Blockchain Technology Development Review and Financial Sector Application Outlook

In 2015, the launch of the Ethereum mainnet opened a new era of smart contracts for Blockchain technology, laying the foundation for its diversified application scenarios beyond Bitcoin. Since then, Blockchain has no longer been limited to being the distributed ledger technology behind Bitcoin, but has carried more expectations about "decentralization" and "trusted collaboration."

Due to the natural compatibility between Blockchain and the flow of funds, the traditional financial sector was the first to pay attention and attempt to apply it to optimize processes such as fund settlement and clearing. In 2015, an authoritative report pointed out that several well-known financial institutions showed a keen interest in Blockchain technology, focusing on exploring its applications in the settlement phase. At the end of 2017, a tech giant announced a Blockchain collaboration project covering multiple fields such as cross-border payments, education, food safety, identity verification, insurance, and shipping, predicting that more and more industries will be directly influenced by Blockchain in the future.

It has been proven that this prediction is accurate. Between 2017 and 2021, various industries experienced a wave of "Blockchain innovation". A global survey in 2018 showed that over 84% of surveyed executives stated that their companies had engaged in the blockchain field to some extent, reflecting the widespread phenomenon of "blockchain fever" at the time. However, these explorations were mostly focused on "permissioned ledgers", essentially using Blockchain for data sharing and tracking within enterprises or between partners. However, limited by the existing digital infrastructure of enterprises and the absence of blockchain governance, the technological potential is difficult to fully unleash.

"Governance" was once one of the most unpopular topics in the blockchain community, but over time, people have gradually realized that governance is not only key to driving the mature application of blockchain but also a necessary condition. Several authoritative international reports point out that for blockchain to enter a mature phase, in addition to technological breakthroughs, there must be continuous efforts in non-technical areas such as standardization and regulatory frameworks.

As "governance" becomes the main theme, the application path of Blockchain is gradually shifting from the idealized "revolution" and "disruption" to an "evolutionary integration" with existing systems. After 2021, people's focus on Blockchain has returned to the financial sector, specifically to "Tokenization". Tokenization refers to the process of transforming traditional assets (such as currencies, bonds, stocks, etc.) into a digital form that is recorded and circulated on programmable platforms like Blockchain. Unlike the wild growth of the ICO wave in 2017, recent Tokenization practices—such as central bank digital currencies, stablecoin legislation in some regions, and RWA (real-world assets)—place greater emphasis on introducing Blockchain based on the advantages of the existing financial system, while also focusing on compliance and risk control.

Over the past decade, while various industries have been eager to explore Blockchain for business innovation, most applications still revolve around "transparency" and "public ledgers", lacking truly irreplaceable core functions. In many scenarios, Blockchain is more of a supplement to existing database technologies rather than a complete transformation. For example, supply chain traceability, public donation records, and some government electronic invoice systems often merely use Blockchain to enhance trust endorsement, rather than fundamentally reshaping processes.

The development path of Blockchain often gives people a feeling of "scratching an itch through the boot." No one denies its value as a technological innovation, but in many industries outside of the gray market, Blockchain has not effectively met core needs, and many seemingly cutting-edge attempts inevitably fall into the trap of "innovation for the sake of innovation." To this day, people's expectations for Blockchain, which once spread from finance to various industries, have ultimately returned to finance—after all, people have realized that finance may indeed be the field with the most practical demand and implementation space for Blockchain.

In recent years, some regions are trying to find a balance between compliance and innovation to attract high-quality digital asset projects, consolidating their position as international financial hubs in offshore currency, cross-border payments, and asset management. However, this direction also faces numerous challenges. Taking stablecoins as an example, the global market often presents a "winner-takes-all" pattern, with US dollar stablecoins dominating trading and storage on the retail side (C-end) for a long time. Other currency stablecoins need clearer differentiation and supporting ecosystem construction to break through, fully leveraging their unique advantages as offshore financial centers. As regulations gradually improve and pilot programs deepen, if the advantages of blockchain and traditional financial systems can be organically combined under the premise of controllable risks, certain financial centers are still expected to occupy an important position in the global digital finance landscape, truly becoming a "bridge" and "testing ground."

Whether blockchain can break out of the "scratching the itch outside the boot" dilemma in the financial sector still requires time to verify, but at least the direction has become increasingly clear.