Wuzhen Hu Jie: Libra vs DCEP, one is a new bottle of new wine, and the other is a new bottle of old wine.

From November 8th to 9th, the “2019 World Blockchain Conference·Wuzhen” hosted by Babbitt was held at the Wuzhen Internet International Convention and Exhibition Center. On the round table entitled "Opportunities and Challenges: Libra and Central Bank Digital Currency", Hu Jie, a professor at Shanghai Jiaotong University and Shanghai Institute of Advanced Finance, analyzed and interpreted the differences between Libra and the central bank's digital currency. The atmosphere was so hot that even after the round table was over, Professor Hu Jie was surrounded by a large number of participants, and a “small class” was temporarily opened next to the venue.

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Hu Jie said that Libra is very different from the central bank's digital currency DCEP. One is a new bottle of new wine , and the other is a new bottle of old wine . There is a big difference between the starting point, the technical path and the purpose. It is DCEP's sole mission to be able to express banknotes and coins with electronic means and digital means while maintaining anonymity.

He believes that Libra's biggest obstacle lies not in the logic of money, nor in its technical means, but also in how it is accepted by national regulatory authorities. This is a circumstance. Therefore, everything that it has experienced now is in our expectation, and it is inevitable to develop according to business logic. But going through it doesn't mean we don't look at it, it's going along the right path. The introduction of the Libra Association by companies such as Visa is only a partial response, and Libra is still able to go on.

He pointed out that the issuance of any currency is actually related to the taxation of a country . This is a fundamental problem. If Libra can solve the tax problem, then it can move forward smoothly. Libra is using a 100-node implementation of information under a new technology architecture. This is challenging but can be solved.

Finally, he also made a fuss about the hypothetical Chinese version of Libra, called Cibra. What Cibra actually implies is the business logic behind it, and at the technical level, our Alipay WeChat payment is strong enough to go forward without Cibra, if not the difference in business logic.

The following is a record of the contents of the round table:

I think Libra is a new currency. Because no currency has a 1:1 correspondence with it, a Libra appears, and you can't say which currency 1:1 disappears at the same time. Of course, a particular currency will be affected to some extent by it, such as disappearing part of it, but after all, this is not a 1:1 relationship, so it is a new currency. This is not the same as the central bank digital currency DCEP. One is a new bottle of new wine, and the other is a new bottle of old wine.

Libra and DCEP are really different things, but we often talk about it together, which is not bad. why? It has connection points, for example, some of the explorations that have been stimulated by technological advances, but the two explorations are indeed very different. From their starting point to the path to the goal are different.

First of all, the starting point . In fact, I also know that the exploration of DCEP started a few years ago. Yao was doing it before, and they are not only theoretical exploration, but also still landing. I am familiar with them, so DCEP has little to do with Libra's launch.

The technical path is indeed different . Both have been influenced by technological advances, but in fact Libra has made it clear that it is in the form of a chain of alliances, and even the possibility of proposing a public chain, which is a pure currency based on blockchain technology. Exploration of distribution and circulation. However, after considering the technical aspects of DCEP, it is not considered to be so important. What is more important is that its application characteristics are to maintain the anonymity of money, that is, to report the anonymity in the exchange of coins and banknotes. You know that I know that such a thing can be reserved to a certain extent. As for the use of blockchain technology or which part of the blockchain technology, this is open-minded, so their path is different.

The most important thing is that their goals are completely different . Some people say that the two goals are exactly the same, which is completely a misunderstanding. Libra is going to produce and manage a cross-global, cross-sovereign currency, and DCEP is definitely not. DCEP is to achieve a very limited goal, of course, beyond this limited goal, the future will not explore more far-reaching goals, this is another problem. The goal of DCEP is very simple, to replace coin notes.

In fact, using the words of digital currency to talk about DCEP, there is actually a little misunderstanding, why? Because 95% of all our currencies are digitized, it is already a digital currency. Now DCEP's digital currency is only a small part of it, it only solves the last corner of the last history – the banknote coin. The core logical feature of banknote coins is that you know what you know, this is its only use. Of course, the elderly have some uses. This is another topic. Whether it is possible to express banknotes and coins with electronic means and digital means while maintaining anonymity is DCEP's sole mission . After the exploration, the electronic process of a local currency such as the RMB is over. Of course, on this basis, we will accumulate a lot of experience, for the future internationalization of the renminbi, the future Chinese version of Libra, may make some technical preparations. This is my personal opinion.

In fact, I have always been optimistic about Libra. I just wrote an article about Libra's cross-border supervision. In fact, the biggest obstacle we see in it is not the logic of money, nor the technical means of it. It is also how it is accepted by the supervisory authorities of various countries . This is a circumstance. Therefore, everything that it has experienced now is in our expectation, and it is inevitable to develop according to business logic. But going through it doesn't mean we don't look at it, it's going along the right path. Governor Zhou Xiaochuan also said that if Libra is not successful, the next Libra will come out like this , so I am very optimistic about it.

The exit of several Libra associations such as Visa is very interesting. You observe that these guys come in defensive styles because they already occupy the payment market. They come in and say that I have to come in, because if Facebook comes together, it may have to erode their territory, so they have to join. So now that there is some political pressure, they must first withdraw from the existing things and not get into trouble. There are no such concerns like others, and now there are more than a thousand to join later. So this thing, this is a partial reaction, and now I can't see it. Is it the most difficult time, even if there is, I think it will eventually pass .

In fact, the issuance of any currency is actually related to the taxation of a country. This is a fundamental problem . Any authority must have enough confidence in your currency issuance and operating system to get what you need to get. So a tax is enough for any country to be wary of any currency that flows within him. In fact, Facebook itself does not have a big sense of evil. I also believe that the Fed, including the Congress, did not want to kill it.

In addition to the United States, tax issues in all other countries are also issues that must be faced. This kind of cross-border currency, our country is also concerned about this issue, but it can be solved logically. We can now solve it under the traditional technology system . It is only under the new technical framework, using 100 nodes to achieve information acquisition, which is challenging, but can be solved. Once this question is answered, I think Libra will definitely pass. Other technical debates, decentralization, and distribution of people are not the problem. Now the dollar is penetrating the world. If it rides on Libra's wings, it can penetrate the world more quickly. Why not? I will do it, but I cannot destroy my previous system, especially my tax system.

In addition, if we only want to internationalize the renminbi, the best way now is to pay through Alipay and WeChat. It is electronic and very convenient. Going forward is OK. But why is Alipay not far away now? It is because the RMB does not flow freely. For this reason, Alipay is not far away. In fact, its convenience and expansion are already very strong, but if your underlying supporting assets are still in the renminbi, it will definitely not go far, this is the first.

Second, if we want to build a Chinese version of Libra, that is, Ciblra, we have to create a new currency. This support not only contains the renminbi, but also contains some other items. At the same time, we have to wait for a basket. The RMB in the currency should be exchanged around, because in this way we may launch it relatively quickly. In this process, Alipay and WeChat can also play a certain role. So the core difference between Cibra's core differences and Alipay is what currency you support, and whether the currencies you support are all freely circulated.

If Xiaozha conceives the currency into the US dollar, it is a dollar vest, but it is not very good for internationalization. Many countries will resist it for this reason. If it is now using a basket of currencies, many countries will have fewer psychological barriers and political obstacles when accepting it. So Cibra actually implies the business logic behind it , and the technical level of our Alipay WeChat payment is strong enough to go forward without Cibra, if not the difference in business logic.

Finally, I think that all the hearings are not very important. What is important is that it will immediately come up with a technical solution, saying that the tax guarantee is guaranteed. If it is OK, it will be passed. Now everything is behind "I am out of control", especially the loss of taxation, of course, including a series of things such as anti-terrorism out of control, money laundering out of control, and others are nonsense. In fact, it has already compared the 1:1 dollar as a point, which has been used all over the world. There is no problem at all because it can control taxes. But it is now a basket of currencies, distributed in the world of 100 nodes around the world, it does not know how to collect taxes. Therefore, if the tax problem is solved, the obstacles facing Libra will be no problem.