Article of the Central Bank Institute of Digital Research clarifies the "right and wrong" of the blockchain: remove fakes and save the truth, you cannot do image engineering for the blockchain

The Blockchain Research Group of the Digital Currency Research Institute of the People ’s Bank of China (hereinafter referred to as “the Central Bank ’s Digital Research Institute”) recently wrote in China Finance that the blockchain, with its unique trust transfer mechanism, helps business data be trusted Sharing, accelerating multi-party collaboration of participating entities, and realizing supervision and penetrating management. It contains the potential to accelerate China's digital transformation and stimulate the development of the digital economy. Blockchain technology has the advantages of credible business data, equalization of participants, and multi-dimensional supervision methods, but at the same time, there are some shortcomings that need to guide the healthy and orderly development of the blockchain industry. To advance in a pragmatic manner, we cannot engage in image engineering for the sake of blockchain. Believe in the role of any advanced technology, but don't superstitize it. Correctly understanding the applicable scenarios of blockchain technology, not all projects need blockchain, and not all data need to be chained.

The article pointed out that the blockchain at the cost of synchronous storage and co-calculation of a large amount of redundant data, sacrifices system processing efficiency and part of the customer's privacy, and is not yet suitable for high-concurrency scenarios such as traditional retail payment; however, Blockchain has been widely used in areas with high sharing requirements and low concurrency requirements, such as transaction settlement, trade finance, and property rights transfer.

Not all projects require blockchain

In recent years, blockchain has gradually become a hot technology in the field of financial technology with its unique trust transfer mechanism. The Politburo of the CPC Central Committee conducted the eighteenth collective study on the development status and trends of blockchain technology in October last year, emphasizing the use of blockchain as an important breakthrough in independent innovation of core technologies.

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In this article entitled "Development and Management of Blockchain Technology", the Digital Research Institute of the Central Bank stated that blockchain technology has major advantages such as credibility of business data, equalization of participating entities, and multi-dimensional supervision. But at the same time, there are some deficiencies such as limited performance and scalability, lack of systematic security protection, full backup storage mechanisms that are susceptible to storage bottlenecks, and difficulty in interoperability of different blockchain systems.

The article pointed out that the healthy and orderly development of the blockchain industry should be guided. In order to remove the false truth, "coin" and "chain" cannot be confused. Although blockchain originated in Bitcoin, blockchain is not the same as Bitcoin. Blockchain is an integrated innovation of a variety of traditional technologies such as cryptography, peer-to-peer networks, and consensus mechanisms, which must be treated objectively and rationally. In order to resolutely win the three major battles, we must maintain a high pressure on illegal fundraising, fraud and other illegal activities under the guise of blockchain, and accelerate the survival of the fittest and turmoil in the market.

The article also pointed out that it is necessary to promote pragmatically and not to carry out image projects for the purpose of blockchain. Believe in the role of any advanced technology, but don't superstitize it. Correctly understanding the applicable scenarios of blockchain technology, not all projects need blockchain, and not all data need to be chained. At this stage, blockchain technology is still immature and faces multiple challenges, such as performance, security, standards, and compliance. All parties should calmly think and explore with all their heart to make effective use of blockchain to resolve industry pain points and serve the real economy in depth.

"On-chain and off-chain account matching" is the focus

The article points out that we must take a long-term view and recognize the systemic, long-term, and complex characteristics of the application of blockchain technology. At present, whether the blockchain can achieve on-chain and off-chain account compliance and security compliance is the focus of industry attention. Participants should comprehensively consider the requirements of multiple dimensions such as market development, risk management and control, legal compliance, etc., to achieve on-chain and off-chain linkage, technology and business integration, and innovation and management, so as to give full play to the "blockchain +" digital empowerment. Energy potential.

Some people in the industry said in an interview with reporters before that that the blockchain can guarantee the authenticity of the data only after the data is on the chain, but the authenticity of the source information before the on-chain is currently beyond control. At present, the authenticity of a large amount of blockchain information before the chain needs to be verified by a trusted and centralized third-party intermediary. The problem of general information authenticity has not been resolved. This is also the difficulty of the current blockchain data authenticity control.

The article also pointed out that it is necessary to advance the standards and guide the orderly development of the blockchain industry. Take full advantage of the experience and lessons learned from the special rectification of Internet financial risks, avoid "polluting first, then treating", and especially pay attention to the possible impact of external risks on financial security. The formulation of technical standards and business specifications can enhance China's right to speak internationally and formulate rules in the field of financial blockchains. It is conducive to clarifying the "right and wrong" and "authentic applications" of the blockchain, and is conducive to maintaining market order and Financial stability promotes the healthy and orderly development of the industry.

Central Bank explores innovation and makes positive progress

"Blockchain costs the synchronous storage and co-calculation of a large amount of redundant data at the expense of system processing efficiency and part of the customer's privacy. It is not yet suitable for high-concurrency scenarios such as traditional retail payment; however, it requires more reliable information sharing. In areas with high requirements and low requirements for concurrency, such as transaction settlement, trade finance, property rights transfer, etc., blockchain has been widely used. "The article pointed out.

The article also pointed out that the Central Bank Digital Research Institute has adopted the blockchain as an important breakthrough in independent technological innovation. Since 2014, it has researched fiat digital currencies, actively promoted the standardization research of the blockchain, and explored the blockchain finance in the fields of transaction settlement, trade finance, and other fields. Innovation, seizing the first-mover advantage and making positive progress.

The first is to lead the development of industry standards for financial ledger . The Institute has taken the lead in compiling a number of financial industry standards such as financial distributed ledger security specifications, and has actively participated in the development of relevant rules of international financial standard-setting organizations such as the International Bank for Settlement (BIS) and the Financial Stability Board (FSB). The development of blockchain standards such as the International Organization for Standardization (ISO) and the International Telecommunication Union (ITU). Currently, the People's Bank of China has applied for a number of blockchain patents, ranking first among global central banks.

The second is to build the PBC's trade finance blockchain platform . The platform was successfully launched in Shenzhen on September 4, 2018, and has successively launched four businesses: supply chain account receivables multi-level financing, external payment tax filing form, rediscount fast track and international trade account supervision. By signing a memorandum of cooperation with the Hong Kong Monetary Authority's trade linkage platform, the People's Bank of China's trade finance blockchain platform has opened up an international connection. In the future, it will unite similar overseas trade gold platforms to jointly build an ecological system. As of December 17, 2019, there were 38 banks participating in the promotion and application of the platform, and the business volume exceeded 87 billion yuan.

The third is to build a digital bill trading platform . In 2017, the Shanghai Stock Exchange and the Digital Research Institute jointly led the work related to the construction of a digital bill trading platform based on blockchain technology. The platform was successfully put into trial operation on the experimental production system on January 25, 2018, and successfully completed the digital bill issuance, acceptance, discount and rediscount services based on blockchain technology. It is the application of blockchain technology to bill business in China. First practice in a real production environment.

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