces the intermediate process, the big sharks are ultimately eyeing the fat piece of digital currency. Whoever seizes the digital currency standard first will be able to obtain the standard for setting the currency replacement of other countries, which is a right to control the economic lifeline.

As a result, the European Union's R3 organization emerged, and various states in the United States began to legislate on blockchain and digital currency. France, Germany and other countries also began to legislate on blockchain technology, but the progress of various countries varies as to whether digital currency can be truly implemented. For example, the governor of the People's Bank of China, Okawa, also proposed to realize digital currency within 5 years. At present, there are shopping platforms similar to Amazon for digital currency transactions, but the legal provisions for legally converting digital currency into US dollars have not yet been officially issued. We will wait and see.

The above are the real motives of the profit-driven bosses.

On the surface, it is penetrating from the banking industry to securities, insurance and other industries related to smart contracts, trading platforms, etc. Blockchain technology is the first step for financial industry oligarchs to test the waters of digital currency.