Guo Cheng: In the application of pan-supply chain finance, the blockchain architecture solves the problem of "who is the boss"

Chaindd exclusively reported that the "2018 Beijing Digital Economy Forum · At the Blockchain Application Innovation Summit, Guo Cheng, an engineer at the Financial Information Center of Chinese Min bank, said that the most important role of blockchain in the application of pan-supply chain finance is multi-party collaboration and credit transmission. The transmission of credit is grafted on the basis of information transparency and information penetration, and multi-party collaboration improves the efficiency of inter-agency and intra-agency on the one hand. On the other hand, compared with traditional institutions, it avoids the question of who is the boss, which is currently a scene that has been tried more in the field of supply chain finance applications.

The following is the full text of Mr. Guo Cheng's speech, which is compiled by the editor of the chain app as follows:

There is a methodology in the blockchain that first translates a real-world problem into a mathematical problem, which may have no economic solution in theory or in cryptography, or no valid solution. From this, it can be concluded that the scheme obtained by this translation is, in reality, an acceptable scheme. For example, immutability, we allude it to cryptography, then translate it into an algorithmic problem, and then get a system. At the same time, like privacy, you can continue to allude to the problem of computational cryptography, and finally get a solution.

We will also encounter this kind of problem in supply chain finance, supply chain finance is a problem of reality change, it can be turned into an acceptable problem in reality, this is the idea of methodological change. Maybe we have to do some correction, at least from the conceptual point of view.

First, for immutability, in most applicable systems it is only difficult to tamper with, more because of the punishment mechanism. This is especially true for systems such as the alliance chain. Technically, it can be modified. At the same time, the penalties for cheating on each alliance member are too high, so it becomes a reality that there will be no tampering.

Second, the concept of decentralization is entirely translated from English. But in fact, when we think about the alliance chain, we will find that it should be a concept of multi-party collaboration. For multi-party collaboration, in fact, there are many scenarios in economic applications, and supply chain finance is a very typical scenario, because it will involve financing entities, creditors, debtors, capital providers, and the entire transaction chain of trade.

In the simplest example, banks usually encounter a problem in supply chain finance: for strong types of enterprises, accounts receivable and accounts payable are not recognized, which is a problem of collaboration. Because in this environment, stakeholders, or strong parties, do not participate in such collaboration. The architecture of blockchain provides a good technical solution that allows more participants to collaborate with multiple parties.

Third, we have always emphasized that blockchain is open and transparent, but this problem will be more serious. Because of openness and transparency, there is currently a need for the implementation of the GDPR privacy protection bill, as well as regulatory requirements, audit requirements, and legal proceedings and a series of requirements. In the future, the concept of openness and transparency will need to add more constraints and conditions.

The application of blockchain technology implemented in the field of pan-supply chain finance mainly has four aspects: one is the so-called penetrating credit financing; the other is the transaction synergy of multiple parties including outside the enterprise and the internal enterprise; the third is to reduce the occupation of the two gold of the enterprise, mainly to reduce the occupation of payables and receivables; and the fourth is that there are two application scenarios in abs, asset securitization and technology finance in practice.

First of all, penetrating credit financing, which is mainly from the perspective of banks. Starting from the core enterprise, the accounts receivable in the entire supply chain system to penetrate the payment, so that the n-level supplier to obtain the core enterprise's bonds, this time found that the bank can make the transaction structure into the core enterprise to confirm the confirmation of the n-level supplier's receivables, so the bank can come to the n-level supplier to issue financing funds, which is a penetrating credit financing.

The second is the coordination of internal transactions. From the perspective of supply chain, Muskie's application scenario solves the problem of cross-regional collaboration: supporting this project, starting to solve the supplier, that is, using blockchain to penetrate 4,000 suppliers upstream and downstream, the shared information is done in reverse, because there will be many orders in the cross-border chair, and once the order is disputed, the entire payment will be frozen in the entire process. Through the improvement of synergy efficiency, the capital that is frozen will be more efficient, because the amount of freezing will be less, which is the scene of transaction coordination between multiple parties, including within the enterprise.

The third application scenario is the occupation of two gold by enterprises, which is mainly the reduction of interest-bearing liabilities. This is the continued payment of the core enterprises in the supply chain system that penetrates the payables in the supply chain system. Previously, 30% or even more money had to be paid between the supplier and the supplier, and these funds had been precipitated throughout the supply chain in terms of actual benefits, until the last level of suppliers completed settlement, and all people completed profit retention.

In fact, money money has been paid since it was obtained. In this way, in the context of actual business transactions, the core enterprise pays the supplier with credit, and the effect will be that the scale of the enterprise's payable increases, but the scale of interest-bearing liabilities will decrease. This is an application from the perspective of saving the financial efficiency of the enterprise. This is the effect of the tools of the smart ledger of a typical enterprise, and the entire circulation process.

The fourth is some of the current attempts that blockchain is making in asset securitization. This is a typical asset securitization process, which will include the underlying assets, the asset service institutions with the underlying assets, and the trust to complete the securitization process. At the same time, there is also the process of going up to the exchange, as well as investors, and so on. For example, the debt financing plan for accounts receivable in 2018, their structure is: led by an exchange, set up a participant called "information qualified service agency", the participants through the blockchain from the enterprise's assets to form a synergy and information interaction in the entire securitization process, including the change management of the underlying assets, to better serve the asset securitization process of scattered assets. That's about 100 billion in size, and it's expected to have a very big growth in each of these years.

The second model is the one used by the more leading financial entities. A highly creditworthy entity, from the exchange to directly take out a share, as long as it meets the supplier structure, regulatory requirements, specifications negotiated with the exchange, all assets can directly enter the securitization transaction market from the enterprise side. Under this model, it is somewhat close to the semi-centralized subject, applying an acceptable solution to complete the process of abs.

There is a more subtle place in this, if we adopt the traditional architecture instead of the blockchain architecture, the subject of high credit must fight with the exchange. The reason is, he doesn't know, where is this system in this matter? Is it in the system of the exchange or the system of the institution? The architecture of the blockchain can solve such a problem, without having to discuss the question of who is the boss in this architecture. This collaborative structure is also being rolled out quickly on major exchanges.

Among the five roles of blockchain in the application of pan-supply chain finance, the most important is multi-party collaboration and credit transmission. The transmission of credit is grafted on the basis of information transparency and information penetration, and multi-party collaboration solves the efficiency problem, improving the efficiency of inter-agency and intra-agency. Second, compared with traditional institutions that avoid the question of who is the boss, this is the scene that has been tried more in the field of supply chain finance applications.

Thank you!

Hosted by Daxing District Emerging Industry Promotion Service Center and National New Media Industry Base, and hosted by People's Financial Services, Titanium Media Group and Tiantong Digital Technology and other units, the "2018 Beijing Digital Economy Forum · The Blockchain Application Innovation Summit will be held on September 21, and hundreds of outstanding blockchain elites will jointly send out the strongest voice of Beijing blockchain.

(This article was first published in the ChainDe app)