Blockchain is on the cusp of the trend, is it the next stop for Internet finance?

“Please raise your hands if anyone here has ever bought Bitcoin!”
In the conference hall that could accommodate 300 people, less than 20 people slowly raised their hands as everyone looked around.
“Anyone who purchased over $200 in Bitcoin please stand up!”
Few people stood up.
“If you have ever bought Bitcoin for less than $10, please stand up.”
Only one person stood up. The venue was filled with scattered applause and boos.
“Hail to the original guardian of digital currency!”

This scene took place in the conference room of Shanghai Bund Hyatt Hotel on October 15, 2015. The brain-burning agenda of the 2015 World's First Blockchain Conference, "Blockchain: Blueprint for a New Economy", was coming to an end. At the beginning of the panel discussion, the host's unexpected question boosted the spirits of the participants who were tired after a day of high concentration.

This conference brought together the earliest digital currency users, the initial blockchain application developers, and perhaps the planners of the existing financial system who are most worried and looking forward to blockchain subverting the existing financial system.

Since the release of the "Notice on Preventing Risks in the Bitcoin Industry" by five ministries in 2013, the glory of the price of one Bitcoin reaching 8,000 yuan is long gone. This may be the first time that representatives of traditional financial industries such as banks, stock exchanges, and accounting firms and digital currency practitioners have gathered together after the digital currency industry has gone from overheated speculation to rationality and calmness, and digital assets have once again become a topic of concern and discussion.

This time, the focus of their discussion shifted from "Bitcoin" to "blockchain".

blockchain

Although there is no written definition of blockchain, there is a consensus in the digital currency community. In simple terms, blockchain is a completely decentralized global ledger that records all Bitcoin (or digital currency) transaction information. "We are very happy that scientists have reached a consensus on the definition of blockchain in Hong Kong just a few days ago." Peter Stephens of UBS said in a speech at the Blockchain Summit.

In the past two years, the discussion about blockchain has gradually transitioned from blockchain 1.0 to blockchain 2.0. If blockchain 1.0 refers to recording digital currency transactions led by Bitcoin on the blockchain, then blockchain 2.0 is based on this and adds a wider range of applications such as copyright registration, equity registration, and financial auditing.

The reason why blockchain is so widely used is that it has established a perfect solution for交易各方信任机制. The essence of blockchain is a string of data blocks generated by cryptographic methods. Each data block contains information about all Bitcoin network transactions in the past ten minutes, which is used to verify the validity of the information (anti-counterfeiting) and generate the next block. Establishing trust is the premise of all value exchanges. The decentralized and tamper-proof characteristics of blockchain solve the most fundamental credit problem.

"Blockchain technology heralds the evolution of the Internet from an information Internet that transmits information to a value Internet that transfers value," said Xiao Feng, vice chairman and executive director of China Wanxiang Holdings Co., Ltd., in his speech at the conference.

Applications and Challenges

For accounting firms, the role of blockchain in审计is obvious. At the meeting that day, Ms. Qin Yi, partner of Deloitte Asia Pacific Investment Management Industry, introduced how Deloitte uses the permanence, real-time and immutability of data established on the blockchain to ensure the integrity and accuracy of audit data. She gave an example:

"If Guosen Securities conducts a transaction today, they have their own bill, which is connected to the clearing house and the bank to ensure that the transaction exists and is matched. This forms a transaction review. When both parties to the transaction input the transaction-related data into the system, it can be automatically matched and a trace will be left in the Blockchain system. From this perspective, the process achieved by the blockchain is quite exciting and important."

Blockchain technology also promotes the transformation of data management and data recording methods. David Johnston, chairman and chief technology officer of Fatcom, said:

“It’s very cumbersome to check information digitally, and it’s even harder to prove that information was entered. However, with blockchain technology, we can have complete records, signed proof of transactions, different chains, such as the mortgage chain, and all of this information will be kept confidential.”

JusticeNet uses Bitcoin's blockchain technology to revolutionize the way businesses and governments manage and record data and to help develop a variety of applications.

Srinivasae Sriram, founder of Skuchain , shared the case of using blockchain technology优化供应链system and create a business cloud model. He said: "Through blockchain technology, we can trace the raw materials and inventory information of this product. In this case, we can better prevent counterfeit and shoddy products from entering the market."

There are endless possibilities for applications, but in the eyes of blockchain application developers, there are still many problems to be overcome. In addition to the generally accepted difficulties in popularizing blockchain, regulatory issues, and insufficient security guarantees, blockchain developers also face insufficient funds and many technical challenges.

Faced with massive amounts of data, the problem of how blockchain can carry it has led to the issue of block expansion and the issue of public and private chains. Jack Lu, CTO of Gongzhengtong, mentioned in the panel discussion that when everyone uses the same system, there may be some problems with the system. For example, each country has many provinces, and they do not pay attention to data outside the province or country. In this case, we need to establish blockchains in different regions, such as a Shanghai blockchain.

The reason why blockchain has a disruptive significance for the traditional financial system is that traditional financial institutions only act as intermediaries, while blockchain directly realizes the transfer of value. Despite this, the guests at the conference still discussed传统金融的竞争与合作.

A guest mentioned,

“The Shanghai-Hong Kong Stock Connect is a very good example. Most financial markets still have great extensions, and they are very eager to connect with more securities markets. Blockchain provides a better technical means, and provides a very good cross-border, fair and transparent trading method. In this way, we believe that it will be possible to connect more securities trading markets like the Shanghai-Hong Kong Stock Connect, and form an open and transparent standard around the world.”

Not only that, blockchain technology also provides监管者with an easier management method. Since blockchain provides transaction records, regulators can more easily discover insider trading, such as someone suddenly buying a large number of stocks before a listed company releases some important information. These transaction records will all be recorded on the blockchain.

At the same time, regulators may also be able to establish and manage the rules of the game through blockchain. Different blockchains can be established in different countries and regions, and there will be blacklists and whitelists for assets to control which ones can be traded and which ones cannot be traded. Each asset has its own different identity.

Han Feng, a scholar at Tsinghua University's Institute for Advanced Studies and editor-in-chief of Wanxiang Blockchain Lab's series, said,

“Foreign friends care about the many functions of blockchain applications in business, such as reducing costs, and whether the government has issued a license to allow you to do it. When I communicated with the Chinese government, I felt that the Chinese government was more like a super company. It first considered its own business. For example, blockchain can help the government improve its regulatory level, reduce the cost of managing society, and improve social credibility.”

The gap between domestic and foreign community development is widening

As major international companies and banks such as Barclays Bank, Citigroup and Goldman Sachs frequently test the waters of blockchain technology, the development and application of blockchain in the domestic community has basically remained blank.

Shen Bo, co-founder of Wanxiang Blockchain Lab, said,

“We all knew that the domestic and foreign communities were relatively developed, but now it seems that the gap is getting bigger and bigger. Domestic blockchain projects are still in their infancy, while foreign ones are developing at an accelerated pace. The gap is widening at an increasing rate.”

Shen Bo is the co-founder of BitShares. He has been working full-time in the digital currency industry for two and a half years. He has seen the real problems in the domestic community.

"First, the industry practitioners are very young and lack experience. Second, there is a lack of funding. Third, the government needs constant coordination. We are now looking for the greatest common denominator, or the intersection, between the government, big companies and the community."

The core purpose of Wanxiang Blockchain Lab is to improve the current situation, integrate global resources, and promote blockchain technology to the maximum extent. Therefore, Wanxiang Blockchain Lab invests $1 million every year, part of which is used to support the research and development of blockchain and smart contract projects. In the past ten months, the three initiators of the blockchain lab, Xiao Feng, Vice Chairman and Executive Director of China Wanxiang Holdings Co., Ltd., Shen Bo, co-founder of BitShares, and Vitalik Buterin, developer of Ethereum, have met almost every week to screen projects submitted from around the world.

Another part of the funds will be used for the education and training of blockchain developers. Shen Bo introduced that "we will cooperate with foreign countries in this regard and make use of existing course videos and other resources abroad" in the hope of increasing the number of Chinese developers who understand and develop applications on the blockchain.

Editor’s Notes:

It will be interesting to review it a week after the meeting.

This week, former JPMorgan Chase CEO Masters said at The Economist’s Sycamore Tree Conference in Midtown Manhattan that “fear and greed” will drive banks to embrace blockchain technology;
Hoberton School has partnered with a blockchain startup, Bitproof, to use blockchain technology to prevent academic fraud; Everledger won the Mobile Ecosystem Forum (MEF) Fintech "Meffy Award" for its development of a diamond anti-counterfeiting digital ledger based on blockchain technology.

Domestically, Baozou Gongqinwang created the website "Blockchain New Economy", focusing on blockchain information and event releases;
The domestic blockchain innovation project Xiaoyi ended its crowdfunding rush at 9 pm yesterday, raising more than 840 bitcoins in 24 hours;
Wanxiang Blockchain Lab and other blockchain-related WeChat public accounts have published many high-quality contributions from blockchain enthusiasts;
On October 27, Shanghai Mall’s monthly Bitcoin gathering was held as usual. It is unknown whether this time it will attract more blockchain enthusiasts to discuss.

We have to admit that both this conference and the good news on policies: "China informally recognizes Bitcoin, and prices begin to turn bullish", the European Court of Justice ruled that transactions of Bitcoin and other virtual currencies are exempt from value-added tax (VAT), etc. have ignited the enthusiasm of blockchain developers and researchers. But facing reality, is it really just a matter of time to solve众多瓶颈facing blockchain, such as consensus mechanism and block capacity?

Blockchain is gaining momentum. At a time when构想多过实际, we look forward to more blockchain application ideas being realized as soon as possible.

Editor: Meng Dada
Source: Babbitt Information