Bitcoin slays the dragon, blockchain competes with the

     The supreme master of the martial arts world, the sword that slays dragons, commands the world, and no one dares to disobey. If Yitian does not come out, who can compete with him? As a disruptor of the old order, Bitcoin has brought an impact on financial institutions in the real world. Blockchain appears as a derivative of Bitcoin, and it has the attributes of decentralization, distribution, and pan-interconnection of the Internet. With the promotion of blockchain in more fields, such as currency clearing and settlement, digital asset management, crowdfunding, smart contracts, and legal document verification, the sword effect of blockchain technology is gradually emerging and is beginning to be recognized by more and more people. The sword of blockchain, the fighting spirit of Bitcoin, has gone through many twists and turns and finally achieved hegemony.

1. Appearance

     The 2015 First Global Blockchain Summit "Blockchain - New Economic Blueprint" was held in Shanghai on October 15 and 16. The summit was attended by about 200 professionals from the financial industry including banking, payment, securities, commodities and other industries interested in the application prospects of blockchain technology, including from the Financial Research Institute of the Central Bank, the Credit Information Center of the Central Bank, the Shanghai Stock Exchange, Lufax, Deloitte, etc. As the frontier field of current Internet technology, digital currency technology and blockchain technology are having a positive social impact in recent years.

     It is reported that the Bitcoin company 21 launched a new product this week - a Bitcoin "mining machine" (a computer that produces Bitcoin gold coins), which is also one of the most anticipated products in the Bitcoin world. In order to develop this product, 21 raised $120 million (about 1.347 billion yuan) from well-known investors including PayPal co-founder Peter Thiel and well-known investment companies such as Andreessen Horowitz. According to the company's financing records over the years, this amount of financing has set a record.

     The author also learned that financial industry giants including credit giants VISA, Nasdaq, and Citibank are strategically deploying Bitcoin derivatives - blockchain technology. Some scholars believe that this technology not only created Bitcoin, but is also expected to usher in a new era of the Internet - Internet and financial decentralization Plus.

2. Bitcoin and Blockchain

     Bitcoin is an electronic currency generated by open source p2p software. In 2008, when the global financial crisis was coinciding, a person who called himself Satoshi Nakamoto posted a research report in a secret cryptography review group, discussing his new ideas for electronic currency, and Bitcoin was born. Bitcoin is not issued by a specific monetary institution. It is generated through a large amount of calculations based on a specific algorithm and is a virtual network currency. The algorithm (automatic adjustment) specifically releases 25 to the network it relies on for storage every ten minutes, and gradually mixes them in half. Bitcoin has the characteristics of decentralization, global circulation, anonymity and convenience, so it has been sought after since its launch.

     Blockchain is the underlying technology of Bitcoin, which refers to a series 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. Compared with traditional technologies, blockchain represents a new decentralized technology based on p2p. It can store transaction data securely and does not require the review of any centralized organization, because the process is completely completed by the entire network. In addition to the financial field, blockchain technology can also be widely used in various fields.

3. Some sober thoughts

     As an electronic currency that relies on the virtual world of the Internet, Bitcoin naturally has a fatal Achilles' heel.

     First of all, the definition of money is a commodity that is separated from other commodities and fixedly serves as a general equivalent. It is the product of the development of commodity exchange to a certain stage. The real currency should be used for the exchange of the required commodities - let the exchanged commodities rather than the exchange medium become the protagonist. Now the people who really trade Bitcoin are not essentially for the purpose of using it, but more for speculation and investment, which is out of the essence of currency. Secondly, the existence of Bitcoin is an act of resisting the central bank's monopoly on the right to issue currency. Its decentralized characteristics are not recognized by the current mainstream concept. It is just a financial experiment, so it will not be supported by the government and has no credit endorsement from the government. It is difficult to have a specific value. Finally, the total amount of Bitcoin is limited and lacks liquidity. The most essential feature of currency is that it can be used for all commodity trades and is widely accepted as a means of payment. At present, there is no effective mechanism and model to ensure the liquidity of Bitcoin. Therefore, the acceptance of Bitcoin is still very small, and it cannot be expanded from the virtual world to the real world. The scope of application is very narrow.

     When Americans were designing robots, mainstream scientists believed that robots should have a brain like humans - a central processor to receive all information in a unified manner. Hands, feet, and legs are all sensors that receive information about distance, position, and obstacles. However, through practice, it was found that due to the large amount of information, robots had difficulty in moving and were easily paralyzed. Suppose the eyes found an obstacle 50 meters in front of them, and the organs of the hands and feet also fed back this signal. A large amount of information data was transmitted, which could easily cause information overload. The central processor could not handle it, and the robot could not move. A few other scientists believed that a simple algorithm could be used to solve this problem. Through a simple experiment of a machine crawler, the machine crawler has six legs, each of which has a small micro motor and a small micro processor to control the rise and fall, forward or backward of the leg. In the experiment, this crawler has no central processor and no management center, but the signals between the six legs can be transmitted. Each leg can do a simple action repeatedly, rising up and down. And it follows an extremely simple algorithm, that is, when one leg rises, the other five legs will think about how to cooperate next based on their own actual situation, and each leg will take care of the group's behavior while doing its own thing. It is such a simple experiment, and it is found that this robot crawler is agile, flexible, and has a high level of group intelligence.

     Take financial transactions as an example. In today's network structure, there is a centralized institution similar to an exchange or clearing center as a data processing center. Blockchain technology is used to solve the trust problem between network nodes, implement time and space mismatch, and provide a widely connected, decentralized distributed cloud network. Each transaction is jointly verified by these nodes, so there is no need to rely on credit intermediaries such as banks and exchanges to complete it.

4. Financial changes

     The top ten application directions of blockchain technology today are: payment, Internet of Things, large-volume blockchain confirmation technology, decentralized cloud storage, securities trading, decentralized domain name server, identity authentication and management, digital asset management, supply chain, and digital currency volatility solutions.

The core of finance is to allocate resources across time and space. Blockchain technology can optimize the allocation of financial resources and improve the utilization rate of funds. It has the bones of the Internet and the soul of data. As a disruptor of the old order, Bitcoin has brought an impact on financial institutions in the real world. Blockchain technology appears as a derivative of Bitcoin, and it also has the characteristics of optimizing financial transaction structure and improving the efficiency of fund utilization. It is foreseeable that the future of blockchain is bright. The Wall Street capital tycoons, who are crowded with people, have already rushed to land on the gold mine of blockchain. The "barbarians" are already fighting with swords, and major financial changes may have arrived.