The vice-head of the Chinese central bank’s Digital Currency Research Institute has warned against the “rash” use of blockchain technology in the financial sector.
Di Gang (狄刚), vice head of the People’s Bank of China’s Digital Currency Research Institute (DCRI) said that financial institutions as well as tech giants such as Alibaba, Baidu, JD.com and Tencent are all exploring the application of blockchains in the financial sector.
The financial sector “cannot rashly pursue fashion when it comes to technology,” however, “because the financial sector is comprised of high-value assets, and any problems that emerge will have sizeable impacts upon society.”
Di made the remarks at the 2018 Financial Blockchain Innovative Application Outstanding Case Selection Event (2018金融区块链创新应用优秀案例评选活动) jointly held by the China Academy of Information and Communications Technology (CAICT) and the financial technology committee of the Payment & Clearing Association of China (PCAC) on 10 October.
Di sees four main challenges in relation to the development of blockchain applications in the financial sector, including:
- Scalability bottlenecks;
- Privacy protection and security management
- Operations management continuity.
Di also highlighted the issue of on-chain to off-chain transfer as “the biggest problem” for blockchain applications in finance.”
According to Di the blockchain itself is a neutral technology which is undergoing continuous evolution, and its applications will be determined by demand.
“Everyone has high hopes for blockchain application scenarios, but as of the present we have found that blockchain development is quite slow,” said Di. “At present the development of blockchain is still at an incipient state, and it is very necessary for us to pay attention to the direction of its development.
“The maturation of the blockchain cannot do without the support and help of the external environment, including internet infrastructure, a developers ecosystem, as well as a commercial ecosystem.”