Davos Forum founder: Blockchain and smart contracts are the fourth industrial revolution

Rage Comment : Steam, electricity and computers, as turning points in every leap of human civilization, have irreplaceable fundamental revolutionary significance; Davos founder Klaus Schwab regards blockchain as the fourth industrial revolution after these three turning points, which is a high recognition of the fundamental and subversive nature of the technology. Obviously, according to the existing achievements of global blockchain technology development and exploration, its wide applicability and wide influence are unquestionable. However, the blockchain technology, which has just started, must be widely recognized and applied by the society to mature, which requires solving long-standing problems. In short, blockchain, like every important change in human history, must go through a process of gradual development and growth.

Translation: Annie_Xu

Blockchain is quickly becoming the hallmark of the Fourth Industrial Revolution, the deep digital transformation that Davos founder Klaus Schwab calls the fourth, after steam, electricity and computers. Blockchain has been called the next big disruptor, fascinated geeks and banks, but has so far lacked mainstream proof of its big impact.

Klaus Schwab

So what is blockchain? We can compare it to a CFO's sales ledger, a comprehensive, real-time accounting record of who owns and what has been transferred. The content of blockchain records is almost unlimited. It can be physical assets such as diamonds, such as Everledger's diamond provenance verification project; it can be land; it can also be intangible - electronic currencies such as Bitcoin, securities trading, derivatives, financial instruments, government-citizen interactions, etc.

The subtlety of blockchain lies in the use of encryption technology. It verifies the identity of the participants and creates an unalterable ledger record hash value, which contains the existing record page (block) and the chain connecting the blocks. What is really smart is that instead of the treasurer keeping the only true record, the blockchain ledger is distributed, and each computer in the network keeps a copy and updates it. This is carefully designed to prevent the authenticity of the ledger from being affected by cyber attacks; because hackers must control more than half of the network's computing power to modify block information.

Obstacles to be cleared

However, blockchain technology is still immature and there are still great obstacles to commercial application. First, regulators need to control it; second, blockchain is fragmented and there are many different ecosystems, the most famous of which are the bank's R3 Alliance, the bank-led Post-Trade Distributed Ledger Working Group and China's Zhongguancun Block Chain Industry Alliance. They need common standards to cooperate with each other. At present, there are some progress in standards. In April, ISO received a formal request to establish a new field of technical activities for blockchain and electronic distributed ledger technology.

The third obstacle is scalability. Blockchain itself requires a lot of computing power. In 2014, the National University of Ireland Maynooth reported that the energy consumption of Bitcoin mining is equivalent to the total electricity consumption of Ireland. Therefore, more efficient energy utilization is crucial for blockchain.

Centralized platforms should beware

With these obstacles out of the way, blockchain enthusiasts began to talk about disintermediation. Uber was surpassed, Airbnb was surpassed, and TaskRabbitt was surpassed by blockchain. This means that while these centralized platforms integrate the supply and demand chain to subvert taxi companies, hotels, and recruitment companies, blockchain can provide a list of all supply chains for a service, allowing users of the ledger to filter, display, and purchase according to their own principles. The technical integrity built into the blockchain makes transactions safer, trustless, and intermediary-free, and has the potential to achieve the functions mentioned above.

Furthermore, blockchain lays the foundation for smart contracts, which are used by computers to establish, verify and execute contracts. Ethereum, the next generation blockchain, is called "the most ambitious cryptographic ledger project" and is developing functions to verify the execution of contracts. Later, on May 28, it was reported that the total amount of Ether financing reached $150 million due to the crowdfunding and venture capital type capital project DAO on Ethereum; and all decisions and commitments of DAO were implemented through smart contracts.

Let us wait and see what the future holds. Welcome to the era of the Industrial Revolution.