The director of the Institute of Digital Currency at the People's Bank of China[1] (PBoC), Yao Qian, believes that while Blockchain[2] has benefits, its shortcomings need to be resolved in order for it to “become the financial infrastructure of the future,” according to an opinion piece by Qian published by state-owned media outlet Yicai[3] today, April 27.
After listing the benefits of Blockchain technology - its security, reliability, use of smart contracts and a peer-to-peer system - Qian notes that “it is precisely because the blockchain technology mainly served Bitcoin[4] in the early stage [why] in some aspects it has obvious shortcomings and deficiencies.” The main problems, according to Qian, are an inability to scale and needs for improvement of data privacy and the governance mechanism.
In the opinion piece, Qian writes that since the “public chain cannot be ‘shut down,’ it’s error repair is also extremely tricky”:
“Once a problem occurs, especially a security hole, it will be very deadly.”
If one relaxed the decentralization of Blockchain, “many problems could be solved,” Qian notes:
“For example, in a multi-center system such as a coalition chain, upgrading the bottom of the blockchain by shutting down the system, or emergency intervention, rolling back data, etc., are available means when necessary. These methods help to control risks and correct mistakes. For regular code upgrades, controllable intelligent contract replacement is achieved by separating code and data, and combining multi-layer smart contract structures.”
Qian references the DAO hack[5] of 2016, when around $60 mln in Ethereum[6] (ETH) was stolen, as highlighting how when problems arise, they “cannot be repaired by shutting down the system and centralizing upgrades as a centralized system does.” The lack
