In recent years, with the emergence of new technologies, the flow of innovative resources has accelerated, which has also brought a huge impact on the global financial system. As one of the most challenging innovations in the field of science and technology, blockchain, with its characteristics of openness, autonomy, anonymity, and immutability, has brought about the transformation of financial trust and reconstructed the operation mode of traditional finance .
“Trust” is the foundation of modern financial development
Trust is the foundation of modern finance. In the traditional financial system, the establishment of trust is often guaranteed by laws and systems. Such trust requires a set of social rules, systems, and laws as a guarantee, and its operating costs are high. Intermediary agencies play an important role in the traditional financial system. Value creation and value transactions pass through intermediary agencies. Intermediary agencies provide credible trading venues and perform centralized clearing services in accordance with laws and agreements. It is precisely based on the trust in financial intermediary institutions that fund suppliers and demanders complete the process of financing through financial intermediaries. In this process, financial intermediary institutions charge intermediary fees and increase transaction costs. However, the processing of information ultimately depends on manpower, causing potential moral hazards. With the rapid development of the economy and society, especially the increase in the number of transactions brought about by the digital economy, the demand for transaction speed has been increased invisibly, and the traditional financial system has gradually exposed a “trust crisis”. How to realize the authenticity of mutual exchanges, transactions, and accounting data, and how to prevent financial intermediaries from using information asymmetry for profiteering, requires the support of new technologies. The emergence of blockchain technology has creatively proposed machine trust based on algorithm guarantees, realizing objective trust that does not rely on the subjective will of a third party, and making transactions in the system open, transparent, effective and credible, so that there is no trust between each other The people in the relationship reach cooperation, which greatly reduces the trust cost during transaction execution, improves the efficiency of resource allocation, and opens up new paths and guarantees for financial transactions.
Blockchain improves modern financial services
After more than ten years of development, the application of blockchain technology has far exceeded the scope of digital currency. From the edge of technological innovation, it has gradually become the mainstream technology application, especially for improving financial efficiency. It has a natural match. The distributed accounting technology of blockchain can solve the problem of information asymmetry to a large extent. In the traditional financial system, the intermediary platform has a large amount of data, but in most cases they cannot obtain or use this data. Instead, these data are used by financial intermediaries, Internet algorithm platforms, etc., resulting in information asymmetry. As a result, an effective credit mechanism cannot be established. According to the development concept of blockchain technology, a freer, safer, and fairer financial transaction environment can be created. Anyone can initiate a transaction, anyone can and participate in the verification transaction, and anyone can simultaneously Read all the information on the blockchain, thereby greatly improving the efficiency of future financial transactions.
Blockchain technology establishes a kind of trust based on machine algorithms, which can greatly reduce the cost of trust. Before the transaction, the rules of both parties are confirmed by the code, and will be automatically executed in the later transaction. There is no need to worry about the system being destroyed, and they can collaborate with each other and build a large-scale cooperation network at low cost. In contrast, in the traditional financial industry, including digital currency, letter of credit business, cross-border payment, digital bills, supply chain finance, credit investigation business, asset transfer, loan business, syndicated business, KYC and related extended business, there is a lack of inter-subjects Scenarios of trust and data confirmation are widespread. With the maturity of blockchain technology, if it is applied on a large scale in the financial system, it will have a huge impact on the credit creation mechanism and business model of traditional financial intermediaries, and will bring to the general public through various business forms of financial services New user experience.
Blockchain helps China’s financial development in the future
General Secretary Xi Jinping pointed out in the 18th collective study session of the Political Bureau of the Central Committee that “the integrated application of blockchain technology plays an important role in new technological innovation and industrial transformation”. Finance is an important engine to promote economic and social development, and has become one of the core competitiveness of the game between big countries. Grasping the commanding heights of future global financial competition will not only have significant national interests, but will even affect the country’s financial security. As China is the world’s second largest economy, it is of great significance to build a financial system that matches it. Actively master the dominance of digital technology and digital economy. In the future global digital economy competition, we will actively take the lead, financial institutions will accelerate research and deployment, and relevant companies will speed up trials, and strive to strive for a greater international voice for China in the field of blockchain finance.
Relying on blockchain technology to promote the internationalization of the RMB. An important sign of the internationalization of the renminbi is that the scope and frequency of the use of the renminbi in the world have been greatly increased, but it is difficult to achieve it through traditional methods. In the process of renminbi internationalization, if the central bank’s digital currency wants to occupy a place in the future digital currency, it cannot do without the support of strong blockchain technology innovation.
Blockchain technology innovation can promote inclusive finance and further expand the scope and depth of financial services. Under the service model of the traditional financial system, small and micro enterprises and low-income groups cannot meet the basic threshold of credit evaluation of traditional financial institutions due to their small scale and lack of mortgage assets, and the demand for inclusive financial services cannot be met. Blockchain technology can integrate logistics, information flow, capital flow and other information through multi-party information sharing, and can better assess the solvency, financing needs, and credit risks of service objects. Financial institutions can provide corresponding information. Financial services, regardless of their scale, can effectively lower the barriers to financial access and expand the scope of financial services.
Article source: “Learning Times” November 6, 2020, 3rd edition
