Li Lihui: The virtual currency represented by Bitcoin is doomed to become a popular payment tool

Original: Xinhuanet

Editor's note: A new round of scientific and technological revolution and industrial transformation is in the ascendant. The digital economy is injecting new vitality into China's economic growth. The recently held Central Economic Work Conference clearly stated that "we must vigorously develop the digital economy." In this issue of Xinhuanet's "Vernacular Finance" column, Li Lihui, the leader of the Blockchain Research Working Group of the China Internet Finance Association and the former President of the Bank of China, is invited to analyze and explain the trends and highlights of China's digital economy innovation.

Question 1: Why should we vigorously develop the digital economy?

Li Lihui: The central government attaches importance to the development of digital technology and digital economy, which is in line with the current global technological innovation trend and economic development trend. Digital technology should be the integration of multiple digital technologies, including blockchain, big data, cloud computing, artificial intelligence, etc. I think the biggest advantage of digital technology application is that it can greatly improve economic efficiency.

Why can we improve economic efficiency, because (digital technology) can build a more direct and efficient network. In the past, we said the world was flat. In a plane, the connections between enterprises, individuals and individuals, and this relationship between people and things are planar. The problem of planar connection or architecture is that there are many nodes and the efficiency is low.

Through digital technology, especially blockchain technology, cloud computing technology, and artificial intelligence technology, I think it is possible to build a three-dimensional, folding, and interactive architecture in the future. In this architecture, the interaction between point-to-point and end-to-end will be more direct in the past, and there is no need to go through more central nodes to further improve efficiency. Blockchain also has a very important advantage. It can establish a digital trust through mathematical algorithms.

We can imagine that in an interactive three-dimensional architecture, there is a digital trust relationship, so that the efficiency of the entire economic operation will be higher, and lower costs, higher efficiency, and The entire economy and society are developing more rapidly.

Question 2: Where is China's research and application of global blockchain?

Li Lihui: After ten years of development of blockchain technology, it should be said that it is still in an initial application stage. There are already some large-scale commercial applications, but the scale is not large in general. In addition, many applications are experimental.

Therefore, if we take a sentence to summarize the current state of development of blockchain technology, it is that blockchain technology is not particularly mature now, and the bottleneck of blockchain scale and reliable application has yet to be broken. And key opportunities for industrial innovation.

Blockchain is a variety of underlying technological innovations, such as P2P peer-to-peer networks, and some cryptographic algorithms as a component technology, which itself is relatively mature. But when we integrate existing component technologies, we will get new requirements. In addition, blockchain also has specific technologies, such as consensus algorithms and smart contracts. These technologies must meet the needs of large-scale and reliable applications, and further innovation must be made to make it more mature.

It is also good to use blockchain technology or other digital technologies in China. One very important feature is that China is a huge market. In the huge market, any digital technology innovation and application of digital technology must meet the high concurrency requirements of the huge market. This is also the direction for further innovation, further improvement and further maturity of blockchain technology in the future.

Question 3: Do you agree with the view that the "blockchain era has arrived"?

Li Lihui: Half agree, half disagree. We cannot singlely emphasize a certain digital technology, including blockchain technology and big data. I think the future should be an era of digital technology and an era of digital economy.

This era is coming and is accelerating. Therefore, I think that any single digital technology is impossible to stand alone. Blockchain technology must be tightly integrated and integrated with artificial intelligence technology, big data technology, and cloud computing technology to be able to play. Greater efficiency and role to meet future economic and social needs.

Question 4: In the context of the continued hot topic of blockchain, how should we treat the speculation of "coin"?

Li Lihui: Bitcoin is Bitcoin, and blockchain is blockchain. In 2009, at the time, Bitcoin introduced a so-called concept of this virtual currency based on a blockchain technology platform. When it comes to Bitcoin, we are also talking about virtual currencies. Virtual currency has two most important problems. Technically, it is based on this public blockchain platform. Under the framework of a decentralized public blockchain, virtual currency represented by bitcoin, Its transaction efficiency is very low and its speed is very slow. It cannot meet the needs of such large-scale applications.

In addition, the virtual currency represented by Bitcoin has the problem of being too speculative, so it is doomed to become a popular or payment tool that can enter the life of public society, or a so-called currency form . Because of such problems as virtual currencies, including bitcoin, there have been some speculations and speculations about virtual currencies around the world, including China. In this regard, it is considered that strengthening supervision is very necessary. In the development and application of any new technology, its own security needs attention. In addition, any new concept may be hyped and requires our special attention to maintain the healthy and sustainable development of new technologies.

I believe that behaviors that may cause significant technical risks, financial risks, or systemic financial risks must be strictly regulated. We will never allow a country as large as China to have some global or systemic financial risks, which is actually a bottom line for financial supervision in various countries.

In addition, we should pay special attention to, protect, and promote the experimental innovation and development of new technologies. We should create a better environment for the innovation and wide application of new technologies and help them grow.

Question 5: The Central Economic Work Conference called for “accelerated financial system reform”. What role can digital technologies play in this field?

Li Lihui: Deepening the reform of the financial system is of vital significance to the development of China's financial industry. Here, I think there are two points that are particularly important: First, the deepening reform of the financial system must adapt to the trend of digital applications in financial applications or fintech innovation. In terms of the financial management system, financial supervision system, and even the overall financial market layout, we must be able to adapt to the new era of digital technology and the digital economy. This is very important work.

In addition, there will be more and more participants and practitioners in the future financial market. In addition to large state-owned financial institutions and small and medium-sized banks, there will also be more and more (other) small and medium-sized financial institutions. Of technology companies may be engaged in some financial or quasi-financial businesses, or even play the role of "fingerprint."

With more and more market players, the financial system and financial system need to be more efficient and coordinated, and more comprehensive supervision is required. Future fintech innovations will provide a new possibility for financial supervision, that is, the use of digital technology to improve supervision efficiency, reduce supervision costs, and also reduce supervision costs, thereby controlling the potential financial risks of the entire market at a low level. Within the scope of the level, to ensure better and smoother sustainable development of the entire financial industry.

In this way, the financial industry can truly achieve its original intention, better serve the real economy, and create higher value for the real economy. (Writing by Xinhua Liu Liuyao and He Fancai)