After Bitcoin, the "cold" term blockchain reappears

▲ Unlike traditional centralized ledger systems, blockchain creates trust and develops credit through distributed property rights management in an open, transparent, unchangeable and traceable manner, thereby reducing the friction coefficient in the value exchange process and achieving zero marginal cost.

▲ In addition to the standardization of underlying technology, business and data, blockchain also faces a series of technical challenges such as performance, capacity and scalability. Its in-depth promotion and application requires a process of integration and development, and requires the joint efforts of all parties in the industry.

Following Bitcoin, another "high-end" term - blockchain, has entered the public eye.

After some international financial and technology giants raised the banner of blockchain, Wanxiang Holdings and Distributed Capital, two domestic early blockchain investors, recently announced that they would invest 150 million yuan in blockchain startup Juzhen Finance. Coincidentally, Minsheng Bank also announced in its third quarter report that it had officially joined the R3 blockchain alliance.

It seems that in just one year, blockchain has become very popular. What exactly is this technology that Don Tapscott, the "father of digital economics", once asserted would "subvert money, business, and the world"? Will it become the next hot topic, or is it just a hype?

From behind the scenes to the front stage

About 7 years after the birth of Bitcoin , blockchain became popular. People found that Bitcoin, the virtual digital currency born on the world's first blockchain, could run stably for many years, and the underlying technology blockchain played a big role. Therefore, after Bitcoin experienced a price bubble and the market cooled down, blockchain was abstracted as a separate technology and gradually came to the fore from behind the scenes.

What is blockchain? At the recent China Blockchain Technology Innovation and Application Alliance Founding Conference and Blockchain Jimen Forum, Beijing Datong Blockchain Research Institute CTO Bi Wei gave an example: Suppose you want to transfer 10 yuan to Xiao Ming, you don't need to rely on third-party trusted institutions such as banks, Alipay, etc., just deduct 10 yuan directly from your electronic account and add 10 yuan to Xiao Ming's electronic account , and the transaction will be completed. In this process, the task of the blockchain is to record, copy, and share the date, time, participants, and transaction amount of the transaction with every user using the system. In other words, everyone has an identical account book, and the fact that you gave Xiao Ming 10 yuan has been recorded in the account books of all users.

Some people may ask, what if Xiao Ming is dishonest and privately deletes the transaction record or changes the transaction amount to 1 yuan? This involves a feature of blockchain - it cannot be tampered with. "Once you check the accounts with others and the system finds that there is a different account book from everyone else, the blockchain will automatically correct the 'wrong' account book." Bi Wei further explained.

In short, blockchain is a series of data blocks generated by cryptographic methods. Each data block contains information about a Bitcoin network transaction, which is used to verify the validity of its information (anti-counterfeiting) and generate the next block. Unlike traditional centralized ledger systems, blockchain creates trust and develops credit through distributed property rights management, collective autonomy, openness, transparency, immutability and traceability, thereby reducing the friction coefficient in the value exchange process and achieving zero marginal cost.

What are the benefits of this "public ledger"? Blockchain supporters believe that it is the core basic technology with the greatest potential to trigger the fifth wave of disruptive innovation after steam engines, electricity, information and Internet technology. A recent report by the European Central Bank also provides rich imagination for this, saying that blockchain will lead an imminent business innovation.

When blockchain meets finance

The future seems promising. " Ten years ago, the Internet wave swept the world. Today, the Internet's function has changed from transmitting information to transmitting value. Blockchain technology can be regarded as a product of value transmission." A relevant person in charge of the China Blockchain Technology Innovation and Application Alliance believes that the rise and development of blockchain will effectively eliminate and reduce the obstacles to global wealth creation, bring about the upgrading of industrial structure and efficient and highly competitive scale effects.

Confidence comes from the unique advantages of blockchain. As a new underlying IT technology, blockchain ensures information security through high information redundancy and realizes self-certification in the process of information regeneration, transmission and storage. "It uses a trust establishment mechanism based on algorithms and IT technology to change the traditional reliance on central nodes and trust verification mechanisms, and builds a network for asset and value transfer between multiple participants without the assistance of intermediaries, reducing the cost of credit establishment, and is expected to promote the Internet to become a new type of credit infrastructure and realize the effective transfer of value." said Li Yan, deputy director of the Service Industry Department of the Information and Software Department of the Ministry of Industry and Information Technology.

This breakthrough shapes the decentralized, secure, consistent and tamper-proof properties of blockchain, and also determines the high degree of compatibility between blockchain and finance.

"Just as Alibaba has built a bridge of trust between buyers and sellers to facilitate transactions (buyers pay after confirming receipt of goods), an important breakthrough of blockchain is to remove intermediaries and third-party trust mechanisms," said Wang Zhongmin, vice chairman of the National Council for Social Security Fund. He cited payment behavior as an example, saying that in the past, if two strangers wanted to transfer money, they had to rely on third-party institutions such as banks. Now with blockchain technology, there is no intermediary agency involved in the transaction, and both parties can directly complete the transaction with mutual trust.

The impact of this cannot be underestimated. In addition to shortening transaction settlement time from weeks to days to minutes or even seconds, according to McKinsey's calculations, from a global perspective, the application of blockchain technology in B2B cross-border payment and settlement business can also reduce the cost of each transaction from about US$ 26 to US$ 15 , of which about 75% is the payment network maintenance fee of the transit bank, and 25% is the compliance, error investigation and foreign exchange exchange costs.

Of course, in addition to money, anything else of value, such as stocks, bonds, hedge funds, and all types of financial derivatives, can also be transformed and securely transferred and stored on the blockchain.

The significance of blockchain goes far beyond this. Xiang Wanhong, vice president of Yuanguang Software, believes that in the context of energy Internet construction becoming a global consensus, the unique advantages of blockchain technology in data encryption, trusted measurement and decentralization will effectively solve technical problems such as multiple transactions, data friction, and multiple trust, and meet the needs of energy Internet in terms of accurate measurement, interactive coordination, etc.

Li Yan said that the development of blockchain has brought new opportunities and challenges to the software and information technology service industry. From a technical perspective, blockchain technology is a universal underlying technical framework that will change the way data is stored and used, and will also drive innovation in software development environments, software connection methods, and data application models.

Points, luxury goods, medical care, supply chain, insurance, government affairs ... "As a glue between the virtual and real worlds, blockchain is suitable for any assets involving ownership," said Zhu Haogang, executive director of the Peking University Blockchain Technology Research Institute.

Blockchain is not a panacea

Blockchain, which seems to be "all-powerful", is now gaining popularity in the capital field. In 2015 , blockchain became the sector with the highest financing in US venture capital. According to statistics from relevant research institutions, the global investment in blockchain startups in the past three years has exceeded US$ 1.4 billion, with more than 800 investment cases involving application fields such as cross-border payment, cloud storage, data identity management and medical data management.

However, the seemingly "prosperous" situation is fraught with risks. According to Li Yan's analysis, although the industry has adjusted and optimized blockchain in terms of cost, security and efficiency, blockchain is prone to waste of computing and power resources during production, and its performance and efficiency need to be improved, while privacy protection and security issues need to be strengthened. At the same time, the integration of blockchain with the regulatory systems of various industries cannot be ignored.

Zhou Xiaochuan, governor of the People's Bank of China, also said that although the People's Bank of China has deployed important forces to research and explore blockchain application technology, blockchain still occupies too many resources so far, whether it is computing resources or storage resources. Whether blockchain can cope with the existing transaction scale in the future remains to be tested.

In fact, in addition to the standardization of underlying technology, business and data, blockchain also faces a series of technical challenges such as performance, capacity and scalability. "Blockchain should be seen as one of the many technologies that will form the infrastructure of the next generation of financial services, but it is not a panacea and can only solve the problems it is suitable for solving," said Zhang Longhua, partner of KPMG.

In the industry's view, although blockchain, which "will not only change the next generation of the Internet but also change human society", looks beautiful, it is still in the exploration and research stage overall. Its in-depth promotion and application requires a process of integration and development, and the joint efforts of all parties in the industry.

"Technology cannot be implemented without application scenarios. How to combine one's own business characteristics and realize the in-depth application of blockchain technology in more fields from appropriate scenarios to maximize the value of blockchain is an issue that every participant should think deeply about." Gao Jian, chairman of the China Blockchain Technology Innovation and Application Alliance, called on more researchers to pay attention to China's underlying independent core technology of blockchain, pay attention to blockchain application scenarios, and promote the implementation of domestic blockchain applications more quickly.