"Blockchain New Economic Blueprint" Preface Summary Dialogue on Blockchain Cognition Author: Gao Hongbing and Han Feng In the following dialogue: "Gao" refers to Gao Hongbing, Vice President of Alibaba Group and Director of the Research Institute
"Han" refers to Han Feng, a doctoral student at Tsinghua University and an I-Center mentor <br/> Location: Alibaba Research Institute Gao: Regarding the understanding of "blockchain", we have had a lot of exchanges in the WeChat group, but it is not systematic. Regarding "blockchain", I need to learn from you, discuss with you and further verify several questions. First, when we talk about "blockchain", how should this concept be translated? I also posted this topic in the group, and many people responded. Second, the meaning of the word "block" is very simple if you separate it into "block" and "block". If someone who already knows about "blockchain" looks at this word in reverse, they will feel that "block" does retain the meaning of the word "Blockchain" well. However, for those who are not familiar with "blockchain", they will think that this word is very obscure. Third, the person who responded in the circle of friends mentioned that just after they figured out "mobile Internet", "blockchain" suddenly appeared, and they thought that technology and the times were changing very quickly. However, strictly speaking, this shows that people's understanding of the concept of "blockchain" is still vague, the definition of "blockchain" needs further discussion, and the application scenarios of "blockchain" need to be developed and sorted out.
Han: In fact, the Internet was composed of several words at that time. Gao: Yes, the word internet had many interpretations back then. For example, it was translated as "Internet" and this concept was widely used in government documents. Even today, the debate is still going on, mainly because Internet technology is constantly upgrading and evolving, and people have various discussions and debates about the nature of the Internet. It even extends to the discussion of "Internet thinking". Back then, some people even believed that internet = inter + net. Taiwan translated it into "Internet". However, today, the real revolutionary starting point of the Internet began with the invention of the TCP/IP protocol in 1973.
Han: I have always believed that the Internet is the basic protocol for all mankind. The TCP/IP protocol is actually extremely simple, and that is the magic. It uses a simple code protocol to solve problems that all mankind cannot solve. How can we ensure that the channel is reliable when we transmit information? Without these basic protocols, we will become very troubled. In the past, the transmission of information was first restricted by the "central control" system, and then there were geographical, physical and cost restrictions, but these restrictions have now been broken. "Blockchain" is the upgrade of this basic protocol. We rely on the first generation of the Internet to ensure that there is no problem with information transmission, but is the information you give me true? I can't prove this. So the Internet once made people think that all the information on it was false and it was too easy to falsify. Even now, it is still the case. In this way, to solve this problem, computers need to overcome the "Byzantine Generals Problem". Assuming that a group of generals do not trust each other, there must be bad guys among them, but as long as the number of bad guys is no more than one-third of the generals, the computer has an algorithm that can ensure that the consensus reached by the generals is true. "Bitcoin" and "blockchain" try to solve the problem of duplicate payments. It stands to reason that if each electronic currency does not rely on a central authority, it would seem that there is no solution to prevent duplicate payments. Everyone would want to cheat and deceive others to gain an advantage. "Bitcoin" relies on a mechanism, that is, the whole network records. I study quantum information. From this perspective, the Bitcoin mechanism is to compress false information and rely on the energy paid by mining to compress and filter out possible duplicate payment transaction information. I talked about this issue in a class at Tsinghua University (please refer to the postscript of this book: Artificial Intelligence of Blockchain). In fact, this is a distributed artificial intelligence similar to quantum computing. The basic protocol of "Bitcoin" written by Satoshi Nakamoto is very simple. The protocol is to stamp the timestamp. All miners record and notarize together, instead of trusting one person. Confirm once every ten minutes, which forms a book database "Block" that records all correct (no duplicate payments) information in the entire network in the past ten minutes. We call it a "block". If everyone agrees and reaches a consensus, it is called a consensus mechanism. Then everyone recognizes that the information on this block is true and cannot be tampered with in principle (modification requires controlling more than 51% of the global mining accounting power according to the protocol). Then each legal block is connected into a chain, which is a blockchain, forming a distributed consensus database, which will become a common source of real information for all mankind in the future. The entropy compression of this mechanism is very large, which can filter out the confusion of false accounts and fraud that you may have made. Recently, I was writing an article with an Asia-Pacific partner of Deloitte. Deloitte is preparing to use "blockchain" extensively. "Blockchain" is very useful for audit firms like Deloitte. The biggest headache is what to do if the audited company makes false accounts? If it is found out, the unit responsible for the audit will be held responsible. Therefore, in order to strictly prevent false accounts, they need to spend a lot of manpower and material resources. Generally speaking, using "blockchain" can solve this problem very well. Tens of thousands of users, Deloitte and regulators around the world agree on accounting, which can be traced and cannot be changed. The accounting is time-stamped. In this way, the audit cost is reduced at once. Now that "blockchain" has just started to be used, it is said that the cost has been reduced by several hundred million US dollars. Therefore, Deloitte will definitely spend a lot of effort on this in the future. After all, their annual audit income is more than 30 billion US dollars. If Deloitte participates in blockchain technology, the situation will definitely be different. Gao: Is this called digital accounting?
Han: Yes, the credit cost has dropped, and it is global, solving the most troublesome problem. "Blockchain" is not only used in finance, accounting, and auditing, but can also be used in many other fields. For example, the recent discussion of smart cities. The Luzhou Municipal Science and Technology Commission is here to discuss the traceability of local specialties. Any brand specialty is destroyed by counterfeiters. How to achieve traceability? If the blockchain and the Internet of Things are combined, the whole network will be notarized from the place of origin, and the cost of counterfeiting will be very high. Just like the Bitcoin system, it costs hundreds of millions to make counterfeit money, which makes the counterfeiting disproportionate to the profits you steal! Gao: I understand. I think that in the early stage of understanding "blockchain" when there are not many application scenarios, if people are not curious enough, they will not listen to it. In front of "blockchain", once people classify themselves as engaged in research in a certain industry or discipline, their understanding of "blockchain" will stop. These problems seem to return to the discussion of "meta-problems", which is the so-called unmeasurable, which in turn leads to unmeasurable definitions. If we only define it conceptually, it is not very meaningful. If there is no actual measurement to support it, then the definition will be controversial. This becomes a "right and wrong issue" rather than a "truth issue". The right and wrong issue is that you think you have your own system, and he insists on his own system. Putting the two systems together is unverifiable. So it is very important to measure consensus itself. So why is there something that is unmeasurable? Let me give you an example. The human nervous system is unmeasurable. In other words, when a person dies, the breath is gone, and the "qi" here is unmeasurable. It has no weight, and even no radio waves. Behind this unmeasurable, the different biological systems of the human body are connected together to jointly produce the nervous function system. If it is unmeasurable, then you can only believe it, or rely on perception and experience to grasp something, but this is not something that the general public can grasp. I believe that those qigong masters, acupuncture practitioners, and pulse-checkers have this skill. But this is not something that everyone can grasp. This is what we are talking about today, blockchain, and the concept of intelligence you mentioned. In particular, intelligence is based on the logic of "computing + data + algorithm + storage". Then, immeasurability is the result of quantum theory that we just talked about.
Han: I have also thought a lot about what is the meaning of unmeasurable? This is how I see it. If you stand in Newton's worldview, it is unmeasurable. Because Newton, including Einstein, believed that everything in the world is determined by locality, and exists at an exact time and place. This is the starting point for Newton to establish his entire world system. But in quantum mechanics, it is not like this. Everything does not exist at a fixed time and place. It is essentially non-local. The visible particle part and the invisible wave part of things appear at the same time and are transformed into each other (Englert-Greenberg relationship in quantum mechanics). So we suddenly find that at least part of the world is not (locally) measurable. But is this really unacceptable? In fact, looking at the history of human civilization, our ancient philosophers discovered the non-local nature of all things very early. Laozi was the first to talk about "existence" and "non-existence", and Laozi's "non-existence" was before "existence". He said: "Existence is born from non-existence" [1]. Such high wisdom was lost by mankind later. The entire modern scientific system is built on the Greek atomic theory system. Atomism first believed that all objects are composed of local atoms, and the rest is only "void". The mechanical combination of the two constitutes our entire universe [2]. But Laozi proposed with his wisdom more than two thousand years ago that his worldview is "existence is born from non-existence". That is to say, a large part of our world is invisible to you, but it does not mean that there is nothing. Now quantum mechanics calls it "wave function" or "field". Second, what should we do after knowing that it is impossible to accurately "localize" measurement? In fact, the Internet has already answered this question, which is "big data". Without big data, it is absolutely impossible to describe non-local overall correlation. Because there is no local causality in that part of the world that you cannot see yet, you only have a few numbers that cannot explain the problem, so you can only say that it is random and there is no pattern. But with big data, it is different. Phenomena such as correlation and entanglement have all been discovered. So now everything is moving towards dataization. Without data, we can only say that there is no measurement. Gao: I think there are several cognitions, let's go back and confirm them. One is that our cognition and understanding of the world should be understood at the level of Newtonian mechanics or ordinary chemistry, and not upgraded to the quantum level. At the level of quantum theory, it is very philosophical. When measuring, there are multiple roles such as the measurer, the measured, and the observer. In fact, people have always been the existing observers in our world, but we often forget this premise. The Laozi you just mentioned said a lot, which was based on his existing experience and knowledge at that time. People are observers. As an observer, people can only "see" so many things today, and cannot see more things that can be "seen" in the future. For example, in the future, the human collective intelligence generated by "big data + algorithm" may help people "see" more things. There are many tools now, but when you use these tools to observe, the observation itself changes. You see the result. For example, when we measure the pH value, we pour the pH test solution into the cup being tested, and it turns red or purple. We use this to judge the pH value. This is observable with the naked eye. That is to say, as long as you add acid, you can see the result. This verification must be based on the scale of your naked eyes as a human. If we switch to a microscopic level that is invisible to the human eye, then the dimension of color does not exist.
Han: When you conduct this kind of observation, you have actually defined a scope. Gao: Yes, the scope is the person himself. Knowledge is determined by human observation ability. So some observers, or people with higher Buddhist skills, can see the soul of a person. Of course, his definition of the soul may be different from that of ordinary people. What he can see is also different from what we see. Some people just have "special abilities", there is no way to change this. He is just better than ordinary people in some aspects. Some people have strong legs and feet, that is, they run faster than others, and some people may be born with a lack of an organ, and so on. In short, there is a problem with the observer's perspective, and this point is often overlooked by us. This itself is problematic, and humans must recognize this point. Now, when we look at "blockchain" and artificial intelligence, it is the same. In the past, we looked at it from the perspective of daily life, and we would not doubt it. But after we stepped out of this scale, we have all kinds of doubts. Looking back, our measurement, statistics, observation or macro-control of today's economic operation is actually based on people's current understanding of the economy.
Han: I remember very clearly what Jack Ma said: “Are the publicly available data real?” Gao: If you continue to ask this question, it will become agnosticism. We must draw a line. When we discuss the problem, when you look at the world of particles that is smaller than the earth, or look at the larger scale outside the earth, it is far beyond the current human observation ability. If we want to observe particles and quantum, we must bombard it with a proton, otherwise we can't "see it". This is a problem with the measurement tool. The naked eye cannot see it because the naked eye relies on light.
Han: This will eventually lead to a paradox because the proton itself is uncertain. Gao: That is to say, your eyes can see now because they receive photons, and light itself is also a quantum.
Han: Photons are also uncertain. Gao: You can see these today because at the quantum level, particles are constantly fed back into your eyes, allowing you to see. If you turn off the light, you can't see. When light shines in, if you add a prism, it is seven colors, and if you don't add it, it is white light. This has already added a space. We often use three-dimensional space plus time to define a scene. However, there are still dimensions such as color and temperature. For example, humans are animals related to temperature. And machine intelligence, within a certain scale, is basically unrelated to temperature.
Han: When we humans measure, we always set a very clear range first. Gao: Then there is the electromagnetic field, the field problem. There are other dimensions involved. In fact, in our daily observations, we have simplified all these contents. At this time, when we discuss some levels, we have already substituted the boundary conditions.
Han: Yes, in fact, our measurement results are based on our different boundaries. And people often don’t know it, and they are unwilling to admit it. The so-called objective truth is just a firm belief that you are the most objective. Gao: Actually, I am asking you, do you really think this is true? If you think about this question thoroughly, you may not think so. What is "true"?
Han: I think what you said is very profound. Only the consensus mechanism of blockchain can achieve the "truth" that we all recognize! Gao: So, I think this is what we need to discuss, which is the issue of epistemology and epistemology. In the past development of epistemology, I think the biggest leap was due to the philosophical meaning of Laozi and Aristotle's logic. Now it is even more dependent on modern physics. The changes brought about by the development of modern physics in the last century. Newtonian mechanics further advanced, and after quantum mechanics, it brought about a huge change in the observation of the entire world. Because the means have been upgraded, it has brought about an upgrade in cognition. For example, Newtonian mechanics can't see atoms no matter how you look at it. Regarding the acceleration of atoms and the state of electron clouds, his formulas are not correct when they are substituted. There is also a field problem that Newton did not touch upon. If Newtonian mechanics is put into astrophysics, then some of it is wrong. At that time, the two systems of heliocentrism and geocentrism were the easiest to understand when you compare them. The system that adhered to the geocentric theory in the past was later broken by the heliocentric theory. The heliocentric theory was further expanded to the Milky Way, and finally it was discovered that the universe has no boundaries. Or it is centerless and multi-centered. If you develop to the microscopic level, it is also multi-centered. After completing these two scales, you will find that your cognition has changed dramatically. It is not only your observation techniques and methods that have changed, but also your worldview and philosophy. Today, you can use a telescope to see objects a billion light years away. However, in the past, there was no such method, so you could not verify the conditions of planets a billion light years away. You could only guess and make logical inferences, but this was too far from the actual results, not just one or two orders of magnitude. At this time, your cognition became wrong, and you began to believe in the geocentric theory. It was so wrong that your conclusion itself was the opposite. If you look at the Chinese version of the world map 400 years ago, China is the center of the world. This is the Chinese's understanding. This is the understanding, and the understanding itself is wrong. I think this is the fundamental change in the way humans observe the world after the advancement of tools and technology. But this is not a technology theory, but an improvement in means. When humans were still apes, how could they see without these tools? They relied on meditation and looked at the relationship between the sun and the earth from the trees. But for a primary school student or a junior high school student now, this is a problem that can be solved in one second. Finally, let's go back to what Lao Tzu said just now. This has become a kind of immeasurable. Their belief is actually immeasurable. I think if we go back to this perspective, this is a philosophical issue, not an epistemological or scientific issue. The second view is the development of "blockchain". Let's discuss it from a technical perspective. The development of the Internet has its premise. First, it is the result of "packet switching, distributed computing technology" + "decentralized thinking". This result is because when the United States and the Soviet Union each had 10,000 nuclear missiles aimed at each other, it was a huge game scenario. Both sides either considered destroying the other's control system in the first nuclear strike, or considered how to prevent the occurrence of this real conflict. The first round of nuclear strikes did not hit nuclear weapons, but the control system of the other's nuclear weapons. This control system is what you call an intelligent system. This is the essence of Internet design. Many people don't know and think that it was originally designed for the network. Ten thousand nuclear missiles destroy the global game system N times. It is a game that binds 6 billion people together. How to play? And there must be no accidental discharge. So the Americans proposed two game countermeasures, one of which is interception. They proposed the Star Wars plan, which cost a lot of money, but accidentally invented the global satellite positioning system that we widely use today-GPS. This is very meaningful. Although the problem of nuclear competition has not been solved, GPS has been retained and applied, including the impact on the "blockchain" you mentioned. People’s location information and IoT information are all recorded because of this game. The second is that both sides discovered the other's intention to attack them, and then the Americans considered whether it would be okay to put the control system on four nodes. I have an original picture of the time, and the four nodes were connected in a docking manner (Figure 1). Later, it was speculated that if the node on the right was used to control the other three, then the center could be destroyed. But now, it is useless to destroy any two nodes. This idea is feasible. The real development of the Internet is the result of this idea. This is what we just discussed about the two results of quantum mechanics in the last century: First, the discovery of the thermonuclear power of quantum theory created nuclear weapons. Second, due to the game between the two major powers over nuclear weapons, a decentralized and decentralized Internet was forced to emerge.
 Figure 1 Han: History has chosen an Internet that is equal at all points. Gao: This is very interesting. It was not completed by any unit, but by the university. So you see, many things invented before were invented by the military industry, but this one is for civilian use. Although it is for civilian use, it was funded by the National Science Foundation of the United States. Although it was also led by the Ministry of Defense, the Ministry of Defense commissioned the university to conduct the research, and the military research project achieved the largest civilian application in human history. This research was also influenced by another thought at the time: the hippie culture in the West and the open source software movement of technology. You will know the background when I say this. The United States has developed open source software for more than ten years, laying the foundation for the invention of the Internet TCP/IP protocol.
Han: They wrote a book, which Professor Gu Xueyong introduced to me. Gao: Do you know what the predecessor of Android is? UNIX. Technological changes have come step by step in this way. It can be said that if there was no UNIX, there would be no Android today. It would also be difficult for the mobile Internet to be widely used among billions of people today.
Han: I also organized UNIX training in the early 1990s. Gao: You should study the history of UNIX. Open source was first developed at Bell Labs, which later developed a version for universities. Later, universities made it open source and then distributed and developed it, but required everyone to mark whose version they used and what they did. They had to write it in the comments, but the copyright did not belong to you. This is the Apache agreement. UNIX has been developed this way all the way, and in the end it is still open source.
Han: I am now considering using "blockchain" to create an open source think tank, which is the basic paradigm for everyone's technology crowdfunding. Gao: The development of the Internet is the result of two ideas: one is the cultural idea of open source software code, and the other is the technical idea of packet switching and distributed computing.
Han: Here is a conclusion. We invited a doctor of law from Peking University, Shuai Tianlong, to talk about the foundation of transcendental cognition in Tsinghua University. He basically talked about Code 2.0. He believes that the future human law, which he calls architecture, will come from a method very similar to open source software, that is, distributed formation. Now we do a lot of things based on national laws, which allow this thing to be done and that thing not to be done. In the future, people's online behavior will be regulated by code consensus. Gao: They are talking about the sharing economy now, but they haven’t figured out the origin of sharing. It’s the sharing of technical codes. Where did this idea come from? It came from the hippie culture in the West. The emergence of the technology community is actually closely related to this culture.
Han: In fact, real entrepreneurship should be built on this (cultural) foundation. Gao: Why do I talk about this? Because this is culture, just like hippies and cowboys. If you know this step, you will understand that its development is definitely not accidental.
Han: So China must develop maker culture. Gao: Many people who study technology say they can't see through it. In fact, there are only a few nodes. If you see through it, there is evidence. After I finish talking, you can go and see, and you won't argue. The only thing that is controversial is the description of the facts themselves. When you see these two changes, you will look back at the invention of the Internet. It is because of the adoption of distributed computing and open source software, and the packet switching method. The packet switching technology has actually brought about a new change. Packaging at the level of the entire data transmission network. There is a person here who is the packet header, compressing the software, and then passing it to the other party through a transparent channel, and then unpacking it. A standard packet is 64k. The packet header marks the route and the address of the other party.
Han: This is the TCP/IP protocol. Gao: That’s the agreement.
Han: Then three round trips prove that this channel is definitely reliable. Gao: This is the IP protocol. The TCP protocol is a media control protocol. The IP protocol is a network protocol, and its bottom layer is a packet switching protocol, which is to package all the transmitted data through the ASKII code, which is what you call compression, with each 64k packet, and then split it into various packets. Write the address and transmit it in a distributed manner. There are various routes, and it does not necessarily take the same route. It takes whichever route is more efficient. At each routing node, the routing switch will record the information, speed and efficiency, and congestion conditions of the past transmission. Then, the router will automatically optimize the best route. It is dynamically adjusted. This is the IP protocol, an IP protocol based on packet switching. The TCP protocol refers to the server side. You need to use email and browse the web. Email was first created on Windows. Later, companies like Tencent and 263 had their own email software and servers, as well as DNS servers and systems, and built a new system. This system will definitely read the PC port you use to access the Internet to communicate with the computer system. In this way, different ports are defined between different servers, such as port 40, port 80, port 4000, etc. What are the different ports used for? This one runs email, and that one runs video. So the server over there and the server over here are both throughput through these ports. You can't use the same port as the video, because the video goes on the upper side. Email goes on the lower side. Every computer system has an IO bus. Behind the bus are input and output. They all have their own ports. Both reading in and outputting have IO ports, which is the IO bus protocol. This bus protocol is TCP, and the packet exchange is the IP protocol, which goes on the other side. These two protocols together are called the TCP/IP protocol. This is called the basic protocol. The TCP/IP protocol can be simply understood as "computer communication protocol", which is the basic protocol of the Internet. I have discussed with you that the blockchain protocol is applied on the TCP/IP protocol layer and can no longer be called a basic protocol. At least technically it cannot be called basic. If it must be called a basic protocol, then an adjective must be added in front of it.
Han: I did write an article, and the title was later changed to "Blockchain is the basic paradigm of future credit." Gao: Let's look back. Blockchain is also a system similar to mailboxes. It has encryption algorithms, but it is not a bottom-level system. The bottom-level technology is packet switching, which has undergone tremendous industrial changes. In the past, we used telephone lines, switches, and a 64k line to build a telephone network, and we ran voice on this network. Then, a modem was added to this voice network, which became packet switching. That is, routers were added to both sides of the telephone line, and it became IP switching. This is how the Internet transformed the telephone network and upgraded it to an IP network. Later, it was simply IP-ized at the optical fiber level. The bottom-level transmission network was also IP-ized. So the telecommunications network has undergone tremendous changes in the past decade. This is the importance of cross-border. If you don't understand this, you can't understand the rest. Many people who study computer science understand this, but don't understand that. Once they get here, they are confused. They think this is the business of the communication company and that is the business of the computer company. Later, the two sides merged together. The entire TCP/IP protocol became the bottom layer, which took up both industries. We have gone through this period in the past. This period is the bottom layer. Even if you look at it now, the mobile phone is the same. Mobile Internet access also corresponds to the IP address and domain name. Without the address, it cannot be found, which is equivalent to your house number. I just said that IP exchange has a header and a tail. When you transmit information, there is a header in front and a tail in the back. The tail is equivalent to where I sent it from. I remember the address, IP address, server, time, and where it was sent from. The header is where it is sent. This header and tail are broadcast and transmitted by these routers. In theory, every piece of information transmitted in this way will be recorded and can be traced back. This is the TCP/IP protocol itself. But why is it difficult to trace the behavior of many people online now? Because we use PCs to access the Internet. When using PCs to access the Internet, there are many caches and logs, so-called anonymity. When you log in with a computer, you must find out who the computer belongs to. You can find the ID number of this computer. Every terminal device has an ID number, which can be found. Everything you send out carries your ID number. So does your mobile phone. These are all traceable. But this is very costly because you need to associate your ID number with your personal identity. This is impossible. But now we have upgraded to mobile Internet, and this problem has been solved by half. Because your mobile phone is unique, you will be asked to verify your identity when you use your mobile phone, WeChat, or Taobao. You will be asked to verify your bank card when you use Alipay. Then your address will be verified when the items you buy are delivered to your home. After several verifications, your identity and this ID number are unique. All the behavior of this person will be recorded. This is the second level. The biggest change from the Internet to the mobile Internet is to verify and authenticate your identity, and then record all transaction data. Because you have an account and password, all the data that comes out when you log in will be recorded. Processing and analyzing this data, the so-called non-structured data, is big data. It is big data if you look at it this way, otherwise it is not big data. I am saying this in an absolute way, but it is definitely true. So from this perspective, the future big data will record a massive amount of information due to such accounts and user names. The data currently counted is not so massive, and there are not so many tags.
Han: In the past, it was just small data, and as long as one was proven, it could be considered as an alibi. Gao: Write down all your data from the past few years, including your mailbox. There is a lot of data, a total of more than one million apps. This is not a simple scale. Ten thousand apps would scare people to death, but here there are one million. Of course, there may be only a few hundred high-frequency apps that are frequently used by hundreds of millions of people. From this perspective, you may have a new understanding of the Internet. From computing to the network to data, all your logic is connected. Without computing, those data are useless. There must be distributed computing and a large system to process all data. The so-called data is the bit data recorded by the ASKII code of 0101, otherwise it is not called data. So this is the difference between big data and ordinary information. You can use 0101 to record, and then there may be a zero marginal effect. The dissemination and sharing of information will have this effect. If you use CDs to spread, you cannot enter such a system. This is the basic boundary. Without this boundary, the following things will not happen. In this sense, I think this road will continue to go down. But this is how I understand the value of blockchain. The greater value may lie in the fact that we record everything involved at the transaction level, perhaps more about recording transactions.
Han: The expansion of blockchain transactions now includes notarization and certification. In the past, notarization was done by the state, such as marriage certificates and real estate certificates. If we have this idea, we can reduce costs. Including smart agreements, there will be a large number of small cross-border agreements in the future. I believe that you may not dare to sign a small agreement of less than 10,000 yuan now, because it is useless to sign it. If it is not executed, you cannot sue. But in the future, smart agreements on the Internet will be automatically executed. Gao: I think that in the future, there will be a credit system formed by data records. This credit system is connected to assets. If you do not execute according to the agreement, your credit will be reduced.
Han: The agreement will be automatically executed. Gao: In fact, the reduction in credit is implemented in accordance with the agreement.
Han: Is this my understanding of shared finance? The most fundamental thing is to realize shared credit. Because in the past, credit was basically everyone's. But shared credit, credit is a resource, especially after the establishment of big data, shared finance can share credit. This is essentially no different from sharing a car. Because if society often lacks resources in this area, there will be problems with its flow in the market. Then this mechanism can solve small cross-border transactions, and there is a lot of room for imagination. Gao: Its premise is to follow the same protocol. Behind this protocol is actually a software system, which can be an application software system, or it can be directly installed in a hardware mobile phone or a server. You can do many things with your own account and password. One day, Taobao accounts can also use this system to authenticate each other. Taobao's data can also be shared or linked to it, increasing my convenience. Or things over there can run over here, and I can increase my credit here. It is a distributed credit system.
Han: When that day comes, there will be no business that is difficult to do in the world! Gao: Americans are very advanced in their thinking. One example is the issue of trusted identity. You have a lot of online identity information, including accounts and passwords for Google, Baidu, Alibaba, and Taobao. You can’t remember all these usernames and passwords. So is there a universal but very secure account system that is linked to credit? Through cooperation with platforms, Internet companies, and the government.
Han: Is it available now? Gao: It started in 2011.
Han: What's your name? Gao: It’s called trusted identity recognition.
Han: This is the path China should take. Gao: China has gone astray and has adopted the real-name system. The real-name system mainly refers to the social management of information dissemination. The United States wants to establish a trustworthy society, while China wants to establish a regulated information dissemination. The starting points are different. So when the real-name system was introduced, many people opposed it. In fact, it is not necessary to do so today. Just like in WeChat Moments now, everyone actually uses their real names.
Han: Actually, the problem in China is that people don’t know the boundaries of their rights and when their rights will be violated. So most people don’t have a sense of fear. Gao: The original fear comes from the situation where information has not changed. Administratively, relying on "central" supervision, and commercially, relying on "B2C model" for management. Now, after the Internet has brought the expansion of distributed computing of information, it has distributed information to the edge. A marginal revolution has occurred. Information empowered to ordinary people and given C. B's power is still there, but because C's power increases, B's power is relatively reduced. It has brought about reverse C to B's information transformation. This is also the same. The result of the change has led to the government's power being readjusted today. If the government wants to delegate power, it needs to listen to public opinion, otherwise it will be opposed by C. Distributed computing has brought about changes today in the field of information dissemination and sharing.
Han: I once said: "What is the Internet era? It is the first time that our basic rights have been guaranteed in the form of a code-based protocol!" Gao: What I just talked about is at the level of information dissemination. At the level of "blockchain", it is to further rebuild people's credit, which is to reconstruct the credit system of distributed computing.
Han: That is how to use distributed computing to prove that it is "true"! Gao: In the traditional financial system, we rely on banks to build credit for both lenders, and we need to build bank buildings very high-end. In fact, this has nothing to do with how the bank does business. It is just to solve a credit problem. But it pays a lot of money. Bank office buildings must be placed in prime locations, decorated in luxury, so that others can feel that this company will not collapse for thousands of years! So I dare to give you the money. In fact, it is increasing the credit of the bank (that is, the B-side). It is using this physical appearance to satisfy C's trust in it. In fact, today's banks have undergone great changes. Most of those buildings are no longer banking. You know, they are renting them and selling them. Selling the building for 3 billion or even 5 billion, and then renting the building back. Investing the 5 billion in financial investment. Because that income is much higher. People still believe that the credit of the bank based on the building is still there.
South Korea: Banks reduce their credit costs in disguise. Gao: The traditional financial system relies on this to increase credit. Then it uses credit as a book to evaluate the borrowers and lenders of the loan. Access and licenses have become important. This market has turned license holders into a scarce resource.
Han: The credit cost built on big data may be reduced by more than a hundred times in the future. Gao: From the era of industrial economy to the era of computing economy, a bank credit building marked by steel and cement is being replaced by a blockchain credit with data as the soil. The two credit buildings represent two completely different eras.
Han: Yes. "Blockchain" may be the main way to build credit in the future. Turn big data into distributed accounting. The more people participate in accounting, the more reliable your credit will be. Gao: If blockchain can be widely promoted, I think when more financial institutions and commercial institutions use it, it may allow C-end users to join in and use this method to accumulate its information and credit. Therefore, the ultimate value of blockchain is the value accumulated by credit, which is to build a credit building for business and finance. At the level of business and credit, the ultimate value of blockchain is here. Commercial credit and financial credit are the core of these two systems. In the past, there was no means, and it relied on evaluating the top 100.
Han: This is a true financial democracy, and power is back in the hands of every consumer. Gao: Why did this be achieved? Technology is empowered.
South Korea: In the future, the credit of the global market will be accumulated by everyone's participation in notarization and transactions. Gao: There was no in the past. You wanted to have it, but there was no means. Just like democracy, without form, democracy cannot be realized. Even representative system is a form.
Han: Now, the cost of the representative system is also very high. High: The cost of representative system is too high, the huge TV communication effect + outstanding acting skills that win people's support. So Reagan is able to become president because of performance. But it is not certain in the real Internet era. Of course, the way you perform will be different, your truth will be deposited and exposed.
Han: Now there is a fantasy that the future forms of democracy may be liquid and community-based. If you are this head, you may only be a very short period of time. Gao: The power of the president's centralized one will be distributed, and there is no need to have such a large power. Because the greater the power, the greater the risk. It is distributed to each small B and C. Don't use a big B as the middle.
: : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : So I agree with Jack Ma's idea. What is the difference between millions of merchants on Taobao and Amazon and general financial institutions? Amazon guarantees that it is the largest merchant, that is, the idea of building a building is to ensure that it is the best. Of course, it does not deny that Amazon is very powerful, but no matter how powerful it is, it will never exceed Alibaba of hundreds of millions of merchants over the long period of time. No matter how weak each individual small merchant seems, as long as there is a basic agreement, it can play a role similar to the little bee. If there is another blockchain in the future, each merchant accumulates its own credit and jointly notarizes and shares credit resources, then through the big data credit accumulated by itself, it will achieve what Jack Ma said, "There is no difficult business in the world." This power will be so powerful that no center can resist it, and it will ensure that the entropy of Alibaba's entire system can continue to decline. This is the long-term stability strategy! I think this is the enlightenment of blockchain for management. Gao: You talked about a core idea and the issue of governance model. The governance model is based on different financial models and has undergone a big change. I have a picture you can take a look at, which is very classic. I attended the "China Management in the Global Internet Era" summit hosted by the Chinese Society of Management Science last weekend. I asked me to talk for 40 minutes. I have two movies that are very valuable and can take a look. (Figure 2)
Figure 2 This picture was drawn by a researcher at Oxford University. According to the Internet population, China has the largest area. Russia's Internet population is not as good as India. The color of the United States is darker because the Internet has an 80% penetration rate. China needs to add online time. Online time is not considered here. China is three and a half hours, while the United States only has one hour. This picture is fatal because it is marked with human behavior and human bitization. One is an ISP, Internet access service, which is drawn according to online time. If you draw it according to data bits, it is equivalent to the distribution of oil.
Han: Who will be the boss in the future?
 Gao: You can draw a picture with big data. Draw a picture with another picture with computing power. You can even draw a number of transistors or diodes. Currently, a smartphone has more than 3 billion transistors. I think the picture on the latter governance is very inspiring. I went to an Internet governance meeting, and I did get some inspiration at that meeting. In the past, the governance method, the democratic way was like this, staring at netizens for unilateral management. But after several stages, American scientific research institutions studied technical management. They said that we don’t have to worry about so much. We set up an agreement and manage ourselves. At that time, we were all inside scientific research institutes and had not yet involved the economic and social level. Later, ICAAN came out, because the domain name address was to be managed, and IETF was released. IETF is the standard protocol group of technology, and an institution called ICAAN address domain name registration agency was established. This institution determines your door number.
Han: But many people are calling it centralized. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :
Figure 3 This is a centralized system, and all information is collected here. This is a reform, or a sub-centered system. You think, this is the country, this is the United Nations, and the United Nations connects each center and turns it into a distributed computing, but there is still a center. In fact, the governance model of the Internet is consistent in all applications. This diagram basically explains the macro level or the underlying level, and all decentralizations have this process. Decentralization does not mean that there is no center, but it is changed to a networked node-based distribution calculation. That is no longer called a center. A node is still a center, but this centralized decentralized and divided labor. The entire business and financial division of labor system has also changed. So, you say it is called a center, but this center is different from that one.
Han: (referring to the leftmost picture in Figure 3) The entropy of this system is mostly increasing, because relying on one center intelligence to generate information is not enough to offset the entropy increase of the entire system! (referring to the middle decentralized system in Figure 3) This system will definitely slow down the entropy increase. This (referring to the right distributed system in Figure 3) can truly reduce the entropy, because each node is a Maxwell monster, and is using intelligence to generate information, just like a little bee building a honeycomb. Gao: In fact, this is the last path, and the key role is the 600 million netizens in China!
Han: I agree that the free choice of these hundreds of millions of netizens can form the foundation for future global market credit through "blockchain", which will release the global trillions of capital that could not have been able to establish credit through traditional financial institutions. This is in line with the Fifth Plenary Session of the 19th CPC Central Committee’s proposal: “Improve my country’s institutional voice in global economic governance and build a broad community of interests.” References:
【1】Laozi, "Tao Te Ching"
【2】Yan Kangnian, "Research on the History of Natural Sciences" Volume 2, Issue 2 (1983): 183-192
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