On the morning of May 20th, the Ministry of Industry and Information Technology released the “2018 China Blockchain Industry White Paper” at the China Blockchain Industry Summit Forum. The “13th Five-Year Plan” National Informatization Plan regards the blockchain as a key frontier technology, pointed out that blockchain technology is expected to promote China’s economic system to achieve technological changes, organizational changes and efficiency changes, and promote the “information Internet” to “value Internet” changes.

The report of the Ministry of Industry and Information Technology lasted more than 50 days and visited more than 70 blockchain companies and institutions. The report is divided into five parts. In addition to analyzing the development status of blockchain technology in such areas as platform construction and hardware manufacturing, it also elaborates on the application of blockchain technology in the financial sector and the real economy. In addition, the report discusses Legal and policy issues of the blockchain industry, such as smart contracts and legal issues of smart integration.

The key points and core ideas of the report are as follows:

First, the overall characteristics of blockchain industry development

The first part of the report pointed out that China’s blockchain industry has formed a preliminary ecological environment, the industry has witnessed rapid development, and the number has rapidly increased. China’s blockchain-based business has reached 456 companies and the industry chain has gradually become clear. The number of industry application companies in the field is the largest.

At the same time, some Internet companies such as BATJ have also started to engage in and develop blockchains to empower existing businesses. At present, Tencent has landed on supply chain finance, medical care, and digital assets; geographically, Beijing, Shanghai, Guangdong, and Zhejiang It is still the focus of blockchain entrepreneurship, accounting for over 80% of the total.

The report also believes that blockchain applications are diversified. From the financial extension to the physical domain, blockchain technology can be applied in almost all industrial scenarios, because almost all industrial scenarios involve transactions. The main battlefield for the application of blockchain technology is the real economy industry. The value of blockchain technology will also be concentrated in the increment of value brought about by the industry scene.

In addition, the blockchain also helps to achieve “information cooperation,” helping the real economy reduce costs and improve efficiency. As far as risk is concerned, technological abuse has caused certain risks in industrial development and cannot be ignored. First, the brutal growth of token financing has brought risks such as illegal fundraising and financial fraud, and the second is technology-level risk. For example, in addition to PoW, PoS, DPoS and other consensus mechanisms have been proposed, but they can be implemented. True security and credibility cannot yet be fully proven.

In terms of policy supervision, the report believes that the policy system has been gradually established and the industrial development environment has continued to be optimized. First, the policy system for the development of the blockchain industry has been gradually improved. Local governments have actively positioned the blockchain technology highly from the industry and actively strengthened the industry supervision. Prevent financial risks.

Second, the development of blockchain industry segmentation

The second part of the report divides the blockchain industry into four parts: platform construction, blockchain hardware manufacturing and infrastructure, blockchain security protection, blockchain industry service organizations, etc. to illustrate the development of blockchain in subdivided industries. situation.

1. Platform construction

The mainstream underlying platforms include public chains, alliance chains, and BaaS. Platform-level opportunities are currently the focus of many companies. No theory is start-up companies or large companies, have in the layout block chain of the underlying platform, public chain as a block chain of “operating system”, is seen as the most promising direction block chain field. In addition, many public-chain projects build platforms first and then look for application scenarios. This brings certain challenges to the actual landing. The performance problems of the public chain are currently the key points.

In the alliance chain, the alliance chain serves as a basic component supporting distributed business, and can better meet the requirements of multi-party cooperation and compliance development in distributed business. The alliance chain will be more suitable for the transaction and settlement between organizations.

At BaaS, big companies are more active in BaaS because they all have their own cloud services, and the business landscape within the ecosystem is abundant.

The report believes that while the public chains and alliances and BaaS have adopted different strategies and development paths, they will still coexist for a long time. Even some platforms may eventually reach the same goal, or they will use a cross-chain technology to separate the dispersed alliance chain system and the public chain. Connect to form a wider range of value Internet industry ecology.

For the storage of digital assets, the birth of digital wallets created by the storage of digital assets, as of the end of March 2018, there are about 15 companies that have developed digital wallets in China. Basically, they are mainly developing hot wallets.

The blockchain technology solution refers to the expansion on the basis of the underlying platform, the purpose is to facilitate developers to develop products and applications based on the blockchain technology, or service providers to provide customers with solutions to specific business scenarios.

2. Blockchain Hardware Manufacturing and Infrastructure

On the one hand, the increasing difficulty of computing and the increase of billing nodes have driven the booming development of the blockchain hardware manufacturing industry. At the same time, the improvement of computing power has also promoted the development of other fields. Bitland and Jianan, which started with blockchain hardware devices Chi released the AI ​​chip last year. The world’s top three blockchain hardware equipment vendors Bitland, Jianan Zhizhi and Yibang Technology are Chinese companies. On the other hand, the blockchain computing center has become the mainstream, sharing computing model landing applications.

3. Blockchain security protection

The opening of the underlying source code makes it easier for attackers to attack the blockchain system. With the development of quantum computers, more and more researchers have begun to pay attention to cryptographic algorithms that can resist quantum attacks. Consensus mechanism and consensus mechanism all have conditions for their establishment. As an attacker, it is also necessary to consider that once the attack is successful, it will cause the value of the system to return to zero. At this time, the attacker has not obtained anything other than damage. Valuable return. Finally, consider the security of smart contracts and digital wallets.

For the security challenges and countermeasures that quantum computers bring, quantum computers will pose a major security threat to the cryptosystems that are used today. In order to deal with the security threat posed by passwords to quantum computers, methods based on anti-quantum computing ciphers and quantum keys can be used.

4. Blockchain industry service organizations include blockchain media and communities, investment institutions, industry organizations and industry research institutions. Many of these investors will choose to invest in the media to enter the blockchain field. In addition, due to the rapid development of the blockchain industry, the shortage of talents is a serious problem. Therefore, relevant universities in various regions of the country are also actively exploring talent training models in this field.

Third, blockchain application development in the financial sector

The blockchain transformation of finance is mainly divided into three aspects: 1. The potential to change the financial infrastructure; 2. The de-intermediation of blockchain technology can reduce transaction costs; 3. Blockchain technology and financial industry Combined, it will inevitably create more and more business models, service scenarios, business processes and financial products. The report unwraps the application of blockchain technology in typical financial scenarios such as supply chain finance, trade finance (letters, guarantees, forfaiting, factoring, bills), credit information, transaction clearing, point sharing, insurance, and securities.

1. Supply chain finance

Blockchain technology can achieve the credit penetration of the supply chain financial system and solve the problem of financing difficulties and expensive financing for the secondary supplier distributors. Blockchain plays two roles in it. The first is the core enterprise’s right-to-authorization process, which includes the verification and confirmation of the authenticity of the entire bill; the second is the verification of the true validity of the transfer of the debt vouchers, and the guarantee of the debt vouchers cannot be falsified, and the credit can be realized. , And then solve the problem of credit extension financing for secondary suppliers.

2. Trade Finance

Beginning in 2017, some domestic banks have started to think about the issue of setting up an inter-bank business message receiving and sending alliance, and started to build their own trade finance platform based on the blockchain system. Through the blockchain credit, guarantee, forfaiting, factoring and billing under trade finance, an interbank message exchange network is established in the form of a coalition chain. Domestic banks, overseas branches, and international banks are equal, shared, and free. The identity can be added, and at the same time, you can use the characteristics of multi-participation in the blockchain to invite the participation of eco-enterprises. Official institutions such as customs, taxation, justice, and industry and commerce can also participate in co-construction of the ecology.

3. Credit information

In the current credit bureaus, whether the capital market credit assessment agencies, commercial market assessment agencies or personal consumer market assessment agencies need to securely share data, it is also necessary to reduce financial risks and data acquisition costs. The use of blockchain technology to connect the blacklisting business systems of various affiliates establishes a blacklist storage platform for alliance institutions, and integrates the blacklisted data scattered among various credit bureaus.

4. Transaction settlement

In the traditional transaction model, the settlement efficiency is low, the liquidation business is too numerous, the liquidation chain is too long, and the clearing center is too concentrated. Blockchain technology can improve the clearing/settling efficiency of existing financial systems. Both parties or parties to the transaction can share a set of trusted and mutually-recognized books, which greatly improves the accuracy and efficiency of reconciliation. Through the implementation of smart contracts, it is also possible to implement automatic transaction settlement and greatly optimize existing processes.

5. Points sharing

The credit system refers to providing mature member credit system and rich member credit card system services for banks and enterprises. Based on the blockchain technology, an irreproducible trust registration mechanism can be established among various enterprises to facilitate the communication of different points. The exchange offers the possibility to revitalize the points and promote the upgrading of various consumer services. The data stored in the blockchain cannot be tampered with, and the integral operation record can be traced locally to avoid fraudulent user integration data.

6. Insurance

“Uniqueness” is the basis and focus of the management of the insurance object, and it is also the difficulty in insurance underwriting and claims compensation. In the context of the blockchain application, its distributed and encryption technology features, combined with related identification technologies, can provide a solution framework and implementation path for solving the “uniqueness dilemma” of identity, ensuring the authenticity and reliability of data and information, and effective traceability. Insurance fraud provides strong technical protection. Using blockchain timestamp and distributed features, combined with the Internet of Things technology, can provide entirely new possibilities for insurance uniqueness solutions in the context of time and space. At the same time, it can also break the limitations of space and time, realize cross-temporal information management based on blockchain, lay the foundation for innovation of insurance products and services, especially for scene-based and fragmented innovations, build more detailed and dynamic based on risk indicators. Insurance solutions to achieve personalized and efficient insurance services.

7. Securities

Intelligent securities issued on the blockchain platform store their information and operational status in the form of data, model various financial instruments and related contractual agreements, automate the complex financial tool operation process, and improve the issuance efficiency. On the other hand, it will reduce the cost of trust. In terms of information disclosure, the transparency of transaction information in the blockchain can expose various illegal behaviors of curvilinear accumulation of money in real time. In addition to traditional information disclosure, the information in the IPO business process can be provided to market participants and regulatory authorities through blockchains, facilitating the supervision, comparison and verification of data by regulatory agencies and social intermediary agencies, and further enhancing the company’s IPO. Transparency.

In terms of securities clearing and settlement, blockchain technology can reduce intermediate links and simplify the settlement process. The Australian Stock Exchange (ASX) announced on December 7, 2017, that it will develop a blockchain-based clearing and settlement system.

In the area of ​​asset securitization, ABS based on blockchain technology has the following advantages. First, it will help to improve the cash flow management of ABS. On the one hand, it has the function of automatic account synchronization and auditing to effectively alleviate information asymmetry. Second, it uses smart contract functions to realize functions such as automatic fund transfer, asset recycling, and automatic revenue distribution. Reduce labor costs and error rates, thereby improving the efficiency of cash flow management; Finally, blockchain technology can boost penetration of ABS underlying assets.

Fourth, the application and exploration of blockchain in the real economy

At present, blockchain technology has begun to be used in many areas of the real economy. The blockchain has characteristics of being distributed, not tampered with, and traceable, and it has begun extensive exploration and achieved initial results in the transformation of the real economy. The pattern and logic of blockchain landing in the real economy industrial scene is also increasingly clear. The next report will introduce blockchain application scenarios and landing conditions in the real economy from fifteen areas of product traceability, copyright, and digital identity. The following will select three aspects to summarize;

1. Product traceability

Blockchain tamper-resistant, distributed storage and other technologies provide a solution to the lack of trust in the traceability industry, providing a transparent mechanism for commodity information flow, logistics and capital flows from the algorithm level. Through the billing method of upstream and downstream multi-party chaining of the supply chain, it is ensured that even if there is a single-party account forgery, it is difficult to find all the chain nodes to collaborate to fit the fraud data, making the counterfeiting cost increase significantly. Jingdong established the “Jingdong Quality Anti-Counterfeiting Coalition”. In terms of cross-country traceability, China’s blockchain technology has also gradually landed. For example, Alibaba Group’s rookie logistics and Tmall International’s layout blockchain traceability.

2. Copyright protection and transactions

Blockchain and digital copyright protection can be perfectly combined to solve the current situation of piracy. First of all, in the process of ensuring rights, the patent application process under the existing mechanism takes a long time and is inefficient. The distributed ledger and timestamp technology of the blockchain make it possible for the whole network to quickly reach a consensus on the ownership of intellectual property rights. In theory, it can achieve timely verification of rights. The asymmetric encryption technology guarantees the uniqueness of the copyright. The time stamping technology guarantees the ownership of the copyright. The copyright owner can complete the process of determining the right quickly and easily, and solves the problem of the traditional inefficient mechanism.

3. Big Data Trading

If blockchain isolation verification technology can be used, data legally available for sale can be isolated and verified, which can not only protect the legitimate use of data demanders, but also protect user privacy to the greatest extent, but it can use blockchain to trace data to source. Identify data ownership and circulation channels, provide evidence for infringement complaints, and provide a more credible environment for big data transactions.

V. Development trend of blockchain industry

The final report pointed out that the blockchain has become the forefront of global technological development, opening a new track for international competition; the blockchain field has become a new hot spot for innovation and entrepreneurship, and technological integration will expand the application of new space; the next three years will be In the real economy, it has become a major support for the construction of digital China. The blockchain incentive mechanism will create a new platform economy and open a new era of shared economy. In addition, the blockchain will speed up the process of “credible digitization” and drive the financial sector to “get out of nothing” to serve the real economy. The country will further improve the blockchain supervision and standards system and continue to lay a solid foundation for industrial development.

Author: Marko Vidrih

@cryptomarks

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