"Hengda Research Institute Blockchain Report": China's economy from high-speed growth to new growth points of high-quality development

This article is a series of research reports of the “New Economy” of Evergrande Institute, looking for new growth points of China's economy from high-speed growth to high-quality development, as well as new technologies and new industries that are expected to lead the future.

Author: Hengda Institute Ren Zeping even a Xixiejiaqi Gan source

Original: https://mp.weixin.qq.com/s/QkXCE2FV9MDQHBYjaqEiHA Summary:

The Political Bureau of the CPC Central Committee conducted the 18th collective study on the status quo and trends of blockchain technology development on the afternoon of October 24. Xi Jinping, general secretary of the CPC Central Committee, emphasized that the integrated application of blockchain technology plays an important role in new technological innovation and industrial transformation. We must take the blockchain as an important breakthrough for independent innovation of core technologies, clarify the main direction, increase investment, focus on a number of key core technologies, and accelerate the development of blockchain technology and industrial innovation.

General Secretary Xi Jinping pointed out that the application of blockchain technology has extended to digital finance, Internet of Things, intelligent manufacturing, supply chain management, digital asset trading and other fields. At present, major countries in the world are accelerating the development of blockchain technology. China has a good foundation in the field of blockchain. It is necessary to accelerate the development of blockchain technology and industrial innovation, and actively promote the development of blockchain and economic and social integration.

The 46th World Economic Forum Davos Annual Conference will include blockchains along with artificial intelligence and autonomous driving in the "fourth industrial revolution." The Economist introduced the blockchain in the cover article "Trusted Machines" in October 2015 – "The technology behind Bitcoin has the potential to change the way the economy operates." Why is the blockchain called "trusted machine"? Why is it so hot in recent years? How will it change the way the economy operates? How to industrialize? What is the development prospect? What are the challenges in the future?

How does the blockchain create trust? We summarize the characteristics of the blockchain with "1", "2", and "3":

  1. The "1" sentence summarizes the blockchain: a trusted distributed database;
  2. "2" big core nature: distributed, not tamperable;
  3. "3" key mechanisms: cryptography, data storage structure, and consensus mechanism.
  4. The nature of “distributed” and “non-tamperable” guarantees the “honesty” and “transparency” of the blockchain, which is the basis for the blockchain to create trust.

How does the blockchain “energy” the real economy and the financial system? Can be summarized as four points: a wide range, cross-subject, improve efficiency, reduce costs.

Wide range: Blockchain technology can serve a wide range of financial and real economy sectors. Almost all industries involve transactions, and both need a credible and reliable trading environment as a prerequisite for the healthy development of the industry. Blockchain creates trust through mathematical principles rather than third-party intermediaries, which can reduce system maintenance costs.

Cross-subject: With the popular view that the blockchain will impact the existing business logic and environment, we believe that blockchain technology is now more suitable for scenarios where the value chain is long, the communication link is complex, and there are game behaviors between nodes. It is an upgrade to traditional information technology, optimization of the existing business environment rather than subversion. Traditional information technologies (such as OA and ERP) enhance the efficiency of collaboration within the enterprise. Blockchain technology further expands the scope of collaboration to cross-subjects. By maintaining the security, transparency and consistency of the books between the entities, the participants are effectively reduced. Information asymmetry.

Improve efficiency and reduce costs: We use four representative application scenarios as examples (cross-border payment, global trade logistics, supply chain finance, credit reporting), and find that blockchain can integrate real logistics, data flow, information. Flow, capital flow, simplify the transaction process of verification, reconciliation, approval, clearing, etc., thereby improving efficiency and reducing costs. In some scenarios, blockchain can also help achieve data validation and facilitate information sharing.

Judging from the distribution of financing rounds of global blockchain-related companies, over 95% of the financing events are currently in the seed round, angel round and A round, and the B round and later only account for 3%, indicating that the industry is still in the early stage. After 2014, the number of VC financing rounds has gradually decreased, and the average round investment scale has gradually increased. Investors have shifted their attention from digital currency to specific application scenarios, indicating that investors are more rational and the industry is gradually entering the end of the early stage.

In terms of industry, it is expected that in the next 3-5 years, the financial industry will be the mainstay, gradually radiating to other physical industries, and the more realistic scenes will be accelerated. The industry will develop from “1 to N” to include entertainment, product traceability, and credit reporting.

Bitcoin is a typical representative of decentralized virtual currency. It is one of the important application scenarios of blockchain technology. It has the characteristics of decentralized, limited total, transaction security and information disclosure. The biggest obstacle to the replacement of credit currency by Bitcoin is the decentralization. It challenges the current global currency issuance mechanism and concept based on national credit. The government's regulation of bitcoin trading activities has gradually tightened. Speculative demand is the intrinsic reason for the skyrocketing price of bitcoin, including trading activities such as disguised exchanges and ICO financing. While recognizing the risks of virtual currency itself, we cannot deny the innovation and development potential of blockchain technology. (Refer to our previous report "Bitcoin: Currency Revolution or Speculative Bubble?")

In terms of technology, the consensus algorithm and technical performance of the current alliance chain can better meet the needs of enterprises for actual business scenarios compared with large-scale public chains. It is expected to develop on a large scale in the next three years.

In terms of policy, the blockchain can increase the transparency of law enforcement, detect the credit situation of the industry, and accelerate the innovation of the real economy. It is expected that in the future, countries will supplement their policy support according to their own circumstances.

Overall, with the rapid influx of capital and talent, we believe that the scenario suitable for blockchain applications will accelerate, and the industry will develop faster and more standardized within 3-5 years.

At the same time of rapid development, blockchains (especially large public chains) also face many technical, commercial and regulatory challenges such as low transaction performance, hidden security risks, unstandardized standards, and incomplete regulatory policies. This shows that the technology itself is still in the initial phase of “from 0 to 1”.

In the future, in addition to the use of sidechain, lightning network, and cross-chain technologies, the blockchain needs to be deeply integrated with emerging information technologies such as 5G, artificial intelligence, big data, and the Internet of Things to improve technical performance and data quality under the chain. Reduce waste of resources.

Smart contracts are probably the most revolutionary application in the blockchain. If smart contracts are widely used in the blockchain, the economic division of labor will be further refined in the Internet era. Network nodes around the world will directly interface with demand and production, and wider social synergies will be realized. If the above vision is realized, the combination of blockchain technology and industry is expected to usher in the "from 1 to N" explosion moment, its outbreak may not be linear but nonlinear, and the blockchain may also be from the "trust machine" "Upgrading has become an important "engine" to lead the industry wave.


1. How does the blockchain create trust: basic structure, key mechanisms and core nature

In recent years, the blockchain has become a hot topic in the scientific and entrepreneurial circles. The 46th World Economic Forum Davos Annual Meeting will include blockchains, artificial intelligence, and autonomous driving in the “fourth industrial revolution”, showing the great significance of blockchain technology and extremely broad development space. Ms. Luo Ruilan, CEO of IBM, has a well-known assertion: "What the internet did for communications, I think blockchain will do for trusted transactions". So what is the blockchain? Why is it called a "trusted machine"?

In the first part of this report, we use "1", "2", "3" to summarize the characteristics of the blockchain, and answer the above two key questions –

  1. The "1" sentence summarizes the blockchain: a trusted distributed database;
  2. "2" core advantages: distributed, not tamperable;
  3. "3" key mechanisms: cryptography, data storage structure, and consensus mechanism.

1. "1" sentence summarizes the blockchain: a trusted distributed database

In a narrow sense, a blockchain is a distributed database that combines data blocks in a time-series manner and cryptographically guarantees that it cannot be tampered and unforgeable (or distributed ledger technology, Distributed Ledger Technology). , DLT). Distributed contains two layers of meaning:

First, the data is recorded by all nodes of the system, and all nodes do not need to belong to the same organization, nor do they need to trust each other;

Second, the data is stored by all nodes together, and each participating node can copy and obtain a copy of the complete record. So what is the basic structure of this distributed database?


The blockchain can be regarded as a ledger, and each block can be regarded as a one-page account, which is linked by the order of recording time to form a "book". In general, the system will set up an update and broadcast of the transaction record every other time interval, during which time all the data information and transaction records of the system are placed in a newly generated block. If all the nodes that receive the broadcast recognize the legitimacy of the block, the block will be added to its original chain in a chained form, just like adding a new page to the old book.


A block can be roughly divided into a header and a body. The block header generally includes the hash value (parent hash), time stamp, and other information of the previous block. Hash is a kind of cryptographic algorithm, which can represent any piece of information as a series of "garbled characters", that is, hash values. The parent hash points to the address of the previous block (header hash), so recursion can help us go back to the first header block of the blockchain, which is the genesis block.

The block header of each particular block has a unique identifier, the header hash value. Any node can simply hash the block header to independently obtain the hash value of the block. The block height is another identifier for the block, which acts like a block header hash. The creation block height is 0, and so on.


The Bitcoin #515056 block in the above figure is an example. In addition to the header hash, the parent hash, and the Merkel root, the block header contains the following important information:

Block Reward : The system awards bonuses to miners who find the correct hash value and create a new block, which is unique to the blockchain of the built-in token system. At present, the Bitcoin blockchain reward is 12.5 bitcoins, which is halved every four years (the total amount of Bitcoin is 21 million).

Difficulty : The difficulty level of the block workload proof algorithm.

Nonce : A counter used for the workload proof algorithm.

The block contains validated data records of all value exchanges that occur during the creation of the block, stored through a special data structure, usually organized in a tree form—such as a Merkle Tree. All data is recorded in the "leaf" node of the tree, traced back to the first level, and finally to a root, and vice versa through the root of the tree.

2. Three key mechanisms of blockchain: cryptography, data storage structure, and consensus mechanism

One of the principles of cryptography: hash algorithm

The hash algorithm is a general term for a class of encryption algorithms and is a very basic and very important technology in the information field. Enter a string of any length, and the hash algorithm can produce a fixed-size output. In layman's terms, we can understand the output of the hash algorithm (that is, the hash value) as the "home address" in the blockchain world. Just like in the physical world we can always use a specific and unique address to identify, we can also use a hash to specifically and uniquely identify a block (if the hash of different blocks is always different, then we call this The class hash function has "collision resistance", which is the basic requirement for the hash function), and just like we can't pull out the internal structure of the house structure, family members, etc. from the "home address", we can't get the hash value. Reverse the specific content of the block (the hiddenness of the hash function).

The second principle of cryptography: asymmetric encryption

Asymmetric encryption refers to encryption and decryption algorithms that use different keys, also known as public and private key encryption. In a blockchain network, each node has a unique pair of private and public keys. The public key is the part of the key pair that is exposed, just as the bank's account can be made public, and the private key is a non-public part, just like the account password. When using this key pair, if one piece of data is used to encrypt a piece of data, it must be decrypted with another key.


In the Bitcoin blockchain, the private key represents control of Bitcoin. The transaction initiator signs the transaction (including the transfer amount and the transfer address) with the private key and broadcasts the signed transaction and the public key. After receiving the transaction, each node can use the public key to verify whether the transaction is legal. In this process, the transaction initiator does not need to expose his or her private key for confidentiality purposes.



Data storage structure: Merkel tree

The Merkle Tree is actually a data structure. This tree-like data structure is highly efficient in quickly summarizing and verifying large-scale data integrity. In the Bitcoin network, the Merkel tree is used to summarize all the transactions in a block, the root of which is the hash value of the entire transaction set, the lowest leaf node is the hash value of the data block, the non-leaf node Is the hash of its concatenation string of child nodes. We only need to remember the root node hash. As long as any node in the tree is tampered with, the root node hash will not match, so that the verification purpose can be achieved.


Consensus mechanism

The consensus mechanism is the core secret of the blockchain network. To put it simply, the consensus mechanism is a mechanism in which the blockchain nodes reach a consensus on the whole network for block information, which ensures that the latest blocks are accurately added to the blockchain, and the blockchain information stored by the nodes is consistent and uncoordinated and even resistant. attack on purpose. To achieve such an effect in practice, two conditions must be met: one is to select a unique node to generate a block, and the other is to make the distributed data record irreversible.

Current mainstream consensus mechanisms include: Proof of Work/Prof of Work, Proof of Stake, Proof of Work and Proof of Attestation (POS+POW), Proof of Proof (Dlegated Proof- of-Stake), practical Byzantine fault tolerance (PBFT), Ruibo consensus agreement, etc. Among them, Bitcoin uses a workload proof mechanism.


Workload Proof / POW

The basic steps of the workload proof mechanism are as follows:

1) The node listens to the entire network data record, and the data record verified by the basic legality will be temporarily stored;

2) The node consumes its own power to try different random numbers (nonce), performs the specified hash calculation, and repeats the process until a reasonable random number is found. This process is also called “mining”;

3) After finding a reasonable random number, generate block information (block header + block body);

4) The node broadcasts the newly generated block to the outside. After the other nodes pass the verification, it is connected to the blockchain, and the height of the main chain is increased by one. Then all the nodes switch to the new block and continue the next round of mining.


The Bitcoin blockchain is to solve the math problem with a large enough workload to reach a consensus on who has the right to book. The “miners” will receive two types of rewards during the mining process: the new currency reward for creating a new block, and the transaction cost of the transactions included in the block (the two parties will provide the miners with a record of the blockchain as soon as possible for the transaction). Pen transaction costs as an incentive). The competitive mechanism of this algorithm and the mechanism by which the winner has the right to record transactions on the blockchain actually solve the problem of distributed accounting and the attribution of accounting rights. In the Bitcoin blockchain, this process also played a role in currency issuance – currently every 10 minutes, miners who dig into new blocks receive 12.5 bitcoins.

Although the workload proof mechanism solves the problem of attribution of billing rights, is it possible for miners who receive billing rights to “cheating” and add some non-existing transactions in the new block of construction? In fact, an important part of the Bitcoin blockchain consensus mechanism is that each node in the network will independently verify the new block, the most important of which is to verify whether each transaction in the new block is legal. If it fails, the new block will be rejected and the miner will waste all power and effort.

Proof of interest

In the workload proof/POW mechanism, all nodes participating in the POW competition will pay a lot of economic costs (hardware, power, maintenance, etc.), and only one node “wins” at a time, which means a lot of resources of other nodes. Will be wasted. In order to solve the problem of resource waste, the equity certification mechanism/POS was proposed in 2013 and was first implemented in the Peercoin system.

The proof of equity is similar to the shareholder mechanism in real life. The starting point is: If the consensus mechanism is mainly used to prove who is investing the most in mining, why not directly allocate the mining “power” to the current All the holders? In the proof of workload, more miners have more voting rights; in the proof of equity, miners holding more coins (and corresponding time) will get more voting rights.

Share Authorization Certificate / DPOS

In this system, each coin is equal to one ballot, and the person holding the coin can cast a trustee of his own trust according to the amount of currency he holds, and the trustee does not necessarily need to have the most system resources. The stock authorization certification mechanism mimics the company's board of directors system, enabling digital currency holders to delegate the maintenance of system accounting and security to those who have the ability to have time to do the job. The trustee can also get the reward of the new currency through bookkeeping. Compared with the equity proof mechanism, the advantage of the share authorization certificate is that the number of book-makers is greatly reduced, and the bookkeeping in turn can improve the overall efficiency of the system. In an ideal environment, DPOS can realize the number of transactions of hundreds of thousands of transactions per second.

The choice of consensus mechanism has a great impact on blockchain performance (resource occupancy, processing speed, etc.) and also determines the degree of decentralization of the blockchain. In general, the higher the degree of decentralization of the blockchain, the weaker its performance. The degree of decentralization and efficiency are difficult to balance in most cases.


3. Two core natures of blockchain: distributed, not tamperable

Distributed accounting and storage

In terms of accounting, the blockchain does not need to rely on a central institution to be responsible for accounting, and the nodes compete for accounting rights fairly through power or equity. This kind of competition mechanism is actually the biggest main blockchain and traditional database. One of the differences. Through the “Wholesale Witness”, all transaction information will be “recorded truthfully” and this account will be unique. In traditional double-entry bookkeeping, each institution only keeps accounts related to itself, but often spends a lot of mid-background costs for reconciliation and liquidation. This inefficient way will be completely changed by the blockchain.

In terms of storage, since each node in the network has a complete copy of the blockchain, even if some nodes are attacked or made in error, it will not affect the normal operation of the entire network. This makes the blockchain more fault tolerant and less risky for server crashes than traditional databases, and because each node has a copy, it means that all accounts and information are open, transparent, and traceable. All participants can view historical books, trace each transaction, and have the right to fairly compete for the next block of billing, which is not possible with traditional databases.

Not tampering

It is basically impossible to forge and tamper with accounts in the blockchain. Non-tampering also means high consistency and security of data. This is another major difference between blockchains and traditional databases.

Why can't the transactions in the blockchain be forged? First, a legitimate transaction requires a private key signature, otherwise it cannot be verified by other nodes. Second, each transaction is traceable, thus eliminating the possibility of being out of nothing.

Why is the blockchain irreversible? If we want to tamper with the data of the kth block in the blockchain, then the header hash of the current block will change. Since the hash function has collision resistance, the changed header hash will not be able to interact with the k+1 region. The parent hash of the block matches, and the tamper needs to continue to modify the parent hash of the k+1 block and modify each block afterwards. This requires the tamper to simultaneously invade all the nodes participating in the record at the same time and tamper with the data. Only recalculate all the blocks following the changed block, and catch up with the progress of the legal blockchain in the network, and put this long Blockchain forks are submitted to other nodes in the network for approval. In many cases, it is not difficult to create a new block. The difficulty of continuously generating multiple blocks to form a new fork is even more daunting. In the context of the huge computing power of the whole network, a malicious node needs to have at least 51% of the computing power base of the whole network. Since the blockchain is a distributed system, most nodes are independent of each other. 51% of attacks" are hard to happen in reality.


The Economist introduced the blockchain in the cover article "Trusted Machines" in the October 2015 issue – "The technology behind Bitcoin has the potential to change the way the economy operates." In our view, distributed and non-tamperable is the reason why the blockchain is called the “trust machine”—not tampering means that the blockchain is always “honest”, and distributed means that the blockchain is always "transparent. Regardless of the interaction between people, or the transactions between commercial organizations, honesty and transparency are the cornerstones of mutual trust between two parties. The “honesty” and “transparency” of the blockchain also make it a high hope for the “trust machine” of the Internet.

2. How does the blockchain “energy” for the real economy and the financial market: a wide range, cross-subject, efficiency, and cost reduction

Blockchain technology can serve a wide range of financial sectors such as payment clearing, bills, insurance, and supply chain management, industrial Internet, product traceability, energy, and copyright. Almost all industries involve transactions, and both need a credible and reliable trading environment as a prerequisite for the healthy development of the industry. Blockchain creates trust through mathematical principles rather than third-party intermediaries, which can reduce system maintenance costs. For traditional financial institutions, the operation and labor costs of online links such as reconciliation, clearing, and auditing will be reduced. For non-financial industries, blockchain can reduce information asymmetry in all aspects of the value chain, thereby improving collaboration efficiency. Reduce the overall transaction cost; for individuals, strangers or parties can cross the physical distance limit and securely transfer value on the network, thus creating more supply and demand.


Unlike the popular view that the blockchain will impact the existing business logic and environment, we believe that blockchain technology is now more suitable for scenarios where the value chain is long, the communication link is complex, and there are game behaviors between nodes. The efficiency of the main collaboration and the reduction of the corresponding cost are the upgrading of traditional information technology and the optimization of the existing business environment rather than subversion. Traditional information technologies (such as OA and ERP systems) have shown sufficient convenience and efficiency in the communication and collaboration within the enterprise. The blockchain is not necessary in many scenarios where trust has been established or can be established offline. . However, due to the lack of mutual trust mechanism in the cross-enterprise and cross-subject scenarios, there is still a lot of manpower and material resources for communication and cooperation. For example, current reconciliation between different organizations often requires exporting data from their respective information systems, sending them by e-mail or even stamping them after printing. The other party receives the comparison and then performs the comparison verification. In this cross-subject collaboration scenario, blockchain technology can effectively reduce the information asymmetry of each participant by maintaining the security, transparency and consistency of the books between the entities.

The following is an example of the practical application scenarios of four blockchains, such as cross-border payment and international shipping logistics, to discuss how the blockchain can “energy” the real economy and the financial market.

1. Blockchain + cross-border payment

The distributed architecture and trust mechanism of the blockchain can simplify the process of wire transfer of financial institutions, shorten the settlement period of 3-5 days, and reduce the high handling fee of SWIFT.

SWIFT takes a long time and costs a lot

SWIFT mainly provides electronic message exchange services for financial transactions for the settlement of financial institutions, and provides uniform financial industry security message services and interface services. Because cross-border financial inter-institutional systems are not connected, direct settlement costs are high, while the proportion of business is low and the counterparty is uncertain, it is difficult to establish a direct cooperative relationship. The existence of the agent bank, the communication of the agreement and the repeated confirmation of the transaction information make the settlement cycle take an average of 3-5 days. It takes 1-2 days to confirm the transaction through SWIFT.


Payment through SWIFT is costly. Payment costs include bank fees, SWIFT channel fees, transaction delay losses, and reserves. Due to the large number of processes involved, the fees of the intermediate participants are high, and the single transaction from the payee to the payer requires a transaction fee of 25-35 dollars, of which the liquidity loss due to the long trading time is up to the ratio. 34%, capital operation costs accounted for 24%.


Blockchain + cross-border payments: speed up transactions and reduce costs

The application of blockchain technology in the field of cross-border payment is equivalent to creating a peer-to-peer network between multinational financial institutions. The transaction needs of the remittance bank and the remittance bank can be directly matched, which greatly reduces the liquidity loss and capital operation in the SWIFT system. And exchange costs.

Ripple: Blockchain technology is used in new areas of cross-border payments

Founded in 2012, Ripple uses a joint consensus mechanism and is used by financial institutions as a market maker to provide decentralized cross-border foreign exchange transfers. After the inter-bank transaction payment information is uploaded to the node server and confirmed by voting, the transaction can be completed, thereby saving the bank's reconciliation and transaction information confirmation time through SWIFT, and shortening the transaction confirmation time of about 1-3 days to a few seconds. The overall cross-border wire transfer time was shortened to 1-2 days. Ripple currently has 90 financial institutions, including Royal Bank of Canada, Standard Chartered Bank, Westpac Bank, and 75 others.


The simplification of the process significantly reduces the cost of cross-border payments. At present, the Ripple system can reduce the liquidity loss, payment fees, exchange fees and capital operation costs incurred by the correspondent bank and SWIFT. According to Ripple, the cost per transaction between banks will drop from $5.56 to $2.21, a 60% reduction. With the number of more than 3 billion payment messages completed through SWIFT in 2016, it can save about $10 billion in 2016. cost of.


2. Blockchain + Global Trade Logistics

Faced with pain points: involving many subjects, long time consumption, poor information, and high transaction costs

Global trade consists of multiple entities including exporters, importers, suppliers, contractors, transporters, and regulatory agencies. Among them, 90% of global trade is transported by sea, and 80% of applied consumer goods are transported by sea. Taking Maersk's transportation case as an example, in 2014, Maersk transported avocados and roses from Kenya to Kenya to Europe, and the one-month cross-border transportation involved more than 200 communication interactions of more than 30 subjects. Each subject has its own file flow for each interaction, and the overall process ends with a file thickness of up to 25 cm.

The information is highly dispersed between the subjects and each has its own own links. A large number of paper operations make the supply chain lack transparency and coordination efficiency. A large amount of collaboration and low transparency in the transaction link make it difficult for all entities to understand the real-time status of cargo transportation in a timely manner, which is prone to the risk of reduced resource utilization, extended transportation time, increased potential damage of goods, and increased costs.


Blockchain makes trade simpler, faster, more transparent, and safer

Blockchain decentralization, traceability, information symmetry, security visibility, etc. Naturally suitable for global trade logistics links, taking the IBM blockchain open logistics platform as an example.

For the transparency of information circulation, the IBM platform is open to all participants, and any detailed information about logistics is verified by both parties and multi-party digital signatures and tokens. The five management systems include logistics, port, customs, supply chain, and transportation and management at the same time, ensuring that all information is electronically shared in real time. Real-time shared information ensures the efficiency and effectiveness of each link in the entire process of logistics, effectively reducing human and material expenditures.

For importers, exporters and manufacturers, end-to-end information transparency can supervise the whole process of logistics in real time and increase the communication efficiency of each link. For port and container centralized management, improve empty container utilization rate and resource mismatch rate. For customs and other inspection agencies, the information is correctly improved to improve the efficiency of the examination; for the transportation management, optimize the transportation route and schedule.

IBM and Maersk worked with the Port of Rotterdam to Newark Harbor, New Jersey, and it was also inspected and licensed by US Customs and other agencies. The mission took a total of two weeks. In fact, shipping companies can save about $80,000 in savings by berthing at the port for an hour. In this cooperation, Maersk has saved more than 40% in time and reduced costs by more than 20%. IBM blockchain technology improves the efficiency of digital management in all aspects, greatly reduces problems such as paper documents, container mismatch or vacancy, intermediate link fraud, and improves resource utilization while optimizing management structure.


3. Blockchain + Supply Chain Finance

Supply Chain Finance: Ten trillion market

Supply chain finance generally refers to the use of credit support of core enterprises in the supply chain to provide relevant financial credit services for upstream and downstream SMEs. Different from traditional medium-sized enterprises on the public credit side, supply chain finance can provide SMEs with faster and more convenient financial support after mastering the overall picture of business flow, information flow, logistics and capital flow in the entire supply chain. According to the estimates of the Prospective Industry Research Institute, the market size of China's supply chain finance will reach 15 trillion by 2020.


Traditional supply chain finance: SME financing is difficult and costly

Under the traditional supply chain finance model, the lack of transparency in information leads to difficulties in financing for SMEs and high costs.

First of all, under the current model, banks mainly rely on the supply and sales capabilities of the core companies in the supply chain. Because the information in other links is not transparent enough, banks are only willing to provide upstream suppliers (primary suppliers) for risk control considerations. Receiving a factoring business, or providing advance payment or inventory financing to its downstream distributors (primary dealers). This has led to the inability to meet the huge financing needs of suppliers and distributors such as the second and third grades, which not only limits the overall market for supply chain finance, but also makes it possible for SMEs in the supply chain to influence production schedule and product quality due to financing constraints. , thus hurting the entire supply chain.


According to the calculation of manufacturing giant Foxconn, the financing cost of its Tier 1 supplier may be 5%, the financing cost of Tier 2 suppliers is 10%, the cost of Tier 3 suppliers is 25% or even higher, and the chain goes to two. At the end, the amount of financing will be smaller.

Secondly, commercial bills and bank drafts are the main financing tools for supply chain finance at this stage. The use scenarios are limited and the transfer is difficult. In practice, the bank is often very cautious about signing the legal effect of “transfer notification” of similar accounts receivable claims, and even requires the legal representative of the core enterprise to sign the bank in person, which makes the operation extremely difficult.

Blockchain + Supply Chain Finance: More efficient, lower cost

In March 2017, the Internet financial platform, Dianrong.com and Foxconn Group's financial platform, Fujintong, launched the blockchain financial platform “Chained Finance”. Chained Finance first converts the core company's accounts payable into online asset eAPs on the blockchain, which can be circulated between suppliers at all levels (for payment or for cash withdrawals). When the core enterprise forms a payable account with the first-tier supplier L1 and writes it into the blockchain, L1 can arbitrarily split the eAP and use it to pay for its own supplier L2, and so on to L3, L4, etc., and finally the eAP becomes a block. "Trade ticket silver ticket" on the chain platform. The online asset eAP has the characteristics of non-tamperable and non-repeatable payment through cryptographic encryption, which will help to enhance mutual trust between the upstream and downstream of the supply chain. The traceability of the blockchain also ensures all transactions and circulation processes. The transparency is visible.


Chained Finance is currently a private-chain model that provides relevant financing services for Foxconn's core companies. It has covered 150 suppliers, the amount has reached 500 million yuan, and the deepest service to the fifth-level suppliers will further expand into the future. Industry and clothing industry. For SMEs in the supply chain, the financing cost of the traditional model is as high as 25%. Under the Chained Finance platform, the core enterprise credits can be financed by accounts receivable, and the financing cost can be reduced to less than 10%.


4. Blockchain + Credit

Credit information system can improve economic efficiency

The credit information is to collect and process the credit information of natural persons and other organizations according to law, and provide credit report, credit evaluation, credit information consultation and other services. The construction of the credit information system plays an important role in the prevention of credit risks and the expansion of credit transactions, thereby improving the operational efficiency of the entire economy. As early as 2014, the report released by the Tsinghua Task Force estimated that the credit system improved the quality of consumer loans of 498.6 billion yuan in 2012, bringing 80.16 billion yuan of revenue to the banks, driving GDP growth of about 0.33%.



The current problem of “information islands” in the credit information system is serious, and information is misplaced.

The credit market of individuals and enterprises is mainly led by credit information service agencies and social credit agencies with government background. As of May 2017, there are 138 corporate credit reporting agencies and 9 individual credit reporting agencies in China's credit information market. The remaining eight “100-line creditors” have obtained operating licenses.

With the increase in the volume of data and the dimension of credit, each credit reporting agency can only be professional in one aspect. For example, Sesame Credit has more payment data, but there is no social data of Tencent credit, and data in the public sector. Slightly insufficient. As a result, the same customer may have different credit data in multiple credit reporting agencies, and there is a serious problem of “information silos”. The data of a single credit reporting agency cannot fully reveal the credit information of a certain customer, resulting in One-sided decisions and risks.

The data of the current credit information system is misplaced. The credit information of individuals and enterprises should be owned by individuals and enterprises. The current credit information system and related information are in the hands of credit reporting agencies, which brings data security and privacy issues.

Blockchain + Credit: Promote sharing, data validation

Through the information sharing of each node of the system, the blockchain can construct a complete “credit evaluation system” to evaluate individuals according to the degree of influence of personal behavior on credit (such as high impact of credit data and low impact of non-credit data). The overall credit level, and the benefits generated by the credit user's query data are distributed according to the contribution of the alliance institution to the credit evaluation, and the "information island" problem is solved.

LinkEye: Preliminary attempt of blockchain + credit

LinkEye is a credit-shared alliance chain solution based on blockchain technology. Through the integration of blockchain technology and credit economic model, it builds a credit data sharing and service platform among alliance members (financial companies). Before the lending behavior occurs, the alliance members reach an agreement with the borrower, and the untrustworthy behavior will be publicized on the platform. The signature mechanism of the blockchain ensures that the data cannot be tampered, thus completing the sharing of the untrustworthy list, and opening the external inquiry interface to the society. Share data. Since its launch in August 2017, 13 institutions including Kuaijinfu and Qianbaobao have participated.


The application of blockchain technology will help to further clarify the attribution of credit data. Under the current credit information system, credit data is all in the hands of institutions. In the blockchain mode, the credit behavior records generated by individuals are fed back by the organization to the blockchain, and recorded on the individual's “book”, broadcasted to the entire network, recorded through a consensus mechanism, and required for credit inquiry. Personal information can only be queried with the permission of the user.


Third, the blockchain industry is developing rapidly, policy support and step by step regulation

From the analysis of the development stage of the blockchain, it can be roughly divided into five stages: exploration, preparation, acceptance, landing and maturity. The exploration, preparation, and acceptance periods are all in the early stages of the cycle and require significant capital and talent support. After exploring and preparing for the initial stage, it is mainly to expand the audience and the scene, and work together to develop the basic framework and standards. As the degree of attention continues to increase, after multiple trial and error corrections, the appropriate application scenarios are accelerated.

In terms of industry, it is expected that in the next 3-5 years, the financial industry will be the mainstay, gradually radiating to other entities, and more realistic scenarios will be accelerated. The industry will develop from “1 to N” including entertainment, product traceability, credit reporting, etc. .

In terms of technology, the consensus algorithm and technical performance of the current alliance chain can better meet the needs of enterprises for actual business scenarios compared with large-scale public chains. It is expected to develop on a large scale in the next three years.

In terms of policy, the blockchain can increase the transparency of law enforcement, detect the credit situation of the industry, and accelerate the innovation of the real economy. It is expected that in the future, countries will supplement their policy support according to their own circumstances.


1. The industry is still in the early stage, and it is gradually developing from “1 to N” with finance as the main factor.

Technological development is inseparable from capital support, and capital investment can also reflect the state of industrial development. At present, there are two main methods from the global blockchain financing project: ICO (Initial Coin Offerings) and venture capital (VC). Similar to the traditional stock IPO concept, ICO is an initial public offering to sell shares to obtain financing, but to change the subject matter of the stock into an encrypted digital currency.

From the overall scale, the VC financing scale growth of blockchain projects has gradually slowed down. As of March 2018, VC accumulated financing of approximately 2.463 billion US dollars, a year-on-year growth rate of 28.5%. After experiencing the outbreaks in 2013 and 2014, the VC project began to slow down.



From the perspective of the number of financing events, VC investors tend to be rational and more important in quality investment. Early investments were biased towards digital currencies, but after a series of technical crises – such as the theft of cryptocurrencies by The DAO on Ethereum, investors began to shift their investment focus from digital currency to embedded applications. Blockchain project.


Judging from the distribution of financing rounds of global blockchain-related companies, more than 95% of financing events are in the seed round, angel round and A round, while the B round and later only account for 3%, indicating that the industry is still in the early stage. After 2014, the number of VC financing rounds has gradually decreased, and the average round investment scale has gradually increased, indicating that the industry has gradually entered the end of the early stage.

From an industry perspective, the top three VC companies in the industry in 2018 are financial services, infrastructure construction and communications, accounting for 37%, 18% and 13% respectively. The reason is that the blockchain can improve the efficiency and value of data transmission between financial institutions, thus gaining execution time and cost advantages, so the potential application in the financial industry is huge. For this reason, more investment institutions are willing to invest in industries such as the financial sector where the future business model is relatively clearer.

Although the financial industry is still the focus of development, other industries have also developed rapidly, gradually moving from “1 to N”. According to CoinDesk and CoinSchedule investment and financing statistics, as of March 2018, the global blockchain investment in the financial sector (including VC and ICO) was 17.2%, up 2.6 percentage points from 2017, ranking second. The communications industry has surpassed the financial industry to the first. More obvious growth is in the industries of gaming & VR, trading investment, advertising services, supply chain and deep learning. The data shows that after gaining experience in the financial industry, the industry began to consider the possibility of combining with other application scenarios.



2. Technology alliances and companies

As the needs of application scenarios become more complex, blockchain technology has become more complex. The forms of public, private and alliance chains, which are carried out by individuals, alliances and enterprises, are radiated to various application scenarios. Among them, the alliance refers to multi-institutional cooperation across regions and industries, including investment companies, technology companies, and regulatory companies.

Compared with individuals and open source communities, the rapid development of the alliance is eye-catching. At present, most of the alliances use the development alliance chain as the main form. The alliance chain can combine the advantages of the public chain and the private chain, and distinguish all nodes in the system according to different permissions, and are controlled by multiple centers. In summary, in the alliance chain, the author does not need to display all the information of the node, only need to display part of the public information according to the contract and permission, and realize part of the low cost, certain privacy, fast transaction, and good scalability. Centralization and resource sharing.


Alliance: At present, science education and industry standards are the main

The development of blockchain is inseparable from the support of talents. The blockchain alliance mainly provides a platform for professional organizations to exchange and share in different fields and promote the long-term development of blockchain technology. In addition to education science, alliances are more about setting standards for industry standards. This is even more urgent and important for the blockchain industry, where regulatory regulations are not yet standardized and comprehensive. By synthesizing established alliances, it can be found that the more the alliance's tentacles, the more collaborators involved, the higher the versatility of its underlying technology. More than 50% of the blockchain alliances involve the underlying rules.

China Alliance: According to the China Blockchain Industry Development Report 2018 published by China Blockchain Application Research Center, from 2015 to 2017, there are nearly 200 blockchain-related alliances and forums established in the world, and ChinaLedger in China. Nearly 20 alliances (China Distributed General Ledger Basic Agreement Alliance), Golden Chain Alliance, CBRA (China Blockchain Research Alliance).


From the perspective of the application industry, most of the current industry scenes are combined with traditional finance, banking, and internet finance. From the perspective of the three most famous alliances in China: ChinaLedger, CBRA, and Golden Chain Alliance, this can also be well illustrated. Taking the Golden Chain Alliance as an example, in March of this year, the Guangzhou Arbitration Commission issued the first award in the industry based on the “Arbitration Chain” of the Golden Chain Alliance, marking the real application of the blockchain in the judicial application of financial lending.


International League: From the perspective of the League of Nations, the most famous R3 and Hyperledger (superbooks), for example, more than half of the participating members come from the world's leading large banks and financial institutions. However, the direction of the two alliances is different. The R3 main attack blockchain is used in the financial field, and the Hyperledger focuses on the technical level.

R3 is one of the few alliances that have performed many experimental verifications. Currently, more than 5 different blockchain technologies have been tested. The experimental objects are participating members to evaluate and analyze the issuance and trading of financial products for each smart contract. And the effects of redemption and other processes. The main work is to launch a blockchain distributed ledger platform for the financial sector, Corda, to achieve cross-border payment and other applications; the implementation of the Observer Node Functionality (Observer Node Functionality) to ensure efficient and transparent node work, and favorable supervision.

Hyperledger is a technology company with over 60% of its members. It is driven by technology and has a wider range of applications, including finance, healthcare, manufacturing, and the Internet of Things. At present, five types of distributed ledger platforms have been developed. The common feature is to create open source, distributed ledger frameworks and code bases to support individual business transactions to reduce actual operating costs. Includes SWTOOTH (a modular platform with PoET as a consensus algorithm), IROHA (Simple Infrastructure Platform), FABRIC (Modular Architecture, allowing plug and play), BURROW (a licensed smart contract machine), INDY (create and use) Independent digital identity tools, code bases, and reusable components).

Enterprise: mainly based on technology companies and financial institutions

Actively deployed companies come from major banks, asset management companies, consulting companies, IT companies, investment companies, etc., including Wells Fargo, Citibank, Accenture, IBM, Nomura Securities. These companies hope to solve the pain points of related application scenarios through blockchain technology.

In the international arena, taking IBM as an example, the layout of the Open Blockchain framework was started as early as 2014, and it was also the early code source of Hyperledger. At present, IBM has an application platform in the whole process of food safety traceability and supply chain logistics management.

Domestically, BAT is the representative enterprise: Alibaba involves commodity traceability, public welfare, finance and other scenarios; Tencent involves games, supply chain finance, electronic deposit certificates, BaaS, etc.; Baidu involves payment, asset securitization, BaaS, credit, etc. Although the industry focuses slightly differently, BAT has a blockchain layout for the financial sector, accelerating the possibility of application of the blockchain financial industry.

3. Policy and attitude

In general, countries attach great importance to blockchain technology, while maintaining an attitude of encouraging support and actively exploring; on the other hand, accelerating the formulation of normative standards as an effective regulatory basis.

China: China maintains a learning and development attitude towards blockchain technology. At the national level, in December 2016, the “White Paper on China's Blockchain Technology and Application Development” was released, and the State Council mentioned in the “13th Five-Year National Informationization Plan” to strengthen big data, artificial intelligence, blockchain, etc. New technology basic research and development and frontier layout; In May 2017, the Ministry of Industry and Information Technology released China's first blockchain standard "Block Chain Reference Architecture", including data layer, network layer, consensus layer, application layer and incentive layer. The local government also responded to the call, including Beijing, Guizhou, Guangzhou, Zhejiang, Hong Kong and other 18 regions gradually introduced the blockchain policy, giving strong support in talent education, financial support, office space and so on. Taking Guangzhou as an example, in December 2017, Guangzhou issued the first government support policy on the blockchain industry, “Guangzhou Development Zone Promoting Blockchain Industry Development Measures in Guangzhou Huangpu District”. The whole policy consists of 10 articles. The core terms include Seven aspects, including growth incentives, platform incentives, application rewards, technical incentives, financial support, etc., are expected to increase financial investment of about 200 million yuan each year.

United States: In addition to having the most blockchain projects in the United States, in general, the regulation of the blockchain in the United States is mainly reflected in monetary supervision and investment activities. In terms of monetary regulation: US regulators define Bitcoin as “convertible virtual currency” and are regulated by the Banking Security Act. Meanwhile, the money crimes that Bitcoin may involve are financed by the Financial Crimes Enforcement Network. ) Law enforcement supervision. In terms of investment activities: “mining” contracts in Bitcoin are investment contracts and are regulated by the Securities and Exchange Commission. In addition, the legal interpretations of monetary services vary widely among states in the United States, so states have different regulatory attitudes.

South Korea: South Korea is currently encouraging the blockchain and trying to explore it in many ways. In February 2016, the Bank of Korea proposed to encourage the exploration of blockchain technology in its report. In February 2016, the Bank of Korea proposed to encourage the exploration of blockchain technology in its report. In the same month, the government supported Korea's only stock exchange, Korea Exchange (KRX), to develop a trading platform based on blockchain technology.

Japan: Japan is one of the most active countries in the world, and it is a combination of blockchain scenarios in multiple industries. On April 1, 2017, Japan implemented the Payment Services Act, which officially recognized Bitcoin as a legal payment method and set clear regulatory requirements for digital asset exchanges. In June 2017, the Japanese government is preparing to open all regional real estate blockchain projects, registering all real estate in towns, farmland and forest areas into a single blockchain account, in addition to the accompanying details and real estate sales prices. The Japan Financial Services Authority (FSA) is developing a blockchain-driven platform that will enable Japanese customers to instantly share personal information between multiple banks and financial institutions.

Fourth, the blockchain prospects

1. Technical, commercial and regulatory challenges

Although the blockchain technology can be widely applied to diverse scenarios, at present, for large-scale public links, problems such as technical performance, security risks, and policy supervision cannot be widely applied. These limitations are more or less present in different blockchain technology systems, but only to varying degrees.

1) Low transaction performance and excessive resource consumption: Blockchain technology based on work proof mechanism like Bitcoin currently has a new block every 10 minutes, and it can be confirmed after 1 hour. It is difficult to meet high frequency. Small financial transactions require more than 10,000 transactions per second. The consensus mechanism represented by the workload proof mechanism needs to consume a lot of computing power to generate new blocks. The British power tariff comparison company PowerCompare's research shows that the average annual power consumption of Bitcoin mining has exceeded the average annual electricity consumption of 159 countries. the amount.

2) Hidden dangers: For large public chains, more and more miners choose to join the mining pool in order to smooth the yield curve, which leads to further concentration of computing power. At present, Bitcoin's top four mining pools account for more than 50% of the total computing power, making the network increasingly threatened by "51% attacks." For the alliance chain and the private chain, the security of the weakly centralized architecture has not been verified by time. In addition, several hacker attacks have occurred in the industry, causing great losses to users. For example, in June 2016, The DAO, a blockchain project based on Ethereum that created a world record for crowdfunding, was hacked. The hacker used a loophole in its smart contract to steal 3.6 million Ethereum coins (at that time About 500 million yuan, causing a large market to be thrown down, triggering the biggest crisis in the entire blockchain industry.

3) The right scenario is still limited: Compared to traditional commercial infrastructure, blockchain technology has the advantages of efficient and robust decentralization, highly reliable data logging, flexibility and automation after the introduction of smart contracts. However, many traditional commercial infrastructures currently exhibit insurmountable deficiencies and failures in terms of efficiency, stability, reliability, automation, and the like. For example, the country's payment and clearing system, stock exchanges, commercial banks and other key financial infrastructures are stable, good, and safe, and also have off-site disaster recovery plans to ensure the stability of the system, then compared to the cost of renovation The evolution of the blockchain technology system can improve the benefits, that is, the "cost-benefit" analysis is an important factor that the blockchain must consider when the scene falls. The blockchain must find a truly significant cost benefit. Scene.

4) Standards have not been unified, and regulatory policies are not complete: At present, there is no universal and unified standard in the blockchain field at home and abroad, which will lead to subsequent application compatibility and interconnection problems, which is not conducive to the improvement of overall efficiency. Major alliances at home and abroad such as Hyperledger, R3, ChinaLedger, BCOS, etc. are committed to the development of unified standards. In October 2016, the Ministry of Industry and Information Technology of China formulated the technical roadmap for national blockchain technology standards, and the International Organization for Standardization is also working hard to coordinate Relevant standards. It will take time for this work to advance.

Blockchain technology poses challenges to existing legal and regulatory frameworks. The variety of digital currencies has created an unprecedented man-made market with tentacles spread across every corner of the globe and has been widely questioned. Service providers and users in the digital currency system are anonymous, making it easy for lawless elements to cover up their sources of funds and investment, which facilitates money laundering, terrorist financing and evasion of sanctions. It is necessary to strengthen international regulatory coordination and form a consistent regulatory policy. The application of blockchain to other business scenarios also has a range of legal and regulatory issues, such as how to define the legal nature of smart contracts, how to resolve the final confirmation of financial transactions, and so on.

2. Outlook: Technology convergence, smart contracts will be the future trend

As an upgrade and supplement to traditional information technology, the blockchain will be integrated and promoted with other emerging information technologies. The current blockchain is still in the early stage of development. It requires not only government, industry alliances, and enterprises to develop technical standards and consensus mechanisms, but also the support of technologies such as 5G, Internet of Things, artificial intelligence, and big data.

5G: Large-scale public chain has limited transaction throughput per second and long transaction confirmation time (Bitcoin currently only supports 7 transactions per second, a transaction usually takes 1 hour to confirm), except for the side chain led by Ethereum and Blockstream. In addition to the lightning network technology, the large-scale commercial application of the future 5G network can greatly increase the data transmission speed and reduce network congestion. The performance of the large-scale public chain will be improved and gradually applied to the commercial application scenarios of tens of thousands of transactions per second.

Internet of Things: The current blockchain technology can only solve the trust problem in the chain, but there is almost no power for the authenticity and accuracy of the data under the chain. After the further development of the Internet of Things technology, the observation, acquisition, processing, transmission and update of the data under the chain will be automated, and the authenticity and accuracy will be guaranteed. The application scenario of the blockchain will also be expanded.

Artificial intelligence: The workload proof mechanism has been criticized and wasted a lot of power and hardware resources. At present, the bite mainland and other mining machine manufacturers have cooperated with the original chain to develop a consensus mechanism and chip for artificial intelligence algorithms, and convert the hash calculation into an application. Matrix computing for deep learning creates greater economic and social value.

Smart contracts are probably the most revolutionary application in the blockchain. If smart contracts are widely used in the blockchain, the economic division of labor will be further refined in the Internet era, and broader social synergies will be realized. The history of the world economy is essentially an intertwined history of the vertical expansion promoted by the industrial revolution and the horizontal expansion promoted by globalization. The industrial revolution promoted the specialization of labor division and the scale of production in specific fields, which ultimately led to a significant increase in production efficiency and a significant reduction in production costs. Globalization is the ultimate performance of the industry's industrial chain research and development design, raw material procurement, production and processing assembly, brand packaging, sales and other aspects of the division of labor in the world. Unlike the previous three industrial revolutions, the fourth industrial revolution, marked by the Internet, for the first time promoted globalization in the sense of network topology. In the classical Internet, people use the Internet to search for information and materials, but they still have to rely on organizations such as companies in the physical world to build trust, sign contracts, organize production, and divide labor. In the value Internet, it is possible for people who have never met to complete the above tasks through the blockchain for the first time. Through the extensive use of smart contracts, the blockchain will create online segments in specific areas that directly address the needs and production of network nodes across the globe. The division of labor in the sense of network topology will form a closer and deeper complementarity with the division of labor in the geographical sense. The blockchain is also expected to be upgraded from the “trust machine” to an important “engine” of the industrial wave.