Deepen the application of scenarios and "chains" to connect a better future

Gan Yutao, Executive Director of Beijing Xinke Financial Development Research Institute

Blockchain technology may sound cold and aloof, but it is actually closely related to people's lives. In recent years, a series of policies and plans have been introduced at the national level to promote the development of blockchain. The development of blockchain in China has entered the fast lane and ushered in new opportunities, with an increasing number of application demonstration scenarios in various fields.

'High Cold' Technology Changes Life

The application in the financial field is advancing in depth. In this field, smart contracts are widely used, achieving automated execution of loan agreements, insurance contracts, and investment agreements, demonstrating significant advantages. For example, in loan agreements, smart contracts can automatically verify the borrower's credit status and automatically unlock the collateral after the borrower fulfills their repayment obligations. Insurance companies use smart contracts to automatically process claims payments based on preset conditions, significantly reducing the need for human intervention and operational risks. Digital currencies are playing an increasingly important role in financial transactions. Currently, in addition to decentralized cryptocurrencies such as Bitcoin and Ethereum, central bank digital currencies (CBDCs) are also gradually emerging. CBDC is a digital form of legal tender directly issued by the central bank of a country, with the aim of optimizing the payment system and enhancing security. Meanwhile, automated anti money laundering (AML) and know your customer (KYC) processes ensure compliance while effectively protecting user privacy.

Optimize the supply chain management system. The application of blockchain technology enables the sharing and transparency of supply chain information, and the data uploaded by all parties forms an immutable shared ledger, ensuring the traceability of information. This helps all parties in the supply chain to accurately grasp the flow and status of products, quickly identify potential problems and risks, and promote transparency and traceability of the global value chain. Shared ledger enables enterprises and institutions to monitor the production, transportation, and sales of products in real-time. For example, Maersk collaborated with IBM to develop a blockchain platform for global goods tracking and trading. Through blockchain technology, real-time tracking of goods is achieved, enhancing the security and traceability of goods transportation while reducing paper documents and intermediate links, making the global value chain more transparent and efficient, and alleviating issues of information asymmetry and inaccurate data.

Blockchain+healthcare opens up new horizons. The distributed nature, immutability, and traceability of blockchain technology provide a solid foundation for the secure circulation of medical data. This not only ensures patient privacy, but also breaks down the "data silos" between institutions, builds a trust bridge between patients and medical institutions, improves the level of data sharing, and enhances the patient experience. For example, the "Medical Chain Health Full Course Patient Management Platform" created by the Medical Chain Group adopts an integrated service model of "product+knowledge base+operation service" to assist doctors, departments, and medical institutions in achieving full process management from appointment to diagnosis and treatment to follow-up, significantly improving the quality and efficiency of medical services and injecting innovative vitality into the traditional medical field.

Reshaping the pattern of intellectual property protection. Blockchain technology can effectively address the pain points of traditional intellectual property rights, such as difficulties in property rights confirmation, piracy and infringement, difficulty in evidence collection, long rights protection cycles, and high costs. It can enhance the digital level of intellectual property protection and innovate digital governance models. The micro copyright intellectual property protection platform innovates the "blockchain+judiciary+intellectual property protection" model, providing online services such as "work confirmation, copyright registration, infringement monitoring, infringement evidence collection, and blockchain storage" for intellectual property, maximizing the application value of blockchain in intellectual property protection.

Assist in smart agriculture and optimize the value chain. Blockchain technology helps agriculture achieve dual improvement in production efficiency and product quality, enhance the brand influence and sustainability of agricultural products, extend the industrial chain, optimize supply chain management, and streamline financial service processes. From sowing to sales, blockchain ensures the authenticity and integrity of information at every stage, promotes standardization and intelligence of the production process, and enhances product quality and added value. In the application case of "blockchain+vegetables" in Weifang, Shandong, the IoT "traceability and quality control integrated management platform" provides technical support for data security management for watermelon planting, effectively improving agricultural production efficiency and economic benefits, and increasing watermelon planting income by more than 35%.

Explore the path of government public service reform. The openness and transparency of government information, as well as the acceptance of public supervision, are crucial. The transparency and immutability of data in blockchain technology have played a positive role in this regard. In government project bidding, blockchain ensures the security and transparency of bidding information, establishing trust consensus among bidders. Arrange subsequent construction steps through smart contracts to effectively curb corrupt behavior. For example, the electronic bidding platform of Hubei Provincial Public Resource Trading Center uses "blockchain+bidding" technology to achieve traceability and tamper resistance throughout the entire transaction process. The industry regulatory authorities have implemented online monitoring and spot checks on 16 monitoring and warning points, achieving full process control of "data encryption, real-time verification, and joint supervision".

Actively empower the carbon trading market. Blockchain technology is highly compatible with the "dual carbon" goal, which helps the government effectively regulate market carbon emissions. Through blockchain technology, automated report generation and real-time auditing can be achieved, significantly improving efficiency and accuracy. By uploading data from various stages of carbon trading to the blockchain, industry regulatory authorities can make macroeconomic adjustments based on the trading situation, guide resource optimization and allocation, and stimulate market vitality. Recently, the Shanghai Data Exchange launched a carbon sector, focusing on data circulation and trading in the green and low-carbon field. This section collects carbon emission data and focuses on developing application scenarios such as green finance and carbon emission management. Using blockchain technology to build an exclusive alliance chain for industry leaders, connecting the data trading chain in the green and low-carbon field. Guide industry enterprises to jointly build an alliance chain and establish a full process carbon trading management and protection mechanism covering "rights confirmation transaction rights protection punishment".

Expand digital application scenarios

With the continuous evolution of technology, the integration of artificial intelligence and other technologies with blockchain is increasingly deepening. This collaborative effect will further broaden the digital application scenarios and help the development of various industries.

Industry standards are further improved. China is establishing and improving the underlying architecture, cryptographic standards, electronic signatures, and other specifications for the blockchain industry. It is expected that by 2027, a standardized system supporting the development of blockchain will be fully established. We plan to develop over 50 blockchain related standards and continue to promote the development of basic commonalities, key application demonstrations, and security assurance standards. Proactively planning a set of key application standards that serve the future development of industries, effectively guiding the development of domestic blockchain technology and industries, and improving the level of technology and application service quality.

Blockchain will enhance the scalability and security of information systems. The integration of AI technology enhances the adaptability and security protection of information systems, effectively reducing the risk of information system vulnerabilities and attacks through real-time monitoring and anomaly detection mechanisms. AI enabled blockchain promotes a higher degree of decentralization, allowing more nodes to participate in consensus mechanisms, thereby enhancing the democracy and fairness of the system. At the technical level, the application of reinforcement learning and genetic algorithms in consensus protocols, as well as the use of fuzzy logic in handling complex decisions, are important trends worth paying attention to.

Asset tokenization has become a significant trend. Asset tokenization refers to the process of creating digital tokens through blockchain technology to represent physical assets. CBDC, as a key application of blockchain technology in the financial sector, is increasingly becoming a global hot topic of concern. Multiple countries are actively exploring the issuance and application of CBDCs, laying the foundation for reshaping the financial landscape. One prominent advantage of asset tokenization is that investors can purchase a portion of the asset rather than the entire asset, allowing a wider group of investors to enter the market that was previously limited to large capital players, greatly enhancing market liquidity and accessibility. For example, in the fields of real estate, commodities, art, etc., asset tokenization has shown initial results and is expected to have a profound impact on the entire industry.

The rise of decentralized finance (DeFi) ecosystem. DeFi is having an impact on traditional banking and credit industries. It gradually reduces dependence on banks and intermediaries, achieving direct and trustless transactions. As more and more assets flow into this field, the trust level of DeFi is increasing day by day, and the growth of DeFi in the future will reach new peaks due to the convergence of multiple factors. A risk management system driven by artificial intelligence can monitor and detect anomalies in transaction data and user behavior, enhance security and reduce potential vulnerabilities, thereby making assets more secure. Emerging DeFi protocols and applications are constantly emerging, providing more diverse choices and features, attracting more users and investors. As of June 2024, the total locked value in DeFi protocols is approaching the $100 billion mark. It is expected that by 2025, more banks and investment funds will directly or indirectly adopt DeFi and integrate into this ecosystem through partnerships and other means.

The application of government and enterprises will continue to deepen. Blockchain technology will be widely applied in various fields such as financial services, supply chain management, healthcare, and copyright protection. Blockchain technology can achieve instant settlement of cross-border payments, full tracking of supply chain information, secure sharing of medical data, and copyright protection of digital content. These applications will significantly enhance the operational efficiency and market competitiveness of enterprises. In addition, blockchain technology will continue to deepen empowerment in areas such as government affairs, people's livelihoods, finance, justice, and energy. Proactively enhancing compatibility, promoting cross chain cooperation, and strengthening data security, promoting value exchange and data sharing between different blockchain systems, reducing technical barriers, and thereby elevating the entire blockchain industry to a higher level of development.

The above content is sourced from China Urban and Rural Financial News