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How does blockchain profoundly transform modern finance He Yue was selected as one of the top 100 blockchain technology leaders

Time : 27/06/2022 Author : 9kd7fv Click : + -
        Recently, the "2020 new area potential & middot; blockchain technology and finance summit" was held in Beijing. The sponsor 36kr and daily planet jointly released the list of "top 100 blockchain financial technology leaders" in 2020fat: financeandtechnology. Heyue technology is very happy to be included in the list together with excellent domestic and foreign technology enterprises. Thank 36kr and daily planet for their recognition. This list is mainly based on 36kr and planet Daily's long-term tracking reports, interviews and surveys in the field of blockchain and encryption, as well as comprehensive data. It also selects 100 leading high-quality enterprises in the blockchain financial technology industry from the five dimensions of company scale and capital market recognition, blockchain technology level and innovation, technical feasibility and market promotion, pain point resolution and financial efficiency improvement, application prospect and development potential.
        The vision of Heyue is to use blockchain technology to build a future business form and provide overall solutions for various industries. The financial industry is the most in-depth industry and the fastest developing field. According to our preliminary data, the assets served by Heyue blockchain solutions in the financial industry have exceeded 50 billion, and the daily added chain assets have exceeded 100 million yuan, far exceeding other fields. In this process, we deeply realize that blockchain will become the underlying technology of new financial infrastructure, and this attribute is mainly reflected in the following aspects. We hope that the following short article (a little long) can discuss with you the profound impact and reform of blockchain technology on the financial industry.
        As a combination of various technologies, apart from its other technical characteristics, blockchain is a great innovation in accounting, and this innovation will breed a new financial paradigm and new financial infrastructure. We review the history of accounting development. Double entry bookkeeping originated in Genoa, Italy, in the 14th century. After Luca's works were published, double entry bookkeeping became wildly popular all over the world. Double entry bookkeeping has been recognized by the industry and is still used today. In fact, the reason why double entry bookkeeping can withstand the test of time is that it records both "credit" and "debit" and captures the essence of transactions. Although the double entry bookkeeping method has achieved success in the early stage of implementation and defined the basic accounting framework, this set of standards has been used by the modern commercial society.
        After a thousand years of development, accounting has ushered in a turning point: the three-way bookkeeping method. The blockchain technology is a system to realize this kind of accounting method. Further, the system creates three groups of entries: two of them are standard configuration of double entry bookkeeping, and the other group is provided by the receipt issuer (nodes in the blockchain system). The items provided by the publisher are presented in the form of a digital receipt of the transaction, with the signature of the publisher on it, which creates a dominant record for the transaction and is stored by the entire transaction network. In short, the three-party (multi-party) bookkeeping of the blockchain retains the transaction loan information of both parties and the third party (the third party is the entire network). In the original single party ledger, both parties keep their own account books, and there are numerous account books in the entire commercial network. When reconciliation and review are required, the third party (audit company), supervision, inter industry clearing Association, etc. are required to carry out, and the overall cost is very high, Moreover, the safety is low and risks are easy to occur.
        The core of the blockchain solves several core problems of double entry bookkeeping:. The reconciliation of different ledgers has become a consensus algorithm mechanism, which greatly reduces the huge cost of security and interoperability of multiple ledgers. The blockchain network is also scalable. Although the expansion of participants in a single blockchain network will reduce the performance, the current alliance chain can basically achieve a small performance loss under 100 level nodes, and can also achieve greater ledger expansion through trusted cross chain, especially for the financial industry, The current technology has been able to support more multi-agent cooperation. The traditional settlement between double ledger accounts, especially in the financial scenario, can hardly achieve real-time settlement. Usually, the business transactions are carried out for a period of time and then the settlement is carried out in a centralized time, resulting in great settlement pressure.
        In the blockchain, it is already possible to achieve transaction settlement (the fastest consensus mechanism at present can achieve block output within one second). In the blockchain system, point-to-point transfer can be directly conducted between different addresses in the blockchain. The gain of address a is the loss of address B. Different account systems require a third party to change the accounts of both sides of the transaction. In the blockchain, transaction confirmation and distributed ledger update are completed at the same time, and the settlement efficiency is high. The distributed ledger and the confirmed transactions are open and cannot be tampered with (under normal consensus). Whether it is utxo mode or account mode, the transaction and settlement tend to be integrated naturally, and the whole ledger is fully automated. With the development of consensus technology, the relatively large bottleneck of blockchain transaction determination has been improved.
        Compared with the traditional centralized settlement method, the efficiency of the blockchain is improved by more than ten times. Before the emergence of Turing's complete smart contract, bitcoin, as the earliest implementation and embryonic form of blockchain, can be seen as a simple trading and settlement network. The bitcoin network and the bank network can be seen as the difference between the simple multi-party accounting model and the retest ledger model. With the development and in-depth application of the smart contract technology, the blockchain Ledger has a strong programmable ability, which broadens the original simple transaction functions, and begins to realize more complex functions such as complex conditional payment, business logic, automatic execution scripts, and multi-party agreements that fit the legal relationship.
        The ledger is only responsible for recording transaction data, but it can complete complex atomic level transactions. Take a simple example: in the case of complex transactions in the retest, the business system needs to complete the transaction, and then record the transaction results in the ledger system. The ledger only records the transaction results, not the process. This intermediate link will become a disadvantage that cannot be ignored in the system. In the blockchain, the complex transaction process takes place in the ledger. The ledger makes consensus and witness on each transaction and event to ensure the correctness of the transaction and finally records the transaction process. This can eliminate inter system risks very well. The most important work of the financial industry is to deal with all kinds of asset issuance and asset exchange.
        However, the current technical means can only be called asset digitization, while the blockchain realizes "digital assets based on full data". How to understand the difference between the two? Asset Digitization: to put it simply, asset digitization is to record the asset information originally recorded on paper documents into the software system with digitized information, and finally save it in the database together with other data (the security level of the system is different, but the essence is the same). Asset digitization improves the efficiency of asset transfer and exchange, but at the same time it brings the risk of being easy to tamper with and falsify, These risks are very likely to become large-scale financial events, which is common in the digital process in recent decades.
        Digital assets with full information: first of all, the digital assets on the blockchain are also the data recorded in the ledger, but through cryptography and consensus mechanism, they better solve the problems of easy tampering and falsification caused by simple digitization. At the same time, the most important feature is that the digital assets on the blockchain can be highly coupled with their subsidiary information, that is, the digital assets can carry a large amount of information throughout their life cycle, It also includes the status change information of its own assets, including transaction records, issuance records and split records. The key of assets or digital assets is the trade background information. When the digital assets on the blockchain carry the authenticity information of their own trade background, the value of digital assets can be easily recognized, which is more conducive to engaging in a series of other financial activities.
        Electronic bill can be considered as a kind of asset digitization. Electronic bill is a kind of digital expression form of traditional paper bill. This bill records only part of the information as a circulation tool, and does not display the background information such as trade contract, logistics, invoice, factoring contract and Legal Relationship Agreement behind the bill, However, the accounts receivable vouchers issued on the blockchain can well contain these trade background information (at this stage, it still relies on the information off the chain). With more and more original information on the chain, the digital assets on the blockchain can better and more comprehensively restore the whole life cycle process of the assets. All these are traceable and cannot be tampered with.
        (& mdash; & mdash; this example is from the book digital assets and digital finance written by Yao Qian). Blockchain provides the financial industry with an infrastructure different from the traditional digital asset lifecycle management, and redefines the concept of assets. At present, there are still huge real assets that have not been online. We believe that blockchain will be an important solution to this problem. Almost all the services of modern finance are based on the bank account system, which is completely in the hands of financial institutions, including the user data generated by users. All the assets and important information of users can be operated by the account keeper. This form has caused the security problems of user information and assets.
        It also led to the emergence of financial hegemony. The blockchain initially realizes the user's independent decentralized digital assets through the public-private key system of cryptography. The signature of the private key ensures the user's independent will in financial activities. With the user's operational sovereignty, the cryptology algorithm ensures that the assets are really handed over to the user, rather than being kept by a centralized organization. Meanwhile, the development of other cryptography algorithms such as zero knowledge technology can further protect the privacy of user data. From another perspective of cost, the bank account system presents a state of account isolation. Different banks and financial institutions have different account systems, and it is very difficult to exchange accounts. The most typical scenario is cross-border transfer. Because people from different countries exist in different account systems, at least one intermediate account is required for account interaction.
        According to McKinsey & company's research in 2016 (McKinsey & amp; company, 2016), the average cost of a cross-border payment made by an American bank through a correspondent bank is between us $25 and US $35, which is more than 10 times the average cost of a domestic payment. Among them, 34% of the cost comes from the liquidity locked in the correspondent bank account (because these funds could have been used in places with higher returns), 27% from treasury operations, 15% from foreign exchange operations, and 13% from compliance costs. For the blockchain, the multi-party ledger + public-private key account system naturally connects different accounts and ledgers, greatly reducing costs.
        What I want to say here is that for KYC and AML, the blockchain can be elegantly implemented in other ways (such as a permissive blockchain, the introduction of an authenticator, etc., which will not be described here). From highly dependent on financial intermediation to self financing, the concept of self financing can be understood as: non-financial enterprises rely on information technology to provide comprehensive financial information services such as investment, financing, payment settlement and value-added to their own or business related enterprises and individuals, such as upstream and downstream enterprises, subsidiaries and branches of the supply chain, end consumers and their own employees, for the purpose of serving their own main business and related industries& mdash;& mdash; The information generated by itself is transformed into financial services oriented to its own ecology.
        In the concept of self finance, assets are generated by users (full information digital assets mentioned above). Users can master their own identity and assets, and users can conduct financial activities without relying on financial intermediaries. From the previous analysis, I can not clearly see that blockchain can be a perfect self financing infrastructure, and this is the most profound change of blockchain to the financial industry. 1、 Generate digital assets based on the total amount through their own activities: Currently, the most typical ones include accounts receivable digital assets in supply chain finance, order digital assets, and user independent data in data bank. 2. Do not rely on financial intermediaries for financial activities: referring to the currently popular defi project, we can see that user point-to-point transactions (most digital currencies) have been realized in the crypto world The decentralized exchange uniswap based on the consensus of the whole network and everyone can make the market, the chain mortgage stable currency system makerdao controlled by the contract, and the loan AAVE without centralized guarantee on the chain.
        And these schemes are constantly realized in different ways in the real industry. In a broad sense, financial infrastructure also includes legal environment, corporate governance, accounting standards, credit environment, anti money laundering and financial supervision, of which the most important are laws and regulations and corresponding supervision. From the perspective of technical characteristics, blockchain technology presents a brand-new regulatory friendly architecture. The traditional technology supervision and the regulated are essentially binary and independent. The supervisor supervises the business of the regulated party from the outside. It is difficult to achieve good results in terms of efficiency and depth, and the cost will be very high. Blockchain technology can enable the supervisor and the regulated party to be in the same business state and environment. Its regulatory means, corresponding laws and regulations and effects are completely different from the original regulatory framework.
        The role of blockchain technology in supervision and risk control mainly depends on the following characteristics:. 1) Full amount of business data can be obtained: first, for risk control and supervision, the account book information can be synchronized at any time, and the ongoing chain business can be monitored. At the same time, the data can not be tampered with, which is very conducive to source determination and criminal responsibility. 2) Programmability of smart contracts: by writing risk management means and business logic into smart contracts at the same time, and by virtue of the automatic execution of smart contracts, risk control means and supervision means become procedures that cannot be skipped, and risk management and supervision can be carried out automatically. In our previous projects, we communicated with the regulatory authorities and made corresponding design to meet the regulatory authorities' better supervision in the blockchain architecture. One of the designs is called the in-process supervision system based on smart contracts.
        The in-process monitoring system is a relevant service component established by the blockchain middleware layer and the smart contract layer. First, the business contract embeds the monitoring rules in it. When the business layer wants to call the business contract, the in-process monitoring system can monitor and analyze the data generated during the execution of the smart contract in real time. If there is any abnormal data, it can be submitted to the supervisor's system, and issue supervision instructions to intervene the business in execution, such as suspension, operation Blacklist and other operations to achieve real-time supervision of business. The whole process of supervision can be automated online, which is impossible to achieve by traditional means in terms of efficiency and depth. Thank you for reading this. In order to avoid too long a text, this article only discusses the impact of blockchain on the financial industry from the aspects of accounting, assets and financial models. Of course, the impact of blockchain is far more than that, and more include: laws and regulations, currency programmability, transaction friction, large-scale Inclusive Finance, borderless finance Differential income and other aspects affect the ancient industry that has developed for thousands of years. As a blockchain technology service provider, we hope to use our technology to help build a more efficient, fair and less friction financial system in the future.
        Welcome to pay attention to Heyue technology and share more blockchain technology and application experience with you in future articles.
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