Wuzhen·Bai Shuo: To compete with Libra, we need to establish a legal digital currency system.

On November 9, 2019 World Blockchain Conference·Wuzhen entered the agenda for the second day. Following the first day of BAT giants, Jia Nan Zhizhi and other companies on the blockchain application layout, digital assets and the underlying infrastructure of the blockchain, there are more exciting highlights on today's agenda: China Mobile, China Unicom, Telecom, ZTE and other communications giants talked about the 5G+ blockchain on the same platform. Huawei and JD.com's blockchain exploration, as well as domestic public links, decentralized finance (DeFi) and other hot topics are waiting for you. In addition, the founders of the domestic public chain (than the original chain, NEO, quantum chain, etc.) and the early evangelists of the blockchain will also gather at the round table to talk about the next blockchain for ten years. (Live link: https://www.8btc.com/wbc-2019/)

At the theme forum of "D-Future: The Future of Decentralized Finance" this morning, Bai Shuo, former chief engineer of the Shanghai Stock Exchange, attended the conference and delivered a keynote speech on "Architecture of the Digital Monetary System".

Wonderful views refine:

  1. Blockchain has the mission of achieving trust and unmannedness
  2. Libra's five major demands: borderless, peer-to-peer, programmable, zero commission and low volatility
  3. To achieve both regulatory visibility and privacy protection, this involves the issue of architecture choice


Bai Shuo speaks at the World Blockchain Conference·Wuzhen

The following is the content of the speech, organized by Babbitt (slightly deleted):

Everyone knows that there has been a major policy inflection point in the blockchain field. It has been incorporated into the country's innovation system, has been mentioned as an important strategic position, and has played a role in helping the frontiers of the global game.

The third world – the digital world

Why is the blockchain playing such a role on such a node? I analyze this from another angle – the mission of the blockchain . Let's take a look at the entire IT development and discover that there are two worlds in the past: the physical world and the spiritual world . There are already three worlds today, in addition to physical and spiritual, there may be an information, or a digital world . There are already a lot of things in this world, and many important processes and important objects are put in. But only halfway through, there are a lot of people in the process to mix in, if it is end-to-end, this end is a person, that end is a person, I have no opinion. But people are mixing up in the process, which is not smooth, because people are inefficient throughout the digital process and do not follow discipline. It's not just things like stock trading that require high IQ and high emotional intelligence to play. People can have problems in their mix, and they need high-trust areas. People are also a problem. Instinct between people does not trust each other, especially strangers.

The emergence of blockchain has opened up the chain of trust

In order to play the chain of communication, we have already paid a lot of cost and cost. These costs will lead to a chain of trust in one kind of process. Such a process is very inefficient and very costly. Kicking people out is everyone’s dream and the direction that geeks have been working hard. The good news is that the blockchain has come out, making it possible to kick people out of the trust process to achieve "unmanned" in the process of trust. Understanding the blockchain from this perspective, we know that if we recognize that digitalization will continue, and that such important aspects as trust continue to be unmanned, then the blockchain has such a mission, such an irreplaceable strategy. status.

Talking about the misunderstanding of the blockchain

  1. Some people say that the technology of the blockchain has been qualitative, mainly to see the landing, what do you mean by referring to the position of innovation.
  2. Some people say that centralization can do the application, what is the use of blockchain.
  3. It is also said to be a liar, of course, more extreme.
  4. In general, the previous paragraph was too much repression in the entire industry.

As we have just said, by kicking people out to improve the efficiency and reliability of trust, we have developed the blockchain as a productive force. But when technology changes productivity, productivity is changing distance, whether it is past traffic or later communication, or trust now. When productivity makes the distance short enough, it will change the structure, and changing the structure will change the production relationship. This is what we call "subversion."

Talking about the changes brought by Libra: Five major demands

Bai Shuo said that Libra has a virtual currency attribute, a legal digital currency part attribute, and a business circle currency. Libra has already occupied the commanding heights, so this place is a battleground.

Libra made five major demands:

  1. Without borders: may involve the currency and anti-money laundering issues of national financial regulatory authorities and currency issuing authorities
  2. Peer-to-peer: If the mobile payment experience like China has done a good job, our point-to-point appeal will be reduced, but in other countries, the mobile payment experience is not so good, the technology is not so good, how? Looking for a peer-to-peer experience, Libra can still help.
  3. Programmable: This will involve how to embed third-party business logic. Now that mobile payment Alipay and WeChat are programmable, there is still a long way to go. If Libra is done, they will overtake in this place.
  4. Zero handling fee : After Libra comes out, the existing exchange system and order will be affected.
  5. Low volatility: Libra's positioning determines that it is used for spending, not for speculation, which also makes Libra and traditional virtual currency, like Bitcoin, open.

There is a claim here, or a more pleasant word, Pratt & Whitney. It is also a fact that in some countries mobile payments are still difficult to advance, and they still do not have such an experience. Not exactly because they can't afford a mobile phone, and more importantly, they can't afford the corresponding communication + financial infrastructure. In particular, some countries with weak central banks, these countries with underdeveloped technologies, let them build such a system and infrastructure from scratch, and may have to wait until the Year of the Monkey. We also see the propositions of Huawei, Ali, and Tencent's overseas deployments that have joined forces to build communications and financial infrastructure.

Can Libra be made? There are some doubts here:

  1. Conversion rate of 2.7 billion users to Libra
  2. The central banks’ defense against “no borders”. In the country where the weak central bank is located, this may be better. The promotion of a strong central bank is always through repeated games.
  3. The difficulty of technically “licensing” to “non-permitted”.
  4. Chinese factor: How does China respond to Libra. It should be said that the world is very big, and it is not only a Libra that can be accommodated. If there is another, China is currently the only country in the world capable of launching.

Libra's development prospects

1. Successful cross-border

If Libra can successfully cross the border, then super-sovereign currencies, super-sovereign user groups and super-sovereign economies will form a positive feedback.

2, frustrated by the border

If it is frustrated in crossing the border, it becomes a stable currency that is not a global currency but a sovereign currency. Of course, it can be exchanged efficiently, and it can also output reproducible technology.

3, a strong French currency, a group of weak legal currency

If you make such an alliance, even if you don't like it, sometimes it is inevitable.

Libra's influence on China's financial technology

Point-to-point does not have this problem for China because the Chinese peer-to-peer experience is already very good. In a world outside of China, everyone has to make up this lesson, which will indirectly impact international business expanding overseas. Programmability is also a corner overtaking because we are currently unable to implement mobile payments. Zero handling fee, this is not necessary to say. Of course, China's Internet traffic is also hundreds of millions. What is the relationship between hundreds of millions and 2.7 billion? We are also a bargaining chip. The technical aspect also has a first-mover advantage, but if Libra becomes, it will be a big impact on us. Blockchain is a strong competitor in traditional technology implementation in technology, cross-border payment, international exchange, and open finance. We must respond positively.

China's possible response to Libra

There are also three possible scenarios from China's response:

  1. The offshore business is built on top of Libra, which is equivalent to surrender.
  2. Retracting to the country does not interact with Libra, nor does it go to international affairs, which is equivalent to our withdrawal. These two are not what we hope.
  3. Create a system that can compete with Libra. One of the efforts, the legal digital currency. The legal digital currency should belong to the private sector, not the intermediate service sector. Its status and cash, which are more than banknotes and coins, are equivalent.

Libra vs legal digital currency

One effort against Libra is the legal digital currency. The legal digital currency should belong to the private sector, not the intermediate service sector. Its status and cash, which are more than banknotes and coins, are equivalent.

At present, we make a basic judgment. The legal digital currency is still 2B. It is being issued and focuses on “within one country.” It has no traffic base and mobile payment traffic is available. In the future, if the administrative forces push it, its traffic is also very impressive. 2C, there is Libra, it is 2C, its distribution and circulation are equal, focus on globalization, have a global traffic base, and it supports smart contracts. The current statement on our side is that it does not support smart contracts for the time being. It seems that it has not been directly put on fire for the time being. But if Libra degenerates into a stable currency of a single French currency, it is directly on fire. If Libra is allowed to globalize, our legal digital currency is only doing these things in China, and it is not enough. We have to go out. If you go out, there is a way to go out and there is a problem with the flow.

Several basic claims of legal digital currency

  1. Monetary and foreign currency policy enforcement tools
  2. Foreign exchange control
  3. Anti-money laundering
  4. Tax aspect
  5. Taking into account the interests of commercial banks and privacy protection

First of all, we have to split the issue of circulation and circulation. If it involves foreign exchange control, it has the problem of border governance and market-oriented foreign exchange pricing, involving cross-chain and exchange technology. Anti-money laundering and taxation will all put forward the demand for super-rights real-name system. Specifically, it is necessary to carry out see-through management monitoring of accounts, intercept some suspicious transactions, and dispose of legally illegal assets. Can such measures be in the blockchain? Take on. Taking into account the interests of commercial banks, the first is multi-level issuance.

Privacy protection is the appeal of the public

Privacy protection is not without technology. If these technologies are done too well, supervision will not be worn. This is not what we hope for. It is also necessary to supervise the see-through and privacy protection. How to do this involves the choice of architecture. At present, we can use the central counterparty method to do it, that is, encryption, collection, and payment. However, in this case, there is a faint thing about the return of centralization. The central counterparty, specifically speaking, is now launched by the Bank of China, DCAB, which has a registered entity. This entity is equivalent to the question of who owns the digital currency. This privacy is protected, but for unrelated people, the central counterparty can still see through the central counterparty.

If thorough privacy protection is used, heavy weapons are used. Includes zero knowledge proof, homomorphic encryption. In order to turn it into a practical and legal tool, you must also lighten heavy weapons. To be able to see through the account, you must have a super account to dispose of it. Lightweight weapons can also cause a lot of problems, and there may be some that are not too hopeful. Specifically, it is a large-value chain and a small-value chain. The issuer pushes your share to the large-value chain. When using it, it uses the small-value chain. You put the quota on the large-value chain and put it on the small-value chain. . If you accumulate more on the small chain, you can go back to the big chain. The small chain is equivalent to your wallet. If there is not much in the wallet, you can find the wallet in the store. If you see a few tickets, you won’t feel that you are There is still money without money. Privacy on the small chain is not out, privacy is on the big chain. As long as we protect the privacy of the large-value chain and hide the traces on the small-value chain, the small-value chain and the large-value chain are hidden. This is not a problem, and it can also play a role. There are small sums and large sums. The small amount is exposed. It is a large amount, and it is invisible. It is a small part that can be seen. This is like a sea iceberg.

The three blocks of the block do not hinder

1. The centralization of the accounting rights does not hinder the decentralization of the supervisory power

Many enterprises engage in the blockchain to directly transplant the centralized business to the decentralization. The majority have the right to use, can not be supervised, and the bookkeeper cannot self-certify innocence. This is a bad structure, and the supervisory power must be pulled. Out, unregistered people have the power to supervise, and such an architecture is the framework that can self-certify innocence. It is understandable that the bookkeeping right is a little central, but the supervisory power should be enlarged.

2. The centralization of distribution does not hinder the decentralization of circulation

That is to say, it is not necessarily like Bitcoin, it must be dug out from its own chain, and it is allowed to be incremented. The increment can be incremented. For example, the ERCR method is an increment of external injection. The increment of injection outside can be chosen. There is nothing remarkable. The source of the increment can be diversified. Don't be confused by the “original teachings”. Only the increments generated in the chain are increments, and other increments are not credible. More important is circulation, maintaining value conservation and maintaining overdraft. Maintaining value conservation is the underlying technology that must be chosen in the architecture, including multi-chain interoperability, which is the cornerstone of the future value Internet. The set that was issued is not, we are not suitable to focus all attention on the issue, forgetting that the value of the blockchain itself is guaranteed to circulate.

3. The centralization of the book does not hinder the decentralization of the contract


On the left is the blockchain world. The bottom layer is the blockchain ledger, which inserts the third-party business logic and transfers the disposal rights to the third-party code. The specific implementation falls on the decentralized virtual machine group. In the traditional finance, there is an open financial statement. The bottom layer is the API of the basic service of the bank, which needs to transfer the disposition to the third party code. But it runs on third-party hardware, and third-party hardware is centralized. As long as the bottom layer is changed to run on the decentralized virtual machine cluster, the entire architecture is back. In other words, there is an implementation of open banking and open finance, which is to return to the blockchain and return to the blockchain at the application level. The underlying account book does not use the blockchain and directly uses the bank's basic services. This possibility also exists, and it is worthy of vigorous development.

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