Zeng Ming: What is the core concept of the blockchain?

Blockchain is the revolution of production relations

The core concepts often mentioned in the discussion of blockchain are:

(1). Distributed Ledger: Distributed ledger, unchangeable, traceable, fully transparent, this is achieved by an encryption algorithm. Confirmation and accounting are done through a point-to-point distributed network.

(2). Protocol and Permissionless trust: Since the confirmation and recording of any transaction is automatically implemented by some kind of consensus, usually an algorithm, which is agreed upon in advance, an important feature of such a network is that There is no need for a centralized organization to endorse the authenticity of these records. This is often referred to as a decentralized trustless trust.

(3). Smart contract: Smart contract. Due to the decentralized peer-to-peer network, some consensus can be followed to automatically complete certain transactions without endorsement by the centralization organization, thereby greatly reducing transaction costs and bringing huge economic benefits. This feature is called a smart contract. And because of the interaction rules between points and points, the behavior of points can be programmed, and the imagination space that can be developed by "smart" is huge.

Point (1) is the technical feature of the blockchain, and point (2, 3) is the economic feature of the blockchain and is the basis for value creation. This is also why the blockchain is called the revolution of production relations. I fully agree with this point. Division of labor and cooperation are the basic driving forces for human social and economic progress.

The finer the division of labor, the more extensive the cooperation is needed, because if there is no exchange, the fruit of the division of labor will not be realized, and the division of labor will not appear at all. Therefore, exchange and cooperation are both the result of division of labor and the prerequisite for further division of labor. The two are actually mutually reinforcing and spiraling upward. In this sense, we often say that blockchain is a revolution in production relations, but it will inevitably bring about major changes in productivity.

The blockchain has caused a sharp drop in the cost of exchange and cooperation between peers, which is “the decline in transaction costs”, which will greatly promote the further refinement of the division of labor, which will lead to another round of development of productivity. This is a very important technological revolution in infrastructure.

The essence of the internet

The three words of the Internet, "link" is the connection, online, the value creation of the PC Internet era is basically based on this; "mutual" is interactive; the mobile Internet makes full use of the value of interaction; "net" is the network, with Network collaboration replaces traditional supply chain management methods.

Taobao is a preliminary evolutionary sample in this regard. The blockchain provides the underlying technical support of “mesh coordination”, which is likely to drive further development of network collaboration.

But the current enthusiasm for the blockchain is largely based on the imagination and expectation of the above possibilities. Most of the discussions did not realize how big the challenge was, what the real difficulties would be, and what the next step was.

Just accounting can't shake business revolution

The proportion of fully transparent book information in overall business information is very limited. Blockchain technology provides reliable, full-book records at low cost, providing direct value in some areas. Such as the record of the entire supply chain.

On the whole, the information that affects business decisions is massive, and the book information is only the basis. Just keeping this account can't shake the big changes in business. But so far, even though the commercial Internet has been in development for more than 20 years, the onlineization of business in most industries has only begun. If the blockchain can drive the full onlineization of core business processes in an industry, the value will be much greater.

The value of "objective" information is very limited. Information transparency is not equal to judgment. Many people often talk about blockchains that can significantly reduce information asymmetry. indeed so. However, in addition to the first point mentioned, the value of the information itself is high enough to have a very important issue to consider. Even if the information is symmetrical, people often judge the same information differently. And the more complex the information, the more it is.

And valuable business information is rarely simple information, often complex information, requiring subjective/professional judgment. Even we can say that there is no such thing as "objective" information, and information is subjective. It is the inconsistency of people's judgments, which brings inconsistencies in the final decision. Business, in the visible future, will rely heavily on human creativity and judgment. The transparency and symmetry of information only increases the value of judgment. The current blockchain discussion is too mechanical and simple to understand business and credit. I will expand on this in the fourth article.

The use of the word "trust" in Permissionless trust can be misleading. The authenticity of the record is only the minimum requirement for “trust/credit”. The "trust" mentioned here is really not a credit that everyone generally understands can really promote cooperation. You believe that all the information provided by a person is true, until you believe that he has given you all the information you have given, until you believe in his relevant abilities (ability judgment), until you believe that he will not harm you, to You believe that he will do his best (motivation judgment), and every step forward is a huge hurdle.

In the development of Taobao, the construction of credit is a long-term huge challenge. The establishment of Alipay, the establishment of the most basic trust from the secured transaction, and then through the extensive participation of the peer-to-peer evaluation system to form a basic credit evaluation for each seller (reflected as the seller's star diamond crown system), to long-term professional anti-counterfeiting and Anti-fraud teams are all about building trust.

We can simply say that as long as the problem of trust is solved, the market can prosper. But in fact, this sentence has to be grounded, and it is a process of continuous innovation. Like the case of Taobao, these mechanisms are accumulated through long-term interaction. There is still a long way to go before the blockchain establishes a decentralized trust based on transparent accounting.

Therefore, the consensus that blockchain technology itself can achieve at present is very limited in promoting social synergy, and it requires huge innovation. Of course, this is why everyone emphasizes Token. The success of Bitcoin is directly related to the design of the miner's reward mechanism.

Therefore, we need to design the interest mechanism to make everyone willing to cooperate actively. But this is itself a very complex economics, management and psychology puzzle, but also how to combine the technical advantages of the blockchain. From simple consensus to substantial reduction in transaction costs, real innovation is needed. This is the key to the future success of blockchain applications. Let's discuss this in our next article.

What is the similarity between blockchain and artificial intelligence?

The blockchain is supposed to produce as much consensus as possible without trust.

These consensuses are written in the algorithm, so it has been possible to significantly reduce transaction costs. However, this article emphasizes that on the basis of these consensuses, how to form true trust is the basis of business. The higher the trust that can be generated in the larger scope, the higher the breadth and depth of collaboration, and the greater the commercial value of creation.

Matter, energy and information are the most basic elements of the world. The processing of information is an important main line in the development of human society. The most important of these is how trust is generated. When the primitive tribes exchange materials, they often exchange the chiefs before they can trade.

Released after the transaction, the so-called mutual hostage mechanism. The two countries have been handed over to the military and are also responsible for the basic information exchange and trust building. Historically, the evolution of various institutions has often been a long historical process. So institutional economics, such as North's research, are historical evolutions of Western capitalist systems for centuries.

Today, what we are doing is that when an economic ecology has not yet been born, it is necessary to write a consensus of trust into the program. This is a rock-shattering thing! We are designing our own destiny! It's like we have a CRISP tool that tries to encode the gene.

Just as artificial intelligence is fundamentally challenging the human brain, the challenge of the blockchain in designing the economic system that human society has evolved together will be fundamental and revolutionary.

Because it directly faces humanity. Only by understanding Token at this level can we have enough awe and a sense of mission to the historical opportunities and challenges we face.