Blockchain: Potential engine for future monetary system

12 Nov, 2018 12:37

香港奇点财经Singularity Financial cited from China Daily

China now has a chance to replace the “current chaotic mass of global money” with real money based on physical constants that don’t change, and it’s an important opportunity for the Chinese mainland to lead a money policy as the existing monetary system begins to sputter, George Gilder, a futurist and former speechwriter for the US president, told the South China Fortune Summit in Hong Kong.

“The current trade dispute between China and the US is really a monetary dispute which, in fact, is an increasing breakdown of the global monetary system based on floating currencies that fluctuate all the time,” he said at the summit organized by the Global Finance Alumni Association of Xiamen University at the Hong Kong Stock Exchange on Nov 9.

The Harvard graduate said the answer to the current trade tension is monetary reform, and China should take the lead in this reform as it has more potential to be flexible, whereas the US’ much-established dollar system makes it hard for the US to spearhead one.

“In the end, there are vast opportunities between the US and Chinese economies,” he said. He believed the rule is “don’t solve problems, pursue opportunities,” indicating the key thing is not to avoid solving the trade spat, but to pursue the opportunity of a new monetary system, which is “probably based on new breakthroughs on cryptocurrencies,” as he thought the ‘cryptocosm’ can offer a new global money offer just in time.

“When the world economy begins to founder under this unsustainable US$250-trillion debt loan, politicians are gonna want a new monetary option, and cryptocosm will provide it,” Gilder said.

He envisaged a future with crypto corporates and platforms, such as Ethereum, BITMAIN, NEO and Hedera Hashgraph, dominating the top spots in terms of market capitalization.

The human society is at a crossroads and has begun transiting to a virtual society instead of a real economy, and blockchain has the potential to wield its influence in future, Zhao Danyang, founder of Pure Heart Natural Selection Fund, said at roundtable forum themed “Application of Digital Economy and Blockchain Finance”.

He said more capital would be circulated on the internet and technology industry in future as commodities, such as oil, gold and copper, only account for a small portion today of US total market capitalization, unlike the era of John Rockefeller, who rose to prominence by controlling 90 percent of all oil in the US at the peak of his career.

Zhao’s insight, to some extent, contradicts with that Andrew Sheng, former president of the Securities and Futures Commission of Hong Kong, who said the financial sector should still serve the real economy even at a Finance 4.0 era powered by blockchain technology, and an ecosystem that encourages innovation, entrepreneurship, research and development must be established under this age of knowledge digitization.

The greatest advantage of digital technology innovation is low cost. Yet, some fundamental social demands, such as quality education and healthcare, go beyond what a market could offer, which makes the State a key player in the knowledge economy, as it could provide supportive measures on law, research and development to boost its progress, said Sheng.

On the other hand, the biggest hope for fueling domestic economy growth at the moment falls on business startups and innovation, said Chen Wei, chairman of Shezhen Oriental Fortune Capital Investment Management.

He said equity investment, which facilitates the development process of startups, should be repositioned and emphasized in China’s national strategy.