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Wanxiang Blockchain Xiao Feng: The new digital finance in my eyes

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Xiao Feng believes that the new digital finance is based on the value network of finance, its account model and accounting methods will be changed.

原文标题：《万向区块链肖风：数字新金融到底是什么样的金融》

Source: Xiao Feng, Wanxiang Blockchain

On June 28th, innovation led, "chain" connects the future -- Jiangbei New Area Blockchain Technology Application Conference and the signing ceremony of Wanxiang Blockchain Co., Ltd. was held in the central business district of Jiangbei New Area. Xiao Feng, Vice Chairman and Executive Director of China Wanxiang Holding and Chairman and General Manager of Wanxiang Blocker, was invited to deliver a wonderful speech at the meeting, explaining how the new digital finance leads the digital advancement of the economic society and serves the digital economy and society.

The following is a slightly abridged transcript of the speech, which is taken in shorthand.

万向区块链肖风：数字新金融到底是什么样的金融

It is a great honor to have this opportunity to communicate with you in Jiangbei New Area. Thank you very much for witnessing the official settlement of Wanxiang Blockchain and three laboratories of Wanxiang Blockchain in Jiangbei New Area. Just now, Luo Qun, member of the Standing Committee, mentioned in his speech that Jiangbei New Area is positioned as "two cities and one center". The center refers to the new financial center. Today, I would like to share with you some personal views on new finance and digital finance.

Recently, I have been thinking about a topic "What kind of finance is the digital new finance". I have learned a lot on the Internet and read some books. However, I think these learning materials and books do not make the new digital finance simple enough. I try to simplify it a little bit.

My first comment: the new digital finance must be based on a completely new social platform and infrastructure. Therefore, new finance and digital finance should be the finance on the "value network".I've divided the evolution of the web platform over the last 100 years into three phases. First is the communication network stage, and then is the middle of the last century due to the development of computers and the Internet and the birth of the information network stage. Now, with the gradual maturity of blockchain and other technologies, it has begun to enter the stage of value network.

In the communication network stage, because of the telegraph, telephone just had like AT& T These truly modern enterprises. AT& T was originally built on a communications network and felt so large that it could not fail, but was later dismantled for alleged monopolies. Now, both in China and the United States, people begin to discuss how to limit the boundary of Internet platform and how to limit its ubiquitous "tentacles", just as AT& appeared at the end of the development stage of communication network; T is split.

The advent of the era of communication network has improved the convenience of communication, but also greatly reduced the cost of communication. Businesses took place because of this, not only did companies like AT& Companies like T, GM, and GE, people are starting to build networks based on communication technology.

The telegraph gave birth to the railroad network, and before the telegraph the railroads could not be dispatched. The contribution of information technology to the GDP of the United States first began with the telegraph, because of which the entire railroad network was built. After the construction of the railway network, a second network, the media network, appeared in the United States. Before the telegraph, a newspaper from New York could hardly be delivered in the same day to Washington, Boston, or Philadelphia, where the Wall Street Journal you might see was three or five days old. With the telegraph, the New York Times could send news stories that day to bureaus in Washington, Boston, and Philadelphia, where they were printed and sold, as did the Washington papers.

Don't look down upon such a network, it makes the physical distance close quickly. Based on communication networks and communication platforms, business has been transformed. The decline of the United Kingdom was due to the decline of relative power, and the United States wrested the supremacy of the world from Britain. The telegraph was invented in the United Kingdom, but the United Kingdom was not the first to embrace the age of communication, while the United States caught up with the development of The Times and greatly increased production efficiency.

In the middle of the last century, computers and the Internet were born in the United States. While the United States continued to lead global innovation, global computer companies and Internet companies emerged. In the Internet era, information networks have dramatically changed many businesses, and many large Internet platforms have emerged. While reducing the cost of information processing to the freezing point, the efficiency of information processing has also been greatly improved.

The Internet era has seen many changes in business, the most important result of which is the birth of the Internet platform. After 20 or 30 years of development, the Internet era is also facing the same problem as the era of communication networks -- Internet giants. At the beginning of this century, a new network platform was quietly born. Cloud computing, AI, and especially blockchain technology are slowly being applied. I believe that the impact of the value network platform on the business and the future of the business results are no less than the previous network platform.

The most important characteristic of value network is to reduce the cost of trust on the commercial platform to the lowest level and increase the efficiency of trust to the highest level. In the age of value network, two strange organizations or people can easily complete a business transaction or establish a business relationship. Communication network reduces the cost of business transaction and communication, information network reduces the cost of information, and value network reduces the overall cost of business transaction. Two new phenomena have emerged in business networks, one of which is "ecological attraction organization", or ecological business model. Two or more institutions can cooperate on a blockchain without any equity relationship or mutual familiarity, or even competing or backing, or relying on intermediaries. Based on this technology, ecological benefits can be achieved and ecological business models can be built.

The other is decentralized self-organization based on blockchain technology, also known as DAO, which no longer needs to handle business, commerce, transactions, exchange as a company. At present, the application of value network is still experimental, but the experiment of more than a decade is enough to prove that these things have "vitality". The next thing to consider is: how can we transform, optimize and iterate on the basis of blockchain technology to truly benefit our human society's business organization and form. Digital finance or digital new finance is a new finance based on value network, which is established to serve ecological business model or self-organizing business organization.

The purpose of new finance and digital new finance is not to serve traditional business models, business forms, business organizations and business activities, but because with the development of economy, new things evolving out of business need a new economic and financial service model. First of all, the new financial service model is based on the new financial network platform. This is the first point I would like to share with you.

Second observation: the new digital finance is based on account models that are completely different from traditional finance and the finance that people are now familiar with. toSo far, there are three different phases of the account model. The earliest is the familiar bank account, which is now widely used. Your money, salary and bonus are kept in a bank account, which is strictly supervised by the bank. But it's not your bank account that you use the most, it's Alipay or WeChat. Alipay and WeChat payment are Internet accounts, that is, the amount changes are recorded in the WeChat and Alipay accounts through the Internet platform instead of the bank accounts.

Three years ago, before the central bank required that the assets of users of all Internet platforms or third-party companies must be subject to the central bank's supervision, the assets were guaranteed by Internet finance outside the bank account system. Because of the Internet and information networks, financial services are integrated into more and more scenarios.

When we have online payment needs such as shopping, it is very difficult to log out of the Internet platform, log into the bank account, and use the bank account to pay, because the asymmetry of information and funds makes it difficult to realize instant payment. WeChat Pay, Alipay and other third-party payment companies can be fully integrated into an application or demand scenario to meet the demand for fast, convenient and safe payment.

It is now safe to manage assets through online payment platforms, as the central bank requires all reserves to be supervised by the central bank as part of its efforts to clean up order in online finance. There is a difference between a central bank being in charge of regulation and a bank being in charge of regulation. If you keep your money with the central bank, the central bank can't fail, your money is kept by the central bank, your money is there. Banks are not like that. Your money is in the bank, and the bank is leveraged on its own balance sheet. Banks all over the world are the same. When it fails, you can only get deposit insurance. In the United States it's $250,000, so if a bank fails and you're a customer of that bank, if you deposit more than $250,000, the bank doesn't guarantee you any compensation over that amount. If the bank is able to pay, if not, it will pay $250, 000 through federal deposit procedure insurance. If your money is in the Fed, the Fed will give it to you, and your money is 100% safe.

Even if banks tightly regulate accounts, Internet accounts carry other risks. Blockchain technology has brought about a third account model that is different from Internet accounts, namely blockchain digital accounts. Technically, blockchain is not an account model, so there has been some resistance to blockchain digital accounts. Blockchain digital accounts use cryptographic algorithms so that even if your money is in the contract, it's still in the account, which is an account that manages and keeps track of the money. Digital accounts represent a new opportunity for banks as digital renminbi from the central bank becomes more common. Anyone who wants to offer a new financial or digital service first needs to think about how to do a better job of creating a digital account within the service to provide customers with a digital account-based financial service, beyond an Internet account.

Banks get beaten at the Internet account stage. Although the bank account system is maintained, ultimately when it comes to scenario finance, users do not use the bank account system to make Internet payments, but use the Internet account to make payments. With the promotion of the central bank's digital currency, financial institutions are not based on the traditional bank account system, but on the blockchain digital account system to rebuild the technical base to serve customers.

The foundation of digital accounts is a shift in account patterns. You can no longer use the bank account system for digital financial services, but to provide new financial services based on the new account model. Digital accounts for banks to promote digital RMB, for financial institutions, licensed financial institutions and banks to provide a new opportunity, what lost in the Internet phase, in the blockchain digital account phase may be able to gain back.

A third idea: the new digital finance is not just a different accounting model, but also a different accounting method.Blockchain-based digital new finance, its accounting method -- distributed ledger has two biggest characteristics. First, your account is not your own record, but by the network of the block chain all nodes to help you remember, that is, your account is not a person in the record, is the whole network together in the record. This makes bookkeeping feasible and untampered, for example, a company's financial manager cannot tamper with the company's financial accounts. Therefore, we presuppose a premise, these accounts by others to remember and the whole network of people common bookkeeping books is irrevocable, and true, accurate, tamper, if need to modify the need to modify the whole network together. "Don't be evil" is the operating principle of Google, and the practice of blockchain keeping accounts together and others keeping accounts is not only self-restraint not to do evil, but it is impossible to do evil. This accounting model makes it impossible to be evil, because no one person can decide how to account.

Distributed bookkeeping is a decentralized approach. When it comes to centralization, you may wonder whether it is politically incorrect or why it is necessary to do so. Keeping your own accounts can do your best and ensure that you don't lie, but it can be difficult to gain the trust of others. The so-called decentralization is actually a governance mechanism.

Building trust and cooperation with strangers at low cost in a complex economic environment requires decentralized governance, that is, achieving something by consensus in a community or ecosystem. Consensus is always slow. For example, it takes a long time to reach a consensus that a blockchain is going to be built by all the people in this room today. Not everything in the world requires efficiency or quick decision making. There are many things, slow is fast, slow is good.

When the aforementioned business models (eco-business models and self-organizing business organizations) are built on blockchain, their governance must be achieved by consensus. The consensus is a decentralized, bottom-up, spontaneous mass movement. If efficient and quick decisions are needed in business activities, centralization can be used. Decentralization is characterized by the pursuit of fairness and efficiency, within such a boundary, everyone finds a balance.

There is now an opportunity for new digital finance, as central banks start selling fiat digital currencies. The so-called digital new finance should serve the digital organizations and serve the new economic organizations, models and business forms, which need to use digital means to provide services. Otherwise, in the Western parlance, "reinventing the wheel". Traditional finance has already covered traditional economic organizations, models and forms of business, and Internet finance has more comprehensive coverage, so I don't think it is necessary to invest more resources and energy to rebuild a new system to continue to serve these organizations and forms of business. There must be new demands, scenarios, business patterns and other services that need digital finance, and digital finance will emerge as The Times require.

Therefore, the new finance must be the new digital finance, and the new digital finance must have a new organizational form. This organizational form is different from the traditional financial institutions, which is largely distributed and self-organized point-to-point, and smart contracts based on blockchain have replaced many contracts of financial intermediaries. When traditional financial institutions do digital new finance, they first need to find their own digital survival mode, that is, how to provide new financial services and serve these new economic organizations by means of digital production. This brings some questions to the digital generation and digital production of financial institutions: What is the digital generation? What is digital production? What is the way of digital production and digital generation?

I personally see the overall economic and social digitization as three phases,The first stage is digital twinning,Digitize things in the physical world and the real world and reconstruct a digital real world. Twinning is because there is a real world, a real existence, a physical existence, and then the establishment of a digital existence. The two correspond one to one. This is the first stage of digitization.

digitalThe second stage is called digital native", the meaning of which is to create a new, digital result or world that does not exist in the real world. The digital native is parallel to the real, physical world. Digital native has come to the fore in recent years, and it's a new trend that deserves our attention. A few weeks ago, for example, Tsinghua University accepted virtual humans as first-year undergraduates. On the basis of Xiaoice, a virtual human named Hua Zhibing was created by Beijing Zhiyuan Artificial Intelligence Research Institute, Zhipu AI team and Xiaoice company. She now has the entry level of a freshman at Tsinghua University and can paint, write poetry and write novels. Tsinghua University hopes that when she graduates in four years, she will be as good as a Tsinghua graduate. This is digital nativeness, the creation of a digital world from scratch. Something in the parallel world of digital native is getting stronger and stronger, and it's bound to come back and affect our real world.

The third stage is called the creation of void and reality,In such a digital process, the digital economy has a very broad prospect. Blockchain technology is the "steel bar" and "cement" of digital financial services in the digitization process of human society and economy, and it is the infrastructure needed to rely on in the digitization process of digital new financial services.

Digital things themselves can not be found, is a string of numbers existing on the network, and easy to be copied by others or "zero cost" spread, and blockchain technology can give digital things a confirmation of property rights. Only blockchain technology can give the digital things uniqueness and certainty, so that all things in the digital world have physical properties and physical sense similar to "table", "chair" and other items in the real world, which is a reflection of the application value of blockchain.

From digital twinningness to digital nativity, virtual reality, we must rely on blockchain to bring uniqueness and certainty to the invisible and untouchable digital universe.If ownership and exclusivity are ensured, we can exchange, trade, mortgage, borrow and borrow with these things, and digital finance is thus born.

Above are my personal views on digital finance, welcome your criticism and correction, thank you!