🇨🇳 ZVChain Global : Shenzhen Roadshow | CTO Wu Yiqun: Dual account system for DeFi, with privacy protection and regulatory compliance attributes. 🇨🇳
On August 18, 2019, Beijing time, ZVChain’s CTO Wu Yi Qun was invited to participate in the 2019 Shenzhen Internet of Things Technology Summit and delivered a keynote speech entitled “Decentralised Finance (DeFi) — ZVChain’s Privacy Account Model”.
The following is a recorded speech of the conference :
“I will introduce myself first at the beginning of this sharing session, I am ZVChain’s CTO Wu Yi Qun and the only person that has been employed by Alibaba twice. I will skip the story about my first employment in Alibaba as a senior product manager. I have left Alibaba to create my start-up, known as “Xiami Music (虾米音乐)”, as I have a great interest in music. Following that, as seen in the news, “Xiami Music” was acquired by Alibaba, so I was re-employed by Alibaba. During my second employment, I was involved in Ali Security as the chief architect of Big Data, managing Ali’s secure big data and machine learning products.
Following on, I left to pursue my development in Blockchain technology in 2017. Together with my team, we have started planning the blockchain architecture, and now we are preparing for the launch of ZVChain’s main net. This time around, I hope to make this project a success and I will not be selling it to Alibaba.
Blockchain is in the early stages of “virtual” and “reality”
I will try my best to explain blockchain for you to understand. Everyone knows that Bitcoin is a POW system, so the consensus is determined by the hash power and cost. This is not a worthless thing. But then, we started to see many alternative coins (Alt-coins). The market response for trading purposes became very popular. Suddenly one day, the value of these alternative coins goes to zero! Why? The reason is simple, we can understand that if a coin is based on POS or DPOS system with low hash rate and is unable to achieve real commercial services or applications, the probability of the coin being worthless is very high.
To provide you with another example, I have compared several data regarding coin market value. So far, the market value of Bitcoin is about 150 billion US dollars, which is probably ranked 50th among global listed companies. Then let’s compare Alibaba. Alibaba’s current market value is about 500 billion US dollars, and Bitcoin is less than 1/3 of Alibaba. Alibaba now has tens of thousands of employees worldwide, but blockchain projects are spread across China, the United States, Europe, Japan, South Korea, and Southeast Asia… There are so many projects coming out, but the entire market value is not even 1/3 of Alibaba. So this blockchain industry is still developing, far from reaching the full capabilities.
Traditional Finance VS DeFi Opportunities and Challenges.
Many students have mentioned before that blockchain has many applications in the fields of gaming, supply chain traceability, and Internet of Things, but the most fundamental area of change must be related to financial services.
From the times of FED to now, traditional finance has been almost 100 years old. We are also very accustomed to traditional finance. We are used to the fact that we don’t feel good about it, nor do we feel it’s bad. We just feel that this is part of our system.
But if we analyze it, we will understand that the advantage of traditional finance is mainly about security. I deposit a sum of money and the bank gives me a receipt. I know that the money must be there under my account always. Such a function is certainly no problem 100 years ago or 50 years ago, but today’s Internet level is so developed, 5G is coming soon, and then looking at finance, it reflects new opportunities.
The first and most direct problem is Inefficiency. Let me give you an example. If we want to transfer money from a local commercial bank in Zhejiang to a local bank in Mexico, who knows how long it takes for the money transfer and how much is it? I don’t think anyone knows. Because I specifically asked about it, the result is that once a cross-border transfer is involved, you will find that banks are not certain how much the next bank in the transaction process will charge and when will I receive it. He can tell me how much he is charging me at this stage, but not for the next stage.
The second problem is Cumbersome. Today’s banks can complete the most basic functions, including deposits and loans, but everyone knows that the development of the Internet has brought ease for new financial services and applications. For example, professional stock trading personnel that have engaged in margin leverage trading and will like to borrow more money. Without proper credit ratings or collaterals, providing loans for these use cases will not be accepted by the financial institutions. The final problem is that the common understanding that in developing country, it is difficult to set up an account with financial institutions.
We have seen many problems with traditional finance, but with the development of the Internet, we have also seen financial progress. We get to be more familiar with Internet finance, as the inefficiencies of traditional finance have promptly surfaced.
However, the rise of a large number of P2P investment companies has caused many to worry. We can see that the purpose of Internet finance is good. It hopes to solve the problems that traditional finance has not been solved.
So what is the problem? As I have analysed several financial investment platform projects myself, I have gathered a lot of information. However, when you go deep into the investigation, you will find that there is something wrong with them. Many of them are known as “Hollow” companies, designed to channel the investment fund for other business operations.
Internet finance has solved some problems of traditional finance, but it has also introduced new problems at the same time. At this time, blockchain technology emerge. Why is Bitcoin worth more than $10,000 now? It is because of two characteristics. First, everyone can participate. Second, everyone can verify. There aren’t too many characteristics of Bitcoin. These two characteristics form the true soul of Bitcoin.
Of course, there are different genres like EOS now, but I think there are some minor criticisms to their system. Its 21 nodes are akin to several big families in Hong Kong, whereby a few people occupy a large share of Hong Kong’s GDP. This is not in line with the true decentralised spirit of Bitcoin. This may be another solution, but I think Bitcoin’s solution is better.
The DeFi Essentials of ZVChain — Security
So, is it possible that we can maintain a high level of security like a bank standards, such that even bitcoin can’t reach it? Let me give you an example. Bitcoin can’t be reversed after six blocks, but it will become unsafe when quantum computing comes. Assume that there is a group of Martians who also want to dig bitcoins, and they have supercomputers. When we dig 10,000 pieces, they may already have 100 million pieces. When they return to Earth, we say that we have dug a longer chain, and then the Earth must roll back to a few years ago.
This problem happens in Bitcoin. I don’t think it’s okay. It doesn’t matter if it happens in-game, but if you are doing finance, you have to solve this problem. The first thing ZVChain has to do is to solve the big problem of “security.”
Another one is the issue of flexibility, that is, everyone I mentioned just now can participate in. Nowadays, many public chains host their nodes on Alibaba Cloud. But this limits the participation of communities like the Australians, Americans, or even the Africans. Hence, we hope that our community is globally distributed and can participate as network nodes, as long as they have a computer or laptop machine.
Special attributes of ZVChain — regulatory-compliant blockchain
Many projects are in the Decentralised Finance space, but ZVChain is unique in being supervisable, and able to fulfil the role of regulatory-compliant blockchain in the financial industry. When it is found that someone is a malicious actor, the community can use the policing algorithm. Should the network garner majority POS votes in favour of freezing the malicious actor’s account, the anonymous account will be frozen.
We all agree that the emergence of DeFi cannot be an environment for dirty money, money laundering or malicious actions. As I have mentioned at the beginning, to make a blockchain market valued beyond a company like Alibaba, you need to do more positive actions, including regulation. If the government and the community think that a certain amount of money is suspected of money laundering, then we need to find a way to freeze him. We welcome the righteous and kind people to use the benefits of Defi, but we do not welcome those who will conduct money laundering.
ZVChain Secure Dual-Accounting System
ZVChain’s overall architecture is divided into three layers from the bottom up — System layer, account layer and application layer.
The core of the system layer is to solve the problem that everyone can participate in a secured environment. For example, a small number of transactions can be confirmed in 2–3 seconds, but a large number of transactions require 2–3 minutes. This is what the system layer needs to do, including how to defend against hacking scenarios.
Then on the system level, we have designed the accounting layer. Anyone who has used digital currency knows that Bitcoin and Ethereum use addresses, as long as the private key is not revealed to others, the account address is safe. According to today’s banking standards, we can send transactions with just a mobile number or personal identity number, instead of remembering a long address string. This is a very good upgrade that we think EOS has done. We will also be introducing this mechanism to ZVChain.
So, we behave like a bank account model, not an address account model. The address account model can only be used as a supplementary model to financial services, not as a fundamental model for finance.
Also, the money in our account must only be known to me and the bank. No one else knows this. This is also the problem that DeFi is going to solve. As we have designed a dual account model to solve this problem, you can use it anonymously like traditional digital currency, but if you want to get privacy protection, you must do KYC.
We will also put some of the most basic financial functions into the system layer. We call it the system contract. We allow the uppermost application layer — third-party guarantees, leverage, etc — available to users. They will have a variety of financial services that can be built through smart contracts.
So from the application layer, it is like a DeFi bank. It is not controlled by anyone.
Students who know the technology can understand this elliptic curve of Bitcoin, and as well as many technical innovators in the blockchain space have gathered here. It is difficult to calculate the hash value of the first ten zeros. It needs to count for ten minutes, but the verification that we are proposing is only 0.1 second. The proposed elliptic curve by ZVChain has a similar characteristics. If I want to calculate something, it may be very difficult, but if I go to verify it is very fast, and it can’t be faked, it is the same as the bitcoin hash calculation. Today’s Algorand, Dfinity Other projects are making breakthroughs in the cryptography direction of VRF, and ZVChain is the same.
Another feature of ZVChain is anonymity, which is the core of our dual-account system. First, users registering with ZVChain will get a common account. If you perform KYC authentication on the common account, you will be eligible to generate an anonymous account, and the money in the anonymous account is not visible to others.
This way, users can transfer their balance between anonymous and common accounts. Other users can send money to either anonymous or common accounts. No one will be able to know the balance in the anonymous account, except yourself. The technical breakthrough we have made lies in the mapping relationship between ordinary accounts and anonymous accounts. It is a breakthrough in cryptography. We have applied for patents in the public stage locally as well as abroad. At the same time, we also invited the Head of the Information Security Department of the University of Science and Technology of China to be our long-term cryptography consultant. Every 2–3 weeks, he will come to Hangzhou to communicate with us and continue to make breakthroughs in the field of cryptography and implement them into the project.
Our main-net is scheduled to be launch in September 2019.
ZVChain test net is online. The development process is relatively stable and ongoing for more than a year. Learn more about our technical development and mining guide at https://developer.zvchain.io/#/.
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