Central bank mu changchun: we will guide the healthy and orderly development of the blockchain industry

Source: China journal of finance

Author: mu changchun

(the writer is from the blockchain research group of the digital currency research institute of the people's bank of China.

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In recent years, with its unique trust transfer mechanism, blockchain has gradually become a hot technology in the field of fintech, which is conducive to the trusted sharing of business data, accelerating the multi-party collaboration of participants, and realizing the penetrating management of supervision. It has the potential to accelerate China's digital transformation and stimulate the development of digital economy. The digital currency research institute of the people's bank of China (hereinafter referred to as "data research institute") has strengthened the basic research and standard development of the block chain technology, successively promoted the establishment and implementation of the digital bill trading platform and the trade and finance block chain platform of the people's bank of China, seized the first-moet advantage, and made positive progress. At the same time, in order to resolutely win the three tough battles, this paper conducts in-depth investigation and research on preventing asset bubbles, malicious speculation, token financing and other chaos caused by blockchain and its derivative financial risks, and puts forward Suggestions on promoting the healthy and orderly development of blockchain industry.

The technical features of blockchain

Blockchain is a new type of distributed database, also known as distributed ledger. Block chain technology USES block chain structure to verify and store data, adopts consensus algorithm to generate and update data, ensures data and ownership security with the help of cryptography, and achieves collaborative computing of data through programmable script code.

The main advantages of blockchain technology

First, business data credibility. Different from traditional distributed databases, blockchain introduces the concept of "everybody's account", in which each participant has the right to keep accounts and keep the latest account books and all historical records. This highly redundant data storage method can improve the information transparency among the subjects who do not trust each other, realize that the account data can not be tampered with and leave marks in the whole process, and thus promote the sharing and collaborative operation of multi-party information. In actual business, through the business data chain, paper documents can be made electronic and electronic information can be trusted, the friction cost of distrust among multiple subjects can be reduced, the problem of checking the authenticity of documents and bills in the traditional business method which costs a lot of manpower and material resources can be solved, and the financial institutions can implement risk control.

The other is the equivalence of participants. When building information systems across departments, the biggest problem is which organization or department manages the data stored centrally. Block chain uniform distributed books technology, natural can solve the problem of "sovereignty" of business, effectively implement each participation main body of the identity of the equivalence, equivalence power equivalence, responsibility, equivalence, interests, and realize the data real-time synchronization between all participants in the main body update, make cooperation more convenient and quick, enhance its partner's enthusiasm.

Third, regulatory means are multidimensional. Regulatory authorities can add regulatory nodes on the block chain platform to obtain regulatory data in a timely manner, and flexibly customize the statistical scope and granularity of financial regulation to achieve rapid analysis. At the same time, programmable scripts such as smart contracts are adopted to increase the corresponding regulation rules. The focus of supervision gradually rises from the compliance review and risk control of financial institutions to the identification and monitoring of systemic risks, so as to realize the supervision system of the whole process before, during and after the event, effectively preventing financial risks and maintaining financial stability.

The main shortcomings of blockchain technology exist

In terms of performance, the performance and scalability of blockchain are still limited. In the block chain, transactions can only be queued and processed in order, and all transaction results and payment records must be synchronized to the whole network node, which seriously affects the processing performance of the system (in the production environment, the block chain system can process more than a thousand transactions per second; In an ideal laboratory environment, the number of transactions per second might exceed 10,000. As the number of participating nodes increases, the cost of data synchronization and validation increases, and the performance of the system will further decrease, thus affecting the scalability of the block chain.

In terms of security, block chain lacks systematic security protection. First, blockchain generally adopts internationally common cryptographic algorithms, virtual machines, intelligent contracts and other core components, which are not completely autonomous and controllable, increasing the risk of attack. Second, there are endogenous security defects in the block chain, that is, 51% attack problem (that is, rewriting the block chain data by mastering 51% computing power). When the 51% attack is mentioned below, it refers to the block chain based on the consensus algorithm of computational force and proof of interest. Third, blockchain is still in its early stages and there may be unknown security vulnerabilities. In case of security problems in traditional systems, cancellation, withdrawal, emergency intervention and even discontinuation of service can be adopted. However, block chain does not support cancel, withdraw and other related operations.

In storage, the storage mechanism of full backup is easy to encounter storage bottleneck. Each node of the block chain needs to store the complete historical transaction information. When the block chain is used in the retail payment system, the storage capacity of the node will expand rapidly. For example, during the "double 11" event in 2019, the peak number of network-connected processing transactions was 71,500 per second, and some simple devices could not meet the storage needs of nodes.

In terms of interaction, it is difficult to solve the problem of interactivity of different block chain systems. Currently, the same type of block chain can achieve mutual data reading, verification and operation depending on the customized communication protocol. However, due to the inconsistency of programming language, data dictionary, system interface and intelligent contract between different types of block chains, cross-chain data is difficult to communicate, which may easily lead to business fragmentation.

In operation and maintenance, the problem of business continuity cannot be underestimated. Blockchain systems that are collectively maintained by multiple parties will also bring huge challenges. For example, member join/quit, system upgrade, business rule update, etc., there is still a lack of mature standards, institutions and operational norms, so it requires multi-party offline communication to deal with collaborative governance issues on the chain.

In terms of compliance, blockchain cannot guarantee the finality of settlement. Due to the 51% attack and other problems, the payment system based on block chain cannot guarantee the finality of settlement. When building a payment system based on blockchain, it is necessary to consider whether it meets the requirements of the financial market infrastructure principles (PFMI) to avoid legal risks.

In terms of functions, the decentralized nature of block chain conflicts with the central bank's central management requirements. The payment service provided by the central bank cannot be separated from the centralized account arrangement and needs to be built on the centralized system, which conflicts with the decentralized nature of the block chain. Therefore, it is not recommended to transform the traditional payment system based on block chain at present.

The applicable field of blockchain

Block chain, at the cost of synchronous storage and co-computing of a large amount of redundant data, sacrifices system processing efficiency and part of customer privacy, which is not suitable for traditional retail payment and other high concurrency scenarios. However, blockchain has been widely used in fields with high requirements for information trusted sharing and low requirements for concurrency, such as transaction settlement, trade finance and property transfer. As an important breakthrough in independent technological innovation, siu has been studying legal digital currency since 2014, actively promoting the standardization of blockchain, and exploring the financial innovation of blockchain in trade settlement, trade finance and other fields.

First, take the lead in formulating the industry standard of financial distributed ledger. Several research has led the establishment of financial safety standards distributed books and so on many financial industry standards, and actively participate in the bank for international settlements (BIS), the financial stability board (FSB) and other international financial standards organization of the formulation of the rules, also participated in the international organization for standardization (ISO) and international telecommunication union (ITU) block chain standard, etc. Currently, the people's bank of China has applied for a number of blockchain patents, ranking first among global central Banks.

Second, we will build the people's bank of China trade and finance blockchain platform. The platform was successfully launched in shenzhen on September 4, 2018 on a pilot basis, and has successively launched four services: multi-level financing of receivables in the supply chain, tax filing form of external payments, fast rediscount channel and supervision of international trade accounts. By signing a memorandum of understanding with the trade linkage platform of the Hong Kong monetary authority (hkma), the people's bank of China's trade and finance block chain platform has opened the international connection. In the future, it will cooperate with similar overseas trade and gold platforms to jointly build an ecological system. By December 17, 2019, 38 Banks had participated in the promotion and application of the platform, with business volume exceeding 87 billion yuan.

Third, build a digital bill trading platform. In 2017, sbi and sdi jointly took the lead in building a digital bill trading platform based on block chain technology. On January 25, 2018, the platform was successfully launched into the experimental production system for trial operation, and the business of issuing, accepting, discounting and rediscounting digital bills based on the block chain technology was successfully completed, which was the first practice of applying the block chain technology to the real production environment of bill business in China.

Potential risks associated with blockchain

Crypto-assets create asset bubbles and financial risks. Cryptographic assets based on blockchain cannot guarantee the stability of their anchored assets, or even lack endorsement of real assets. They are mainly speculative transactions. Some bookmakers and speculators manipulate the price of cryptographic assets by means of knock-offs and other means, resulting in severe market fluctuations and asset bubbles. By the end of September 2019, there were 2,417 types of cryptoassets, including bitcoin, with a total market value of more than $219.2 billion. At the same time, some dark net trading websites use encrypted assets to commit illegal crimes such as money laundering, bribery, tax evasion and terrorist financing, which have hidden risks.

Take the opportunity to hype, token financing, fraudulent investment run road and other financial chaos return. In the second half of 2019, many listed companies in order to get hot spots, have revealed the action or intention of "shangchaining", block chain concept stocks are hot, even more than 100 stocks have a crazy market of trading limit; As the market tends to calm, rational, these stocks fell back sharply, one after another limit, a lot of blindly chasing the rise of the stock market by the high. At the same time, token financing (icos) is back in vogue, with some institutions fleeing with cash after raising funds and investors suffering heavy losses.

Block chain's hard to tamper feature poses a major test for public opinion control. Block chain technology stores information in multi-party servers in a decentralized way, and its "hard to tamper" technical characteristic will lead to the perpetuation of information on the chain, which is in conflict with the "deletion right" and "correction right" in personal information protection, and may even encounter the problem of harmful information on the chain.

We will guide the healthy and orderly development of the blockchain industry

The first is to eliminate the false and preserve the true. "COINS" and "chains" should not be confused. Although blockchain originated from bitcoin, it is not equivalent to bitcoin. Block chain is the integration innovation of cryptography, peer-to-peer network, consensus mechanism and other traditional technologies, which should be treated objectively and rationally. In order to resolutely win the three major battles, we need to maintain a high pressure on illegal activities such as illegal fund-raising and fraud under the guise of blockchain, so as to speed up the survival of the fittest in the market and stimulate the market.

Second, we need to push ahead in a pragmatic way. We should not carry out image projects for the sake of blockchain. Believe, but not believe, in the role of any advanced technology. To correctly understand the applicable scenarios of blockchain technology, not all projects need blockchain, and not all data need to be linked. At the present stage, the block chain technology is still not mature, facing challenges in performance, safety, standards, compliance and other aspects. All parties should think calmly and make painstaking efforts to use the block chain to resolve the pain points of the industry and deeply serve the real economy.

Third, we should take a long-term perspective and recognize the systematic, long-term and complex characteristics of block chain technology application. At present, the industry is concerned about whether the block chain can achieve the consistency between the account and the actual value of the chain and the security compliance. All parties involved should take into account the requirements of market development, risk management and control, legal compliance and other dimensions, realize chain linkage, technology and business integration, and attach equal importance to innovation and management, so as to give full play to the digital enabling potential of "block chain +".

Fourth, standards should come first to guide the standardized and orderly development of the block chain industry. We should fully learn from the experience and lessons of the special rectification of Internet financial risks, avoid "pollution first, treatment later", and pay special attention to the impact of external risks on financial security. The formulation of technical standards and business norms can enhance China's international voice and rule-making power in the financial blockchain field, help clarify the "right and wrong" and "true and false application" of blockchain, help maintain market order and financial stability, and promote the healthy and orderly development of the industry.

Text link:http://www.xinhuanet.com/fortune/2020-02/24/c_1125617276.htm  & have spent

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