Preface and Chapter 1: The Agreement of Credit——Part 1 of the Essentials Series of Blockchain Revolution

Series Preface

For most people who are interested in Bitcoin and blockchain, they are more interested in the basic principles of blockchain and its application prospects in various industries than in specific technologies and codes. Unfortunately, there are relatively few popular articles and monographs in this area. Either technical experts are keen on discussing various specific technical issues, or die-hard fans sporadically publish some romantic fantasies about the future, which are neither systematic nor precise enough.

Fortunately, the recently published book "Blockchain Revolution" has completely changed this situation.

"Blockchain Revolution: How the technology behind Bitcoin is changing money, business, and the world" is a blockbuster new book in the blockchain field. It was published on May 10, 2016, with 360 pages and is a bit thick. The main content of this book is to introduce the possible applications of blockchain technology in various fields and its prospects. You can think of it as a qualitative book that imagines the future. It is a good combination of technology and the future, which can help people open their minds and understand the actual application scenarios and various possibilities of blockchain technology.

As you may know, there are not many best-selling books about Bitcoin and blockchain. Previously, there was a technical book about Bitcoin called "Mastering Bitcoin", but it was too technical and not widely read. Later, there was another book in print called "Bitcoin and Cryptocurrency Technologies", which also focuses on technology. Now the industry has shifted its focus to the underlying technology of blockchain and tried to find applications in various industries. The current state of the industry is probably that everyone knows that this thing is important, awesome, and disruptive, but most people don't know how to do it or how to implement it. The industry urgently needs someone to step up and provide guidance.

Therefore, a book like this has recently come out that introduces the prospects for industry applications. It is not an IT technology monograph, but is aimed at ordinary readers. It will do immeasurable good for promoting blockchain technology, popularizing blockchain thinking, and promoting entrepreneurship, and the timing and location are very appropriate.

The author heard that the Chinese version of the book might be out in a month or two, but he was impatient and immediately ordered the English version from Amazon, which cost about 180 yuan, which was a bit painful. Now that I have read a few chapters, I really can't put it down, and I have a strong urge to introduce it to more readers. Therefore, I dare to write this series, and try to select the essence of the most core 10 chapters in the book and recommend them to everyone. Please give me your comments.

In addition, I have no connection with the translation team. This series is directly based on my reading, excerpting and understanding of the English version, so errors and omissions are inevitable.

Okay, the foreplay is almost over, goddess, let’s get straight to the point.

Praise for this book from great people

There is a very good paragraph on the outer packaging of the book, which is exciting to read. I copy it here:

The first generation of the digital revolution brought us the Internet of information. The second generation-powered by blockchain technology- is bringing us the Internet of Value: a new , distributed platform that can help us reshape the world of business and transform the old order of human affairs for the better.

Such an awesome book must have invited many great people to give their support, and there is no lack of praise from various great people:

“The blockchain is one of the most fundamental inventions in the history of computer science. Read Blockchain Revolution to understand its profound implications.”
—Marc Andreessen , cofounder, Netscape and Andreessen Horowitz

This is one of the most powerful angel investors in Silicon Valley. His investment style is known for being forward-looking and aggressive, and he has invested in many powerful companies. He also highly praises blockchain and believes that its importance can be compared to when the Internet was first born.

“The Tapscotts have written the book, literally, on how to survive and thrive in this next wave of technology-driven disruption. Likely to become one of the iconic books of our time.”
—Clay Christensen, author of The Innovator's Dilemma

The author of "The Innovator's Dilemma" is a master of innovation management.

"The great missing element in the Internet has been a 'trust protocol," a way of knowing that a transaction is verified and authentic. Blockchain technology could provide a foundation for that. It's a revolutionary idea, and this lucid book explains why."
—Walter Isaacson , author of Steve Jobs

A biographer, he has written biographies of Steve Jobs, Albert Einstein, Henry Kissinger, and Benjamin Franklin. He also wrote The Innovators, which describes the grand history of the development of information technology. It is a large volume and worth reading. Therefore, it is appropriate to invite him to write a recommendation.

"What a spectacular book. Mind-blowing in its expansiveness and profundity. It makes me think we're at one of those times in technological, economic, and social history where the sky is the limit."
—Steve Wozniak , cofounder, Apple Computer and chief scientist, Prime Data

One of the founders of Apple.

In addition, Blythe Masters, the CEO of Digital Asset Holdings, who is familiar to everyone, and Benjamin Lawsky, who used to work in financial regulation and started a business immediately after learning about blockchain, also wrote praises for the book.

Blythe Masters, known as the No. 1 commodity manager at JPMorgan Chase and the mother of CDS, praised the book for capturing the passion, potential and importance of the topic.

Lawsky was a financial regulator in New York State. He was the first to promote the regulation of digital currencies and became famous for holding a series of hearings. He called this book a definitive guidebook that attempts to explore this field.

Content structure of the book

The book has 11 chapters and is divided into three parts.

The first part is called Say you want a revolution, you need a technological revolution, which introduces the background and basic principles of blockchain. It is also the focus of the first article in this series.

The second part, called Transformations, consists of seven chapters, which introduce the application prospects of blockchain technology in seven fields, including financial services, corporate system, business model, Internet of Things, charity and economic equality, government and democracy, and culture. It is the most important part of the book, and this series will also focus on introducing them one by one in the future.

The third part, called Challenges and the Future, is divided into two chapters. One chapter discusses the top ten challenges facing blockchain technology, and the last chapter introduces the future of the blockchain ecosystem, such as leadership, central banks, regulation and other topics.

Chapter 1 Credit Agreement

This chapter first reviews the history of electronic currency, from David Chaum's eCash in 1993, to Nick Szabo's God's Protocol, to Satoshi Nakamoto's Bitcoin concept and system in 2008. The article mentions Marc Andreessen's surprise after he first learned about the principles of Bitcoin: (paraphrased)

OMG, this is it! This is the huge breakthrough. This is what we’ve been waiting for. He solved all the problems. Whoever he is should get a Nobel Prize—he’s a genius. This is the distributed trust network that the Internet has always needed but has never been invented. He said in an interview with the Washington Post that we will be here discussing blockchain in 20 years, just like we are discussing the Internet today.

The author then briefly explains the basic principles of Bitcoin, concluding by emphasizing that just as double-entry bookkeeping enabled the rise of capitalism, digital ledger technology can record almost anything of value and importance to humans, from birth/death certificates, marriage contracts, ownership rights, educational degrees, financial accounts, medical procedures, insurance documents, voting, food traceability, and anything else that can be coded.

Why should we ordinary people care about this?

The author says distributed trust will profoundly affect all aspects of people's lives.

What is more interesting is that the author calls the wave of heroes jumping into the blockchain field to start businesses Rational Exuberance, which implies that the blockchain economy has just begun and good times are yet to come. Rational Exuberance actually comes from Irrational Exuberance, which was first proposed by Greenspan to comment on the Internet bubble in the late 1990s. Later, Nobel Prize winner Turnbull Schiller wrote a book with this name, which elaborated on the history and formation mechanism of the US real estate bubble. I have gone off topic.

In this chapter, the author introduces some theoretical things. He explains the internal structure of integrity and believes that integrity includes four elements: honesty, considerations, accountability, and transparency. He believes that a globally credible ledger is to embed integrity into all institutions and organizations, thereby creating a safer and more credible world. The slogan is too big, so scary.

Since it is a revolution, there must be an object of revolution. The object of the blockchain revolution is violent despotism. In addition to violent political despotism, modern society is more dominated by large corporate despotism. Every technological revolution will change the power structure of society and economy. Since the beginning of the Internet era, the world has become more and more flat. Everyone has enjoyed the benefits of the almost zero-cost dissemination of massive amounts of information, and everyone has been included in it. This is in contrast to the power concentration and economic monopoly of the industrial era.

Of course, in the information age, some new and more terrifying monopolies have emerged, such as Google, Apple, Facebook, Alibaba, Tencent, etc. These large institutions control most of the information production and interaction in the world. While bringing value to users, they have made huge profits, and at the same time, they control most of the data assets and privacy, whether we agree or not.

In addition to the autocracy brought by big companies, there is also government control. Even in the United States and Europe, the government's monitoring of Internet information has continued to increase, not to mention countries like China and Russia. They monitor, eavesdrop on the public, and guide public opinion to maintain their political power. The book specifically mentions the Chinese and Iranian governments, calling them repressive governments.

Now, with blockchain, everything may be different, and all the old trends of yesterday may be changed. We will truly own our own personal identity and data, and we can completely break away from intermediaries to create and exchange value. Massive small transactions and a large number of unbanked people (people without traditional bank accounts) can access the world of blockchain and freely discover and explore endless possibilities. The current world often uses wealth redistribution (taxation, charity, etc.) to solve the problem of the gap between the rich and the poor, while blockchain is inherently distributed, fair, and does not reject anyone.

Because this is the first chapter of the book, the author uses the following 12 sections to explain the new possibilities that blockchain may bring to the economy, society, and each of us.

Identity and privacy : Each of us proves our identity and existence through external documents such as ID cards, birth/death certificates, credit cards, consumption cards, emails, avatars, and consumption records. We live online and leave countless footprints and data online, which constitute our identity proof. Most Internet companies will retain user data, which brings convenience but also comes at a huge cost, that is, the privacy of users is compromised. And the right to privacy is the cornerstone of a free society. (Americans write books in this tone, and they always talk about freedom and human rights). The author envisions a "personal avatar", which means a personal digital identity. We can use different identities in the "personal avatar" when engaging in different activities, and different identities are completely isolated and will not refer to each other. Traditional identity information such as ID cards actually contains a lot of private information. Let's make a bold guess. In the future, suppose you can pay taxes on blockchain A, buy things on blockchain B, and trade stocks on blockchain C, and no one knows that these three identity addresses are actually one person. In this way, your personal avatar becomes a small black box to protect and manage personal privacy, so that each specific activity in the digital world only discloses specific identity information, and personal privacy is best protected. Your black box may include government-issued ID cards, social security numbers, medical records, service accounts, financial accounts, passports, professional certificates, birth certificates, other certificates, and other private information such as sexual orientation, health status, and body BMI index. In this way, you can disclose your specific identity and private information to specific objects within a specific effective time frame. Your avatar assistant can also only answer "yes or no" to reduce the leakage of personal privacy, for example, only provide a personal income range instead of an exact number.

The impact of this is that in the real world, your reputation is always localized and accompanied by a lot of public private information. In the blockchain world, your reputation exists on the entire network, and because of its secure and private nature, no one knows who you are.

Economic fairness : With blockchain, billions of people who are excluded from modern society can join in, find opportunities, and realize their own value. This includes

Create a true P2P sharing economy : You may know that Airbnb and Uber are now known as the models of the sharing economy. In fact, their sharing level is far from enough because they are intermediaries and monopoly platforms. Blockchain-based house sharing and rental sharing will directly kill Airbnb and Uber, directly connect the supply side and the demand side, and turn the blockchain into a public platform shared by all parties. The blockchain will not make taxi drivers lose their jobs, but will only make Uber unemployed, so it is a complete disintermediation.

Reshape the financial system in terms of speed and inclusiveness : The traditional financial system is cumbersome, highly centralized (one of the root causes of the financial crisis), insecure, opaque, with high customer barriers and always lagging behind in supervision. Blockchain finance enables everyone to access financial services (as long as there is an Internet connection). Banks, stock exchanges, credit card companies, insurance companies, audit firms, brokerages, micro loans, real estate agencies, etc. can all be cleared and settled on one (or a few) blockchains, which greatly reduces IT costs and improves speed and efficiency.

Global property rights protection : Property rights are the cornerstone of capitalism. Various ownership and intellectual property rights can be traded on the blockchain, including real estate, financial assets and even ideas. The on-chain registration and trading of ownership rights may even bring about global justice, economic growth and peace. (This is too optimistic. Just defining ownership rights is a very troublesome thing, such as real estate and land. See my uncle haha)

Remittance : Blockchain is suitable for low-cost global remittance. This is basically a consensus, so I won’t introduce it in detail. There is a figure that says it took Western Union 150 years to have 500,000 outlets around the world, but blockchain companies can achieve it in just one or two years. I deeply realize that blockchain is a magical tool for value transfer and exchange.

Cutting off bureaucracy and corruption in overseas aid and charity : Because blockchain is completely transparent and does not involve intermediaries (intermediaries are like the Red Cross, you know). Just before the post, there was news that Alipay announced that it would use blockchain technology for one of its charity businesses, which can be regarded as a domestic application.

Protect intellectual property rights : mainly aimed at artists, music, etc., and the specific operation mode is not discussed here.

Redefine the structure of future companies : The current corporate structure is vertical and is a product of the industrial age. Future companies should be networked, open, and based on smart contracts (for example, automatically paying wages and commissions after completing a certain amount of work, haha), directly eliminating many middle management levels.

Seamless connection with the Internet of Things : All sensors and objects can be registered on the blockchain, and transactions and value exchange can take place between objects and between people, making objects fully intelligent.

Blockchain encourages entrepreneurship : anyone can participate in the blockchain economy, looking for entrepreneurial opportunities, selling their own labor and services on the blockchain, etc., without having to get an account in a bank. This sentence is very exciting: no matter how small the resources and talents are, they can be monetized on the blockchain.

Subvert government regulation and governance : Whether in a democratic or authoritarian country, the government is cumbersome, slow, costly, and has distorted incentives. Blockchain can make public services and voting more transparent, more efficient, and less labor-intensive.