Academic to big coffee | Hu Jie: Blockchain is just a tool, awesome for finance

The Babbitt reporter first met Professor Hu Jie , who was on the “Blockchain and Digital Finance” forum of the CCF Pujiang Lecture Hall held in Shanghai on December 8, 2018. At that time, he made a share entitled "From Bitcoin to the General Economy: A Blockchain in the Eyes of a Financial Man".

It is worth mentioning that in the questioning session, one viewer asked, “In the future, the SDR (Special Drawing Rights) created by the IMF, a basket of currencies or Bitcoin or other certain currency, is likely to become a global currency. ?"

Professor Hu Jie replied, “ SDR is just a symbol of accounting. It is not a currency in its full sense. Everyone promises 'I subscribe for 30%, he is 20%'. After the subscription, for example, I will help 1 million SDRs in Zimbabwe. The money is still the currency of each country. If the SDR is equipped with a ledger, a clear settlement system that supports payment, it may become a global currency. The focus of the financial system is on the books and books, SDR There is no independent book, and a basket of currencies that support it, each with its own books, is controlled by each country and is still centralized. Those who control the books should remove the '0' on your account, you There is no temper. But no one can remove the '0' on Bitcoin. This is the core difference at the book level. The strong vitality of Bitcoin is that it is a book maintained jointly by the whole world. Now there is no book with Bitcoin. successful."


After half a year, after Facebook released the Libra project white paper, Professor Hu Jie also interpreted Libra from the perspective of the books in the conversation with Yuandao (the chairman of the Zhongguancun Blockchain Industry Alliance).

“Libra does not deviate from the traditional currency issuance logic. Compared with the Alipay balance, the biggest difference is that the book that supports Libra issuance and circulation is a new algorithmic ledger, rather than the traditional goodwill ledger. The characteristics of the algorithmic ledger include The book is normalized, the authenticity is algorithmized, the accounting node is decentralized, and the account opening is autonomous."

Hu Jie is currently a professor at the Shanghai Institute of Advanced Finance (SAIF) at Shanghai Jiaotong University. His research interests include financial technology, wealth management, financial institutions and financial markets. He holds a Ph.D. in Finance from the Kellogg School of Business at Northwestern University and a Master of Science in Physics from the University of Chicago. He was a part-time professor at Cheung Kong Graduate School of Business. He was a chief economist at the Federal Reserve Bank of Atlanta in the United States for many years. After returning to China, he became a startup. And entrepreneurs, engaged in software, Internet finance and other services; once served as CEO of the Thunder Group financial sector; currently led the design of a "blockchain + supply chain finance" project.

In early July, the Babbitt reporter interviewed Professor Hu Jie. In more than an hour of interviews, we talked about Libra, Bitcoin, blockchain, and life. Professor Hu Jie’s clear and humorous expression is impressive. He is like a literati who walks in the financial rivers and lakes, whispering a blue light and illuminating the temples and the rivers and lakes .

Libra: something new under the sun

In Professor Hu Jie's view, the core elements of a financial system are credible books and stable currencies . Money as a medium of exchange must have a stable currency to be accepted by the public.

As far as the issuance logic is concerned, Libra does not escape the framework of traditional monetary studies. Similar to the Alipay balance, Libra is the base currency for anchoring the issue and does not support the derived currency . The issuance process of Alipay balance is that the issuer recharges the RMB of the number Y to the licensed third-party payment platform Alipay, which is essentially hosted there, and then the issuer will obtain a new quantity of Y in a fixed ratio of 1:1. currency. It does not support derived currency, because any Alipay balance borrowing must be based on a full reserve, ie any individual or entity is technically unable to lend more than the Alipay balance that it actually owns. In the same way, if a friend has Libra in his hands, he can lend money, but he only has 100Libra in his hand. He lent you 200Libra. When you take 200Libra to pay for it, others will verify it on Libra's account. It is not supported.

In terms of currency books , Hu Jie believes that the biggest difference between Libra and Alipay balance is that Libra is supported by an algorithmic ledger, while Alipay balance is supported by a goodwill account . The goodwill type book and the algorithmic book are the two concepts proposed by Professor Hu Jie. The core of the goodwill book is that the numbers on the traditional books can be manually intervened/modified, and the importance or credibility of the person is called goodwill. For example, traditional currencies such as the US dollar, the renminbi, and the Alipay balance. The core of the algorithmic ledger is the automatic accounting by the computer, which cannot be intervened manually, and there is only one ledger in the world, such as bitcoin. “Why is the cost of cross-border payments so high now? Because you have a ledger, I have a ledger, and we have trouble with a pair of accounts, and the management and time costs are high.”

Libra has a large number of users from all over the world, and chooses a basket of SDR as a support. “It means that this is not a big one.”

During the interview, Professor Hu Jie mentioned the speech of Zhou Xiaochuan, president of the China Finance Association and former president of the People's Bank of China, when he was a guest at Shanghai Gao Jin. "Zhou Xiaochuan will not pay too much attention to technical details. He believes (an anchor SDR) A certain currency of a basket of currencies is a matter of time. He is open and positive ."

The concept of SDR (Special Drawing Right) was proposed by the IMF (International Monetary Fund) in the first International Monetary Fund Agreement in 1969. It was allocated according to the share of countries in the IMF. It can be used by member countries to balance the balance of payments.

In March 2009, Zhou Xiaochuan, then president of the central bank, published an article on " Thinking about reforming the international monetary system " on the eve of the G20 summit. He stressed that

“SDR has the characteristics and potential of a super-sovereign reserve currency. At the same time, its expansion is beneficial to the IMF to overcome the difficulties faced in the reform of funding, voice and representation. Therefore, efforts should be made to promote the allocation of SDR. This requires members. In the political coordination of the country, in particular, the fourth constitutional amendment in 1997 and the corresponding SDR allocation resolution should be adopted as soon as possible so that the member states who joined after 1981 can also enjoy the benefits of SDR. On this basis, consider further expansion. The issuance of SDR."

Professor Hu Jie said, "The world currency at that time was mainly the US dollar. When he called for the SDR, the Americans would certainly not be interested. Regarding the question of what currency should be used for world trade, Keynes also proposed after World War II. A similar concept. But the Americans disagreed and said, 'You all have to use the dollar.'"

He added, "China has been pushing a e-money based on a basket of currencies that is independent of the dollar, of course, along the IMF's traditional financial framework , rather than Libra alone. In addition to traditional financial institutions. In the end, they want to take it slow and slow down the rhythm of time."

Bitcoin: Jiangshan has a bubble, each lead two or three seconds

In many public speeches, Professor Hu Jie emphasized that the success of Bitcoin lies in “point-to-point credible books”, and the failure lies in “money instability”. He also summarized the “ three major heritages ” of Bitcoin: trusted books, equity passes and smart contracts.

When "bitcoin" and "heritage" are put together, we will have more or less a sense of discomfort , and at the same time, we can vaguely feel Professor Hu Jie's disdain for Bitcoin . In fact, his attitude towards Bitcoin has never changed. "The first time I learned, Bitcoin didn't bring me too much impact. In terms of the characteristics of currency science (unstable currency), I think it I can't get into the climate. Now I still have this view… For those who are studying finance, some people have done such an experimental exploration. This is of course good, but I never thought that Bitcoin would become a public eye. The object of hype."

For ordinary investors, the most attractive thing about Bitcoin is its price instability, so some people say that Bitcoin gives young people a chance to "squat the table." Professor Hu Jie did not agree,

"Any kind of speculative bubble will create a small number of people. It is not a real creation of wealth, but a redistribution of wealth. For example, we are burning garlic today, just a few lucky people have become rich, but if the whole company People are attracted to fry garlic, this is definitely not a direction. Human beings live forever in the bubble, the bubble is one after another, ' Jiangshan has a bubble, each lead two or three seconds .' In two or three years, now the Fomi3D is a little game for drums and flowers. It’s too fast. There is nothing new under the sun.”

Despite this, he affirmed the new pass-through business model brought about by the Bitcoin system. Specifically, in the business activities, the use of trusted books to record job performance, the use of equity pass to achieve incentives, the use of smart contract division of labor cooperation.

The requirements of the trusted ledger include billing (who pays, pays, and collects), functions (not erroneous, not missed, not recountable) and security (cannot be faked, cannot be tampered with, cannot be destroyed); the essence of the pass It is a certificate of equity, that is, a carrier that represents a specific interest. All economic exchanges are exchanges of rights. The advantage of equityization is that it provides the efficiency of equity exchange; in the foreseeable business scenario, the reliability of smart contracts is high. The implementation cost is low, and the incentive mechanism can be flexibly designed in combination with the trusted account book and the equity pass.

Internet technology has transformed the information industry, and the financial industry is an information-intensive industry , which has led to Internet technology for banks, insurance, funds, trusts, brokerages, investment banks, stock markets, bond markets, private lending, equity crowdfunding, etc. There are different degrees of penetration and transformation. Blockchain technology was once seen as a technology that subverts the financial industry. In the view of Professor Hu Jie, this is a lack of awe in finance.

“The financial industry is an industry that deals with money. In the process, we found that we can use information technology. It used to be the Internet. Now it is a blockchain that can be used to improve the efficiency of the original business. In the face of financial business, one Practitioners of financial technology should not reinvent the wheel, but stand on the shoulders of giants."

Life: Watching the changes of the times like a hunter

From physics masters to Ph.D. in finance, from Fed economists to investment banking elites, from Internet entrepreneurs to finance professors, every transformation of Professor Hu Jie is just at the cusp of the times. He laughs, "because it is because Jumping around, so there is not much success in one aspect."

But he doesn't regret it, because it is a character. "If I let one thing do, I might really feel bored. If the path you choose is different from your character, then you will be very Pain, such as a very active person who is restricted to a desk, can be very difficult. So observe yourself, understand yourself, and find a path that suits you."

When asked how to grasp the times, he said, "In addition to vision, effort, and luck, it is very important that you find that any animal that is hunting is not chasing its prey every moment. Every day, the hunter is obsessed with it. In fact, the hunter is observing most of the time, and then slowly approaching his prey. When he sees the opportunity, he rushes out and tries it once. If he doesn't catch it, he will wait for the next time. "

For ambitious young people, he suggests that you should consciously observe the changes in this era, and gradually develop your ability to learn continuously, update your knowledge, and do not restrain yourself in your mentality.