Tsinghua University Professor Xu Ke: Using blockchain to build the technical foundation of the sharing economy

Recently, the "2015-2016 Annual Meeting of Microfinance 50 Forum" hosted by Microfinance 50 Forum was held in Beijing, with the theme of "Opening the Dream of the Future - Microfinance and Sharing Economy". At the "Crowdfunding and Sharing Economy" session, Xu Ke, a member of WF50 and professor of Computer Science and Technology at Tsinghua University, gave us a speech entitled "P2P and Blockchain - A Brief Discussion on the Technical Foundation of Sharing Economy". He pointed out that the essence of P2P is still a resource sharing, which also explains the spirit of sharing on the Internet.

The following is the full text of the speech:

I am in the Department of Computer Science at Tsinghua University. Actually, my main field is the new generation of Internet. So how did I end up at the Microfinance Forum? It’s a long story. In short, maybe ten years ago, we were studying the Internet architecture and how the Internet would develop next. There was a very important problem in the middle. The current Internet technology is not profitable. The operation is very bad. The only one that is profitable is Baidu. This kind of ICP is profitable, and the operator is not profitable. So we considered doing some work on the economic aspect of the architecture itself. Of course, we didn’t have more background, so I found Professor Wang Yong from Tsinghua University and started some cooperation. Gradually, we had a common interest in the field of Internet economy, so we have been doing cooperative research in recent years, but we are more from the field of Internet technology. The understanding of the economic aspect may not be correct. We put forward our views for everyone to correct.

I want to talk about P2P and blockchain. The P2P here refers to the P2P in computer network technology, not the P2P finance.

A simple introduction to some content.

Speaking of P2P, it has been around for many years, starting in 1999. After more than a decade of development, some foreign manufacturers have now gone bankrupt. These are some P2P technology companies that emerged in China later.

When we talk about P2P, we return to the basic starting point of resource sharing. What we focus on when we build networks is how to effectively transmit information. Different people have different views on this. For example, Sormaff proposed his own law. There are also groups of one person to many people on the Internet. What we want to say is that P2P has established shared interests of all sizes, and you can share your ideas in a group.

Everyone knows the definition of P2P, and its characteristics are also very clear. There is no center, or no real center. Later, some technologies with central services emerged. This is the evolution of horizontal technology, and distributed collaboration is basically closed. Of course, this is a big improvement over the model of a technical server, and there is no obvious boundary. Here is a schematic diagram for comparison.

Everyone knows the P2P model, which was first proposed by Napster and later joined Facebook.

This is a shared image. The website is no longer in existence. It was soon sued by the US Securities and Exchange Commission for copyright infringement. It went bankrupt in a short time. Its expansion speed was relatively simple. Users tasted the sweetness and continued to come out. They learned the lesson of Napster and did not use a central server to store user files. Instead, they put the data on the user's computer.

P2P technology also has its shortcomings. The first is the difficulty of management, the second is the copyright issue. The third is the authenticity and security of the shared content. It says it is shared, but we have no way to verify whether it is the content it claims to be, because any user may share false content or content containing viruses and Trojans, and we have no way to evaluate and check it.

This is a schematic diagram, which can lead to some malicious behaviors. How to solve such a problem? This problem is a serious constraint on its development.

Here we have to mention Bitcoin. Someone once said that it was found in the United States, but later denied it. It is still an unsolved case. Everyone has some understanding of this, and now everyone regards it as a representative of virtual currency. So here we have some of its characteristics. It started to grow suddenly after 2013, and then there were many drastic symptoms. The current number has reached more than 15 million, which is still a relatively small scale. As the scale grows, it becomes increasingly difficult for new ones to come out. There are ITM machines for Bitcoin in China. Why talk about Bitcoin? Because it is a P2P model.

Bitcoin transactions are relatively complex. It is in-out-in. The basic point is that Bitcoin is an expense that is not easily accepted in human life. It makes a record in the entire network. Imagine that this is a large expense. Let's look at this example. Alice pays me 10 yuan, and he goes to find money and then pays.

How do we ensure security in the process? We use the mechanism of public key and private key. It is calculated according to each address, and the basis is still based on the key of the computer itself.

The conference room next door is discussing blockchain. We have taken it out as a separate technology that can solve the authenticity and security of P2P. Bitcoin is an application scenario that we can use in other more complex scenarios.

A quick look shows that blockchain also comes from Bitcoin, but there is no special description in between, and everyone says that its security has withstood the test. In fact, blockchain is a decentralized paradigm for establishing credit without the need for trust accumulation. It records all the past and makes it clear at a glance. It is not a single technology, but the result of the integration of multiple technologies.

Let's take a look at a diagram. Why is it called a ledger? It is a running bookkeeping process. The system is always linked back.

Operational aspects: Who keeps accounts? Everyone. Where do we keep accounts? In the block.

Let's briefly summarize. Compared with the P2P we mentioned earlier, blockchain is distributed, highly redundant, data is immutable, can only be added, digitally signed, and timestamped. There is a consensus mechanism. There are also some requirements for open source and anonymity.

The technical foundation for implementation and the sufficient computer power. Everyone has noticed that Mike, a well-known Bitcoin expert, publicly said that the Bitcoin experiment has failed. Why? Because China is occupied by two major mining pools in China, and in fact our security is no longer valid. We say that we are a large public system with many people participating. If you want to enrich the system, you must master 51% of the computing power. But this thing really happened. After it was gradually concentrated in the hands of a few people, these few people could control this aspect. We separate Bitcoin and blockchain, and use blockchain as a basic technology, which can be used in new applications.

Blockchain solves the Byzantine Generals Problem from an algorithmic perspective. It mainly emphasizes the algorithm as the basis. As we mentioned earlier, the overhead of recording is several hundred KB for each transaction, and each node requires tens of GB of space to record. We only have such a small amount of currency space. If the scale is increased by 10 or 100 times, our nodes cannot be supported by ordinary computers. It is already a scalability problem. This is the result in a relatively small case.

Then there is the issue of security. Will this kind of calculation be broken? Quantum computers may make it invalid. Secondly, the assumption based on consensus can also be broken. So there are certain problems, which is worth our study. It is not because of this that it is locked. We hope to use technical means to improve the foundation.

Finally, we have also done some work. This is a book on the new cyber economy that I and Professor Wang from Tsinghua University have done. It will be published in March this year. We welcome your criticism and correction. We have made some analysis on the opposite sides of the sharing economy and virtual economy.

We can do more work based on our trust relationship.

Because the most important thing in the P2P financial industry is the authenticity and payment security. We currently have some plans to use our blockchain technology to reconstruct such a system in the future, turning it into a better technology and better promoting financial services. For example, IBM directly said that blockchain is the next generation of cloud, putting it at a very high level of technology. This is a summary of some blockchain practices.

Speaker introduction: Xu Ke, born in 1974, is a professor and doctoral supervisor at Tsinghua University. He is engaged in the research and development of computer network architecture, high-performance routers and large-scale distributed systems such as P2P. He proposed a "multi-dimensional scalable optimization analysis model for the new generation of Internet architecture", which provides new ideas and methods for the analysis and evaluation of the new generation of Internet architecture. He designed and implemented an scalable and reconfigurable router software platform and development environment, and its key technologies have obtained 10 authorized patents and created great economic benefits.