The beginning of 2018 marked a surge in blockchain-related stocks, reigniting public interest in the transformative potential of distributed ledger technology. Amid growing speculation, the 102nd Zhongou Lujiazui Financial Salon, hosted on January 26, 2018, brought together over 100 professionals from finance, business, and academia to explore a critical question: Is crypto finance the dawn of a new financial system?
Led by Dr. Liu Gongrun, Assistant Director of the Zhongou Lujiazui International Financial Research Institute, the event featured Dr. Jian Gang Wu—a leading blockchain expert and Chief Development Officer at FUSION Foundation—as the keynote speaker. With years of research, publications like Cryptocurrency: How Virtual Money Challenges the Global Economic Order, and advisory roles across financial institutions, Dr. Wu offered deep insights into the evolution and future of crypto finance.
From Information Internet to Value Internet
Dr. Wu began by framing blockchain as more than just a financial innovation—it’s a fundamental shift in how humans cooperate.
Historically, human collaboration relied on physical interactions—what he calls the "atomic state." Today, we’re transitioning into the "bit state," where digital interactions dominate. This shift has given rise to two distinct layers of the internet:
- Information Internet: Enables data sharing but lacks trust, security, and autonomous execution.
- Value Internet: Powered by blockchain, IoT, and decentralized networks, it enables secure, trustless, and automated transfer of value.
In traditional finance, contracts and signatures govern transactions. Yet electronic agreements struggle with scalability due to reliance on centralized authorities for validation. Banks and financial intermediaries act as trusted third parties—confirming transfers, maintaining records, and enforcing agreements.
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Blockchain disrupts this model by enabling decentralized consensus. Through distributed ledger technology, participants can execute smart contracts, verify identities cryptographically, and transfer value—without intermediaries. This forms the foundation of crypto finance: a new financial paradigm built on encryption, decentralization, and programmability.
The Rise of Crypto Finance: Promise and Reality
Bitcoin’s launch on January 3, 2009, marked the birth of the first decentralized ledger. By the end of 2017, the total market capitalization of crypto assets approached $650 billion, with over 1,600 different tokens in circulation—a nearly 40-fold increase in value within a few years.
Despite this explosive growth, real-world adoption remains limited. Most projects have either replicated Bitcoin’s model or introduced minor improvements without meaningful use cases. Practical applications in payments, lending, or asset management are still nascent.
However, 2017’s token boom signaled a turning point. For the first time, blockchain moved beyond currency speculation toward tokenization of real-world assets—a digital transformation mirroring traditional securitization.
Tokenization: Bridging Real Assets and Digital Value
At its core, tokenization converts rights to an asset into a digital token on a blockchain. These tokens can represent anything of value: real estate, equities, intellectual property, or even data.
While native crypto assets (like Bitcoin or Ethereum) exist purely on-chain, most off-chain assets require centralized binding services to link physical ownership with digital representation. Here’s how it works:
- A real estate property is tokenized, with each token representing fractional ownership.
- The physical asset is held in custody by a trusted institution.
- On-chain tokens enable instantaneous, peer-to-peer trading, divisibility, and programmable logic via smart contracts.
- Off-chain services—such as auditing, legal compliance, accounting, and verification—ensure legitimacy and regulatory alignment.
This hybrid model combines the efficiency of decentralized networks with the reliability of traditional institutions. It opens doors to previously illiquid markets, allowing global investors to access fractional ownership in high-value assets.
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Core Challenges: Interoperability and Institutional Adaptation
Despite progress, crypto finance faces significant hurdles. According to Dr. Wu, the most pressing issue is interoperability—the ability of different blockchains and digital assets to communicate and transact seamlessly.
Today’s ecosystem is fragmented. Bitcoin, Ethereum, and other chains operate in silos. Cross-chain transfers are complex, slow, and often require centralized exchanges. Without robust interoperability protocols, the vision of a unified value internet remains incomplete.
Moreover, widespread adoption hinges on institutional involvement. While blockchain reduces the need for traditional intermediaries, it doesn’t eliminate them entirely. Instead, banks and financial firms may evolve into off-chain service providers, offering:
- Asset custody
- Regulatory compliance
- Audit and accounting
- Legal verification
- Token issuance platforms
This transformation positions legacy institutions not as obsolete players, but as essential enablers in the crypto finance ecosystem.
The Future of Finance: Coexistence and Evolution
Dr. Wu emphasized that crypto finance isn’t about replacing traditional finance—it’s about expanding its possibilities. The future likely won’t be fully decentralized nor entirely centralized, but a hybrid landscape where both systems coexist and complement each other.
Smart contracts could automate loan approvals based on real-time data. Tokenized securities might settle in seconds instead of days. Decentralized identity systems could reduce fraud and streamline KYC processes.
Yet these innovations require time, regulation, and technological maturity. Public trust must be earned through transparency, security, and demonstrable utility—not hype.
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Frequently Asked Questions (FAQ)
Q: What is crypto finance?
A: Crypto finance refers to financial systems and services built on blockchain technology, using cryptographic verification and decentralized networks to enable trustless transactions, smart contracts, and tokenized assets.
Q: How does tokenization work in practice?
A: Tokenization involves representing ownership of a real-world asset (like real estate or stocks) as digital tokens on a blockchain. These tokens can be traded peer-to-peer, divided into small units, and programmed with rules using smart contracts.
Q: Can blockchain really replace banks?
A: Not entirely. While blockchain reduces reliance on intermediaries for transaction validation, traditional institutions still play vital roles in custody, compliance, legal enforcement, and customer service—especially for regulated or high-value assets.
Q: What is the difference between information internet and value internet?
A: The information internet allows data sharing (e.g., emails, videos), but lacks native mechanisms for secure value transfer. The value internet uses blockchain to enable direct, secure exchange of value—like money or assets—without needing third-party verification.
Q: Why is interoperability important in crypto finance?
A: Interoperability allows different blockchains to communicate and transfer assets seamlessly. Without it, users face fragmentation, inefficiency, and dependency on centralized exchanges—hindering mass adoption.
Q: Are we already in the era of crypto finance?
A: We’re in the early stages. While foundational technologies exist and use cases are emerging, widespread adoption requires solving scalability, regulation, security, and user experience challenges.
Conclusion: A New Financial Dawn—Still Rising
The 102nd Zhongou Lujiazui Financial Salon underscored a pivotal moment in financial history. The rise of blockchain has sparked a reimagining of how value is created, transferred, and governed.
Crypto finance is not a speculative bubble—it’s an evolving paradigm with real potential to democratize access, increase efficiency, and reduce systemic risk. Yet its success depends not just on technology, but on collaboration between innovators, regulators, and traditional institutions.
As Dr. Wu noted: “The dawn is here—but the full light has yet to break.” The journey toward a decentralized financial future has begun. And with every step forward, we move closer to a world where value flows as freely as information.
Core Keywords:
crypto finance, blockchain technology, tokenization, value internet, smart contracts, decentralized finance, interoperability