The world is experiencing a blockchain boom

In 2008, a mysterious figure, Satoshi Nakamoto, who has only been heard of but never seen, brought Bitcoin to the world through a mysterious paper that has not been published in any academic journal. Bitcoin, born in the virtual world, represents a consensus of human beings on mathematical algorithms. Based on this consensus mechanism, even without any government credit endorsement, Bitcoin has still been recognized by the world. Whether it is from the initial exchange of dozens of Bitcoins for a pizza, or on December 1, 2013, the price of Bitcoin exceeded the price of one ounce of gold, Bitcoin has shown the world its side as a measure of value. Although the sharp rise and fall of Bitcoin prices has reduced its possibility of being used as a currency on a larger scale, Bitcoin has shown the world a possibility of value transfer without the need for an intermediary. This possibility is blockchain.

As Melanie Swan pointed out, Bitcoin and blockchain include three levels of content: blockchain underlying technology, protocols and encrypted digital currency. Blockchain technology is a combination of peer-to-peer communication technology and encryption technology. The blockchain generated based on blockchain technology is essentially a decentralized distributed ledger database; based on this database, a large number of applications can be developed, and these applications achieve various functions through consensus mechanisms at the protocol level; finally, at the application level, customers can achieve peer-to-peer interaction without the need for intermediate authority arbitration, including Bitcoin. Some people use "organizational decentralization and technology that achieves perfect consistency in logic" to describe blockchain technology, while others use "one of the basic protocols for the next generation of global credit authentication and value Internet" to explain the characteristics of blockchain. In general, the application of blockchain technology mainly includes the following contents.

First, financial product innovation. Since the main content of the financial product infrastructure is the agreement on the rights and obligations of the participating parties, all kinds of financial products such as currency, bonds, and equity can form innovative financial products corresponding to the traditional financial product categories through the consensus mechanism established at the protocol layer. Since the blockchain has formed a consensus mechanism that can exist independently, the blockchain technology has the function of automatically executing the agreement, and people classify such agreements as smart contracts. The basis for the implementation of smart contracts is the consensus mechanism rather than centralized verification, which minimizes the execution cost of smart contracts and greatly improves the execution efficiency. Innovative financial products based on smart contracts have the significant characteristics of high transparency, high security, and high efficiency. Based on the above advantages, the blockchain technology will bring subversive changes to the financial industry. Some roles in the existing financial system will no longer be needed, and the functions of financial intermediaries will also undergo profound changes.

The second is the transformation of financial infrastructure. Blockchain itself is a database. Based on point-to-point communication technology and encryption technology, the organization of the database is more open and traceable. Based on blockchain technology, each data node can participate in verifying the authenticity and integrity of the ledger content, which is equivalent to reducing the trust risk of the system by improving the accountability of the system. This feature gives blockchain a significant advantage in credit investigation, auditing, asset confirmation, etc., thereby indirectly improving the operating efficiency of the financial system.

The third is the intelligent Internet of Things. Since blockchain forms an independently operated consensus mechanism, blockchain technology can be applied to the data processing and system maintenance of the Internet of Things. For example, some organizations have proposed to use blockchain technology to manage the identity, payment and maintenance tasks of tens of billions of Internet of Things devices. Using blockchain technology, manufacturers of Internet of Things equipment can greatly extend the life cycle of products and reduce the cost of Internet of Things maintenance.

Fourth, it is the technical foundation of the sharing economy. The decentralized consensus mechanism of blockchain has greatly extended the application scope of computing services. Although the development of electronic payment technology has greatly reduced the cost of payment, the cost of extremely small payments, such as less than 0.01 yuan, is still very high under the existing payment business model. A company is developing a micropayment technology based on blockchain to provide a metering tool for each person's computer to use idle computing power for mining, storage and other tasks. This metering service is the premise of various sharing economies and will greatly broaden the depth and breadth of the sharing economy.

To sum up, the main advantage of blockchain technology lies in the consensus mechanism formed based on distributed networks. Distributed networks make blockchain-based applications obviously open and scalable, which can lower the threshold of some business models and even create new business models. The independent existence of the consensus mechanism reduces the execution cost of the contract to a minimum, greatly improves the execution efficiency, and greatly expands the scope of computing services.

The world is experiencing a blockchain boom. Various forces from the academic and scientific communities have joined the blockchain development and entrepreneurship boom, and a number of very innovative startups have emerged, becoming an important force in Fintech (financial technology); by the end of 2015, more than 20 of the world's top financial institutions and venture funds had announced their participation in various blockchain application development projects. Of course, we must also be aware that the development of blockchain technology is still in its early stages both internationally and domestically, and various technical solutions and business models need further exploration and practice. Especially in my country, as a brand-new concept and theory, people's cognition, research and practice of blockchain have just started. In order to accumulate advantages in this field and lead the world, sufficient attention and more investment are needed, and active investment and benign interaction are needed from theoretical researchers, network technicians, financial practitioners, and government regulatory departments. It is against this background that the publication of "Blockchain: Reconstructing the Economy and the World" fills the gap in the analysis of the characteristics and applications of blockchain technology in China. It is hoped that the publication of this book will provide some reference and reference for the development and application of blockchain technology in my country.