Peng Yunqiang
Distributed Economy: The Goal and Only Way of Digital Transformation.
The progress history of human society is the history of the demise of old things and the evolution of new organizational forms. In 1994, the WIred magazine’s first editor Kevin Kelly (KK) published his masterpiece: Out of Control: The New Biology of Machines, Social Systems, & the Economic World. The predictability of opinion has been mentioned in the book. 30 years later, it is emerging or quietly becoming a popular concept; not only that, but the book also hides the predictions of the future that we have not yet confirmed or peeked through. In this century, some of us will be fortunate to practice some of them.
The author summarizes the trend of future organizational evolution in the book, referred to as “The Nine Laws of God”:
1. Distributed state
2. Bottom-up control
3. Cultivate increasing returns
4. Modular growth
5. Maximize the edge
6. Courtesy mistakes
7. Do not seek optimal goals; but seek numerous goals
8. Seek lasting imbalance
9. Transformation
Throughout the development of finance and technology in the past few decades, KK’s foresights have been continuously verified, such as the epoch-making invention born with Bitcoin-blockchain technology, and the subsequent birth of Blockchain 2.0-Ethereum (distributed Smart contract) is a kind of “irreversible invention”. What is an irreversible invention? It’s nothing when it is not invented, but after it has been invented, human beings will never be able to return to the state without it.
In the blockchain system, there is no centralized organization responsible for management and decision-making. Everything is open source, and its operation is maintained by the open community collectively. Most of the community participants are programmers and engineers based on a set of rules (algorithms). Completely voluntarily maintain the stability and continuous iteration and evolution of the system. This is the vivid practice of the above: “distributed state”, “bottom-up control” and other laws.
Figure 1: The three pillars of digital transformation
The pandemic since last year has accelerated the fulfillment of the above-mentioned laws around the world, as Apple CEO Cook said: the company cannot go back to the office before the pandemic. According to the workforce confidence index recently released by LinkedIn, about half of American professionals believe that their company will allow them to choose to work remotely for a period of time after the outbreak. This is the case in the technology, finance, and media industries. The pandemic has accelerated the digital transformation of various industries. Digital transformation means a thorough reflection on customer experience, business models, and operations. Its purpose is to find new ways to deliver value, create revenue, and improve efficiency.
Digital Transformation: Solving the Pain Points of the Road Freight Industry.
Taking the logistics transportation industry as an example, HGC Ltd., a trucking SaaS provider, recently it is planning to offer Trucpal token as security token to qualified investors. I would like to briefly analyze how China’s truck transportation industry can achieve digitalization through blockchain and distributed ledger technology ( DLT ) Transformation and disruptive innovation. First of all, we need to understand what STO is. The full name is Security Token Offering, which is the issuance of security tokens. Its purpose is to use blockchain technology to legally raise funds from specific accredited investors in the international capital market under a compliant regulatory framework. TheHGC Ltd., plans to complete the registration of compliant securities in the United States in 2021 and issue them globally, and plans to raise US$20 million from qualified investors. It is also expected to be listed on accredited digital securities exchanges in the United States and Hong Kong, etc. Founded in 2013, HGC Ltd., is a digital intelligence transportation supply chain management service system provider dedicated to providing asset management and vehicle operation management for the entire life cycle of trucking for the road freight industry.
In 2018, China’s first survey report on truck drivers, “China Truck Driver Survey Report №1”, showed that the number of truck drivers in China is as high as 30 million, and 76% of the total freight in China is completed by trucking. In other words, Over 30 million truck drivers carry 76% of China’s total freight volume. However, due to factors such as identity constraints, individual drivers cannot provide value added invoices, causing the freight forwarder’s value-added tax deduction chain to break, and causing companies to be unable to make tax deductions.
Under the current situation of high tax costs, some companies have opted for “blank bills”. However, the “blank bills” are not recognized by the tax bureau. Once checked, the enterprise not only needs to pay the corresponding value-added tax, but also needs to pay the penalty.
Figure 2: Global value chain of road logistics transportation industry
Trucpal is an underlying platform for the road freight industry, which includes freight solutions for individual drivers. Among them, the Internet, big data, cloud computing and other advanced technologies have been embedded to build platforms, so that online truck fleets can join them, sign freight contracts with shippers as the carrier, assume the responsibilities of the carrier, and entrust the actual carrier ( Truck drivers).
STO : The new development trend of financial technology.
Blockchain is one of the fastest growing digital technologies recently, and its revolutionary decentralized model is being adopted by more and more industries. 2021 may be the year of the rise of a so-called STO, or “securities-based token offering,” and HSC vehicles are using this technology to raise funds from accredited investors. Compared with the high threshold of fundraising through the traditional financial market, STO lowers the barriers to entry for investors, allowing anyone with qualified requirements to participate. This means that companies that are undergoing disruptive innovations like HGC Ltd., can raise funds quickly without having to pay high fees, which greatly increases the flexibility of the project.
Figure 3: STO accelerates disruptive innovation
Meanwhile, the STO can further realize the ecological incentives for trucking industry and the community . For example, on the Trucpal token ecosystem, road freight practitioners will earn reward points on the platform. These points can either swap to shipping points or Trucpal tokens so as to achieve incentives for industry ecological participants.
Cross-border and cross-platform circulation is a key pain point in traditional financial markets. For example, it is difficult for domestic investors to directly invest in international capital markets such as US stocks and European stocks. There are restrictions on foreign qualified investors’ access to China’s capital market. The STO will help improve the liquidity of global high-quality assets. Take China concept stocks as an example. If they are listed on the US stocks, they cannot be listed on the mainland A shares. If the stock wants to return to A shares, it needs to go through privatization and delisting, the removal of the VIE structure, A-share IPO queues or backdoors before the relisting can be completed. For STO, through pre-programmed smart contracts, decentralized, permissionless, and distributed free flow can be easily realized. This is why, in the context of the current pandemic, HGC ltd., has still obtained 2 million USD of Pre-STO investment. This round of Pre-STO financing will further support the upgrade of the company’s sustainable business model and the globalization of digital securities. Asset tokenization is becoming a new development trend of asset securitization.
