People’s Bank of China (PBoC)’s director of the Institute of Digital Currency, Yao Qian said that excessive decentralization of blockchain platform can lead to severe problems for the leading public blockchains like Bitcoin (BTC), Ethereum (ETH), and others. Qian’s opinion piece was published by the Chinese media-outlet Yicai on April 27.
According to Qian, despite its benefits, there are lots of shortcomings in the blockchain that need to be resolved in order for it to become the financial infrastructure of the future. The research director not only listed the flaws but also mentioned the benefits of blockchain technology such as its security, reliability, peer-to-peer system, and use of smart contracts. Qian notes that “it is precisely because the blockchain technology mainly served Bitcoin in the early stage [why] in some aspects it has obvious shortcomings and deficiencies.”
Some of the issues with blockchain technology that require fixing include the need for a governance mechanism, inability to scale, and improvement of data privacy. According to Qian, since it is not possible to shut down blockchain during emergencies, repairing its errors also becomes extremely difficult. The director believes that due to its excessive decentralized nature, governing the informal blockchain on a large scale becomes almost impossible.
Qian Wants Blockchain To Take Flexible Approach
Qian also said that the industry should rather take a more flexible approach and one of the best solutions to overcome this shortcoming is an appointment of a central governor. Qian has already proposed a blockchain structure for PBoC with the ability to shut down or pause the system, roll back transactions as well other data and even upgrade software as and when needed.
Qian explained that by separating code and data combining the multiple layers of the smart contract layers it will be possible to carry out regular code upgrades and make small contract replacements. It is not the first time that a director from a Chinese regulatory agency has put forth the flaws of Blockchain demanding decentralization of the governance structure. Just a month ago, the director of the China Securities Regulatory Commission (CSRC), Zhang Ye, also said that since blockchain is software it must be centralized.