The blockchain industry returns to rationality, and countries speed up the layout of the commanding heights of the technology

Reporter: Xiang Mengxi

Source: Financial Times

Blockchain, as a collectively maintained trusted database technology in a decentralized manner, has the characteristics of decentralization, tamper resistance, and high scalability, and is becoming an emerging technology that will have a significant impact on the future development of information technology. The 46th World Economic Forum Davos Annual Conference will include artificial intelligence and autonomous driving in the "Fourth Industrial Revolution", saying that it is expected to advance humanity from the information Internet era into the value Internet era. As the key technology of the next generation Internet, major countries in the world are scrambling to lay out in this field. Blockchain has become a key area for the development of science and technology in big countries.

After the cold winter of capital in 2018, a large number of blockchain companies were eliminated, the industry's overall enthusiasm declined, capital returned to rationality, and the barbaric growth phase of the blockchain industry was nearing its end. A large number of market speculators come for wealth, and go with the wave. What remains unchanged is the core of the value of a secure, efficient, and decentralized blockchain technology. In 2019, Europe, the United States, Japan, South Korea and other countries and regions are accelerating the development of blockchain technology. China also regards blockchain technology as an important breakthrough in independent core technology, and has promoted the development of blockchain technology as a national strategy. With the continuous advancement of applications, supervision, and standardization, policy factors guiding capital and talents will once again flow into the blockchain industry track.

Return to rationality, the heat of capital in the blockchain industry has declined

Bitcoin, which soared two years ago, quickly frowned on the concept of blockchain in the capital market. For a while, a lot of market speculators poured into this emerging industry. However, with the bursting of the cryptocurrency bubble in 2018, the capital environment has tightened, and investment enthusiasm for blockchain has declined. Under the big waves, the blockchain industry is gradually returning to rationality.

Aside from the hugely volatile currency circle, only using the global blockchain-as-a-service market data in the direct blockchain market as a sample, we can clearly see the changes in the growth trend of the blockchain industry. According to Zion Market Research data, in 2016, the global blockchain direct market size was US $ 228 million, the market entered an active period, and investment and financing events continued to increase. In 2017, the global blockchain direct market value reached 4.1 Billion US dollars, a year-on-year increase of 79.8%; in 2018, the global blockchain market size ushered in an explosion, reaching about 4.6 billion US dollars, with a compound growth rate of 172.23%. And this year, the growth rate of the global blockchain market has slowed down significantly. At the current growth rate, the agency predicts that the market value will reach approximately 30.59 billion US dollars by 2024, and that the compound annual growth rate from 2018 to 2024 will increase. Slowed to 85.09%.

In terms of the number of new companies in the industry, Deloitte data shows that in 2017, the number of new global blockchain companies reached a peak, exceeding 600; in 2018, the number of new global blockchain companies was more than 400; since 2019 The number of new companies in the global blockchain has dropped sharply. As of August, the number of new companies was less than 50.

From the perspective of global blockchain-related company financing, venture capital is on the decline, and the previously popular digital currency has gradually shifted to blockchain projects in practical application scenarios. There are two main methods of global blockchain financing projects: initial coin offering (ICO) and venture capital (VC). According to the "Global Financial Technology Development Report for the Third Quarter of 2019" released by the world-renowned venture capital research institute CBInsights, the growth rate of VC financing for blockchain projects has gradually slowed down. After outbreaks in 2013 and 2014, VC projects have begun to slow down. As of the end of the third quarter of 2019, the cumulative growth rate of VC financing decreased by 28.5% year-on-year. Investors are becoming more rational, investing more in quality, and gradually shifting their investment focus from digital currencies to blockchain projects embedded in practical application scenarios. At the same time, early financing declined, seed rounds, angel rounds, and round A rounds of investment fell, while round B rounds of financing increased corporate growth in the medium term. This shows that investors are more rational and that the early barbaric growth phase of the industry is coming to an end.

Rapid development and continuous expansion of blockchain industry applications

The biggest impact of Bitcoin on the world is not the skyrocketing currency value, but the underlying technology blockchain. After taking off the shell of digital currency, the industrial application of this technology is continuously expanding. According to CBInsights data, as of August 2019, 38% of global blockchain companies are concentrated in the field of cryptocurrency, 23% of companies are mainly engaged in the development of blockchain technology, and 13% of companies focus on the application of blockchain technology in the Internet field .

Deloitte's "2019 Global Blockchain Survey Report" proposes that in 2019, blockchain technology will perform particularly well in the fintech industry. Blockchain technology can widely serve financial fields such as payment clearing, bills, and insurance. 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. It has obvious advantages in financial credit reporting, inclusive finance, and financial asset transactions, which help promote the efficiency of the financial services industry, reduce costs, and support the real economy. Using the blockchain to create a data platform for financial credit reporting, data can be shared between credit reporting agencies, so that lenders can more fully understand the borrower's credit situation, and promote the development of consumer credit and Internet finance.

With the continuous upgrade of blockchain technology and business models, its applications will become more widespread. According to the latest "Blockchain White Paper 2019" released by the China Academy of Information and Communications Technology, in addition to integrating traditional finance, blockchain is also helping the development of the physical industry, from product traceability, government affairs, people's livelihood, electronic certificate, digital identity and supply chain collaboration In real estate, social welfare, tourism, logistics and other fields, the application scenarios of blockchain have been spreading out, becoming more and more in-depth and diversified. Almost all industries involve transactions, and they need an honest and reliable trading environment as a prerequisite for the healthy development of the industry. For non-financial industries, blockchain can reduce information asymmetry in each link of the value chain, thereby improving collaboration efficiency and reducing overall transaction costs.

Accelerating the layout, countries grab the commanding heights of emerging technologies

The transformative effect of blockchain technology on economic development is gradually being squarely faced. Governments of various countries are accelerating the exploration and research of blockchain technology, and the pace of blockchain landing is accelerating. According to Bloomberg data, as of August 2019, the number of blockchain projects promoted by countries around the world reached 154, which are mainly used in the fields of finance, government archives, digital asset management, and voting.

The United States took the lead in recognizing Bitcoin's legal status in 2013. In recent years, states have also introduced a series of bills on the blockchain to promote its development. In 2017, the State of Delaware pointed out in a relevant resolution that the application of blockchain technology should be promoted as soon as possible, and in July 2018, three bills on blockchain technology were passed; North Carolina promoted the "best for blockchain The "chain" proposal expands the currency scope of the National Currency Transfer Act, recognizing Bitcoin and other blockchain-based digital currencies; Colorado introduced a bipartisan bill designed to promote blockchain specifically for government record keeping. As of June 2019, more than 70% of U.S. states have issued regulations regarding cryptocurrency or blockchain technology. The 50 federal states in the United States implement their own rules and have different attitudes and positions on blockchain regulation and legislation. In July this year, the U.S. Senate Business, Science, and Transportation Committee passed the Blockchain Promotion Act to jointly formulate the definition and relevant standards of blockchain at the federal level in the United States to prevent blockchain technology in terms of cognition, jurisdiction, and legislation. Fragmentation at the state level, and set up a framework for future blockchain technology supervision, so as to better promote the innovation of this technology and maintain the global leadership of US blockchain technology and industrial development.

The United Kingdom pioneered the "sandbox supervision" model, which ensured the development of fintech innovations within the control of the government. As of May this year, the British Financial Regulatory Authority (FCA) has approved 14 blockchain and distributed ledger technology-related companies Enter the regulatory sandbox. In addition, the British Parliament has recently led the establishment of a global party committee of cross-party blockchain groups to provide professional advice on the planning, development, and formulation of blockchain-related policies by the British government. The global expert committee consists of 14 members from parliamentary parties such as the British Conservative Party, Labor Party, and Liberal Democratic Party. This combination is to ensure that members of various parties in the British Parliament can fully understand the benefits of blockchain and other distributed ledger technologies. Opportunity. The British Parliament said that blockchain technology can stimulate a new generation of business models and maintain the status of an international financial center for British business and financial services. It is reported that the group will be devoted to exploring "how the blockchain technology is effectively put into practical application" and "how the healthy development of the blockchain technology" and other issues. The committee will also regularly provide the UK parliament with relevant recommendations in the blockchain field and report.

At present, Japan has promoted the combination of blockchain scenarios in multiple industries. In 2017, Japan implemented the Payment Services Act, officially recognizing Bitcoin as a legal payment method, and setting clear regulatory requirements for digital asset exchanges. In the same year, the Japanese government plans to start a real estate blockchain project in all regions, register all real estate in towns, farmlands, and forest areas to a single blockchain ledger. In addition, it also includes incidental details and real estate sales prices. The Japanese Financial Services Authority (FSA) is developing a blockchain-powered platform that will enable Japanese customers to instantly share personal information between multiple banks and financial institutions.

As one of the important breakthroughs in independent innovation of China's core technology, the blockchain bears the expectation that China will occupy the commanding heights of innovation in emerging fields and obtain new industrial advantages. At the national level, in December 2016, the "China Blockchain Technology and Application Development White Paper" was released. At the same time, the State Council mentioned in the "Thirteenth Five-Year Plan" National Informatization Plan to strengthen big data, artificial intelligence, and blockchain And other new technology base R & D and cutting-edge layout. In May 2017, the Ministry of Industry and Information Technology released China's first blockchain standard "Blockchain Reference Architecture", including the data layer, network layer, consensus layer, application layer and incentive layer. Local governments have also responded to the call. Currently, 18 regions including Beijing, Guizhou, Guangzhou, and Zhejiang have gradually introduced blockchain policies, which provide strong support in talent education, financial support, and office space.