In the traditional financial system, all records of transactions and financial transactions are stored in the central database of financial institutions. Therefore, financial institutions must invest considerable human and material resources to maintain their databases to ensure that they can operate stably and that the data is safe and secure. In terms of the financial system, related investments have also increased the cost of financial transactions.
In view of this, the concept of distributed ledger emerged. Under the distributed ledger structure, all parties involved in the transaction have a part of the entire ledger, so no central database is needed to keep the entire transaction ledger. However, due to the parties to the transaction All the books you have are only part of the full book. How to ensure that the other books are correct and that the data has not been tampered with will become a big problem. The blockchain is an effective solution to this problem.
There are various blockchain applications, even more powerful with Industry 4.0
Further deduction, blockchain technology can not only be used in the financial industry, any data using distributed architecture, can use blockchain technology to verify its authenticity. More importantly, blockchain technology is basically open source, Just on Github, there are 26,000 blockchain-based development projects. Well-known international companies such as IBM and SAP also support the open source blockchain Hyperledger Fabric, which can be used to implement Commercial applications.
As a matter of fact, the topic of industry 4.0 that has been prolonged for many years will inevitably make use of blockchain technology. Industry 4.0 has many facets, except for the concept of digitalization of processes, digital twins, and IIoT. Besides the terminology, at the later stage of the development of Industry 4.0, upstream and downstream information systems (such as ERP, MES, etc.) in the supply chain must also be connected in series so that manufacturers can achieve flexible production and reduce stock preparation.
According to the author's understanding, some large-scale accounting firms have begun to take precautions for the changes brought about by Industry 4.0, and have cooperated with relevant industrial equipment/system manufacturers. Because, in the highly digitalized manufacturing, raw materials, semi-finished products, and product inventory data The change will be in seconds. How to respond to these changes in real time in the accounting process and in the financial statements is also a big challenge.
On the other hand, manufacturing customers must be very sensitive to the above figures, especially large-scale electronics manufacturing, because margins are generally low, whether raw materials, semi-finished or finished products, everything is a cost item, and often it is the profit and loss of the company. The key point is that although securities regulators may not require listed companies to shorten the disclosure cycle of earnings-related information, real-time financial data is still an important reference for corporate decision-making.
For a large-scale manufacturing industry such as Taiwan's Electronics Group, it is necessary to use a centralized architecture to handle the data of thousands of upstream and downstream manufacturers. IT-related software and hardware costs must be very striking, and the system may also be It will become large and complex, and it will bring challenges to management and maintenance. Importing blockchain technology and adopting distributed data architecture will be an attractive solution for these large-scale manufacturers.
In addition to applications related to Invoicing management, blockchains have a number of other application possibilities. For example, in the context of industrial IoT, sensor networks constantly send out various data, but in the event of transmission of these data, After tampering, the operation of the production line may become chaotic and even jeopardize the safety of the plant. The blockchain technology can be used to prevent data from being tampered with, so that the information security of the Industrial Internet of Things can be further guaranteed.
Corporate finance will flip due to blockchain
In addition to verifying the authenticity of distributed data and ensuring that data is not tampered with, there is an important application of blockchain, which is to issue tokens. This application is precisely what caused the virtual currency market to flood with a lot of bubbles. The reason - almost anyone can issue tokens to finance, use virtual currency in exchange for dollars, renminbi, Taiwanese currency, etc., which have government endorsements.
Regardless of the various chaos and bubbles that exist in the current virtual currency market, tokens are actually an application that has deep potential for corporate finance applications. In the case of manufacturing, products cannot be created out of thin air. One manufacturer wants to produce certain items. For products, it is necessary to purchase raw materials or components from upstream suppliers, and pay the purchase price at a predetermined period.
In the current situation, even though the supplier has already shipped the goods to the customer, what they have got is a check that can be cashed in a few months. Should the supplier suddenly need cash flow, it can only find the bank discount, and There is also an interest to be paid to the bank. Moreover, check discounting is subject to many restrictions. For example, a check with a long ticket period is usually not accepted by the bank. This also allows the underground financial industry to have room to survive. In fact, many large scale Manufacturing industry uses the time difference between accounts receivable and accounts payable to create huge profits, but the capital risk is borne by the supplier.
On the other hand, if the customer abruptly places large orders, the supplier must urgently expand production. Unless the customer is willing to pay the purchase price in advance, many small and medium-sized suppliers may not be able to do so because banks usually have strict requirements for SME financing. Restrictions: SMEs can often get very low credit lines and can't even get credit lines. At this time, SME owners often only have a chance to take a loan and use their own real estate as loan collateral. Many are attached to large-scale loans. The SMEs under the manufacturing industry, although their businesses seem to be stable, have found that their cash flow is not working properly and they cannot adjust their positions with normal financial institutions. The main reason is here.
To some extent, this is also one of the main needs of the real estate market in Taiwan. If small and medium-sized business owners have spare cash, investing in immovable property is an option that can be attacked and retired. It is both an opportunity to earn a bid-ask spread, and it can also be used by companies. Working capital is used as a collateral for loans. Real estate is one of the bank's most willing to accept loan collateral, because its price fluctuation is usually lower than other securities, and the real estate appraisal mechanism is quite mature.
If large-scale manufacturers use blockchain technology to issue their own tokens and circulate within their own supply chain system, the entire supply chain's capital operation schedule will present another scenario. In fact, the generation of blockchain technology distribution Currency is not only a substitute for traditional currency, but also can be equipped with Smart Contract function. The issuer can not only customize the contract content with the recipient. After the contract conditions are satisfied, subsequent trading actions can also be performed automatically. There is absolutely no need for human intervention. This feature can significantly reduce transaction costs for buyers and sellers.
In other words, tokens with smart contracts are a bit similar to letters of credit (LCs) used in international trade, but there is no bank intermediary guarantee. And if these tokens have limited openness to the secondary market, Manufacturers' supply chain members can buy and sell members in the same supply chain system (this creates a bond-like market, but the participants are limited to a certain group of specific corporate entities), or they can use it as financing collateral. It will cause great disruption to the existing corporate financial market.
Moreover, according to the current financial regulations, it is difficult for the government to intervene in the regulation because the entire system is generated by the transactions between private companies. The “currency” or “credential” to be used by buyers and sellers as the medium of transaction is entirely two. Creating contractual freedoms. It is not uncommon for companies to borrow money and turn around each other. What assets should be used as collateral and even unsecured loans. If both parties are not listed companies, they are basically the boss.
The golden opportunity of traditional enterprise gold
It may be easy for readers to understand why the traditional financial industry is so cautious about Fintech innovation based on blockchain technology because in this new game rules, financial institutions are not only Marginalization may even be excluded.
However, for the traditional financial industry, the situation may not be so pessimistic. As mentioned above, due to various factors such as credit costs and risks, banks are basically hard to make credit loans to SMEs and must have collateral. If the large-scale manufacturing industry issues tokens for its own supply chain companies, and opens its algorithm to banks, banks can easily grasp the transaction records of small and medium-sized enterprises with large-scale manufacturing industries in the system, significantly reducing credit costs. The supervisory authorities are willing to loosen further regulations and treat these tokens as quasi-products of certain types of securities. Of course, these tokens can also be used to finance bank mortgages.
Regardless of whether the former is the latter or the latter, for the existing financial institutions, the emergence of tokens helps to make the pie of SME financial services even bigger.
In fact, if financial regulators are to intervene in large-scale manufacturing to issue tokens for their own supply chain system, conferring certain legal status on these tokens is an inevitable result. The legal status of tokens must be clearly defined before the government can proceed. To control. If the token is not legally anything, government regulations also go unnamed.
Long-term plan for mining machine industry
Since the exchange rate of Bitcoin against the US dollar soared in 2017 and officially detonated the long-awaited boom in the mining industry, the opportunity for mining machines is a hot topic within the electronics industry chain in Taiwan. There are also several IC design companies in China that have launched mining operations. Dedicated ASICs burst into flames. However, if you understand Bitcoin, the rules behind the game, you can assert that the current business model of mining for cash will not be a long-lasting business.
In terms of Bitcoin, its total number of issues is 21 million, and there will be no new bitcoin after the release. This is the “big limit” of the Bitcoin mining machine industry. It is estimated that as of mid-2017, bits The circulation of coins has reached 16.38 million, and as Bitcoin's remaining issuance quota is getting lower and lower, it will take longer for mining machines to dig into a bitcoin, resulting in a return on mining investment. Decreasing with time. It is generally believed that the remaining 4 million bitcoins will be issued before 2040.
As for Ethereum, although its total amount is not as bitcoin as Bitcoin, Vitalik Buterin, the co-founder of Ethereum, proposed to adjust the upper limit of the circulation of Ethereum to 140 million, which shows the mining of Ethereum. In the end, the machine may still encounter problems similar to Bitcoin.
On the other hand, the Ethereum community has always been opposed to mass production of the Ether coins by mining machines. Because the over-concentration of the cryptocurrency owners will cause many drawbacks to the cryptocurrencies themselves, professional miners, In particular, professional miners using ASIC excavators will accelerate the concentration of cryptocurrency ownership. Currently, TEC-based mining machines are used for excavation of coal coins. The mining efficiency is lower than that of ASICs, but the benefits are Adapt to changes in the mining algorithm.
A few days ago, China's IC design company Bitland announced that it will launch an Ethernet mining ASIC dedicated to ether, and a few days later, the members of the Ethereum Foundation (ETH) immediately proposed to modify the mining algorithm of the Ethernet coin. Obviously, it is aimed at ASICs such as Bitland. The developer's behavior comes. The outcome of this battle is very easy to foresee - the development cycle of ASICs is at least three to six months, and the cost of photomasks is often millions of dollars, but if there is consensus in the community, It may take only a few weeks to modify the algorithm, and the cost is close to zero. Hardware and software "resilience" always suffer, and even FPGAs with the most flexible circuit architecture have some limitations.
In general, the current business model of mining machines is not sustainable. However, if all industries and industries begin to develop their own vertical applications with blockchain technology, the situation will be very different. The mining behavior is essentially a solution. For example, to deal with blockchain data, therefore, with the wide application of blockchain technology, all industries and industries will have relevant needs. This is the long-term business of the mining industry. As mentioned in this article, In the case of supply chain finance, for example, hundreds of thousands of electronic related companies all over the world use blockchain technology to deal with supply chain financial problems. With the demand of banks and other traditional financial institutions, mining machines will become one of the corporate IT markets. The door is not a small business, but this market may be relatively fragmented and may not be suitable for programmable solutions such as ASIC, FPGA or GPU, and may be commercially feasible.