Researcher of Chinese Academy of Social Sciences: Implementing the rule of law network into blockchain management

Source: Guangming Daily

Author: Zhao Lei

During the eighteenth collective study of the Political Bureau of the Central Committee, General Secretary Xi Jinping pointed out that the integrated application of blockchain technology has played an important role in new technological innovations and industrial changes. Blockchain should be taken as an important breakthrough in independent innovation of core technology, the main attack direction should be clarified, investment should be increased, and a number of key core technologies should be overcome to accelerate the development of blockchain technology and industrial innovation. He emphasized that it is necessary to implement the rule of law network in the management of the blockchain and promote the secure and orderly development of the blockchain. This important statement is a scientific judgment based on the current status and trends of the development of blockchain technology, and provides a basis for improving our ability to use and manage blockchain technology.

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In the blockchain system, data is stored in different blocks, and data production and encryption are implemented using cryptographic methods. Blocks are linked together in a point-to-point manner to recognize and verify each other. Benefiting from this decentralized, distributed storage, collective maintenance, openness and data tamper-resistant characteristics, blockchain technology has established a technology trust system that is separate from the real world credit mechanism, and is widely used in all aspects of economic society. . Today, the application of blockchain technology has extended to many fields such as digital finance, the Internet of Things, intelligent manufacturing, supply chain management, and digital asset trading. China's blockchain technology has a good foundation, but there are also some issues that cannot be ignored.

Legislation and institution building are relatively lagging behind. From the technical level, the blockchain provides conditions for applications in various fields, improves transaction efficiency, solves credit problems, and realizes value transfer. However, China's current legislation and institutional construction related to blockchain technology is relatively lagging behind. Once the scale of transaction data rapidly increases, inefficient querying and mining analysis will obliterate the data transparency advantage of blockchain technology and virtually enlarge market players. Transaction risk. Take the application of smart contracts as an example. Because the contract is compiled from code, although it is convenient and efficient in the application, once problems and loopholes occur, it is difficult to clarify the responsible person and make up for changes.

The technical supervision system is not yet complete. On the one hand, blockchain technology standards are unclear. Which technologies have reached the true blockchain standards, and which are "fake chains" and "pseudo chains" under the guise of blockchains, lack of recognition standards. On the other hand, the absence of regulatory bodies and the lack of clear understanding of blockchain technology by relevant departments makes it difficult to formulate regulatory standards and industry specifications. For example, China ’s blockchain technology does not have a clear regulatory body, and the relevant management responsibilities are only covered in the “Regulations on the Management of Blockchain Information Services” formulated by the State Network Information Office. For another example, the widespread application of blockchain technology cannot be separated from the development of smart contracts, but the development of smart contracts has a great impact on the current contract law. Regarding the coordination between new technologies and traditional laws, there is still no clear solution.

Blockchain technology has a tendency to be generalized. Some companies use the name of developing blockchain projects to issue digital currencies and digital assets, and many of them are "air coins" and "empty chains" without the support of physical projects. As a point-to-point information storage technology, blockchain can only operate in virtual space. How to integrate it with traditional business models is still in the research and exploration stage. But recently, blockchain technology tends to be generalized. For example, some people advocate "everything is on the chain", and some online malls have appeared in the so-called blockchain technology such as "blockchain wine" and "blockchain rice" The application of traceability, but in fact, these things that cannot be directly digitized and informationized do not have the basic conditions for applying blockchain technology.

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General Secretary Xi Jinping emphasized the need to strengthen the guidance and standardization of blockchain technology, strengthen the research and analysis of blockchain security risks, closely track development trends, and actively explore development laws. In order to guide and regulate the healthy development of the blockchain industry, to implement the rule of law network into the management of the blockchain, we should proceed from the following aspects.

Encourage the development of multi-centralized alliance chains and, to a certain extent, the development of public chains. According to the degree of centralization, blockchain can be divided into public chain, alliance chain and private chain. The public chain is open to everyone, and users can enter and exit the blockchain system anonymously and freely without the authorization of others. Private chains are generally only used within an organization. Users join and withdraw from the blockchain is determined by the organization, and information read and write, accounting rules and permissions on the chain are also formulated by the organization. The alliance chain is a blockchain between the public and private chains. It consists of multiple pre-selected nodes. Each node participates in accounting and authentication. Entry and exit must comply with the alliance agreement and be agreed by all pre-selected nodes. The public chain is completely decentralized, because without a centralized organization, the outside world cannot obtain any information in the chain and cannot conduct supervision. We can develop public chains in some areas to participate in international competition, but we must strictly control the scope. The multi-centric nature of the alliance chain takes into account the advantages of public and private chains without excluding regulations. The multi-centralized alliance chain has the characteristics of multiple credits, information sharing and high efficiency, and can be widely applied to all aspects of social governance.

Accelerate the development of national standards for blockchain. Only by formulating specifications for specific application scenarios can we provide targeted strategies for specific industry supervision. At present, many so-called blockchain applications have not reached the level of technology they should have, or have not found a suitable application scenario, but claim that their core technology is blockchain, which has misled regulatory authorities and the public. A unified understanding of the blockchain can play a role of clearing the source and helping investors and regulators accurately identify what is a "true chain." This is not only the need for regulation, but also the need to protect small and medium investors. At present, blockchain technology is still in the early stages of development. With the deepening of people's understanding, there are many scenarios in finance, law, and social management that are suitable for blockchain applications. The unified standard helps practitioners in traditional industries understand and accept the blockchain. Only when all parties involved reach a consensus can their applications be promoted quickly.

According to the different industries and scenarios of blockchain application, the classification and supervision are implemented to realize the combination of other disciplines and self-discipline. Only when any technology is applied to a specific scenario, it may involve social or public interests. For example, blockchain finance should be supervised by relevant financial regulatory authorities, and blockchain applications in the legal field can be supervised by relevant judicial authorities. Of course, at the national level, the People's Bank of China, the Banking Insurance Regulatory Commission, the Securities Regulatory Commission and other institutions can set up a joint supervision group, or the State Cyberspace Office, China Internet Association and other leaders can take the lead in macro-regulation of the national blockchain. In the financial field, such as payment settlement, supply chain finance, securities insurance, etc., self-regulatory regulation has a strong flexibility advantage, and these self-regulatory organizations are the communication bridge between enterprises and corresponding government regulatory agencies. Through self-discipline and standardized management, it is very important to establish the corresponding industry self-discipline organization. On the one hand, the government can clarify the current application status of blockchain technology in the corresponding industry; on the other hand, through self-examination, self-correction and mutual supervision of its own behavior, it can enable financial supervision departments and government agencies to rationally view blockchain technology.

Put supervision ahead and promote the integration of regulatory standards and technology in the design stage. In the process of formulating smart contracts and corresponding technical specifications, regulators or legal professionals and technical personnel can be considered to participate in the preparation of technical codes, and specific financial industry access standards such as personnel restrictions, capital restrictions, and the spirit of relevant laws and regulations can be considered. Through the initial programming into the blockchain program, the integration of regulatory standards and technology at the design stage is realized. In addition, the learning exchanges between professionals in related industries and blockchain technology talents should be strengthened to fully understand the industry situation, better monitor them, and achieve healthy development.

(Author: Zhao Lei, Department of CASS researcher at the Institute of Law)