Yao: digital currency bitcoin blockchain, and should be relaxed”

Yao: digital currency bitcoin blockchain, and should be relaxed”


The observer said: bitcoin network world ICO (initial digital currency) is a phenomenon in the. Bitcoin is quasi digital currency, to become a digital currency legal sense. Bitcoin nominally called coins, in essence is a non monetary asset number. Bitcoin may be a certain value to the collection, niche asset classes; however, historically, all kinds of asset bubbles and financial crises in some extent is reflected the weakness of human nature.

Digital assets as the representative of bitcoin, unable to effectively fulfill the monetary transaction medium, three basic functions of unit pricing and a store of value, has become real currency itself conditions, let alone to replace the national credit endorsement, with the highest value of currency trust, to define it as “quasi” digital currency more accurate.

ICO (InitialCoinOffering, initial digital currency) phenomenon can not be avoided. From the perspective of system construction, we should give ICO a statement in law as soon as possible, a complete regulatory framework, to promote the healthy development of the whole industry chain block is very important. You can take regulatory sandbox way. The intrinsic value of the legal support of digital currency is not to have any change, change in monetary form is digital, digital distribution technology.

Multi perspective analysis of digital currency

First of all, the report keenly observed the Internet economy, “monetary innovation” this very forward-looking proposition. To explore the digital currency in this context, the conception of pattern is very high.

Secondly, the report comprehensively combed the literature research in the recent period of time, some of the IMF, BIS, the central bank’s report was refined, summed up the main viewpoints and conclusions, reflected in the definition, for the study laid a good foundation.

Again, the report establishes the relationship between basic research and innovation of digital currency monetary theory and monetary form, try to use the new monetary economics, such as money market theory of monetary economics method to explain and analyze the field of digital currency. It is commendable that the report from the two dimensions of economic and technical analysis, put forward to the solution center block chain based on time. Although the scheme is questionable, but this is a very good attempt.

Finally, the report did the theory with practice, put forward a digital currency innovation on monetary policy and financial stability of the two core functions of the central bank, and to explore the compliance and regulatory innovation. And put forward the DLT (Distributed Technology Books) can support the future of the financial infrastructure problems, implications for further research.

Bitcoin is defined as “quasi” digital currency is more accurate

Now the topic of digital currency is very hot, most people think of bitcoin on behalf of digital currency. In fact, the bitcoin is called “quasi” or “class” digital currency is more appropriate. Bitcoin, Ethernet coin using the block chain technology, solves the technical problems of digital payment trust, intelligent technology contract currency can also open commercial Ethernet new application mode. Therefore, investors are generally optimistic about the prospects, but advanced technology can not solve the problem of trust asset value behind it.

BIS and IMF have pointed out that bitcoin behind the lack of strong support of such assets, the weakness of it is fatal. Someone joked that “mining bitcoin is the biggest flaw”, although from a technical point of view, this is a kind of innovation. The inherent defects resulting in bitcoin value instability, credibility is not strong, acceptable, easy to produce large negative externalities. So precisely, although bitcoin nominally called “money”, is essentially a non monetary asset number. Known as “virtual currency” definition, the so-called “virtual” the qualifier is still not qualified person to understand the meaning of.

Money is the asset, but not necessarily monetary assets, as the representative of bitcoin digital asset liquidity is low, liquidity risk is high, can not effectively perform the monetary transaction medium, three basic functions of unit pricing and value storage, has become a real monetary conditions, not to mention the currency replaced by the state credit endorsement, with the highest value of trust.

Rational view of ICO

Some people think that money is the representative of the quasi digital technology infrastructure or the right to use prepaid services using open source project, but now, the private holding quasi digital currency, more is for investment or speculation, but not for payment. Data statistics and expert assessment results show that bitcoin for sale ratio is not high. Most owners simply hold, trading ratio of less than 20%. From the holder structure, technology enthusiasts early bitcoin holders in the majority, but from the beginning of 2013, some non technical personnel and institutions began to hold bitcoin. Experience also shows that new players make it to investment as an asset, and not to use as a medium of exchange.

ICO is now a very important means of financing the blockchain project, the amount of money you can melt into a VC investment of more than 2 times. The earliest ICO is interpreted as InitialCoinOffering (initial digital currency), and very much like IPO. Considering the sensitivity of privately issued quasi digital currency, and for “Coin is money” also controversial, so there is a document called InitialCryptoTokenOffering (initial encryption token issued). This statement is accurate, refers to the way of financing through the issuance of cryptographic tokens. The so-called tokens, in reality usually refers to in a certain range, the use of a certificate of alternative currency. It can be regarded as a kind of encryption options issued in block chain and circulation. Although a lot of ICO and do not have much value, but it appears on the development of block chain industry is still beneficial.

Such as Ethernet square, it started by ICO raised more than 30 thousand bitcoin, committed to the development of a can not stop, anti shielding and self maintenance of the contract to the center of the intelligent platform — in the development process of the blockchain, intelligent contract is a good direction. For example, the data tier, ICO issued Zcash (coin), which promote the development of trade information completely anonymous this technology, and is a real sense of progress, the advent of high price tokens. For example, NextCoin, ICO to raise funds for the development of PoS based (rights proof mechanism) block chain. Like many examples, including the application level to the center based on payment, digital wallet, asset trading, fund management, storage, gambling, gaming and other applications. Although I am not in favor of currency speculation, but the ICO phenomenon can not be avoided, but also worthy of study, such as how to price?

At present, investment or speculation that ICO is worth mentioning, however it’s yield is very high. 10 years ago, the market value of 10 thousand coins to buy a pizza, now a bitcoin price of more than one unit of gold. The current state of bitcoin to very tough attitude, but in a sense, we are cautious on the basis of the need to ICO the market value of the top ten companies. On the one hand to provide you with an investment opportunity — maybe to black technology, than to buy some junk stocks strong. On the other hand, from a national perspective, the neighboring countries, including Japan, South Korea, Singapore is to encourage the development of bitcoin, they think it is high-quality assets. Not to mention that this can promote the financial industry of science and technology innovation, holding at least is the asset quality of the national interest.

Monetary theory also has a very similar encryption and ICO equity statement: cash or currency is essentially the central bank issued to the public debt, or because it has or has the nature of creditor’s rights (ContingentClaims), can be seen with the public on the sovereign state holdings of equity. Because the digital currency is a kind of quasi private equity issuance in the chain block encryption and circulation, and to the public issuance of sovereign debt or equity of similar height. Therefore, the monetary authorities are understandably wary. Especially now currency speculation style is very popular, but we need to distinguish between not yigunzidasi, herd and negate, are common mistakes.

ICO on the implementation of “regulatory sandbox”

We must do a good job supervision of ICO, it can be prudent tolerance, but it must not be allowed to run. At present, ICO exists in the business community and the token exchange environment, community and token exchange itself is separate, it will lead to regulatory discontinuity, and the tokens in the exchange speculation will lead to the intrinsic value of ICO issued token price deviation from its project. In theory, the price should be determined by the inherent quality of token ICO project to decide. If the ICO project itself has no real value, only the home is looking forward to buying the home tokens to higher prices to offer, so this kind of pass the parcel speculation speculation, is a typical Ponzi scheme. In this regard, we should pay enough attention to.

The current ICO in the legal edge, starting from the system construction, should give ICO a statement in law as soon as possible. A complete regulatory framework is very important for promoting the healthy development of the whole industry chain block. And the report view, I also suggest ways to implement regulatory sandbox.

There are several options available for reference, one is set up similar to the public to raise the platform ICO platform, take the education of investors and risk warning, ICO project examination, qualification, custodian of funds, information disclosure, supervision urged the use of funds, money laundering and other related duties. The other is to exchange tokens for encryption regulation, but the disadvantage of this approach is that, even if the control token exchange, it can also go to the center of trade. It is also suggested that the introduction of venture capital (VC) management ideas, let professional managers choose the direction of investment, assisted ICO operation of the project, the ICO project to promote transparency and innovation. With the development of decentralized exchange technology and mature, the future may also exchange tokens to the center, then the single country regulatory action will lose the starting point, international regulatory cooperation and coordination is very important.

There are some regulatory experience in the UK and Australia sandbox, they have a very clear financial supervision mode to control. Our country is a separate supervision system, in this system, can easily lead to regulatory arbitrage and regulatory confusion phenomenon, nor with multiple innovation characteristics and test ICO the needs of the project. Therefore, to further strengthen financial supervision and coordination mechanism, promote it to more effective level, is of great significance to carry out supervision of the sandbox.

In the ICO supervision, it is particularly important to strengthen the education of investors. Investors need to mature mature market. Review the history, various types of asset bubbles and financial crises in some extent is reflected the weakness of human nature. The ICO token is still a novelty, strong technology, the definition of attribute and value cognition, there are still considerable controversy and disagreement. ICO investor protection supervision need to make a difference, but in the long run, there still needs the investors own mature, including professional knowledge, emotional stability and rational cognition etc..

Ethernet and intelligent interaction to promote the development of contract Fang

Time to the center of the payment scheme based on the report, very interesting. But this is more like a private chain and non-public chain under the scheme. There are two problems in the private chain can be resolved, but the public can not achieve the chain.

First, the scheme requires a uniform time base, the operation of the system depends on the time reference service trustworthy and reliable, and each node can guarantee absolute time synchronization. Public chain time is relative, not only because of different local time node, communication delay, time node receives data packets are different, even the order is not the same, so the public chain only cares about the order, do not care about the absolute time of the incident, no concept of absolute space and time.

Second, the technical scheme can describe the system under normal operation. In the public chain, the system is in the open space, the environment is not controllable, so the biggest difficulty lies in all kinds of exception handling, including packet loss, delay, “bad” and so on. So the design of public key chain should be how to deal with the abnormal mechanism of abnormal. At present, the research in the consensus algorithm block chain there is a major breakthrough. On the contrary, because Ethernet Intelligent contract breakthrough workshop, relatively fast — taking into account the etheric currency rise, it is likely to exceed the bitcoin. From the view of application prospect of components inside the block chain is not uniform development, the basic focus on Intelligent contract, this is not the chain of artificial intelligence blocks? Because you can open the real intelligent business application mode. Because of this, the intelligent technology in the rapid development of contracts, despite a major safety accident like TheDAO. Only to overcome the difficulties will have the innovation, the etheric efforts in that direction with fang.

“Two relaxed”

If you can put the “two free”? One is the digital currency bitcoin and deregulation; two is a digital currency and block chain deregulation.

Don’t focus narrowly understood as digital currency bitcoin is, should be from the private digital currency up to the statutory digital currency this perspective to look at things. We deal with the definition of digital currency Chinese — this is a new field, do not have to copy the existing statement. From the perspective of public economics, may be helpful in understanding the quasi digital currency and digital currency.

According to Hart Mutter Pixite? (1992) point of view, monetary services consist of “paid service” and “accounting unit value stabilization service”, which “paid service” (i.e., liquidity) has the properties of quasi public goods, and the currency’s “accounting unit stable value service” has the property of public goods.

Generally speaking, the private sector to successfully provide public products, need to have a series of conditions: first, the private supply of public goods should be generally is a quasi public product. Secondly, the quasi public product scale and scope is generally small, involving a limited number of consumers. Again, in the quasi public product consumption must be present on exclusive technology. Finally, the most critical is private to successfully provide public products must have a series of conditions to guarantee system.

Control, quasi private digital currency weakness is obviously, for example, we often see the private key leakage caused by digital assets is difficult to recover the stolen; liquidity is the key to maintain bitcoin bitcoin exchange level, has not made the relevant safeguard system (arrange bank deposit insurance, bank lender of last resort), in order to ensure bitcoin transactions, cash and safety storage. In February 7, 2014, due to network attacks, the world’s largest bitcoin exchange Mt.Gox stop bitcoin extraction operations, transactions caused confusion, then Mt.Gox declared bankruptcy. Obviously, the ability of private quasi digital currency does not have “paid service” and “accounting unit value stabilization service” and other public products and services, the only legal digital currency to be competent and play this role, only the legal digital currency can only become the cornerstone of a new generation of financial infrastructure and the future development of the digital economy.

For the above second relaxed, I understand. The traditional distributed architecture, digital currency cannot work? Of course not. The original digital currency is a branch of cryptography, long before there is bitcoin. So why should we rely on the blockchain technology? Block chain technology is mature? Can be truly large-scale use? There are a lot of worries, why must we will block chain and digital currency tied to each other? This is an optional technology, as for how to use, but very flexible — this is a tool, how to use and how to use, not good with words to give up is also a kind of choice.

Of course, for us, really instructive block chain technology. In our system, the earliest how could think of high value data are not allowed to change? This concept must be implanted in the new construction system. The traditional architecture in the distributed consensus algorithm is seldom considered abnormal situation. Because in the process of the original system from proprietary to open, be sure to consider all kinds of attack sabotage and extreme anomalies. In this regard, provides a lot of reference block chain, such as the Byzantine agreement to deal with the “traitor”, which is the improvement of traditional distributed system, we can learn this concept, but the method can be varied.

For instance, the contract put forward higher quality requirements of intelligent digital currency to the central bank, I think it is necessary to consider. The use of existing payment products sense has been very good, a new payment tool to have better quality, in order to improve the attractiveness to customers.

Where is the competitiveness of legal digital currency

The legal digital currency competitiveness is reflected in two aspects. One is from a technical point of view, we must absorb the advanced digital technology mature, this is very important, and this is precisely the strengths of private digital currency. The two is from the perspective of economics, it will put the traditional monetary long-term evolution in the process of inheriting reasonable connotation.

The legal digital currency as a new currency, we must consider the similarities and differences with traditional private money, quasi digital currency, that is to change what, including where to change, where the same, why change, the sublation of what what the succession and so on, it is very important to define these problems. The intrinsic value of the legal support of digital currency is not to have any change. Where is the change of monetary form is digital, digital distribution technology. The original in the release process, money can only have the denomination, issuing institutions and other information, but the new technology can try to make adjustments in this respect. For example, the whole life cycle of information transfer process and record holder of each digital currency in information, this is the result of technical progress, of course, which in turn will make high demands on technical system. Need to have new ideas, landing this concept, also need to explore in practice.

Recently, the European Central Bank has an assessment report. It is suggested that allowing non main banks in a 1:1 ratio, bank deposits into digital monetary base, is based on the main purpose of the main non bank using digital currency is based instead of cash, rather than bank deposits. The European Central Bank believes that as long as to replace cash, the negative effect of digital monetary base can be ignored. In the initial stage, the central bank can be complementary or alternative positioning digital money into cash, to get more experience. This progressive idea should become the consensus in most countries of the central bank.

The report is consistent with our ideas. There are two ways of legal digital currency, there is a way to expand the table – the central bank according to the needs of the target of monetary policy, through asset purchases by issuing digital currency to the market, expanding the central bank balance sheet. Of course, there will be another problem, the premise is to define the qualified asset types, quantity and price appropriate to buy. This way is more complex, in a sense, the European Central Bank provides an easy start, it is easy to obtain a consensus solution.

Of particular note is that, although the legal compensation method with digital currency natural properties, with circulation environment conditions, any person, any organization can not reject, but as mentioned earlier, cash or currency is essentially the issue of sovereignty to the public debt or equity, therefore in sovereign debt, debt monetization high level, increased the risk of default under the condition of domestic residents will lose interest in local currency. In extreme cases, their cash (including legal digital currency) may also lose money qualification, this is not alarmist. On the other hand, how to scientific decision and regulation of digital currency issuance, in order to ensure the stability of the currency, the central bank issued legal digital currency should become the most important consideration, the key will be different monetary authorities launched digital currency competition in the digital economy.

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