Officials talk about the application of blockchain in China's CBDC and the problems of cryptocurrency
Author : Jiemian
"The world has entered the stage of digital high-speed integration and development, the role of digital technology has been widely recognized by the whole society, and has been rapidly developed in the financial industry, compared with the previous electronic, informatization, network, has now developed to the digital and intelligent era, and the relationship with the real economy has developed from auxiliary, support, and empowerment to integration, native, and ubiquitous. " Di Gang, deputy director of the Digital Currency Institute of the People's Bank of China, said at the 18th annual global meeting of the International Finance Forum (IFF) on Dec. 5.
Di Gang pointed out that in March this year, China released the 14th Five-Year Plan and the Outline of Vision 2035, and in the section of accelerating digital industrialization, it was clearly proposed to cultivate and grow emerging digital industries such as artificial intelligence, big data, blockchain, cloud computing and network security. "Among the digital technologies focused on, blockchain technology has become an important engine for the development of digital finance."
In fact blockchain technology has been commonly adopted. According to Di Gang, 2021, the results of blockchain research conducted by relevant consulting organizations for ten countries, including the United States, the United Kingdom, Singapore, Germany, China and Japan, show that 81% of the institutions surveyed believe that blockchain technology is widely scalable and is being adopted by the mainstream, with the percentage of financial institutions agreeing with it being as high as 84%, and all the global financial institutions surveyed have made blockchain an an imperative strategic priority. A research institute in September 2021, research on the use of blockchain by the global TOP 100 listed institutions shows that 81 institutions are using blockchain technology.
The application of blockchain technology in the field of digital finance is showing early results. Di Gang pointed out that, on the one hand, from fighting patents to fighting strength, from finding scenes to building ecology, blockchain landing achievements are increasing and playing more and more value advantages; on the other hand, blockchain technology has realized landing in cross-border payment, supply chain finance, agricultural finance, trade finance, inclusive finance, social city, "three rural areas", people's livelihood, etc. Some large international financial institutions are also actively expanding blockchain application scenarios, including trade finance, information sharing, foreign exchange trading, equity trading, etc.
Di Gang focused on the use of blockchain technology by the Institute of Digital Research. He pointed out that Numerical Research Institute took the lead in realizing the digital RMB to actively explore blockchain applications in its R&D projects.
First, a unified distributed ledger was built in the digital RMB system based on blockchain technology. The central bank acts as a trusted institution to upload the transaction data onto the chain to guarantee the authenticity and reliability of the data, and the operating institutions can conduct cross-institutional reconciliation, collective maintenance of the ledger, multi-point backup, etc.
Second, the multilateral central bank digital currency bridge project is carried out with the support of the Bank for International Settlements Innovation Center. As the chairman of the technical committee of the Digital Currency Bridge project, Numerical Research Institute explores the test platform of the currency bridge built using distributed ledgers.
Third, the Institute took the lead in undertaking the major special project of the National Key R&D Program to build a blockchain platform for trade finance, with the goal of penetratable information, transferable trust and shareable credit, and to complete the construction of a blockchain-based trade finance ecosystem.
Fourthly, in the field of standardization, Numerical Research Institute has actively strengthened the construction of standards system, led the development of several blockchain international standards, served as the deputy director of the National Blockchain Distributed Ledger Bookkeeping Technical Standards Committee, participated in the development of several national standards such as blockchain technical reference architecture, and promoted the development of blockchain evaluation rules, security specifications, interconnection, trade finance and other related industry standards with the support of the Gold Standard Committee.
Di Gang believes that blockchain is still facing six major technical challenges in the field of digital finance. He pointed out that although blockchain technology has expanded many application scenarios in the global digital finance field, it still faces a series of technical challenges.
On the one hand, in terms of architecture, there are still many problems with performance and scalability, and it needs to pay attention to the solution ideas of side chain, multi-chain, hardware acceleration, and on-chain and off-chain collaboration.
Secondly, in terms of privacy protection, "the current limitations of mainstream privacy protection technologies such as zero-knowledge proof, homomorphic encryption, secure multi-party computing, and federated learning are still large, and innovation from the theoretical level is still needed, as well as from engineering technology." Di Gang said.
In terms of information security, Di Gang believes that blockchain faces challenges such as autonomous control, open source licensing, and quantum computing, and needs to further strengthen security technology innovation, including smart contracts, formal verification, contract security, and DID distributed identity.
In addition, in terms of regulatory auditing, Di Gang believes that there are still many nodes inside the blockchain that are anonymized and dense, which are difficult to supervise by decentralization, and can be combined with privacy protection technology and regulatory technology to achieve penetrating supervision.
At the level of integration, "the integration and compatibility of blockchain and traditional technologies need to be strengthened, and there is technical friction. It is necessary to strengthen the research on the inheritance and improvement of blockchain based on traditional technologies, and to strengthen the research on the integration and innovation of new technologies." Di Gang said.
Finally, in terms of the standard system, Di Gang bluntly said that blockchain interoperability is poor, and the core technical standards and application standards are not enough, which needs to increase the construction of interoperability standard system.
In Di Gang's view, the future of blockchain digital finance has room for improvement in many aspects such as basic theory, core technology, core technology and in special demonstration.
For example, in terms of basic theory, Di Gang believes that we should increase the research of basic theory, as the practice of digital finance technology is often faster than the development of technical theory, and we need to increase the technical theoretical innovation in terms of architecture, trusted technology, consensus algorithm, cryptography theory, etc. In terms of core technology, the core technology includes smart contract innovation, blockchain network technology, chips and hardware, as well as cross-chain, regulatory audit and threat monitoring.
Di Gang pointed out that the Institute of Digital Currency of the People's Bank of China is an institution directly under the People's Bank of China, which undertakes the research and development of national legal digital currency and focuses on the innovative development of financial technology according to the national strategic deployment and the overall work arrangement of the People's Bank of China. "The digital RMB has been piloted since the end of 2019 and is now being piloted in 10 regions and the 2022 Beijing Winter Olympic Games scenario, and in July this year, the PBoC released the White Paper on the Progress of R&D of China's Digital RMB, and as an important part of the digital RMB R&D pilot and the Winter Olympic Games preparation, the pilot of the digital RMB Beijing Winter Olympic Games scenario is also is advancing in a steady and orderly manner."