The development of my country's blockchain industry from the perspective of foreign practices

Yesterday, the Zhongguancun Blockchain Industry Alliance was officially established. At the summit forum after the founding conference, Ernst & Young, Microsoft, Factom, EastEasy and other companies shared their views on the development of blockchain in the world and China. Tang Wenjian, partner of Ernst & Young's Global Blockchain Group in China, delivered a speech on behalf of Ernst & Young entitled "Blockchain Technology: A Catalyst for Leading Change? -- From Foreign Practices to the Development of my country's Blockchain Industry". The following is the full text of the speech:

Dear leaders and guests, good afternoon! As we are about to bid farewell to the old and usher in the new, I am very honored to be able to discuss the annual hot word "blockchain" in the IT and financial sectors with industry experts as a partner of the Ernst & Young Global Blockchain Group China Group. The title of my speech is: Is blockchain technology a catalyst for leading the change of the times? Looking at the development of my country's blockchain industry from foreign practices.

First, I will observe the actual situation abroad with you in the form of a mind map; then I will rationally think about the actions we can take from the perspective of the development of the blockchain industry.

Going back to the origin, we can see the evolution of blockchain technology from the timeline. Blockchain is the underlying technology of Bitcoin, and now it has gradually developed into distributed ledger technology. In 2007-2008, a person named Satoshi Nakamoto who has not yet appeared in public published the white paper of "Bitcoin". The emergence of "Bitcoin" made digital currency possible in the true sense and made the change of currency form possible; "Bitcoin" itself is very controversial. In China, the central bank also has clear requirements that financial institutions and payment institutions are not allowed to carry out Bitcoin-related business. However, Satoshi Nakamoto himself may not have thought that the underlying technology with "blockchain" as the core supporting "Bitcoin" is a "golden egg", because it makes it possible for accounting services to change from relying on a third party alone to relying on an alliance or even relying on a group of people who do not know each other, that is, public accounting; with the further development of "blockchain", assets in various forms can be registered and transferred with the help of distributed ledger technology, from equity to bank notes, from land use certificates to real estate contracts, and even artworks, assets in different forms can be exchanged for value. It should be said that it has a very bright application prospect.

Looking down at the world. Although the absolute amount of investment in "blockchain" is not large, more than 1 billion US dollars, it has grown very fast in the past two years. Some heavyweight investment institutions such as "Softbank" are also looking for valuable investment targets. From the distribution point of view, Europe and the United States are the main ones, among which the San Francisco area near Silicon Valley accounts for nearly 50%. The statistics have not been completed in China. According to observation, the investment amount obtained by domestic innovative enterprises has not exceeded 20 million US dollars. If capital is profit-seeking, one aspect can reflect that there are not many innovative enterprises in the field of blockchain in our country.

Listen to the voices of government agencies in major economies. The voices and discussions of these agencies have gone far beyond Bitcoin itself. At the government level, the British government is studying corresponding national policies to guide the development of distributed ledger technology in a positive direction, rather than the opposite; while in other countries, influential departments are calling on everyone to use blockchain technology for innovation. One of the voices at the government level in our country came from the seminar on central bank digital currency.

Let's listen to the voices of heavyweight companies, especially financial institutions. Blythe Masters, a former head of JPMorgan Chase, is optimistic about blockchain technology and believes that the influence of blockchain technology is very similar to the influence of the Internet in the early 1990s. He is now starting a business in the blockchain field and established Digital Asset Holdings (DAH); Jan Bellens, the global banking managing partner of Ernst & Young, believes that cryptocurrencies based on blockchain technology have disruptive development potential. There are also some common views that the use of blockchain will achieve breakthroughs in国际支付and国际清算, and we should start the development of blockchain prototypes, proof of concept, and small-scale experiments immediately. In our country, it is mainly after the central bank spoke that heavyweight companies began to pay attention to blockchain technology. If blockchain technology began to "walk out of the laboratory" abroad in 2016, it will "enter the laboratory" in China.

Although there is still a long way to go for large-scale commercial application and recognition of blockchain technology, the innovation around blockchain is accelerating every day in terms of speed and coverage. How are these high-tech enterprises distributed? In foreign countries, there are about 900 leading blockchain startups distributed in 13 major application fields, and there are about 20 to 30 startups distributed in 7 fields in China. Specifically, in terms of investment amount, wallets, payments, foreign exchange, mining, application innovation, financial services, and platform construction have attracted more investment; big data, certification, investment, public services, consulting, gambling and other fields have also attracted some investment.

As the saying goes, "there are thousands of ways to go." For new technologies like blockchain, different companies choose different paths. Some companies attach importance to blockchain technology from a strategic level because they value financial technology, while some companies choose to acquire relatively good start-up blockchain companies. There are direct investment methods, incubation methods, sponsorship and alliance methods. What kind of ecosystem will it be in the end? At present, governments, research institutions, financial institutions, physical enterprises, high-tech companies, and consulting companies have begun to enter this field. A lot of work is underway!

Marx once said that "gold and silver are not money by nature" and "money is gold and silver by nature". Today I want to talk about two other natural things: electronic cryptocurrency is naturally based on blockchain technology, and blockchain technology naturally requires alliances.

As an emerging technology industry, what actions are most valuable?

1) Blueprint: Good technology also requires a good blueprint. Blockchain technology is revolutionary. In the foreseeable future, the government will use blockchain to further enhance the credibility of public services (such as subsistence allowances in the charity industry and invoice authentication in value-added tax reform), the Internet of Things will be accelerated with the help of blockchain, and the sharing economy will be accelerated. The impact of these innovations needs to be grasped at a higher level so that the advancement of new technologies can better serve our economy and people's livelihood.

2) Research: There is still a lot of research to be done. The application scope of blockchain technology is too broad, involving a wide range of professions. In the computer field, it includes: information security, computer law, cloud computing and other sub-disciplines. In the economic field, it can be involved in finance, energy, medicine, transportation, etc. It requires both in-depth research in different fields and interdisciplinary joint research. Blockchain technology itself needs to be connected with other technologies. If it cannot meet the needs of large-scale transactions and storage, these may need to be associated with technologies such as cloud computing and cloud storage. The development and application of related technologies also need to be studied.

3) Policy: From a policy perspective, many leaders are here today. The Zhongguancun Management Committee can try to get more favorable policies to attract more blockchain-related startups to enter the park.

4) Governance: Governance comes first. Any technology has two sides. The lack of supervision of blockchain applications may lead to some illegal activities, such as Bitcoin being used for money laundering. On the other hand, some very perfect application scenarios under blockchain, such as smart contracts, legal texts notarized by blockchain, exist in the form of electronic contracts, and are automatically executed after triggering specific conditions. Do existing computer laws support this? Our existing electronic signature law may no longer be fully applicable. Therefore, both supervision and law need to be followed up simultaneously at the governance level.

5) Standards: Pay attention to standards. Some banks abroad have applied for patents for blockchain technology, and "blockchain" has been registered as a trademark in China. In order to protect ourselves and to seize the right to speak, our standard research needs to be promoted simultaneously.

6) Cooperation: Attach importance to cooperation and industry alliances. As mentioned earlier, blockchain technology naturally requires alliances. There is already an R3 alliance in the foreign banking industry, and our Zhongguancun Blockchain Industry Alliance is a very good start.

7) Incubation and growth: As an entrepreneurial mentor for many incubators at home and abroad, EY has seen that entrepreneurial companies in the industry alliance generally go through three stages before they achieve ultimate success: new technology research and innovation point analysis, commercial application prototype development, and continuous improvement in combination with the business ecosystem. So how can high-tech innovative companies grow safely? EY's experience is summarized in four key words: speed, rhythm, focus, and risk, that is, using new technologies to solve current business pain points faster to quickly realize commercial applications, maintain the rhythm of innovation, let innovation focus on the most valuable work, and balance risks and benefits when necessary.

As an auditor, Ernst & Young is honored to have witnessed how leading high-tech companies such as Apple, Google, and Baidu have grown from scratch to become industry leaders;安永全球区块链小组now has a professional team of more than 100 people providing professional services. We also very much hope to see the birth of new and influential high-tech companies in the field of blockchain.

Will the disruptive effect of blockchain technology really be like the Internet? If it is not properly grasped, will the survival of the enterprise be affected? The industry involved in the annual hot word "blockchain" is by no means a complete description in just 20 minutes. I hope to continue to discuss with you in the business world of "blockchain" in the future.

About EY Global Blockchain Group:

Ernst & Young, one of the world's four largest accounting firms, is committed to building a better business world and encouraging and advocating innovation and development in the new technological economic environment.
Ernst & Young has established a Distributed Infrastructure working group worldwide, whose members are composed of professional service personnel from more than 20 Ernst & Young local offices in America, Europe, Asia, etc., including high-tech, financial and other industries. In addition to providing professional services, the global team regularly shares the latest progress and industry applications of global blockchain technology to better support the application and promotion of distributed technologies including blockchain technology.