Déjà vu for Blockchain

May 24-2019   

Some news of late about the block-chain industry gives NSD Prof. Shen Yan a sense of déjà vu: High-tech zones vie to lavish so called block-chain+ Fintech firms with incentives; 2018 was declared the Year One for applications of block-chain technology.

P2P (peer-to-peer lending) was showered with the same ardor in 2013, and fell off the pedal pretty quickly. In 2014 and 2015 alone, over 4,000 Internet financial firms cropped up. By 2018, 6,622 such firms existed, though 84.7% were deemed “problematic”, causing many an investor to lose their investment nest or even in some tragic cases, their lives.

Against this backdrop, Prof. Shen Yan advocates caution and careful planning for block-chain in her commentary for a Chinese media. She quotes industry experts as saying that there remain daunting challenges that put the commercial viability of block-chain in doubt, such as exorbitant costs, lack of scalability, privacy concerns, difficulty in transforming legacy system, among others.

While commending some local governments’ openness in embracing new concepts and technologies, she urges them to draft a well-thought-through plan before deciding on favorable policies for businesses. A balance between encouraging innovation and forestalling risks should be struck, she says.