Blockchain is a hot word at the moment and a trend that is coming. Although Bitcoin is still controversial, its related technology, blockchain, is gradually becoming a hot topic in the financial industry. Blockchain is very popular, but how many people really understand it? In order to let everyone have a deeper understanding of blockchain technology, Zhang Jian, head of Huobi Digital Currency and Blockchain Research Center and vice president of technology of Huobi, was invited to give a live speech at the Beijing branch event held by EGO. The following is a summary of his speech. The birth and issuance of Bitcoin Blockchain is derived from Bitcoin. Many people want to separate blockchain from Bitcoin, but if you want to understand the history of blockchain, you have to talk about Bitcoin. We all know that 2008 was the worst time for the global economic and financial crisis. Starting with the collapse of Lehman Brothers, the financial crisis reached its climax in the United States and spread to the world. Then at the end of 2008, Satoshi Nakamoto published a nine-page white paper on the electronic cash system he was researching. In early 2009, Satoshi Nakamoto mined the first block of Bitcoin, the Genesis Block, on a small server in Helsinki, Finland, and wrote a news headline about bank rescue on the front page of the Times that day into the Genesis Block, which also represented the birth of Bitcoin. So, in this context, how is Bitcoin priced and issued? In fact, Bitcoin does not have a main body at all, and its issuance is completed by the market competition mechanism. Anyone can "mine" Bitcoin, but this requires costs. At the same time, the system is not controlled by any one person or organization alone, and the evolution of the system is based on the interaction of the interests of the participants. So I think it is very promising or possible in the future. Of course, there are still some debates, such as whether it involves the problem of waste of resources, because Bitcoin "mining" requires a lot of electricity. We can consider this issue from two aspects: On the one hand, any system has operating costs, including running such a large decentralized system, which requires even more costs. On the other hand, whether there will be a better consensus mechanism in the future to make Bitcoin better is a big question mark. So, I think Bitcoin has opened a window for blockchain technology, but the construction of a new generation of infrastructure is still in its infancy. Blockchain technology is only in its early stages of development. In the future, after people’s cultivation, it may become a very fertile land. From Bitcoin to Blockchain Bitcoin can actually be understood from many levels. If we simply talk about "coin", we can understand it as a currency or a currency that is developing. As for Bitcoin itself, it is essentially a decentralized ledger system. The meaning of a decentralized ledger is that compared with a centralized ledger, it has no center and everyone is the center, which means that each node participating in the system keeps a complete ledger. The above is a screenshot I took from the website. The number on the picture is the number of all transactions and transfers of Bitcoin since its birth. This number will always change. The bright part on the picture represents the distribution of nodes. The denser the bright area and the darker the color, the denser the distribution of nodes. In fact, you can observe that there are a lot of nodes in the United States and Europe, but almost none in Africa. Looking at China, Japan, Australia, New Zealand and South America, we can find that the distribution of Bitcoin nodes is related to the level of development of the country and is basically proportional. Every node in the system is the same and equal. They all keep a record of all account transactions from the beginning to the present. Each node keeps a complete ledger, which makes it easy for us to think about the problem of consistency. If everyone is keeping accounts, how can we ensure that so many nodes that have no trust in each other keep consistent ledgers? This involves the question of who keeps accounts, who maintains the ledger, and who issues currency. Before the emergence of Bitcoin or blockchain, no one could solve these three problems well. Competitions, bookkeeping and rewards As mentioned above, how to solve the consistency problem of decentralized accounting system? The Bitcoin blockchain designed by Satoshi Nakamoto solves this problem well through competitive accounting. The so-called competitive accounting is a mechanism to compete for the right to record accounts with the computing power of each node, namely "computing power". In the Bitcoin system, a round of computing power competition is held approximately every ten minutes (the size of the computing power will determine the probability of winning a round of competition, and the probability of winning the computing power competition is greater for nodes with high computing power). The winner of the competition will obtain the right to record once, so that within a certain period of time, only the winner of the competition can record and synchronize the new ledger information to other nodes. Of course, this competition requires costs, and no one will compete without benefits. Correspondingly, the Bitcoin blockchain system will reward the winner of the competition, and this reward itself is Bitcoin. The results of the computing power competition are visible and verifiable to everyone. This is the proof of work (POW) mechanism used by Bitcoin. How is this achieved? Let's take a simple example. For example, if you want to produce some toys, I give you some parts in the morning, and when I come back in the evening, I see the toys you need on the table. Although I didn't watch you make the toys from morning to night, I can be sure that you did so much work. This is a simple understanding of proof of work - through a specific result (which everyone can verify), it can be confirmed that the (competing) participants have completed the corresponding workload. The Bitcoin blockchain has built such a positive economic system, which is both an incentive for competitors and a currency issuance. Seven years have passed since 2009. Without the promotion of the government, large institutions and centralized organizations, Bitcoin has still been able to grow naturally. The economic system built by Satoshi Nakamoto has made an indelible contribution. Future trends of blockchain Why are people so concerned about blockchain now? Let's take the Internet as an example. In fact, the Internet is also a decentralized system, but one of the characteristics of the Internet is that it is only responsible for information transmission and does not care who the information belongs to. However, currency or other assets have ownership. As for how to transmit valuable digital information, the Internet cannot solve this problem at this level. Blockchain has the potential to build a new layer on the Internet that can transmit valuable information. This is the part where blockchain can transcend Bitcoin. Compared with the Internet, I think blockchain builds a value transmission network. Technically speaking, it can be compared to the TCP/IP protocol. We only need an open protocol to build a global trust system that does not require any third party. The future is unpredictable. Maybe the Bitcoin blockchain will eventually become an irreplaceable underlying layer. Maybe in the future there will be a new blockchain that will develop better than the Bitcoin blockchain. What I am talking about below is only the public blockchain, not the private blockchain. The public blockchain is the blockchain we trust and use. This value transfer platform is completely decentralized and does not rely on any third party. It is completely guaranteed by mathematics. Under this premise, I believe that the future blockchain must be layered, and the underlying layer is a shared structure. Of course, the most fundamental underlying layer is the currency system, because currency is the most important medium for carrying value transfer. In the future, we can use blockchain technology to digitize all kinds of asset transaction information. Taking advantage of the blockchain's easy transfer and non-loss characteristics, the company's equity should be able to be traded very conveniently in the future without the need to be escrowed to a certain center. Our money does not have to be placed in a certain bank before it can be transferred to you. Therefore, asset securitization and asset digitization are the future trend. From: Sohu | 
