Analysis of the prospect of blockchain in the financial field
Blockchain technology was born in 28, and its first application was Bitcoins. Blockchain technology uses decentralized knowledge mechanism to maintain a complete, distributed and tamper-proof account book database, which enables participants in the blockchain to realize a unified account book system without establishing trust relationship. In 215, many mainstream financial institutions in Europe and America recognized the application prospect of this technology and explored the application of blockchain technology in the financial field. The International Monetary Fund pointed out in a report that "it has the potential to change finance", and some people think that blockchain technology will profoundly change human society like double-entry bookkeeping and shareholding system.
Blockchain will make it possible for all individuals to become important nodes in the allocation of financial resources, and will also promote the improvement of the existing financial system and financial rules, and build a win-win financial development ecosystem. The emergence of blockchain technology is a revolution in human credit creation, which enables both parties to carry out economic activities without a third-party credit intermediary, thus realizing low-cost value transfer. It can be said that blockchain technology is a more efficient value exchange technology in the Internet era, and the Internet has evolved from an information Internet that transmits information to a value Internet that transfers value, which is conducive to the transformation of traditional financial institutions and the internetization of endogenous business processes and application scenarios.
1. Features and shortcomings of blockchain
(1) Main features of blockchain
(1) Decentralization. In the blockchain, there is no centralized hardware or management organization. The distributed architecture and open source protocols allow all participants to participate in data recording and verification, and then send them to all nodes through distributed communication. Each participating node is "self-centered" and has equal rights and obligations. Blockchain is not a simple decentralization, but a multi-center or weak center. When the Internet of Things makes it possible for all individuals to become central nodes, the central position of traditional financial intermediaries has changed, from a monopoly center and strong intermediary to an open platform and a differentiated center among service-oriented polycentrics.
(2) to trust. From the perspective of trust, blockchain adopts a set of open and transparent mathematical algorithms, based on agreed specifications and protocols, so that all nodes can automatically and safely exchange data in a untrusted environment. Blockchain essentially solves the trust problem through mathematical methods, and all the rules are expressed in the form of algorithmic procedures. Participants do not need to know the credit level of the counterparty, do not need the transaction endorsement or guarantee verification of the third party organization, and only need to trust the algorithm of * * *, and create credit, generate trust and reach * * * knowledge for participants through the algorithm.
(3) timestamp. Blocks are generated by packaging data and codes in a period of time. The header of the next block contains the index information of the previous block, and the end-to-end connection forms a chain. Blocks that record complete history and chains that can be verified completely form a time stamp that can trace the complete history, which can provide retrieval and search functions for each piece of data, and can be traced back to the source and verified one by one with the help of blockchain structure. Therefore, when the blockchain is generated, it is stamped with a time stamp, forming a database that cannot be tampered with or forged. Modifying the database on a single node is invalid unless more than 51% of the nodes in the system can be controlled at the same time, so the data reliability of blockchain is very high.
(4) asymmetric encryption. Blockchain uses asymmetric encryption algorithm, that is, a "key pair" is used in the process of encryption and decryption, and the two keys in the "key pair" have asymmetric characteristics. In the application scenario of blockchain, on the one hand, the key is the public key visible to all participants, and all participants can encrypt a piece of authentic information with the public key, and only the information owner can decrypt it with the private key. On the other hand, the private key is used to sign the information, and the signature is verified by the corresponding public key to ensure that the information is sent by the real holder. Asymmetric encryption can minimize the friction boundary in value exchange, realize the anonymity of transparent data and protect personal privacy.
(5) Smart contract: Because the blockchain can realize point-to-point value transfer, corresponding programming scripts can be embedded during the transfer, and some unpredictable trading patterns can be handled through this smart contract to ensure that the blockchain can continue to take effect. This kind of programmable script is essentially a list of many instructions, which realizes the pertinence and conditionality of value exchange and the specific use of value. Therefore, any value exchange activity based on blockchain can be hard controlled by intelligent programming, such as its purpose, direction and various restrictions, saving the cost of soft constraints by law or contract.
(II) Main problems in blockchain
(I) High energy consumption. Impossible trinity exists in the traditional monetary banking system, that is, it is impossible to achieve decentralization, low energy consumption and high security at the same time, and impossible trinity also exists in the blockchain construction. For example, in the practical application of Bitcoin, its development has brought about the rapid expansion of computer hardware, and the main costs in the process of "mining" have shifted to hardware costs and power costs. Therefore, after the application of blockchain technology to realize the cost-benefit of equity, it is an urgent problem to maximize its technical efficiency.
(2) storage space problem. Because the blockchain records every transaction information from the initial information in the system, and each node has to download, store and update the data block in real time, if the data of each node is completely synchronized, the network pressure is greater, and the storage space capacity requirement of each node may become a key problem restricting its development.
(3) the problem of compression resistance. Based on the blockchain, the system follows the barrel theory and takes into account the worst processing speed and network environment of all network nodes. Therefore, if the blockchain technology is extended to the large-scale transaction environment, its overall anti-pressure ability remains to be verified. If the number of transactions generated per second exceeds the design capacity of the system (the weakest node), the transactions will automatically enter the queue for queuing, which will bring bad user experience.
second, the application of blockchain in the financial field
(I) financial infrastructure
as the infrastructure of the internet, blockchain has shown broad application prospects in many fields. In the financial industry, blockchain technology will first affect financial infrastructure such as payment system, securities settlement system and transaction database, and then it will also be extended to general financial services, such as credit system and "anti-money laundering". This is because, based on the characteristics of blockchain technology, it will first cut into the infrastructure field with high trust requirements and high cost of traditional trust mechanism. In the past, infrastructure was all public products, but the new technology and system of blockchain made it possible for more people to participate in the supply of public products. In the future, Internet finance will use Internet technologies such as blockchain to transform the core production system of traditional financial institutions and build financial enterprises on the Internet.
the current information internet can be collectively referred to as TCP/IP model, and HTTP is the most important application protocol in the application layer. In the value Internet, blockchain is a point-to-point transmission protocol in the application layer. Its value is the same as that of the HTTP protocol in the information Internet. The great potential and prospect of blockchain is that it can reconstruct the infrastructure and core production system of the traditional financial industry, not just at the application level such as APP. This is because, at the network level, blockchain is based on IP communication protocol and distributed network; On the data level, the blockchain database system is brand new and obviously superior to the database of the existing financial system; At the application level, the blockchain-based registration and settlement, clearing systems, smart contracts and the Internet of Things can greatly improve efficiency, and the financial activities on the blockchain are programmable finance.
(2) Digital currency
From the perspective of safety and cost, it is the general trend that paper money will be replaced by new technologies and new products. The establishment of digital currency issuance and circulation system is very necessary for financial infrastructure construction and economic development. Following the idea of the integration of traditional currency and digital currency, the issuance, circulation and trading of digital currency should be led by the central bank, reflecting convenience and security, achieving a balance between protecting privacy and maintaining social order and cracking down on illegal and criminal acts, being conducive to the effective operation and transmission of monetary policy, and retaining the control of monetary sovereignty. Digital currency is freely convertible and controllable at the same time.
The success of blockchain technology in Bitcoin proves the feasibility of programmable digital currency. Research by the Bank of England shows that the central bank can consider issuing digital currency based on blockchain, which can increase financial stability. The technical route of digital currency can be divided into two types: account-based and non-account-based, and can also be used in layers to try to save. Blockchain technology is characterized by distributed bookkeeping, not based on accounts, and cannot be tampered with. If the digital currency emphasizes the protection of personal privacy, this technology can be selected. However, at present, the blockchain occupies too many computing and storage resources to cope with the current transaction scale, and this problem needs to be solved before it can be popularized and applied.
(3) Self-financing
From the perspective of service and non-monetary creation, modern finance is realized through intermediaries. In the Internet era, it is possible to realize the real direct finance of disintermediation. However, this possibility is not complete. The main reason is that Internet finance is based on the original finance and cannot be jumped out. Blockchain technology provides a possibility. Blockchain can be divided into public blockchain and private blockchain. The public blockchain is like Bitcoin. When the agreement is approved, it becomes an integral part of the blockchain. Private blockchain still needs to be licensed, and the blockchain technology of the banking system needs to be audited by each participant. Private blockchain is very similar to a self-financing form, and public blockchain is more similar to the support and guarantee for the bottom of private blockchain. When blockchain technology is widely used, the third-party financial management technology is generally presented, and self-financing based on blockchain technology is completely possible.
iii. blockchain application and financial supervision
blockchain technology is the only tool that can be used to record and prove the consistency of transactions and the financial accuracy of the company without a third party. Therefore, it can meet the requirements of potential regulators and the public for audit effectiveness, accuracy and timeliness, and has broad application prospects in the financial field. But its development is still restricted by the current system. On the one hand, the blockchain has brought an impact on the current system, because its decentralized and autonomous characteristics dilute the concepts of state and supervision. For example, the digital currency represented by Bitcoins challenges the country's right to issue currency and the right to regulate monetary policy, which leads the monetary authorities to take a conservative attitude towards the development of digital currency. On the other hand, the regulatory authorities also lack full understanding and expectation of this new technology, and the establishment of laws and systems will be seriously lagging behind, resulting in the lack of necessary institutional norms and legal protection for the use of blockchain and increasing the risks of market players.
once the blockchain financial technology is widely developed in the financial industry, the de-financialization of supervision will come into being, and the supervision function, supervision mode and supervision means will be redefined. For example, if securities lending, repurchase and margin trading can be traded through the blockchain, the regulatory authorities can consider using the information in this public account book to monitor systemic risks in the market, which is not only efficient but also reliable. From the perspective of macro-finance, the mechanism of money creation and transmission and the pattern of credit creation will change after the emergence of the financial era. From the perspective of micro-finance, with the further development of blockchain technology, it is difficult to distinguish between finance and commerce, which will surpass the meaning of separate and mixed supervision. The reform of financial supervision system needs to be discussed from this perspective.
The "decentralization" brought by blockchain technology still needs the standardized and guaranteed support from centralized departments. Regulators can take the initiative to embrace the new technology of internet finance. Kara Stein, a member of the US Securities Regulatory Commission, believes that regulators need to be in a leading position, take advantage of blockchain technology and respond quickly to its potential weaknesses. For example, blockchain technology hopes to break the privilege and artificial manipulation and let computer algorithms realize "free notarization of credit". However, in practice, due to the lack of supervision, currency transactions such as Bitcoins face high risks of speculation and money laundering. Therefore, the application of blockchain technology requires the regulatory authorities to formulate relevant standards and norms to ensure the rational use of financial innovation products. At the same time, it is necessary to improve the protection of consumers' rights and interests, strengthen the education on the protection of financial consumption rights and interests, and raise consumers' awareness of risk prevention. ;