Bitcoin blockchain technology: a cure for all areas of lack of trust

     Blockchain is an important concept of Bitcoin. It is a string of data blocks generated by cryptographic methods. Each data block contains information about all Bitcoin network transactions in the past ten minutes, which is used to verify the validity of the information (anti-counterfeiting) and generate the next block.

"Blockchain" sounds very obscure, but it has become increasingly popular recently. Kevin Kelly has talked about this technology several times when he came to China. Not long ago, China Wanxiang Holdings Co., Ltd. established the Wanxiang Blockchain Laboratory and set up a $50 million fund to invest in blockchain application technology projects with commercial prospects.

Blockchain is the technology behind Bitcoin, and Bitcoin is actually the most successful application of blockchain technology to date. The core of Bitcoin is: a distributed public ledger that is shareable and trustworthy, and everyone can check it, but no single user can control it.

Bitcoin is not backed by any central bank, but is increasingly accepted by people. Bitcoin makes a monetary system without a central bank possible.

Looking back at history, when steamships were invented, they ran slower than sailboats, but sailboats could only go downstream, while steamships could go upstream, ushering in a new era. Similarly, Bitcoin is still immature compared to the current monetary system. Many people associate Bitcoin with speculation, but a monetary system without the backing of a central bank has emerged. This is the beginning of the blockchain era. Blockchain is a machine that creates trust, which can create trust in each other's collaboration without a central authority.

Covering all areas of lack of trust

Governments, banks, and insurance companies have realized the value of blockchain and are looking for ways to utilize it.

Blockchain technology is very useful in real estate registration. The Economist magazine gave an example: One day in 2009, the Honduran police rushed into Mariana Catalina Izaguirre's house and expelled her from the house where she had lived for 30 years. However, the local government housing authority showed that the owner was someone else. Izaguirre was forced to leave. Real estate ownership management is not easy. Greece actually has no formal land registry, and only 7% of its territory has been correctly marked. Currently, the US startup Factom is using blockchain technology to help Honduras' property registration agency implement reforms.

Large warehouses often worry about employee theft and malfeasance. If blockchain technology is used, the ledger cannot be modified, and its transparency will make it difficult for corruption to occur at any stage of procurement.

The application of blockchain technology in the financial field has attracted attention. Nasdaq attaches great importance to blockchain technology and has launched the test project in Nasdaq Private Market, which is a novice market specializing in pre-IPO transactions of private companies. When private companies process their share transactions, they need to go through a large number of informal systems, including lawyers manually verifying electronic forms. Nasdaq wants to use blockchain technology to replace this process.

Robert Greifeld, CEO of Nasdaq Group, said that blockchain technology will be a digital revolution for the management of traditional securities. It is not only beneficial to corporate customers, but also has a far-reaching impact on the global capital market. 25 banks have joined a blockchain startup called R3 CEV to develop a common standard. Including UBS, Barclays, Citi, etc., they believe that blockchain technology may reshape the future financial world.

Payment systems are still centralized, with money transfers going through central banks. When financial companies do business with each other, synchronizing their internal ledgers is a laborious task that takes days, tying up capital and creating risk. Spain's Santander Bank believes that by 2022, blockchain technology will help the financial industry reduce bookkeeping costs by $20 billion.

In addition to the financial industry, the medical industry is also a big industry that will benefit from blockchain technology. Tierion is a blockchain company specializing in data collection and recording, and Philips Healthcare Group has completed its first project with it. Patients' medical records and information must be kept confidential at all times, so a centralized database is not the best choice. Blockchain technology can be completely transparent while respecting user privacy. In the past, patient information leaks have occurred frequently, and with blockchain technology, this situation can be greatly improved.

Blockchain technology can be used in any area where the core problem on a distributed network is a lack of trust. Blockchain technology is expected to eventually disrupt not only the traditional financial industry, but also the way people record and transfer financial assets, including stocks, contracts, property certificates, patents, marriage certificates and everything else that requires confirmation by an intermediary.

In IBM's view, compared with a centralized device network, blockchain allows you to operate a distributed network where devices can manage themselves. It can reduce management costs by 99%. Blockchain has the ability to create large, low-cost networks and is highly needed as a basic technology.

IBM is developing a project called "Adept", in which blockchain plays a vital role. In a recent report titled "Device Democracy", IBM said that in the era of the Internet of Things, there are billions of smart devices. It is costly and unwise to track and manage them centrally, and they are vulnerable to hacker attacks and government surveillance. The distributed network brought by blockchain technology is the key to solving some of these core problems.

There are not many Chinese startups engaged in blockchain, but many foreign companies in this field have received investment. For example, Chain, a blockchain API service provider, received $9.5 million in Series A investment; PeerNova raised $8.6 million, focusing on Bitcoin blockchain applications; Factom uses blockchain technology to innovate government, social, and commercial data recording and management methods, including audit systems, medical information records, supply chain management, voting systems, property deeds, legal applications, financial systems, etc.

The next generation of Internet?

The historical status of blockchain technology cannot be fully determined at present.

From the history of financial development, central banks, settlement centers and other facilities are actually the infrastructure of the paper currency era, which can be regarded as the transaction costs of the paper currency era. Blockchain technology represented by Bitcoin is undoubtedly greatly reducing the transaction costs of finance, opening up a new era.

     From a broader perspective, the problem solved by the first generation of the Internet is the decentralization of information transmission, which makes the cost of information transmission close to zero. But how can you ensure that the information you transmit is true? Blockchain technology solves this problem, bringing us into the era of free notarization of information, and may reconstruct the production and organization of human society like the Internet.