Blockchain: A decentralized technological utopia

1. Introduction

In 2016, the name blockchain, which sounds a bit rigid, quickly became popular throughout the Internet world. Now, all walks of life and Internet organizations have expressed great enthusiasm for blockchain, expecting it to play an important role in various fields such as electronic currency, bills, clearing and settlement, equity transactions, auditing, notarization, and games. The concept of blockchain is popular because of its natural attributes of decentralization, openness, sharing, and open source. Blockchain has established an equality and trust mechanism from the underlying protocol, which has inspired the human desire for freedom, equality, and decentralized control since ancient times.

2. The distinctive features of the blockchain utopia

Unlike traditional technologies, blockchain perfectly solves the consensus problem under decentralization and eliminates the information asymmetry crisis brought about by centralization. It strives to build an open, shared, and decentralized technological utopia. Blockchain also introduces economic incentives into the utopia, forming an ecosystem that is closely integrated with the real world, enabling the blockchain utopia to have the capabilities of self-renewal and self-improvement.

1. Blockchain perfectly establishes a decentralized trust mechanism

Trust is as indispensable as air. In the Internet world that advocates openness, equality, collaboration, and sharing, there are many Internet trust solutions and examples: such as the three-way handshake of the TCP protocol, which provides reliability trust issues between nodes; two-factor identity authentication is used to enhance the trust of clients; CA certificate authorities put public keys into client certificates to establish a trust mechanism between clients and certification centers. However, these trust-based technical means serve centralized systems and are solutions to certain local trust issues, and do not systematically establish a point-to-point trust mechanism.

Blockchain is different. It integrates core elements such as cryptography, distribution, and peer-to-peer into the blockchain data structure, and establishes a trust consensus on a global scale through mathematical algorithms combined with cryptographic theories. In a peer-to-peer and decentralized environment, establishing a trust mechanism requires considering several aspects:

The first is the consensus issue, eliminating disintermediation;

Second, information confidentiality and integrity are guaranteed to prevent information tampering and forgery;

The third is openness, ensuring that information is transparent and traceable.

How does blockchain do this?

First, blockchain uses a unique data structure. Blockchain combines transaction blocks within a period of time into a specific structure in a chain-like manner through hash values ​​in chronological order. The chain-like data structure uses cryptographic algorithms to ensure that information cannot be tampered with or forged.

Secondly, blockchain establishes a decentralized distributed shared ledger. The ledger is shared by all nodes in the entire network. Every transaction generated in the system will be broadcast to each node, and the miners on the node will verify and update the record. The relationship between nodes is equal, and there is no centralized service node. This data sharing mechanism also ensures that the crash of a few nodes will not affect the integrity of the entire network ledger.

Thirdly, blockchain is open, transparent and verifiable. In order to avoid the information asymmetry and trust crisis of centralized systems, blockchain provides an information transparency mechanism: from two levels. One is the transaction level. When a transaction occurs, all participants on the chain will receive the same information, and these transaction records are publicly searchable. Second, the blockchain protocol is completely open source, and anyone knows the logic and rules of the blockchain system.

In addition, blockchain has established a consensus mechanism based on proof of work. The famous Byzantine Generals Problem points out that it is difficult to deal with consensus issues in distributed communications under the premise of mutual distrust. Blockchain introduces the proof of work method and solves the Byzantine Generals consensus problem under peer-to-peer by adopting consensus mechanisms such as POW (proof of work), POS (proof of equity), DPOS (delegated proof of shareholding), and POOL (validation pool).

Blockchain is a "trust machine" that is open source, open and decentralized. Based on the characteristics of blockchain, it can be imagined that if a project has the attributes of blockchain and is recognized, it will be trusted and sought after. For example, if users use decentralized exchanges based on blockchain, they can avoid concerns about false transactions and running away with funds brought about by centralized exchanges; if they use online car-hailing systems based on blockchain, drivers will not have to worry about online booking platforms assigning orders or maliciously modifying mileage. This is the influence and expectation of the blockchain world.

2. Blockchain builds a healthy ecosystem

Unlike big data, cloud computing, and the Internet of Things, blockchain is not just a solution to a certain technical field. Unlike the TCP/IP protocol, the blockchain protocol is not just a basic protocol. The blockchain has established an ecosystem that integrates developers, miners, and users, and has also derived organizations such as communities, mining pools, and exchanges. Under the rules of the blockchain white paper, these organizations and individuals are closely integrated and interdependent, forming an inseparable part of the blockchain utopia.

In this decentralized ecosystem: core developers develop underlying protocols, project developers develop application projects based on blockchain protocols; miners consume hardware, electricity, and manpower to compete and calculate math problems, package blocks, and receive Bitcoin rewards and transaction fees; users obtain or consume Bitcoin through exchanges, transfers, and other channels.

Blockchain has successfully integrated innovative business models into the ecosystem. Global blockchain projects often issue virtual currencies and set a limit on the total amount of currency in the early stages. After the project is put into operation, developers usually receive a certain percentage of virtual currency rewards. When the project is successful and recognized, more and more people use legal currency to buy virtual currencies through exchanges, thereby pushing up the price of virtual currencies. Developers, mining pools and exchanges benefit from this. This virtuous cycle allows the blockchain ecosystem to maintain healthy development.

In the blockchain ecosystem, all links are closely linked, and any problem in any link may affect the balance of the system. Take Bitcoin as an example. During the price stability period, if the price of Bitcoin suddenly drops and remains for a long time, the mining profit will decrease, the enthusiasm of miners will decrease, and even the miners will go bankrupt, and the Bitcoin ecosystem will be destroyed. Therefore, the price of Bitcoin must continue to rise in the long run to maintain the stability of the ecosystem.

3. Obstacles to Realizing the Blockchain Utopia

The blockchain utopia regards decentralization as the supreme spiritual force. In the eyes of blockchain enthusiasts, projects entering the utopia should be highly decentralized and perfectly autonomous. However, just like the ideal kingdom of philosophers envisioned by Plato, there is always a gap between ideal and reality. The blockchain utopia is not perfect, and there are many obstacles on the road to realizing the utopia.

Imperfect Centralization The blockchain is carried on the centralized Internet architecture. The blockchain industry chain also has stakeholders such as developers, mining pools, and exchanges. On the road of blockchain development, developers and mining pools have more and more say. In the face of some major developments and emergencies, the blockchain may be affected and influenced by centralized interests.

Difficulties in implementation The main implementation issues are: Is the blockchain protocol applicable to complex application scenarios? Is the proof-of-work method of blockchain economic rewards applicable to alliance chains and private chains? Can blockchain applications meet the technical requirements of massive transaction volumes, and how can they be effectively integrated with existing business systems?

The issue of personal information security On the blockchain, the security of the private keys of the nodes in the system is crucial. Wallets and private keys may be threatened by phishing, viruses, etc. Imagine if you store a car on the blockchain as smart property, but accidentally lose the private key, which means your car no longer belongs to you. This is probably hard to accept. In addition, although transactions are anonymous, public ledger sharing is easy to check, which increases the risk of user privacy exposure.

Low awareness: Blockchain technology is obscure and difficult to understand. Many people have raised doubts and questions such as "Bitcoin is a Ponzi scheme-style pyramid scheme", "Bitcoin has no value", "Bitcoin-like virtual currencies can be infinitely copied", "Bitcoin is similar to Q coins", etc. This may become a stumbling block to the development of blockchain technology.

IV. Future Prospects

Blockchain technology is very attractive and has high expectations from all walks of life. However, blockchain cannot completely replace traditional centralized technology. Centralized traditional technology is highly mature, has high processing efficiency and supports massive data processing. Blockchain has low processing efficiency and simple functions for implementing application scenarios. For example, the function implemented by Bitcoin is mainly transfer transactions. A Bitcoin transfer transaction usually takes several minutes to complete, which is inefficient. In addition, users do not care about the trust advantages brought by some blockchains. For example, in the train ticket sales system, users are more concerned about the function implementation and do not care whether the ticket sales system used adopts blockchain technology. Therefore, it can be boldly predicted that the future should be a coexistence and superposition of centralized and decentralized systems.

Now, blockchain applications such as Bitcoin and Ethereum have already occupied a place in the Utopia. What other applications may enter the blockchain Utopia in the future? There have been many discussions on the Internet. Finance, Internet of Things, notarization, auditing, academic certification, insurance, etc. are the fields most likely to realize blockchain concept verification. Let us look forward to the next influential blockchain application.