Chen Bin believes that Web3.0 is the ideal economic paradigm for the digital economy.
Speech: Chen Bin, General Manager of Wanxiang Blockchain
Respected guests and colleagues, good morning everyone!
I am Chen Bin from Wanxiang Blockchain, and today I am here to talk about the theme "Trusted Digitalization of Assets is the Pass for the Integration of Physical Economy into the Digital Economy." There is no doubt that the digital economy, as an important engine for global development, has become a global consensus. Understanding the development of the digital economy can be viewed from two dimensions:
The first aspect, considering economic laws and economic paradigms, we believe that Web3.0 is a very ideal economic paradigm for the digital economy. Web3.0 includes two important features:
First, decentralization emphasizes fairness, data sovereignty, and the sharing of rights among stakeholders.
Second, the tokenization in Web3.0 emphasizes the efficiency of asset circulation. One is fairness, and the other is efficiency, with higher efficiency. When we tokenize all assets and use smart contracts in the new network, the efficiency of economic circulation becomes higher. This is the first aspect, looking at the paradigm of the digital economy from the perspective of Web3.0.
The second aspect, looking at it from the perspective of digital assets, involves native assets and twin assets. The development of the digital economy cannot be separated from the large-scale development of digital assets. What are native assets? In traditional fields, digital games are a very traditional form of native digital economy. In addition, traditional economies will only develop significantly when they are integrated into the digital economy on a large scale. For example, industries like e-commerce and O2O are typical cases of the integration of large physical economies into the digital economy within the traditional internet. Only the development of these industries will drive the development of the digital economy.
Just as we now talk about the digital economy and digital assets, everyone will mention crypto and encrypted assets. If all encrypted assets are purely native assets, the scale of this industry may not be very large. It is necessary to have a large-scale entry of traditional economies and physical economies into this field, transforming into a digital economy and digital assets, in order to become a new engine of economic growth. In the physical economy, there are very important characteristics, such as regular operation, in line with traditional rules. We see that the development of the physical economy is traditionally determined by changes and influences from four aspects: supply and demand, productivity improvement, short-term debt cycles, and long-term debt cycles.
In the era of the digital economy, there will be new operating rules, called "smart economy." The basis for the operation of the smart economy is a set of economic operation models in Web3. Of course, when we talk about the new economic operation model, many guests have mentioned the impact of AIGC on the new economic model in the past two days. Professor Yang Xiaohu just expressed his concern about whether many industrial matters in the physical economy will be very boring and make everyone feel bored.
Quoting a line from the rock singer Cui Jian's song, "My ideal is there, my body is here." Of course, many of us who are involved in Web3 are young people and don't listen to Cui Jian's songs very much, but this line of lyrics can very well illustrate the current development status of the industry. If one day we want to expand the proportion of the digital economy and develop the Web3.0 industry on a large scale, a very significant sign is that the physical economy and physical assets need to enter the crypto field and the digital economy on a large scale. The integration of the digital economy and the physical economy is a very promising future. This is also the reason why I am discussing this topic today.
When we talk about the development of digital assets, many people will think of crypto and tokens. However, in Web3, today we have discussed many topics such as DePIN and RWA. It can be seen that when physical economic assets are integrated into the digital economy, not all assets are suitable for digitalization or tokenization. This brings up a question: which assets are suitable for digitalization and tokenization?
If we want to establish a new economic operation model in Web3.0, asset tokenization is a prerequisite, but not all assets are suitable for tokenization. In the public chain field, many people are also exploring how to tokenize traditional economies and traditional assets. In the field of alliance chains, in addition to the problems encountered in the public chain field, especially in China, there will be issues related to policies and regulations, determining what can be done and what cannot be done.
Around this, we put forward a point of view: this road may develop for a long time, because the ideal is there, but the body is still here. We need to integrate a large-scale physical economy into the development of Web3.0 and the digital economy. There is still a long way to go, and it may be in a state of Web2.5 in the middle.
Trusted digitalization of traditional economic assets is a necessary step before tokenization. What does it mean for assets to be trusted and digitized? This involves the concept of digital twins and trusted digital twins.
Previously, when people mentioned digital twins, they thought of 3D engine rendering and simulation of the real world. They talked about this kind of technology, and the technology is not unfamiliar. In Web3.0, games like the traditional "Second Life" are essentially a form of digital twin. In the early days of the internet, there was a famous saying, "On the internet, nobody knows you're a dog," which means that when we create digital twins, we must consider what constitutes a trusted digital twin, ensuring that all assets twinned into the cyber world are trustworthy and not just simple simulations. This will bring a lot of new and different technological, scenario, and commercial application values.
When discussing trusted digitalization of assets, there are mainly two categories of assets:
- Financial assets, with a global scale of approximately 250 trillion.
- Non-financial assets, physical/biological assets and real estate, with a global scale of 350 trillion, compared to the global encrypted assets of only 1 trillion US dollars. This represents a huge space for traditional assets to enter the crypto and digital economic world.
Trusted digitalization of assets must consider three dimensions:
- Physical dimension, from the perspective of physical and non-financial assets, there must be physical trust. For example, is the inventory there, and what is its status? There must also be trusted transactions. Are the transactions of financial assets and supply chain purchases and sales real and trustworthy?
- Ownership trust, whether the ownership of assets is truly yours. In traditional methods, there are property rights certificates and ownership certificates. How can traditional centralized accounting methods be mapped to a trusted digital environment?
- Value trust, when we map assets into the cyber space and transform them into digital assets, in addition to ownership and physical trust, the trust of value is very important, because value is constantly changing. It requires the use of large-scale data analysis technology, and even AI technology, to determine the trustworthiness of the assets owned and held in the real world. These are the three dimensions of trusted digitalization of assets that we have discussed.
Many key technologies will be used in this process, not just the rendering and 3D engine technologies I mentioned earlier, but also identity management, data security, real-time monitoring and reliable collaboration, access control, and traceability audits. This includes the IoT technology that Lin Yao talked about today, and how to make assets trusted and put their status on the chain in a trusted manner, accepted by multiple parties. These are very important technical paths in the trusted digitalization of assets that we have discussed.
I will share a few cases to illustrate how trusted digitalization of assets empowers the integration of the physical economy and the digital economy.
As mentioned earlier, a large amount of blockchain technology is used in this process, and before tokenization, trusted digitalization of assets is in a state of Web2.5. There is a lot of financing potential in this process, realizing the digital financial value.
Case One: Trusted circulation of supply chain assets.
In traditional supply chain finance, based on the core enterprise's credit, accounts payable are generated. Once these electronic bills are tokenized, in the value network formed by the blockchain, they can be infinitely split and circulated, ultimately realizing the financing value of these bills, empowering small and medium-sized suppliers and enterprises in the supply chain to solve the problems of difficult and expensive financing.
Case Two: Trusted operation of battery assets.
For example, there are now a large number of energy storage and new energy charging pile equipment. These devices encounter significant pain points in the traditional economic field, especially in the operation of distributed energy storage and charging piles. The important feature is that the operation is centralized, but the asset deployment is distributed. This brings about difficulties in management and the involvement of multiple parties, such as asset investors, operators, and users. How can these parties trust each other, solve financing issues, address operational problems, and resolve incentive issues? Through the trusted module of blockchain and IoT technology, the operational status of batteries and charging piles can be recorded on the chain in real-time, allowing multiple parties to share data. This can enable the financing of charging piles and energy storage networks, which is also a very important application scenario.
Case Three: Trusted pledge of oil storage assets.
This approach can be applied to inventory assets. Traditionally, financial institutions may prefer real estate or credit-based financing based on the credit of the subject, which is what we usually refer to as traditional finance based on the credit of physical assets and the credit of the subject. However, when dealing with movable assets (inventory), a series of financial fraud problems such as unclear ownership and multiple mortgages have occurred in the steel and bulk oil storage trading sectors, causing many financial institutions to be reluctant to touch this type of movable assets.
Through the technology of trusted supervision of movable assets, which involves IoT technology, blockchain technology, and big data technology, including the previously mentioned trust in value, ownership, and physical aspects, this field can be very well represented. It can enable inventory assets that were previously unable to be used for collateral financing to become eligible for such financing, which is a very valuable digital financial application.
Case Four: Trusted supervision of biological assets.
In the past, there was a saying, "A family's wealth is counted in thousands, but the hair of animals is not included."
When we go to the pastoral areas of Inner Mongolia, Qinghai, and Tibet, many farmers and herdsmen have a large number of production assets, and the value of biological assets is very high, but their financing potential is very poor. For example, in the beef cattle industry, when we attach a blockchain ear tag with a communication module to each beef cattle, and transmit the real-time status of each cattle to the backend webpage, each cattle becomes an NFT. Based on NFT, it can become eligible for financing.
This is a very interesting case. We usually talk about agriculture and animal husbandry as very traditional industries, belonging to the primary sector. When we tag each cattle in the beef cattle industry with a blockchain ear tag, and each cattle becomes an NFT, a digital asset, the traditional industry and the traditional primary sector become a digital economic industry. This is a very meaningful and typical case in the trusted digitalization of assets and the integration of the physical economy into the digital economy.
Of course, as we mentioned earlier, the trusted digitalization of assets is currently doing things at the level of Web2.5, solving the issue of financing potential under traditional finance. Of course, this is a necessary stage. For example, in Web3.0, especially when physical assets need to be tokenized and transformed into a new economic value network in the blockchain and Web3.0, we may still have a very long way to go. In the process, we need to explore step by step, whether it is in the way of trusted digitalization of asset classes, or how to generate practical economic value after achieving trusted digitalization of assets, and solve the real difficulties encountered in the industry. If we solve these problems, there will be corresponding value.
The emergence of new technologies will only truly drive the development of the entire industry after generating real value for the actual industry.
In conclusion, we all believe that Web3.0 may be a very ideal economic paradigm for operating in the digital economy. When it has the updated value internet stakeholders' capitalist model running the new economy, it is necessary to bring a large-scale physical economy into this field in order to drive the development of the entire industry.
Wanxiang Blockchain is gradually integrating with various industries in China, digitizing assets from various industries to solve industry problems, and is working tirelessly to tokenize assets and realize the updated economic value in the Web3 network. I hope this will make a greater contribution to the entire society and economy.
That's all for my sharing today. Thank you, everyone!
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