Finance, literally the financing of funds, is the allocation of funds in time and space, serving the real economy, and does not directly create wealth in itself. In the financial business, the funds and financial instruments in circulation have a certain correspondence with offline entity assets, that is, they are a kind of shadow of physical assets. Finance serves the real economy, but does not directly create wealth, and the actual wealth is still the current property.
Mention a concept, asset equity. Financial instruments are an asset equity, such as stocks, bonds, etc., expanding this concept, China's legal tender RMB is issued by the central bank through reserve assets, from this point of view, legal tender is also asset equity.
Key links in financial business
There are three key links in the financial business.
- The first step is the evaluation of asset equity.
- The second link is the issuance of the asset certificate.
- The third link is the circulation of asset proof of equity.
Combining these three links, let's take a look at what links blockchain can participate in?
**The first step is the evaluation of asset equity. ** Blockchain is an online system, which itself is difficult to directly combine online data and offline entities, so it cannot replace financial intermediaries to evaluate the value of some physical financial assets. And we also need these intermediaries to ensure that this correspondence still exists, such as when the electronic proof of assets is still there, but the assets no longer exist.
The second link is the issuance of asset stake. It can be decentralized with electronic proof of stake, and it is guaranteed to be tamper-proof.
**The third link is the circulation of asset proof of equity. **Based on blockchain, the asset's proof of stake can circulate peer-to-peer, and it can be split again, making its liquidity much stronger than before.
Therefore, on the whole, in the financial field, intermediaries still play a very important role, which can provide assessment, risk control, value-added and other services, and disintermediation is not an inevitable trend.
Here we can give an example, Satoshi Nakamoto wrote a piece of information in the genesis block of Bitcoin, this information was a front-page news headline of the Times at that time, in the later node consensus process, this information must exist in every ledger, everyone believes that it must be tamperable, this is indeed no problem, but whether the meaning behind this information is true, at least in the blockchain network is unverifiable. Therefore, we can think that the use of blockchain in the financial field can be used for the issuance management and circulation of asset proof of equity, but it is difficult to participate in offline equity evaluation.
Advantages of blockchain technology
Compared with traditional technology, blockchain technology has the following four advantages:
- First, it is difficult to tamper and more secure,
- Second, heterogeneous multi-active, strong reliability,
- Third, there is a smart contract that can be executed automatically,
- Fourth, the network direct collaboration mechanism is more transparent.
The advantages are generally heard more, so I will not go into detail here.
Shortcomings of blockchain technology
Here we focus on the shortcomings and shortcomings of blockchain.
First, performance and scalability cannot meet the requirements. **In public blockchain systems such as Bitcoin and Ethereum, the accumulated transaction data will become larger and larger over time, making it impossible for ordinary computers to store this data, which in turn will allow only a few large companies to run the entire system, which is contrary to the original design of decentralization. Although there are many distributed nodes on the blockchain network, each node is running the same program and using the same data, so it cannot improve performance by adding new nodes compared with the traditional distributed architecture.
The second is that data privacy and access control need to be improved, and in the current blockchain, any participant can obtain complete data entirely. Therefore, the data is transparent to all. However, for Bitcoin, because most people cannot associate the transaction address on the network with the real identity of the person, it still has a certain anonymity effect. But when the blockchain network needs to carry more services, such as registering real-name production. This requires more sophisticated solutions for data privacy and access control.
**Third, the governance mechanism needs to be improved. The blockchain community has now figured out upgrade mechanisms such as hard forks and soft forks. But because the public blockchain cannot be shut down. Bug fixes that occur on it are also very troublesome, and if something goes wrong, especially a security vulnerability, it can be very fatal.
The above problems, by removing or relaxing the restriction of "decentralization", we can still find many solutions, for example, using a polycentric system such as the alliance chain, which can improve performance, data control, and shut down the system to solve the shortcomings and shortcomings mentioned above.