On November 8th, the “2019 World Blockchain Conference·Wuzhen” hosted by Babbitt was officially opened. The conference gathered more than 100 global blockchains, digital assets, AI, 5G experts and scholars, and technical geeks. Opinion leaders and founders of popular projects, with the theme of “application unbounded”, explored the application of blockchain, technology frontiers, industry trends and hot issues, and promoted blockchain technology and industrial innovation.
On the afternoon of November 9, at the theme forum of “Opportunities and Challenges of Digital Asset Trading”, Meng Yan, Associate Dean of Digital Assets Research Institute and Ruixin Capital Partner, delivered a speech titled “Paradigm Switching of China Blockchain” . Meng Yan pointed out that the blockchain is essentially a database of facts. It is a new way to determine what the facts are by cross-validation. Then form such digital evidence, then go to the authority and ask it to take action.
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When talking about the latest paradigm of China's blockchain, Meng Yan said that he does not believe that digital currency will receive policy support and permission in China. China will continue to ban digital currency. After the relaxation of policies and ideas, a new possible model will emerge, which is led by government agencies and joined by enterprises and social organizations to establish a multi-party coordinated blockchain.
The following is the full text of the speech by Babbitt:
My theme is digital asset trading, titled "Paradigm Switching of China Blockchain." I explain why you talk about paradigm switching. Before the big time node on October 25, in China, the blockchain could not be called an industry, it could only be called a field. We know that before October 25, the government supported the development of blockchain technology, but severely cracked down on virtual currency, especially the act of virtual currency speculation and illegal fund-raising under the banner of the blockchain. Aside from this type of illegal behavior, there is a long-standing debate about the chain and the currency circle in a very formal blockchain circle.
Doing a chain of circles advocates “no-coin blockchain”, which is characterized by the blockchain as a distributed shared database. This database has a series of advantages, such as it can cross the trust boundary, span the interests, and multiple The principal simultaneously saves data to the database. Once this data has been written, it cannot be tampered with and can be traced clearly. Such a feature does have certain characteristics compared with the traditional database. It really cannot be said to be an advantage. This method has been accepted and recognized by the society before. The so-called currency circle is a group of people who really believe in using the blockchain as an infrastructure to rebuild the currency, transform digital assets, transform the financial management system, and use such an infrastructure to reconstruct the credit currency system that has been popular for more than 200 years.
This matter has been very controversial. Simply saying that we are allowed to do the chain government, but always feel that the projects made with the blockchain are not painful and do not achieve the desired results. A well-known blockchain company in China has done dozens of pure-chain projects in the past two years, and none of them succeeded. And I don't think that after 10·25, the general secretary said that the project that went forward according to the original wrong route will automatically succeed. I think it is unlikely. If you use the idea of currency to do the blockchain, you will find it very useful, but it has a strong rebelliousness. How can this contradiction be solved? I think the essence of the debate is the two routes to the digital economy. Whether it is the chain or the currency, it is necessary to push the digital economy to a higher stage. They only talk about the chain of people, they regard the blockchain as credible data, and provide credible digital evidence for financial institutions; the currency circle directly changes the currency issuance mechanism, redistributes the coinage and the coinage tax, radically Transform all financial infrastructure and basic logic.
The development of high-level digital economy
From the logic of the chain, we believe that a high level of digital economic development will present an evolutionary context, so it cannot be done overnight and needs a little advancement. First, we digitize our products and services. This has been very successful in the Internet over the past 20 years. Next we have to digitize assets, such as real estate, steel, warehouse receipts, accounts receivable into figures, crude oil. The stocks are digitized and then placed on the blockchain for trading. Would you say that digitalizing these things on the blockchain is different from what it is now in a cloud computing or centralized server? Digital assets that are now placed in centralized servers may be defined as claims and may also be defined as property rights. Once you put it on the blockchain, it will be defined as property rights without exception. From a legal point of view, property rights are higher than claims, and asset digitization must be placed on the blockchain to become property rights, in order to enjoy higher-level legal status.
However, the digitization of assets is not enough. We must go one step further. The ultimate goal of the chain is to realize the assetization of digital. What is the assetization of numbers? It is that you have left a series of digital evidence on the Internet through your own practical actions. After cross-certification, you have proved some of your characteristics, facts, and endowments, and these talents are directly used as assets. An economy recognizes that something is an asset. The important feature is whether it can be used as collateral on the left side of the bank's balance sheet and the credit is released on the right.
Here I propose a unified framework for understanding the application of blockchain. As everyone knows, I am pushing the economy in the circle. Here we can understand three different things with a set of frameworks. The so-called chain or industrial blockchain, they have to do this, first of all a node provides digital evidence for a certain fact. For example, there is such a roll of steel in the warehouse. This fact is provided by the warehouse node with digital evidence. There is also a node dedicated to monitoring, which provides digital evidence of this fact through video. If there is storage, there is transportation, and it provides digital evidence for this fact through the truck transport record. Then do the steel inspection, provide an inspection report on the quality of the steel, and provide a digital evidence. Multiple or all nodes perform cross-data verification on this fact, proving that there is a volume of steel with a weight of 20 tons, which is indeed present in a warehouse at this moment. After that, it enters the digital evidence chain to request the authority to act, that is, to go to the bank or the exchange, and hope that they will use this warehouse receipt as a collateral to issue loans to us. This is what the industrial blockchain does.
At the end of the digital currency, it does not need to go to the authorities, because several digital nodes have verified this fact. As long as the smart contract receives a positive digital fact, the cross-validated digital facts can be issued a digital currency based on the smart contract, which is what Bitcoin does. Bitcoin is a group of people, one of whom finds a number, and all other nodes cross-validate the correctness of this number. After the verification is completed, a certain amount of bitcoin is issued as a reward according to a predetermined algorithm, which is the logic of the digital currency.
The logic of the blockchain is this: the world is not just money. When all the digital evidence is collected and cross-validated, it is possible to issue not only currency, but also points, stocks, notes, and various digital assets that are not yet thought of. After the release of these digital assets, we can first collaborate based on these digital assets and digital rights. As for the last time to become money, I still need to help the authorities.
Industrial blockchain application model
What is the typical industrial blockchain application model? We want to prove that there is a roll of steel in a warehouse, and we want to prove that there are 10,000 tons of coal at sea. We want to prove that one person has found an important piece of evidence that can be used as a legal evidence. As long as you do, multiple nodes simultaneously provide evidence from different perspectives on this fact, and this evidence continues to increase the credibility of this fact. After reaching a certain level, we can think that this fact exists. So the blockchain is essentially a database of facts, which is a new way of identifying what the facts are by cross-validation. Then form such digital evidence, then go to the authority and ask it to take action.
The current application block of the industrial blockchain is like this. This picture was found in the white paper of the blockchain of Tencent. It is quite comprehensive. You can refer to it. I don't have time to expand all of them, basically covering all the problems that are now suitable for solving with blockchains.
What is the typical CIS economic application model? A group of users interact with a part of the system called a miner. A group of people form an organized relationship with the nodes and become a so-called self-organized organization. Under the self-organized organization, the miners contribute to this community. Don’t think of this matter narrowly as mining with computational power. It can also include pulling new, logging in daily, publishing articles, commenting, and various Every contribution to the system, including facilitating transactions and advertising, can be considered a contribution.
After making a contribution, the self-organized organization is equivalent to an entity that can create value. This value will eventually go to the market and become a hard currency and become money. Only after this money is earned, we can go back and rely on the distribution of the certificate in the self-organized organization, which in turn motivates all those who contribute to the system. This is the model of the general economic application.
The new paradigm of China's blockchain
I said that now the paradigm shift, the nature of the switch seems to me to be an organic fusion of the chain mode and the pass mode. I still don't think that a way such as digital currency will get policy support and permission in today's China. China will continue to ban digital currency. After the relaxation of policies and ideas, we feel that a new possible model is about to emerge. It is led by government agencies and joined by enterprises and social organizations. Let us build a multi-party coordinated blockchain. Our users can interact with the blockchain system, and multiple organizations jointly verify, and agree on the user's behavior and data state authenticity, and confirm it on the chain. Corresponding to the issuance of standardized and non-standardized certificates, the first use of the pass to realize the digitization of assets and equity, and then implement effective incentives internally, so that miners and nodes can be fully motivated, and these digital certificates may directly enter Trading on the exchange. Real estate exchanges, commodity exchanges, etc., they can directly support data pass transactions in the future. In the final step, financial institutions are needed. I mainly refer to banks. Financial services are based on evidence provided by the certificate.
I think this new paradigm is a model that China can work in the future, and it will get a big development. Give an example of supply chain finance. If we can use the new paradigm to organize supply chain finance, it is possible to rely on warehouse receipts, contracts, evidence of transportation, evidence of video recordings, evidence of quality inspections, and multiple rating agencies, each with its own blockchain. Nodes, they at the same time cross-certified a fact, indeed prove that there is such a steel, there is such a pile of wood, there are such coal, there are some containers of goods in a customs warehouse. On this basis, we can standardize, digitize, and pass the coal or the pile of steel into a certificate. Once you become a pass, as long as you can prove that this thing really exists, there are actually many ways to finance it.
Everyone knows that China's annual interest rate for bridge loans can sometimes reach 30%. Why are most people not exposed to high-quality and high-yield assets? Because it has no way to standardize, there is no way to confirm the right, there is no way to provide valid digital evidence. Once such digital evidence is provided on the blockchain, the authorities inject the action, which forces us to put all relevant digital evidence on the chain. On this basis, we will continue to do supply chain finance, and the credibility and efficiency will be greatly improved.
I can give another example to help everyone understand. Everyone knows that real estate has many rights. There are only two rights to trade: one is ownership and the other is leasehold rights. In fact, real estate can have a lot of derivative rights, such as all, part of the lease; part of all, part of the sub-lease; part of the sub-lease, part of the sub-lease; and all, part of the lease out as a warehouse and so on. Why are these transactions not happening in real life? You can imagine that if you want to rent a room today and put some of your own items, it is very likely that this happens:
Everything is fine when you rent. After you put the items in the house, the fire department has said that you are sorry. This place is not qualified for fire. You are not allowed to put such things here. The things you buy are not effectively asserted, and their transparency and credibility are not strong enough. The advantage of the government's involvement in the blockchain is here. The government can inject authority into it and turn this into a social norm, so everyone can be required to clearly put the power of houses and real estate in the block. In the chain, the derivative is based on clear power in the chain. At that time, you got a pass, and there was a lot of condensation behind the pass. There may be more than a dozen or twenty authoritative departments behind it, because it was produced by cross-digital evidence.
These examples allow you to understand the traditional chain of practices, and once combined with the pass, can create a new paradigm. And we can imagine that the verified warehouse receipts that I have just mentioned, the verified real estate certificates, can be transferred on the back-end compliance exchanges, and this circulation itself will make the entire financial transaction very efficient. Upgrade. Of course, there will be occasional failures here, such as one in ten thousand or one in one hundred thousand. If someone succeeds in drilling a void and forging a warehouse receipt, then the insurance institution will have an abnormal situation. This is what I have conceived. In the future, China's blockchain application will be compared to the mainstream paradigm. As for whether it is correct, I hope to discuss it with everyone and then practice. Only time will tell if this model really works, can it be popular.
I am here to throw out some ideas, I hope everyone will criticize and correct, thank you!