On December 27th, the world's first blockchain year-end speech "Ling Listening 2020" was held in Hangzhou Canal Culture and Art Center. The theme of "Ling Ting 2020" is "Sense of Certainty". It is led by Tang Xia Ling, vice president / editor of Babbitt and the founder of Ling Ting Blockchain. Together with 3 heavyweight guests, 9 industry think tanks have observed deeply. Look at the trend in the cycle, be confused with the right mindset, and find a way to the future to help you find your own coordinates in the long river of blockchain.
That night, Tao Rongqi , the founder of X-Order and a partner of NGC Ventures, delivered a speech entitled " Open Finance: An Important Application of Blockchain ."
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The following is the full text of the speech:
Today's theme is "Open Finance: An Important Application of Blockchain." The term open finance has, in fact, not yet given a very suitable definition.
What exactly is open finance? This problem has troubled me for a long time. Recently, an article by Yao Qian, general manager of CSI Securities, inspired me by a new type of blockchain-based financial market infrastructure . The article mentioned that blockchain technology is also called distributed ledger technology, and distributed financial infrastructure has three benefits:
First, the system is highly integrated: registration, settlement, payment, settlement, on-chain completion;
The second is the unified and seamless connection of business: 7X24 thousands of assets, global cross-chain delivery;
The third is the openness and tolerance of ecology: currency, securities, and alternative assets. I don't think this is open finance, so I will be bold to define open finance as distributed ledger-based finance . This is not what I said, but what Yao Qian said.
Open finance: finance based on distributed ledgers
When will open finance come? In fact, we all hope that such a finance can come today or tomorrow. We have also seen various attempts in various countries around the world. For example, in China, we will not talk about it any more. In the last PPT of Teacher Meng Yan, for example, Europe, Germany, the United Kingdom, the United States, and Japan were all trying various sandbox supervision.
Sandbox supervision has begun. The central bank has already begun, the problem is that it is also just a regulatory attempt. Next is a pilot. The next step is improvement, and finally it will mature. How long will it take, next year, or three years, or even longer?
What I want to say is that open finance has actually emerged, and you don't have to wait until next year, not even today. It has appeared in the past and is being ruled by the United States. Let's go back and look at what is open finance. I think the Crypto market is open finance (I dare not use other words, but dare to use Crypto), it perfectly meets the three characteristics of the beginning of the speech.
This picture is a comparison chart of global blockchain companies made by X-Order using the knowledge map. The larger the circle, the higher the influence and importance. The smaller the circle, the opposite is true. In terms of color, you can see the pink represents the United States, so you can feel the dominance of the entire United States in global blockchain companies without looking at the details inside.
In terms of quantity, there are more than 1,300 blockchain companies in the United States, and about 200 in China. Even more than 200, even less than Singapore. Singapore is certainly very powerful, but the fact that China is less than Singapore is actually unacceptable , and the reason is very simple. Chinese blockchain companies have no way to dare to register in China, and they all ran to Singapore.
What I want to say on this page is all the main players in the field of open finance in the world. I would like to read it. This is probably the Asia we are in. These main subjects in Asia have some characteristics. For example, they like to do similar things very much and they like to hold a group . The others basically look at colors, that is, American power.
In addition to the above two pictures, the American rule lists the following aspects:
Through the SEC, it rules open financial supervision.
Through Wall Street, it rules the financial support services of open finance.
Through Silicon Valley, it governs entrepreneurship and technology in open finance.
Through Coinbase and Bakkt, it rules open financial pricing power.
The dollar ruled the right to open financial valuation, including the right to settle later.
Through Libra, a currency derivative that dominates open finance. Why can the United States rule? Why did the UK start mentioning blockchain in 2016 and wrote a government-level white paper on blockchain technology? Why is American rule now? The reason is very simple. There is no sandbox in the eyes of Americans. Americans don't tell you about sandboxes. What they want is the market . Americans occupy the market directly, through regulatory power, through Wall Street, and through technology, directly occupy the market. Again, there is no sandbox in the eyes of Americans. You go to play sandboxes. It is the United States that directly captures the market.
Blockchain-based currency war has begun
Next we will look at the reasons behind the fact that Americans only do market-oriented work in open finance. We all know that the relationship between the US dollar and oil comes from the collapse of the Bretton Woods system, and it is said that the US dollar and gold are no longer linked. Then what to do, it is simple. Let's bind oil.
So it is well known that the US dollar bound Saudi Arabia after the collapse of the Bretton Woods system, and the defense of Saudi Arabia in exchange for the only standard oil settlement dollar. In other words, any country that wants to buy Saudi Arabia's oil must buy it in US dollars, which is about equal to oil. You don't need US dollars, but you will definitely need oil, so when I bind oil, it is equal to your demand for dollars.
What does this tell us? We see the whole world in the process of playing games with various great powers. What are they fighting for? land? neither. The contention is for the right to settle . There is a saying that the existence of the United States is for the US dollar. In fact, if we go further, the existence of the United States is to make the US dollar a universal settlement currency and compete for settlement rights . This is why we can see Europe as well as Japan. Everyone wants to bypass the US dollar for settlement.
The latest news is that the European side has begun to change the settlement currency of some gas producing countries to the euro. Why is the settlement currency directly compared with the relationship between the US dollar and oil? It is very obvious. What is the currency? Money is artificial. How can artificial things give value to it? Let it be valued only if it is given a very just needed demand on it. On this basis, you can use currencies to conduct various currency wars through more financial means. This is a second story.
The first point is to give currency a just-needed demand. This is why the dollar and oil are so strongly bound. This is also why in the process of de-dollarization around the world, the first thing to get rid of is the just-needed hooks. The contention is for the right to settlement. The currency war is, in my opinion, a war for settlement rights.
Jumping back again, does such a traditional currency war jump to the current era of the digital economy, do we still have to wait, or how far away we are. In fact, it's not far. This happened last month. At a Harvard research institute, they had a simulated discussion. The topic they simulated was how the United States should deal with the coming of a digital currency threat war two years later. It wasn't the students who attended, they invited a lot of retired people and had previously participated in this discussion in the financial and political fields. The protagonist is the United States. It is a victim. Americans always have some delusions. They think that people in shape want to invade them.
Who is the villain? Everyone guess. On November 19, 2021, two years later, China ’s new and extremely popular digital currency, which was simulated as a digital currency, began to challenge the US dollar. Sorry, it's our turn for the villain this time, we are smart and cute villain, two years later.
Stablecoin: the focal point of the big game
What I want to say is that the blockchain-based currency war has begun. Today, with the dollar occupying an absolute dominant position, they have begun to simulate and prepare for the war two years later. Do we still think these wars are far away? When we did n’t even know how to attack others, others had already begun to guard against us and become a Patriot system. At present, the United States is still far ahead. They are just a persecution delusion. Two years later, of course, we are thinking of offense, and now more of them are not good at defense. What do you mean, the biggest thug in open finance, the biggest thug in the US dollar is stablecoin.
This chart is the USDT, from its birth in 2015 to the most recent market cap chart. I'm talking about market value, not price. The market value has increased more than 10,000 times. The stablecoin is the largest growth currency in the open financial system. The stablecoin has naturally become the focus of the game of big powers, with the fastest growth and demand.
At the same time, it is a thug. What does thug mean? When we discuss various digital assets in the entire market, I'm sorry, I can't say which specific assets are, everyone knows the well-known reasons. What kind of currency do we use for pricing? Is it Renminbi, is it Euro, or USDT? It's USDT!
The USDT white paper states that for every USDT generated, a $ 1 deposit is required. OK or not is another matter, at least the white paper says it is written like this. Quite simply, this means that USDT is the dollar's thug, so the stablecoin will become the focus of the big country game, so Libra will become the focus that stirs our global nerve in 2019.
Why is Libra so noticeable? Because Libra is the infrastructure of 3 billion people, it is a digital native state, which can be separated from physics; finance itself is digital, and finance itself is separated from physical.
Libra's advantages are as follows, as Yao Qian said.
Reuse of existing Internet infrastructure;
· Only Libra coins are circulated, no cross-currency conversion is involved;
Decoupling with Real Time Gross Settlement (RTGS) in various countries to avoid being subject to RTGS, which can run 7 × 24 hours;
Peer-to-peer transfers, without relying on correspondent banks, low cost and high transparency;
· The payment network is flat and simple, eliminating the need for interoperability between different systems, avoiding the problem of inconsistent international standards, and making transfers smoother. What I want to say is that the real advantage of Libra is the dollar substitute in the open financial world . Again, Libra's real strength is the dollar stand-in in the open financial world.
Why do the Fed and Libra always frown? The reason is: it is the dollar substitute in the open financial world, it is its thug. What it really means is that all Internet applications will eventually become part of open finance. All Internet applications start with Libra and Facebook.
Let's calm down a bit and see what finance really is? For me, as a practitioner, I keep thinking about what finance means.
Some people say that finance is a lever, some people say that finance is a scam, and some people say that finance is a gamble. These are all right. If you use some more neutral words, I believe that the essence of finance is a self-proliferating middleman. There is nothing wrong with this word, the proliferation of living things.
I believe that many people have come to similar conclusions before, and I am too lazy to find them. Everyone will always have many similar conclusions. Why do you say self-proliferation? Self-proliferation means that when we discuss finance, especially assets, we need to think about what its purpose is. From a capital perspective, it has only one ultimate purpose, self-proliferation. 1 block becomes 2 blocks, 2 blocks become 4 blocks, gone.
What is a middleman? The middleman is very interesting. When we think about finance, we always think that it may be money, and we often ignore the business of middlemen. In other words, when we think about the middleman business, we tend to ignore its drive for self-proliferation.
Take it apart, what is a middleman. Everyone knows that when Wall Street was founded, Wall Street's business was in Wall Street, where some middlemen did buy and sell. This was Wall Street's first middleman business. Then let's think further, what kind of business is replaced by Wall Street's middleman business? As the first digital matching trading system, Nasdaq replaced human gestures to buy and sell.
From this, I think of another point. It seems that Nasdaq has done the job of matching buyers and sellers, and Taobao is also doing it. From the point of view of the middleman, we find that Taobao and Nasdaq do the same thing, and they do things that match the two sides of the transaction. At the same time, other characteristics, they are all digital, and they all act as a middleman. And the role of this intermediary is more and more through a technical means. We say that FinTech, the middleman, is supposed to be replaced by technology. The financial Internet was really very close, but we first cut it apart and said that you are financial and you are the Internet. Can you still tell clearly now?
Blockchain goes from reality to reality: "Web + stable coin + smart contract"
The term Web3.0 is often mentioned in the industry. A well-known project advertises itself as Web3.0. In fact, it seems to me that Web 3.0 is more appropriate to say that the state of financial and Internet integration. The state of the integration of finance and the Internet is why they are integrated. The reason is that the two are originally provided to drive the needs that the world will meet to meet the needs of the world. It is a state of a middleman, a state of a digital middleman.
Let's take a look at the two sides of finance. One side is the fierce horse rolling forward, and the other side is the unbreakable sharp blade. Just mentioned self-proliferation, this fierce horse self-proliferation brings economic benefits, and at the same time, it can become cancerous if left uncontrolled. This blade can cut everything and hurt everything, so it has two sides.
When talking about the final conclusion, I want to say that everyone can see what kind of state is not very good. In other words, if you want to get rid of emptiness and reality, what kind of logic is more appropriate to interpret finance, a set of theories I use is Coase's cost economics of education.
The reason for the existence of the company is that the company's cost is lower than that of the society to make transactions by itself. Applying this to finance, if finance is an intermediary, there is a cost to the intermediary, and the cost of finance as an intermediary can be less than the income of both parties to the value transaction, then the matter of finance is OK. Conversely, it would be wrong if the cost of finance as an intermediary is higher than, or much higher than, the benefits to both parties in a value transaction.
The so-called deception is that there are too many middlemen. The entire market is full of speculative money. The entire market is full of financial institutions, and the cost is high. How to get rid of reality and reduce the cost of the middleman, or increase the income of both parties to the value transaction.
How can we increase the income of both parties to the value transaction? Serve more value creation; value creation in the physical world is too slow, not that it is not fast enough, but that it is too slow compared to the digital world; value creation in the digital world is very fast, we all know such a result So, the way to get rid of the truth, my answer here is "Internet + open finance".
"Web + stable coin + smart contract", this is an important starting point in my opinion that the blockchain is de-realized. Let's take a look at what this starting point would do if placed on Libra. The real meaning of Libra is that all Internet applications will become part of open finance. We map it into such a set of formulas, as shown below,
This set of formulas will build a more three-dimensional, faster, what is more three-dimensional in the future, we imagine that the physical world is two-dimensional, the digital world is three-dimensional, as simple as that, it is three-dimensional. In other words, the physical world is two-dimensional, and the digital world is four-dimensional and five-dimensional. It's that simple. It is a world that is easier to create and contains more possibilities. The value in it is left to Web 3.0 to discover.
We see such a result, Facebook will achieve a self-financing system. What is the result? Such a country with the most populated quotation mark in the 21st century, Facebook, has no geographical borders, and all its value comes from numbers. Facebook is originally a set of products from the digital world. You can't see anything in it, but it is valuable. At the same time, it adds financial attributes. What is more frightening is that the base currency of this system is still the US dollar.
Finance is a sharp blade. The US dollar has already harvested us once again in the physical world, and we have to sharpen our hearts in the open financial digital world. Are we ready?