Speaker: Dr. Xiao Feng, Chairman and CEO of HashKey Group

On February 20, Dr. Xiao Feng, Chairman and CEO of HashKey Group, posted at the Web3 Voyage event hosted by HashKey Chain A keynote speech entitled "Block Chain: Starting from the Origin". The following is the full text of the speech, compiled from the on-site shorthand, and some of them are deleted that do not affect the original intention.

Hello everyone, first of all, welcome to our on-site meeting today.

On August 28, 2023, we held a sailing ceremony for our Hong Kong Exchange HashKey Exchange at the same location - the Hong Kong Maritime Museum. Hong Kong is a harbour city, so we specially chose this symbolic place to hold the opening ceremony.

Today is the second time the group has held an event here. HashKey Exchange is one wing of HashKey and HashKey Chain is the other wing of HashKey Group. In today's speech, I will explain in detail why HashKey Chain is so important to us.

Blockchain: New Financial Infrastructure

From the origin of blockchain, from the first principle, and from the basics, we need to examine the crypto assets that are now hotly discussed. Or virtual assets.

It is all built on blockchain technology. Therefore, we must return to our original intention and explore what blockchain is.

Three Elements of Human Social Evolution

Before the official start of the speech, I would like to quote the research results of a Nobel Prize winner in economics. He studied the industrial revolution for a long time and came to the conclusion that "the industrial revolution has to wait for a financial revolution."

His research results cover the first three industrial revolutions, and now we have entered the fourth industrial revolution ——The era of intelligence and digitalization.

He believes that all industrial revolutions rely on the support of new financial services to support the development, development and growth of the new industrial revolution. On the other hand, without the support of the financial revolution, the industrial revolution in human society may not be successful.

Many people are ashamed to admit that blockchain is the infrastructure that supports the Fourth Industrial Revolution, so we often mention that we should do it. "Affiliate Chain" or "Coin-free Blockchain". But practice over the past decade has proved that most of these attempts do not work. We must bravely admit that as a tool to adjust production relations, blockchain’s core entry point is finance. Without financial demand, we don’t need blockchain at all. This means that when mankind enters the Fourth Industrial Revolution and conducts digital and intelligent production relations innovation, a new financial revolution cannotOr missing. Otherwise, all this may not happen or fail to succeed.

Four "Industrial Revolutions"

The economist further pointed out that each industrial revolution is a superposition of energy revolution, industrial revolution and financial revolution, among which financial revolution is often the prerequisite.

This reminds me of research in physics: social development and scientific and technological progress are inseparable from the conversion of energy, energy and information. This transformation is inconsistent with the energy revolution, industrial revolution and financial revolution in some scenarios. Along this framework, we look back at the past three industrial revolutions:

The first time was marked by a steam engine, which occurred in the UK;

The second time was represented by electricity and wireless communications, It happened in the United States;

The third time it was marked by computers, code and the Internet, it also emerged in the United States.

Another scientist once mentioned that humans have experienced three cognitive revolutions:

The first time It is to invent language and realize communication between people;

The second time is to invent words, record and inherit experience;

The third time is to invent code in the last century. As a new language, code expands the scope of communication, communication and coordination in human society countless times.

Without code, there will be no AI, blockchain or the Internet. Code creates the language between people and machines, machines and machines, making informatization greatly expand the space for survival and economic activities. This also explains why the market value of listed companies today can reach $3 trillion, while the highest is only $600 billion in the industrial economy era - such as ExxonMobil and General Electric. Today, there are many companies with trillion-dollar market capitalization, and some even predict that Nvidia may reach the 5 trillion or 10 trillion US dollars.

The Fourth "Industrial Revolution"

The Fourth Industrial Revolution emerged at the beginning of this century, represented by blockchain, AI and cloud computing. If it was in January, I dare not say it was related, but now it can be said that China and the United States are jointly promoting this wave. From the Internet to AI, the research and development of the top ten platforms and big models is almost concentrated in China and the United States, and it is difficult to see Europe and Japan, so it has already taken the express train.

However, the Fourth Industrial Revolution must be supported by the financial revolution. The UK relies on the credit and bond markets, the United States relies on investment banks and capital markets, and for the third time, it relies on venture capital (VC) to spawn Silicon Valley and Internet platforms. Doesn’t the Fourth Industrial Revolution require a new financial model?

The greatest value of AI lies in embodied intelligence and spatial intelligence, which requires a large number of robots. What currency does it use to pay between robots and between humans and robots? US dollar or RMB? Only programmable currencies based on smart contracts can be competent. This means that the Fourth Industrial Revolution will inevitably call for a new financial revolution, otherwise its potential will be greatly reduced.

The Fourth "Financial Revolution"

The Fourth Industrial Revolution is inseparable from blockchain, smart contracts, digital wallets and programmable currencies. Blockchain is an open and transparent worldPublic ledgers, human calculation methods have only changed three times in a thousand years: single bookkeeping in the Sumerian period, double bookkeeping in Italy in 1300 AD, and distributed bookkeeping brought by Bitcoin in 2009. Distributed accounting is born from the cross-time, cross-space and cross-organizational characteristics of digital survival, and is the financial foundation of the Fourth Industrial Revolution.

Compared with traditional finance, there are three major changes in new finance:

One is that the calculation method changes from multiple accounting to distributed accounting;

The second is The account changes from a bank account to a digital wallet;

The third is that the accountancy unit changes from a legal currency to a digital currency. This has spawned crypto assets—a new asset class based on distributed encryption algorithms and ledgers.

The First Principle of Blockchain

What is the First Principle of Finance? It is a mismatch between the time and space of value, and this essence remains unchanged for thousands of years. But the service methods are changing: from no bank to bank, from no central bank to central bank. Some people say that the essence of finance remains unchanged, but banks and exchanges are just tools. Digital activities span time and space, and payment has become a peer-to-peer, distributed, and self-organized network. Remittances from Hong Kong to the United States are received in a few minutes without the need for reconciliation of five institutions. Which method is more in line with human nature? Isn’t it a better choice for a payment of seconds and a nearly zero handling fee?

The essence of finance

The yield of DeFi (decentralized finance) on blockchain is very high, 10%-20%, or even 30%-40%. Traditional financial circles often say that more than 7% of the returns may be a scam, accusing DeFi of being a Ponzi scheme.

I have been thinking about it for many years and concluded that standardized DeFi projects provide risk-free returns, with leverage lower than banks (bank capital adequacy ratio is only 12%), but achieved high returns due to excessive mortgage. The core lies in the efficiency of capital turnover - the bank's turnover 12 times a year is at its limit, while DeFi can reach ten thousand times, and Lightning loans can even be completed in seconds. This efficiency improvement is the charm of new finance.

Digital native to digital twin

Talk about several hot topics, first of which is RWA (real world assets). Ten years ago, stablecoins (such as USDT in 2015) started to tokenize monetary, with transaction volume reaching US$16 trillion in 2024, with a scale of only US$300 billion, and the efficiency far exceeding the US$300 trillion transaction volume of traditional finance. Starting from 2024, the tokenization of financial assets will emerge, and American asset management companies will mint fund shares on the public chain, and their scale will exceed that of stablecoins. The third wave is the tokenization of physical assets, which requires solving the oracle problem and realizing offline to chain digital twins.

The five types of tokens

There are many types of tokens, and different types of tokens have different functions. They can be divided into five categories: payment type (such as stablecoins), reserve type (such as Bitcoin), and function. type (such as Ethereum ETH), securities type (such as ETF share) and meme coins (such as tokens issued by Trump).

Finally, I want to say that we are going to welcome a new era from "off-chain to on-chain". In 2025, this trendThe driver is about to come, and the driving force is US legislation and the presidential push. After the United States gives the crypto industry legality and compliance, countries will follow up, and Hong Kong has enacted legislation. Subsequently, global financial institutions will enter the crypto field in a large scale, build a new payment settlement system based on blockchain, or issue new financial assets based on the token economy. "On-chain" will truly enter the explosive period.

I'll share this, thank you everyone.