Accelerating digitalization, faster Internet transmission speeds, continuous accumulation of distributed computing resources, the application of mathematic and cryptographic technologies in the digital era: these are the factors that lead us to foresee that in the future, we will see an underlying public chain based on the features of Blockchain (including but not limited to: decentralization, openness, autonomy, irreversibility, and privacy protection). This underlying public chain will be utilized for distributed credit reporting, debt registration, wealth management, and asset transactions. It will enable business participants in different countries and regions around the world to provide financial services in a much more convenient way. A new type of virtual agency based on blockchain technology—"Distributed Banking"— will emerge. A Distributed Bank is not a traditional bank, but rather an integrated ecosystem of distributed financial services.
The concept of Distributed Banking is to break the monopoly of traditional financial institutions through fair financial serviced and return earnings from financial services to all providers and users involved, so that each participant who has contributed the growth of the ecosystem may be incentivised, thus truly achieving inclusive finance.
Through decentralized thinking, Distributed Banking will be able to change the cooperation model in traditional financial services and build a new peer-to-peer and all communications cooperation model across all regions, sectors, subjects and accounts.
As it pertains to business, Distributed Banking will completely transform traditional banking's debt, asset, and intermediary business structure through replacing liability business with distributed wealth management, replacing asset business with distributed credit reporting, debt registration and replacing intermediary business with distributed asset transaction with . The tree-like management structure of the traditional bank will evolve intothe flat structure of Distributed Banking, which will establish distributed standards for various businesses and improve overall business efficiency.
As it pertains to distribution, decentralization is disintermediation, a way of breaking up original excessive premiums that result from information asymmetry among intermediaries, and returning such premiums to ecosystem participants, thus achieving the redistribution of
ecosystem value as well as fair distribution among participants through digital consensus algorithm.
As it pertains to regulation, the fact that all records registered in the blockchain cannot be tampered will enable regulators to penetrate into the underlying assets in real time. Big data analysis institutions can also help the regulatory bodies understand and respond to industry risks more quickly based on blockchain data analysis. It will be possible to develop a new "Basel Accord" on the management system of blockchain-distributed banks.
The Foundation will launch a main blockchain - Distributed Credit Chain (DCC) to establish business standards, reach consensus on the books, deploy business contracts, implement liquidation and settlement services, and so on, for a variety of distributed financial business.
The establishment of a distributed banking system will require a five- or even ten-year process. We hope that after a period of construction, the distributed bank can become an important node of new finance, and traditional businesses can enter the distributed business ecosystem through distributed banking.
We will begin with conducting credit business on DCC, and reconstruct the business ecosystem of traditional credit through decentralized thinking and distributed technology. In the following section, we are going to specifically describe the reforms of distributed banks in the credit field.