The Central Political Bureau collectively learns the blockchain technology to transmit the signal? Interpretation of the former chairman of the China Securities Regulatory Commission, Xiao Gang

Author: Xiao Gang

Source: People's Political Consultative Conference

△ Member of the National Committee of the Chinese People's Political Consultative Conference and former Chairman of the China Securities Regulatory Commission Xiao Gang

Around the 18th collective learning blockchain technology of the Political Bureau of the Central Committee, I will talk about some learning experiences.

First, the meeting was timely. The Politburo collectively learned blockchain technology. Just a few days ago, Facebook CEO Zuckerberg once again explained his ideas to Libra at the US Congress hearing. He mentioned at the hearing:

“China is Libra's biggest competitor and China's financial IT infrastructure is ahead of the US.”

How will China face the possible impact of Libra? China has a group of powerful Internet companies that have achieved outstanding results in the payment field. For example, Alipay and WeChat payment have carried out cross-border payment arrangements in Southeast Asia and other places. China also has a market for new technology applications. Against the background of Sino-US trade frictions, this meeting shows that we are not afraid of competition.

Second, the conference gave great encouragement to the blockchain technology that has developed slowly in recent years. China's digital economy is booming, digital finance is in the period of explosive development, and the central government has clear guidance on the application of cloud computing, big data, and artificial intelligence, but the development of blockchain technology is relatively slow. Due to the impact of the ICO incident, on September 4, 2017, after the seven ministries jointly issued a document to stop the virtual currency, the relevant meetings and applications of the blockchain were in the “underground” state, and the blockchain industry experienced several years of silence. Practitioners are fearful. Before this meeting, the industry, academia and research circles were hesitant to continue to study blockchain technology. The political bureau collective learning clearly pointed out that we should actively embrace the blockchain technology. After the meeting, the public opinion orientation can be said to be completely reversed. Some people in the WeChat public account published the article "The blockchain scam", but they were blocked.

Third, the guidance and regulation of blockchain technology is very important. On October 24, the Politburo learned collectively. On October 26, the Standing Committee of the National People's Congress passed the cryptography. The trust mechanism of the blockchain is derived from the cryptographic algorithm. Mastering the autonomous core encryption algorithm is the premise of the large-scale development of blockchain technology in China. The introduction of cryptography is not only conducive to the application of new technologies such as blockchain, but also to the application of new cryptography in blockchain.

After the talks, I will talk about a few interpretations.

The first is about the role of blockchain technology. General Secretary Xi Jinping proposed to seize the opportunity of blockchain technology integration, function expansion and industry segmentation, and play a role in promoting the data sharing, optimizing business processes, reducing operating costs, improving synergy efficiency, and building a credible system. effect. The second half of this sentence mentioned is the pain point of the current financial industry's coordinated development of financial technology, which requires data sharing and improved synergy efficiency. Blockchain technology has some advantages that make it possible to solve these problems, which is an important reason for us to develop and promote blockchain technology.

The second is the focus on the application of blockchain. General Secretary Xi Jinping stressed that "we should explore the use of 'blockchain +' in the field of people's livelihood, and actively promote blockchain technology in the fields of education, employment, pension, precision poverty alleviation, medical health, commodity anti-counterfeiting, food safety, public welfare, social assistance, etc. The application of the people to provide more intelligent, more convenient and better quality public services. It is necessary to promote the combination of the underlying technical services of the blockchain and the construction of new smart cities, and explore the promotion in the fields of information infrastructure, smart transportation, energy and power. Application to improve the level of intelligence and precision in urban management." This shows that there are differences in the emphasis of China and the United States in promoting the application of blockchain technology. The United States is more focused on country-level applications, such as the US Department of Homeland Security is seeking to use blockchain technology to ensure security solutions for US border cameras. China's blockchain application is closer to the needs of people's livelihood. The blockchain must be empowered to the real economy and landed in real demand scenarios.

The third is about blockchain technology research. General Secretary Xi Jinping emphasized that "it is necessary to strengthen basic research, enhance the original innovation ability, and strive to let China take the leading position in the emerging field of blockchain, occupy the commanding heights of innovation, and gain new industrial advantages." Although the blockchain is considered to be "the same revolutionary (information technology breakthrough) as the 1975 personal computer and the 1993 Internet, it is not a completely new technological invention, but an existing technical resource. Innovative integration and application. I have read some information. Blockchain technology is not an independent technology. It is composed of four technologies that have existed for more than 30 years. These four technologies are originated in the United States, have a long history, and have been widely used in industrial practice before the blockchain appeared. The first technology was distributed technology invented in 1984, the Turing Award (Nobel Prize in the computer field) in 2013; the second was the asymmetric encryption technology invented in 1976, and the Turing Award in 2015. The third is the hash technique of the 1970s, the Turing Award in 2002, and the fourth is the scripting system. The C language appeared in the 1970s and the Turing Award in 1983. China's computer field is heavily applied to light research, and original technology lags far behind the United States. There is currently no Turing Award winner. There are still many lessons to be supplemented in the basic research of blockchain in China. It is not easy to overtake the curve in technology. The theoretical research on blockchain has a long way to go.

The fourth is to actively learn new technologies. General Secretary Xi Jinping emphasized that “the relevant departments and their responsible leaders should pay attention to the status quo and trend of blockchain technology development, improve the application and management of blockchain technology capabilities, and enable blockchain technology to build a network power, develop a digital economy, and help the economic society. Development and other aspects play a greater role." Can our CPPCC organize experts to talk about blockchain technology? Only by truly understanding the basic principles of blockchain technology and understanding the inadequacies and difficulties of blockchain technology development can we better contribute ideas and suggestions, and more in line with technological development. Proposal for trends. In recent years, there have been proposals from CPPCC members on the application and supervision of blockchain. For example, the NLD Central Committee proposed to establish a “technical identity card” system based on blockchain technology to establish a digital system for each scientific and technical personnel to make evaluations even more Accurate and more open. Zhou Hanmin, a member of the National Committee of the Chinese People's Political Consultative Conference, proposed "accelerating the use of the Internet, big data, cloud computing, and blockchain in the field of government services, using technology to force government functions and process reengineering to create lower cost, higher efficiency, more secure and reliable. Governmental Ecosystem." We can also consider a case study on the application of blockchain to form relevant recommendations.

Finally, I would like to make a few preliminary suggestions.

First, the word “digital currency” was not mentioned at this meeting, but it does not mean that it is not important. At present, the most widely used blockchain technology and the most influential application is bitcoin. Although bitcoin prices have been fluctuating for 10 years, they still account for nearly 70% of the market value of all digital currencies in the world. In the short term, after this meeting, the impact on China's financial sector may be that the central bank's digital currency issuance may accelerate.

Second, the financial regulatory authorities should give a clear definition of the application of the blockchain in the financial sector to better regulate development and eliminate chaos. At present, it is not clear what is the real blockchain application, which leads to some fraud and damage to investors' interests. For example, in the past, a company issued token financing through ICO, which caused many investors to lose their money. Regarding the ICO, there is a joke on the Internet: "The blockchain can be anti-counterfeit, but it can't prevent companies that issue ICO tokens from cheating money." There is a dilemma of "the doctor does not self-medicate."

Third, in the era of digital finance, we must have a pre-judgment. There may be some new types of financial institutions. How to supervise them is a relatively urgent matter. At present, we have seen virtual currency, digital currency exchanges and so on. Although China's current policy is still not allowed, but will encounter these problems sooner or later, is it necessary to continue to ban virtual currency and prohibit ICO financing? Around the entire industry chain, with the deepening of the application of blockchain technology in the financial industry, digital banking, digital investment banks, digital asset exchanges will appear in the future, and even similar to traditional brokers, market makers, ratings and Research institutions such similar institutions. These institutions have both financial attributes, technological attributes, and even anarchic attributes. How to supervise them is an unprecedented proposition, and the world's financial regulatory authorities are facing trials.

Fourth, blockchain technology has broad application prospects in the capital market. In terms of stock issuance, trading and settlement, in the future, based on blockchain technology, digital stocks may appear, especially in the IT company's own business and products are on the Internet. These IT companies may use technology to directly issue digital stocks on the Internet without intermediaries. Investors can directly trade stocks or transfers, and investors can use digital stocks to purchase company products or services. Public, small, and mass Internet equity financing: At present, when the equity of the equity financing of the Internet changes, the maintenance of the shareholder register is time-consuming and laborious. The blockchain can greatly improve the efficiency of equity transfer, and the blockchain technology can also be used for corporate finance and other The information is recorded, disclosed and managed, and the information is difficult to be falsified and deleted, which improves the transparency and credibility of the information and reduces the risk caused by the information asymmetry between the financing enterprise and the investor. Off-market market: At present, the OTC market is mainly faced with problems such as complex equity registration process, difficulties in equity confirmation, high transaction risk and lack of standardization of products, which restricts the development of the OTC market. Consider the advantages of blockchain technology to solve these problems.

Fifth, the blockchain is widely used in supply chain finance. Traditional supply chain finance participates in many subjects and links, information asymmetry, long span of logistics links, and so on. There are a large number of manual verification of various transaction documents in the business, which is time-consuming and labor-intensive. Future blockchain applications are expected to achieve digitalization of operations, reduce costs and improve efficiency, and truly meet the needs of the development of the real economy.

Sixth is to strengthen investor education. After the news of the collective study of the Politburo was released, it had a huge impact on the virtual currency market. The price of bitcoin rose from $7,600 to $10,000 in one day, rising more than 30%, and the volume of transactions increased by more than three times. The share price of the blockchain technology company rose by 107.8%. The price of the virtual currency market has risen sharply and rapidly, and there is also a sharp downside risk in the future. Through various forms of education and training, we call on everyone to participate in the investment of virtual currency.

(The author is a member of the National Committee of the Chinese People's Political