Blockchain needs to solve many problems

[Abstract] After the digital money industry from being stir to rational insipid, the banks, exchanges, audit companies and other giants began to look to Bitcoin's underlying technology-blockchain.

Halloween night, accompanied by the ghost of the information and the blockchain of the hot discussion, suddenly gave birth to a problem: what is the blockchain is a "ghost"?

2013 Five ministries "on the prevention of bitcoin industry risk notification" document issued, a bitcoin price reached 8000 yuan of the scenery has long gone, experienced Mt Gox incident, with drug trafficking, smuggling scandal associated with the bitcoin slowly fade out of the public opinion, the digital money industry from the stir to the rational insipid, banks, exchanges, audit companies and other giants began to focus on Bitcoin's underlying technology-blockchain. Recently, a blockchain start-up company called R3 CEV announced that it has received the support and participation of 25 major international banks.

From "Coin" to "chain"

For the public, the concept of blockchain first appeared in the relevant discourse of Bitcoin. Bitcoin is a controversial digital currency, and blockchain is the underlying technology underlying bitcoin. Bitcoin is just one of the most famous applications of blockchain.

Blockchain (Blockchain) is a distributed peer network without central control points, using distributed collective operation method to achieve a set of non-tamper, trustworthy database technology scheme, which is characterized by decentralized storage, highly transparent information, not easy to tamper and so on.

In a more popular sense, blockchain is the "open big Ledger" that uses computer programs to record all transaction information throughout the network. The node in the blockchain network can obtain the right of bookkeeping by calculating a difficult computational problem; nodes on any blockchain network may observe the entire general ledger; Blockchain data is maintained by each node, and each participating maintenance node can replicate a copy of a complete database. Unless you can control more than 51% of the nodes in the entire system at the same time, modifications to the database on a single node are not valid, and data content on other nodes cannot be affected.

Over the past two years, discussions about blockchain have gradually transitioned from 1.0 to 2.0. If Blockchain 1.0 refers to the large ledger on the blockchain to record Bitcoin-led digital currency transactions, then Blockchain 2.0 is based on this, adding a wider range of applications.

Direct hit Pain point

Optimistic technology believes that all involved in the centralized record and interaction can be considered in the blockchain technology development related applications, the following are the various possible application patterns in the exploration.

One is registration. Blockchain has a credible traceability, that is, the blockchain uses a kind of algorithm called "Proof of work" and some consensus rules to ensure that only valid blocks can be added; a chunk is validated and linked to the blockchain, it is permanently stored; the database on the Internet is indestructible, The recorded information field is associated with the generated time and corresponds to the information in the trusted account chain is unique and non-tamper, so the blockchain can be used as a reliable database to record various information.

For example, Bitproof and blocknotary try to keep a contract on a public bill by recording a contract transaction on a blockchain. Colu uses digital tokens to manage assets. Verisart uses this distributed technology to verify the authenticity of artwork. London's Everledger company has recorded 830,000 diamonds on the blockchain to avoid the diamond industry's annual losses from fraud.

The second is the right to confirm. The open source of the blockchain can be shared so that institutions and individuals can participate in the operation of the whole system, and each participating maintenance node can replicate a copy of a complete database, thus making the owner of the information a right. Blockchain is the ideal solution for storing permanent records, such as authenticity verification, land ownership, equity trading, and more. The "Ant" System is attempting to register the company's equity (shares) with a blockchain, becoming the company's shareholder roster and the rightful place to record holdings information.

Third, intelligent management. Blockchain advocates believe that the core contribution of blockchain is to solve the problem of trust in the process of multi-point information interaction-"Byzantine general Problem". The problem stems from the Byzantine Roman Empire, where the imperial armies of the generals were geographically separated, and the generals were traitors who misled the generals into making decisions that made them unable to win, and made it difficult for the generals to agree on the right message.

Translated into computer language, "Byzantine general Problem" is the traditional system of information interaction faced by any node in the whole network system can not trust the other side of the problem of communication. But based on the rigorous and powerful algorithm consensus mechanism and the distributed maintenance principle, the blockchain can ensure that all the nodes in the whole network are automatically and securely exchanged data in the trusted environment.

This has helped IBM, which is investing heavily in the IoT business, as IBM is trying to implement the key issues of IoT technology with blockchain technology-the ability to self-manage and intelligently interact with each device in the form of a distributed cloud network. Shocard Company is also studying the realization of the intelligent management of contracts, that is, once certain terms are met, the contract will be automatically processed.

Internet Finance 2.0

The 1.0 version of Internet Finance has changed the financial business and service model, the financial essence has not wavered, even some experts think "internet finance will become history". The infrastructure of blockchain as a digital currency and information exchange may provide the direction for Internet finance to upgrade to version 2.0.

While the global financial giants, including Nasdaq, JPMorgan Chase, Citibank, UBS and Goldman Sachs, are busy setting up a blockchain lab to invest in technology companies, they may not want to transform their financial infrastructure, but their interest is likely to help them improve their business efficiency. Reduce costs in the following areas of application.

One is to improve the level of automation to reduce operating costs. Financial institutions in various business systems and back-office work, often faced with long processes and multi-link, blockchain to simplify and automate these manual financial services process, provides the possibility. The management consulting firm McKinsey published a report that blockchain finance will enable the electronic bond transactions, blockchain and programmatic transactions, reducing the staffing costs of the front and back office. The report also mentions that the future business model of the bank will change dramatically, and that the digital channel will be a "standard configuration" for trading with customers on the sales and trading side.

Second, to improve the efficiency of payment. For banks, the main attraction of blockchain is that it can be used as a recording system: reliable, meticulous and irreversible. The most promising applications in the short term will be payments, which amounted to $583 billion in the global cross-border remittance market last year, a huge amount. Ripple is turning it into a reality, and it is a payment settlement system based on distributed General Ledger. Inspired by Ripple, Earthport introduced the Distributed General Ledger service in August 2015, which combines the potential of ripple with earthport cross-border payment services and uses a local automated Clearing house (ACH) to settle payments. At the same time, some financial institutions are seriously considering using the blockchain technology behind Bitcoin as a replacement for their clearing and settlement systems.

Third, to meet the regulatory and customer requirements for data logging. Deloitte believes that blockchain technology solves the difficulties that the audit industry has traditionally met in meeting public demands and meeting regulatory requirements, ensuring the integrity, permanence and non-change of all financial data.

The future is still a blip

The designers of Widly's blockchain have built a new financial infrastructure and methodology. However, "analyticals, Reminder", this origin and all kinds of intermediary characteristics may become its practical application of the challenge. As a technical school, the blockchain is "neglected" in terms of legal jurisdiction, taxation, and national concepts. The blockchain constructs a set of autonomous norms according to the principle of "maximum Convention". (See Melanie Swan, "blockchain:bule of a New Economy").

Financial bosses involved in blockchain research should acknowledge that distributed general Ledger technology may have transformative effects on financial services such as payment clearing. However, for any financial innovation, the Bank must ensure that it can provide economic benefits, but also meet regulatory requirements, can not be separated from the existing operating system too far, so the application of the blockchain can be successful, need practical experience.

And at the technical level, blockchain still needs to solve many problems, such as network security and block capacity.

In the field of foreign fintech, new concepts are emerging, and in the field of domestic internet finance, investors are looking for new opportunities and new hotspots. Blockchain, is the dawn of new technology applications, or is it another flash of speculation concept? The author with curiosity and awe on the claim to get 25 world-famous banks in the R3CEV company website, see the technology and business information is poor, but the company released its own press releases and media coverage of the company is a very comprehensive list.

In the concept of many ideas

Blockchain needs to solve many problems