Ten years of blockchain and changes in traditional finance

Blockchain technology is essentially a perfect mathematical solution constructed by the credit mechanism of all parties to the transaction

Blockchain technology is the bottom-end technology that accompanies the emergence of Bitcoin and supports its operation. Bitcoin, which was born in 2009, is the world’s largest and most watched virtual digital currency. As of January 14, 2021, The total market value has exceeded 690 billion US dollars, almost equal to the market value of Alibaba.

From the perspective of the depth of blockchain technology development, it can be divided into three levels, namely: blockchain 1.0 technology represented by Bitcoin and virtual currency, and blockchain with the “blockchain + financial industry” model. 2.0 technology and blockchain 3.0 technology applied in non-financial fields.

On October 24, 2019, the Political Bureau of the CPC Central Committee conducted the 18th collective study on the current status and trends of blockchain technology. General Secretary Xi Jinping emphasized when presiding over the study, “The integrated application of blockchain technology is used in new technological innovation and It plays an important role in industrial transformation. We must take the blockchain as an important breakthrough for independent innovation of core technologies, clarify the main direction, increase investment, focus on a number of key core technologies, and accelerate the development of blockchain technology and industrial innovation. ."

In fact, in the past ten years, the blockchain has been unknown to the public from the beginning, even being misunderstood to being slowly accepted, and then being included in the national development strategy.

Blockchain is considered to be the most revolutionary innovative technology in the field of financial technology in recent years. From decentralized currency to decentralized finance, blockchain has obtained the strongest credit endorsement so far by solving credit problems. .

Blockchain technology is essentially a perfect mathematical solution constructed by the credit mechanism of all parties to the transaction. Through extensive consensus and value sharing, new rules and value systems for financial activities will be built, and new financial forms formed by blockchain technology will promote funds. The nature of free circulation has become clearer. Blockchain technology has gradually occupied the core area of ​​the financial industry and has brought major changes and far-reaching effects to the traditional financial industry.

The challenge of blockchain to traditional finance

The core characteristics of blockchain technology are "decentralization" and "trustlessness." Compared with traditional finance, blockchain has some natural advantages. In terms of the credit system and trust mechanism, traditional finance must rely on strict transaction records to accumulate credit in order to achieve financing or loans, while blockchain can use technical means to ensure the security of both parties' transactions.

In terms of transaction settlement time, traditional financial transaction time is still relatively long, especially for cross-border transactions, while blockchain has more obvious advantages.

In terms of service costs, an important source of income in the traditional financial transaction system is to rely on the collection of transaction fees or loan interest. In cross-border transactions, you have to pay the costs caused by exchange rate changes. The cost of using blockchain for transaction services is much lower.

Integrated development of traditional finance and blockchain

Under the impact and challenges of blockchain projects, traditional finance has also accelerated its pace of change, using blockchain to achieve its own optimization and upgrading. Blockchain technology not only brings a rapid improvement in the efficiency of banking services, but also enables commercial banks to significantly reduce costs and can make the securities transaction process more open, transparent and efficient. It can be said that the integrated development of traditional finance and blockchain has had an important impact on its core business (including storage, payment, lending, investment, financing, insurance, etc.).

It is more obvious that after the launch of the Libra (Diem) project, many countries around the world have accelerated the development of CBDC.believe that in 2021, the central bank-led digital currency will make greater progress and have a profound impact on global finance.

Finally, financial projects and products driven by blockchain technology innovation will challenge and impact traditional financial institutions for some time to come, but it is undeniable that the two will merge and merge. In the future, learning from each other's strengths and competing for development will surely usher in a better tomorrow for technology finance.