Zhu Jiaming: 2020 will be an important year for the integration of blockchain and industry

This article is excerpted from CITIC Press's new book "Industrial Blockchain: An Important Breakthrough in Independent Innovation of China's Core Technology" in May 2020.

"In the history of modern science and technology, blockchain technology is undoubtedly a technology with rich scientific and conceptual connotations, a significant difference from traditional hardware technology, a technology with development potential and tension, and a technology with extensive application of imagination, which is full of Charming technology. "-Zhu Jiaming

2020 will be an important year for the integration of blockchain and industry. The book "Industry Blockchain" co-authored by Tang Daosheng, Xu Siyan, Meng Yan, and Cao Jianfeng was published by CITIC Publishing Co., just in time. This book not only provides a comprehensive picture of the industrial blockchain, but also discusses the deep mechanism of the industrial blockchain in depth.

01 The pattern of combining blockchain and industry

In 2008, Bitcoin and blockchain entered people's vision. Around 2015, blockchain became a professional research object, and many blockchain monographs, academic papers, and popular science literature came out. The concept of blockchain has changed from little known to unprecedented popularity. What is even more shocking is that in the past three years, the application of blockchain technology has entered the real economy from cryptocurrencies and has echoed the rise and development of the digital economy. "2019 is a milestone year for the development of the blockchain industry. ".

In 2019, global spending on blockchain solutions is estimated at US $ 2.9 billion, an increase of 88.7% from US $ 1.5 billion in 2018. During the forecast period of 2018-2022, blockchain spending will grow at a strong rate, and it is expected to reach US $ 12.4 billion in 2022, with the largest proportion entering the real economy such as the service industry. Europe is the fastest growing region in global blockchain spending. In 2019, Europe's blockchain spending exceeded US $ 800 million. It is expected that this number will reach US $ 3.6 billion by 2022.

However, as an emerging frontier technology, the blockchain has not yet formed strong technical barriers. For countries around the world, they are basically at the same starting line. However, the "arms race" of the global blockchain has already begun.

Due to the influx of large amounts of capital, the development of the blockchain industry has accelerated. In the field of industrial blockchain, there are four major participants: large technology companies, financial institutions, consulting companies and system integrators, startup companies and organizations. Among them, the most influential are overseas technology giants such as Microsoft, Google, IBM and Facebook, as well as financial institutions such as JPMorgan Chase, which have affected the development of blockchain technology, industrial ecology, industrial layout to market competition models, and even The scene landed. In 2019, Facebook released a white paper on cryptocurrency Libra, and the impact on the world's financial community, government regulatory agencies and the economics community has not recovered.

Can blockchain technology have a disruptive impact on the world ’s real economic system? It is too early to draw conclusions, but, “Blockchain as a new technological and economic form is bringing different subjects, different cities, different countries and different industries Involved in it. From a few geeks to start-ups, large airline companies, to government-led public services, and finally to a city-based blockchain trusted city. Blockchain is suitable for almost all application scenarios. " In any case, if you believe that blockchain technology is beginning to lead the birth of new industries and transform traditional industries, to accelerate the process of digital economy, it is still realistic.

02 In- depth reasons for industrialization of blockchain and industrial blockchain

The combination of blockchain and industry has begun to accelerate, with deep-seated reasons from demand and supply.

First, the traditional economy, or the digitalization of the traditional real economy, has encountered a bottleneck. Because data and traditional assets have huge nature differences, with features such as easy deletion, easy modification, and easy replication, blockchain fundamentally ensures the uniqueness of digital objects, which cannot be copied and cannot be tampered with, helping traditional industries to meet the cloning challenge , Challenge of rights confirmation, challenge of property rights, challenge of privacy, challenge of security, through data on-chain, to achieve digital transactions of intangible assets such as trusted digitization, rights confirmation data and IP.

Second, the shortcomings of the traditional economic innate centralized system and the difficulty of multi-party trust cooperation. The blockchain solves the problem of multi-party trust and cooperation through a multi-center approach combined with smart contracts and other technologies. On the basis of data trust enhancement, it combines smart contracts and other technologies to reshape trust and cooperation.

Third, the insurmountable limitations of the Internet. Although the Internet can quickly generate information and copy it to any place for efficient dissemination, the existing network security technology is difficult to ensure the transfer of high-value data on the Internet, and the existing Internet technology cannot achieve value transmission. The platform based on blockchain technology is a universal platform of value technology, which can effectively support the transformation of asset digitalization into digital assetization.

In the next one or two decades, with the advent of the digital age, data will become assets, data assets will effectively affect the future wealth creation method and distribution pattern, become the new kinetic energy of the digital economy, and data will become the new economic growth engine . Blockchain technology will effectively support data as a new factor of production, and support the platform of factorization and data assetization of data production, or the new infrastructure of the value flow system in the era of digital economy. Therefore, as a technology cluster, blockchain is providing a holistic solution including thinking mode, action protocol and application mode in technology, application mode, supervision and system design.

03 The field of combination of blockchain and industry

However, blockchain is by no means a panacea. "Industry Blockchain" proposes three scenarios where it is not suitable to apply blockchain:

(1) A number of entities that have no affiliation or command relationship with each other cooperate with each other.

(2) All parties are unwilling to relinquish data sovereignty or data governance, nor to share data unconditionally.

(3) Excessive gaming caused by opaque information seriously reduces the efficiency of collaboration.

There are some necessary conditions for the application of blockchain technology in any field. The most important ones are the degree of digitization of relevant industrial departments or enterprises, the implementation of the same standard of blockchain and consensus on governance, and the human resources to achieve blockchain operation. To form a team of talents who understand the industry, understand the blockchain, and have business process design capabilities.

So, in what areas can blockchain technology be applied? The fact of the past few years is that the application of blockchain technology has extended to the fields of digital finance, Internet of Things, intelligent manufacturing, supply chain management, digital asset transactions, etc. The industries involved include finance, social governance, entertainment, education, medical, Public welfare for poverty alleviation and smart cities.

This book provides a chart based on the 2019 global blockchain investment and the impact of related industries. It shows that the financial, public governance and entertainment industries are in an absolute leading position. As for medical care, education, especially agriculture and manufacturing, they are still in a few stages. On this basis, a more lengthy description of the application industry of blockchain:

(1) Blockchain and finance, support supply chain finance, and ease the financing difficulties for SMEs. (2) Blockchain and copyright protection, from right confirmation to rights protection, effectively reduce the time cost from right confirmation to rights protection, and open up the entire process of copyright protection. The combination of the blockchain and the content industry establishes a new value evaluation system for content, accelerates the value circulation of content, and protects the copyright income of creators. Long tail content welcomes spring. (3) Blockchain and cultural entertainment promote the formation of a brand new cultural industry value network. Take the gaming industry as a representative and change the current status of the industry's opaqueness, the weakness of consumers' discourse power and the poor circulation of value. (4) The combination of blockchain, education, and industry-academy encourages students to gain strengths, protect the academic copyrights gained from learning, and improve the learning community.

(5) Blockchain and medical health, establish a digital medical treatment and smart medical system based on blockchain, reconstruct the medical insurance system, and ensure the traceability of medicines. (6) Blockchain and government affairs, government affairs processes are open and transparent, simplify taxation, resolve the problem of electronic invoices, and form a business environment with a stable trust foundation.

(7) Blockchain and justice, establish identity authentication, protect personal information security, and accountability after supervision and law enforcement becomes real-time prevention, helping to establish a social credit system.

(8) Blockchain and public welfare poverty alleviation, providing smart contracts to achieve transparency and efficiency of poverty alleviation resources.

(9) Blockchain and smart cities, that is, trustworthy cities, use blockchain as the basic structure to form interactions between government planning, enterprise response, and resident support, reshape the relationship between people and cities, and improve the community ’s ecological environment. City residents have a deeper sense of security, and then establish an inter-city blockchain alliance.

In general, as a permanent, non-tamperable, verifiable, trustless, and programmable distributed ledger technology (DLT), blockchain is expected to realize the registration, inventory, and transaction of any form of assets in the world Decentralized records in scope. The application of blockchain technology should and will inevitably produce at least the following three benefits: reduced economic costs, increased earnings, and positive and positive social impact. Fundamentally, this will be conducive to achieving the sustainable development goals set by the United Nations in 2015.

04 China's blockchain strategy

Compared with the major developed countries in the world, China's blockchain industry is still very small. According to relevant statistics, the scale of the blockchain industry in the first half of 2019 is about 495 million yuan, accounting for only 0.001% of China's 45 trillion yuan GDP (gross domestic product) in the first half of 2019. In China, as early as 2015, the blockchain layout of major technology companies began. However, in the following two years, Bitcoin fluctuated greatly, and the market transition hype represented by ICO (Initial Coin Offering) generated a huge amount of bubbles, and the government had to strictly regulate it. In this way, technology companies and private companies have turned to conservative attitudes toward domestic blockchain investment, and the layout has also been low-key and cautious.

This situation began to change after late October 2019. On October 24, 2019, the Political Bureau of the Central Committee of the Communist Party of China conducted the eighteenth collective study on the development status and trends of blockchain technology, and determined to use blockchain as an important breakthrough in independent innovation of national core technologies. Artificial intelligence and blockchain are the main supporting technologies for the basic establishment of a new digital economy strategy in China.

"Industry Blockchain" believes that there are three directions for China to launch a new blockchain strategy, that is, technology-oriented, industry-oriented and people's livelihood governance. In other words, the three major areas of people's livelihood, economy and government affairs are used as breakthroughs in industrial integration. The book further predicts that blockchain is expected to become another key area of ​​China's investment in technology after cloud computing and 5G, forming a blockchain industry policy and blockchain industry pattern that conforms to China's national conditions. In China, the "national team" and innovative companies will together form the force that promotes the overall development of the blockchain. New Chinese technology companies represented by Tencent, Alibaba, JD.com, Baidu, and Huawei have fully returned to the planning and layout of basic blockchain technology and applications, and are likely to brew the climax of blockchain technology innovation and blockchain industry.

05 Conclusion

Regarding the future of industrial blockchain, this book proposes seven trends worth sharing and thinking about:

(1) Industrial blockchain has become the main battlefield for the development of the blockchain industry, and alliance chains and private chains have become the mainstream direction.

(2) Blockchain promotes economic and social governance reform.

(3) The increasing number of large traditional enterprises introduce blockchain.

(4) The combination of blockchain and cloud computing is getting closer and closer, and "cloud chain usage" has become a new indicator to measure the development of the digital economy.

(5) The establishment of a multinational blockchain industry alliance promotes the application of blockchain in vertical fields.

(6) Blockchain combined with multi-party computing, secure computing, and federal learning to solve the privacy protection and sharing of data.

(7) Distributed business will continue to experiment and explore scalable business models.

The core of the above seven trends is the upgrade of blockchain technology, the formation of industrial blockchain, and the iteration of industrial chain technology are complementary to each other. The final expansion of the industrial blockchain ultimately depends on the enterprise at the micro level. Starting from their own needs, enterprises actively seek the path of blockchain application, adhere to the "trial and error" way of thinking, improve repeated market verification, establish the best application scenarios, and create product development and operation models based on blockchain technology. With more enterprise blockchains, there are industry blockchains and industry blockchains.

In addition, the cryptocurrency and asset transactions that use blockchain as the technical foundation are still in the early stages of development, and are not yet large in scale and cause social risks. Governments of all countries need to discuss how to establish a system that not only imposes supervision but also prevents technological innovation.

In short, the next three years will be a crucial period for the close integration of traditional industries and blockchain, and new business models and regulatory service models will emerge. This provides opportunities and challenges for the real industry to change lanes and overtake, and digital assets become important assets for enterprises. Because the application range of blockchain is more scattered, cost reduction and efficiency increase are the key to the promotion and application of blockchain technology. In the long run, with the maturity of blockchain technology, it will help to shape a more harmonious and healthy society. All these judgments are rational and deserve serious consideration by readers. With a history of technological innovation and change, there is no tumultuous mass movement, no thrilling political evolution, or even continuous media attention. The future of an industrial blockchain and the industrialization of blockchain is coming quietly.

Blockchain is a technology cluster with profound scientific origins, which is likely to undergo structural and systematic changes due to breakthroughs in other disciplines and technologies. For example, the progress of quantum computing is closely related to the future blockchain. In this regard, this book needs to be given enough attention.

(Author: Zhu Jiaming, an economist, Chairman of Academic and digital asset Institute of Technical Committee)