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Asset Blockchainization on Bytom (V): “Cognitive Dimensions” of Migrating Asset Onchain

Asset blockchainization is a notion that could be discussed from various cognitive dimensions, different minds have varied understandings on asset blockchainization, about which Bytom has come into contact with a plurality of industrial and financial practitioners in the process of migrating asset onchain and get some interesting ideas. This article attempts to reach readers from the perspective of 5 cognitive dimensions on migrating asset onto blockchain.

Cognition on the 1st layer: asset blockchainization is to migrate “asset itself” onto blockchain.

It is a dimension easy to understand. When we work on asset blockchainization, we’re build a connection between the asset and blockchain, and the connection here refers to the mapping from off-chain asset to on-chain asset.

Just as Tether issues USDT, its basic principle is that every tether is backed 1-to-1 by offchain traditional currency in reserves, so 1 USDT is equivalent to 1 USD.

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Figure 1-1 Balance sheet of Tether (July 4, 2018)

In this dimension, a mandatory guarantee is needed for onchain assets via means like Internet of things, account transparency and mandatory reserves to verify that onchain asset is backed 1-to-1 by offchain asset.

How to verify the 1-to-1 relationship thus becomes the major issue confronted in this phase, as centralized onchain asset issuers are very likely to do evil.

Cognition on the 2nd layer: asset blockchainization is to migrate “asset holder” onto blockchain.

In the blockchainization case like Tether, the average users’ account system is not involved. While once the asset is issued based on blockchain, it is required for an asset holder to build a blockchain-based account in order to prove the holder really owns the asset. Currently the public/private key system of blockchain could represent and implement our control over the onchain asset, but it does not directly represent an offchain individual; that means the public/private key is not directly bridged with the account in real life.

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Figure 1-2 Blockchain encryption system of public/private key

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Figure 1-3 Account-opening process of a traditional financial account

It is not hard to imagine that if the account systems are not bridged, onchain&offchain double spending will be unavoidable. Therefore, the difficulty in this sector is how to bridge between onchain and offchain. Zhang Yifeng, head of China Banknote Blockchain Research Institute, put forward the “Decentralized Identifier (DID)” – to build a distributed identity based on individuals, organizations and even things.

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Figure 1-4 Distributed identity registered on blockchain

The writer hereon thinks that the market of distributed ID is super huge, since companies of internet finance are ahead of bank-like financial institutions in user portrait, it is suggested that these enterprises could make attempts in this area if they’re looking for change.

Cognition on the 3rd layer: asset blockchainization is to migrate “rights and obligations” onto blockchain.

By bringing in the account system, here comes the concept of rights and obligations of an account. The rights and obligations could be specific equities which is also a kind of asset.


Figure 1-5 Receivables between two accounts

As shown above, rights and obligations here are account receivables and payables. In the atom world, the majority of financial assets are in essence a relationship of right and obligation. That means, asset blockchainization is not necessarily related with physical asset, abstract notions like rights and obligations of an account could be migrated onchain.

This blockchainization, beyond physical asset, tracks the credit between accounts and inter-account credit. So asset blockchainization corresponds to two credits: credit related to offchain physical asset, which could be verified by the aforementioned means of “pledge, mortgage and IoT”; credit related to account, which could be verified based on the performance history of the account. In this aspect, we could build an onchain credit system, and introduce new credit concepts like blockchain-related “Bitcoindays Destroyed”.

Cognition on the 4th layer: asset blockchainization is to migrate “measures” onto blockchain

Based on the first 3 dimensions, when we migrate transactions of the atom world onto blockchain, it is of great importance to build account system and onchain&offchain mapping, as well as conduct AML (Anti-Money Laundering) and KYC (Know Your Customer). While in fact, the standard or measurement of asset comes foremost in the process.

When we build a blockchain that could support various assets go onchain, the measurement of an asset then becomes the standard to measure its value. If no unified measurement is provided for various assets that need migrating onchain, the blockchain-based market would be limited.

The “measure” of asset that needs migrating onchain, namely unit such as “square meter, yuan, kilogram, ton”, just like USDT for dollar. Migrating some basic measures onchain can make the ecology more standard.

Cognition on the 5th layer: asset blockchainization is to migrate “ecology” onto blockchain

Have a quick review of the 4 dimensions above, imagine the scenario where people could manage their asset on blockchain, the onchain world is a full mapping of the offchain one, value delivered via the blockchain network like information passed on via the internet… It would be a massive migration.

This migration process involves the construction of six systems in total:


Figure 1-6 six major systems of asset blockchainization

Onchain measure system (value-measure-based blockchainization)

Onchain identity system (build a decentralized identity system)

Onchain gamble system (account-based rights and obligations)

Onchain credit system (bitcoindays-destroyed-based transaction)

Offchain blockchainization system (investment-bank-like institutes/individuals)

Offchain delivery system (reverse predicting machine, onchain impact offchain)

Specifically, the blockchain-based market will be super huge.

At the entrance of the blockchain market, roles similar to investment bank will assist in asset verification and blockchainization; at the exit, there will be delivery market similar to spot market for asset going back offchain. On the blockchain, various app market will come up, like the “apple store” and “Android market”, and emerge a variety of gambling tools (including forecasting tools, speculation tools, security tools, etc). All coming from the centralized world trade on the decentralized platform, and complete the delivery back in the centralized world.

So far the cognition of the 5th layer is still an ideal envision, nevertheless, the evolution rule of both blockchain and asset forebode the coming of such an existence, to which Bytom will be dedicated and co-build the big ecology of asset blockchainization working with all our partners.

Translated from the fifth in a series over asset blockchainization on Bytom 比原链资产上链研究五:资产上链的“认知维度” by Ma Qianli, vice president of 8btc News, responsible for the scenario realization of asset migrating onto Bytom Blockchain. Having competitive capability in IPO, M&A and asset securitization with many successful cases, Qianli was the director of investment banking arm in Codi Capital, and securities affairs representative of vöhringer after graduating from Shanghai University of Finance and Economics. 


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