Di Gang of the Central Bank Digital Currency Research Institute: Blockchain helps the development of digital finance break through 8 aspects

On September 10, at the 2021 China (Beijing) Digital Finance Forum, Di Gang, deputy director of the Digital Currency Research Institute of the People’s Bank of China, said that digital finance is not just about financial services using the Internet to move business processes, but also using intelligence, Digitization realizes the interconnection of all things, realizes process reengineering and efficiency improvement.

Di Gang of the Central Bank Digital Currency Research Institute: Blockchain helps the development of digital finance break through 8 aspects

The current target requirements of digital financial services include user experience, efficiency improvement, security, cost reduction, and realization of inclusiveness, intelligence, and ubiquity. Based on these needs, some basic disciplines and innovative technologies are needed as support. In terms of innovative technologies, we often talk about cloud computing, artificial intelligence, 5G, blockchain, especially blockchain, which supports many innovative applications.

The value and advantages of blockchain mainly include six aspects: improving collaboration efficiency, promoting data sharing, optimizing business processes, reducing operating costs, helping penetrating supervision, and building a credible system. Blockchain is constantly developing amidst disputes. Up to now, the development of my country’s blockchain has achieved initial results. It has gone from fighting for patents to fighting for strength, and from looking for scenes to building ecology. At present, the results of blockchain implementation are increasing, policy support is overlapping, the standard system is initially formed, key technologies have been breakthroughs, and the talent team is gradually established.

Digital Currency Research Institute explores digital renminbi blockchain applications

From the perspective of the industry application of blockchain in the financial field, it mainly includes endogenous improvement and external empowerment. In terms of endogenous improvement, there are applications such as supply chain finance, agricultural finance, trade finance, and inclusive finance; in terms of external empowerment, financial institutions also provide better areas for smart cities, “agriculture, rural areas, and people’s livelihoods”. Blockchain application services. For example, there are application cases such as the medical insurance blockchain platform, the blockchain bond issuance platform, the deposit certificate platform, and the blockchain precision poverty alleviation platform.

Di Gang said that the Digital Currency Research Institute is also actively exploring the application of digital renminbi blockchain, building a unified distributed ledger based on the blockchain at the issuance layer, improving the efficiency of reconciliation; at the same time, with the support of the Bank for International Settlements Innovation Center, The multilateral central bank digital currency bridge project explores the use of distributed ledgers; at the same time, it has also built a trade finance blockchain platform, and has also undertaken a major special project of the national key research and development plan.

In the field of standardization, the Digital Currency Research Institute actively strengthens the construction of the blockchain standard system, and takes the lead in multiple standardization organization working groups and standardization projects at home and abroad, including the establishment of a legal digital currency standard working group in the Golden Standard Committee and serving as the leader unit. Served as the deputy chairman unit of the National Blockchain Distributed Ledger Accounting Technical Standards Committee, and also promoted the development of blockchain standards under the guidance of the Golden Standard Committee.

Blockchain challenges in digital financial applications

For the innovation and development of blockchain in the field of digital finance, we must first raise awareness and clarify the concept. On the one hand, blockchain is an integrated innovation that integrates multiple technologies, involving sophisticated combined applications such as cryptography and consensus mechanisms, and realizes the high-level trust problem of untrusted subjects. The second aspect is that the blockchain is not equal to Bitcoin . The blockchain is just a technology. The technology itself is neutral, and there is an essential difference between a currency and a chain. In the third aspect, the blockchain is a tool for self-certification of innocence among non-trusted subjects, and the internal blockchain of a strong-trusted subject cannot play a significant role. The fourth aspect is that people with different professional backgrounds have different understanding of blockchain, and everyone should discuss it in the same dimension.

Secondly, we must take the essence and avoid its shortcomings. Blockchain is not omnipotent. It sacrifices storage and calculations and establishes trust. It has shortcomings in many aspects. Its advantage scenario is to solve the trust problem, but it is not very suitable for scenarios with high concurrency and high privacy and performance requirements.

Third, we must fully understand and develop pragmatically. Technical decentralization does not mean decentralization in management. Blockchain is decentralized, but everyone often misunderstands decentralization. Everyone often emphasizes distribution in computers, but distribution is also one. A manageable distributed, blockchain, as a technology, should also be a manageable distributed architecture, so here we have to discuss several principles. First, blockchain is not a subversion of existing technology. It is necessary to discuss how to apply it in various scenarios, actively play the role of improvement of the technology itself, and solve the pain points of the industry. Second, we cannot build blockchain for the sake of blockchain. We need to be neither aggressive nor conservative, rational and pragmatic, and integrate various mature and advanced technologies to achieve the best results. This is the starting point for digital RMB research and development to adopt a hybrid technology architecture. Third, technology is neutral, with positive effects and side effects. Therefore, in order to pursue one kind of extreme, another problem will arise. For example, when the pursuit of performance, stability may be problematic, so we should combine it and look at it. To avoid the shortcomings of the advantages and disadvantages, combine the advantages to maximize the effect. Fourth, the development of blockchain is still on the way. Do not overestimate the current role or underestimate the future potential. The original intention of technology is to solve problems. This is the fundamental starting point for applying blockchain technology.

Then, long-term evolution and system thinking are required. Blockchain is still under development. It is systematic, long-term, and complex, and requires systematic thinking and dynamic thinking. We are currently facing multiple challenges, including on-chain and off-chain collaboration issues, business continuity issues, engineering implementation and security issues, and performance issues.

Finally, distinguish right from wrong and match the scene. Blockchain has its application scenarios, and you cannot use a hammer to find nails.

In addition, for blockchain, there are still many technical challenges in financial applications.

First, in terms of system architecture, there are still many problems with performance and scalability. We need to pay attention to the solution ideas of side chain, multi-chain, hardware acceleration, on-chain and off-chain collaboration.

Second, in terms of privacy protection, mainstream privacy protection technologies such as zero-knowledge proof, homomorphic encryption, secure multi-party computing, and federated learning have relatively large limitations. It is necessary to strengthen innovation from the theoretical level, and also to innovate in engineering technology, such as Combination of soft and hard.

Third, in terms of information security, the blockchain is facing challenges such as autonomous controllability, open source licensing, and quantum computing. We need to strengthen security technology innovation, including the formal verification of smart contracts, contract security, and DID distributed identities.

Fourth, in terms of regulatory auditing, many of the blockchain nodes are anonymized, encrypted, and decentralized, making it difficult to monitor. We can achieve penetration through the innovative combination of privacy protection technology and regulatory probe technology. Supervision.

Fifth, in terms of integration, the compatibility of blockchain and traditional technology integration is not high, and there are technical frictions. It is necessary to strengthen the research on the inheritance and improvement of blockchain based on traditional technology, and to strengthen the integration and innovation of new technologies.

Finally, in terms of the standard system, the blockchain interconnectivity is poor, and the core technical standards and application standards are not enough. This requires an increase in the construction of the standard system.

Blockchain has broken the situation in eight aspects of the development of digital finance

Di Gang said that in the future, blockchain technology will help the high-quality development of digital finance have eight breakthroughs:

1. In terms of basic theory, increase basic theoretical research. The development of technology often surpasses the development of basic theory, which involves basic theoretical innovation in terms of system architecture, trusted technology, consensus algorithm, and cryptographic theory.

2. In terms of core technology, breakthroughs in core technologies, including smart contract innovation, blockchain network technology, chips and hardware, as well as cross-chain, regulatory audit, threat monitoring, etc.

3. In terms of standard support, formulate core technical standards, establish a standard system, participate in international standards, and seize the right to speak in technology.

4. In terms of special demonstrations, we actively promote major special projects and demonstration application projects, leveraging and leading the industry through demonstration projects.

5. In terms of industry-research collaboration, strengthen joint research on government-industry-university-research-applications, coordinate expansion of scenarios, and promote the connection and transformation from scientific research to technology applications.

6. In terms of talent training, strengthen the cultivation of technical and business compound talents, and form a strategic talent resource reserve and talent echelon.

7. In terms of ecological co-construction, an ecosystem is established to form an industrial agglomeration effect and a synergistic effect.

8. In terms of policy guarantees, industrial guidance policies have been introduced, and the transformation of technological innovation achievements and incentive mechanisms have been proposed.


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