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Blockchain Apocalypse: The moment a bitcoin breaks through $ 10,000

On January 3, 2009, the Minister of Finance was on the verge of implementing the second round of bank emergency assistance. "The first" block "in human history was born, which is called the" Creation Zone. "

This is the headline of the front page of The Times newspaper that day. A man named "Nakamoto" copied it in his own technical system.

No one knows how Nakamoto thought, no one knows who he is. After copying that sentence, he vanished in the public eye.

Too mysterious. Like the " bitcoin: a peer-to-peer electronic cash system " he posted in a covert cryptographic forum in November 2008 , 3,000 words, a system, and one that have so far been unpredictable and controversial virtual reality.

The real world at the time was experiencing a financial crisis that has affected the country so far. In the midst of the crisis, the two big giants of the U.S. mortgage sector, Fannie Mae and Freddie Mac, the top investment banks of Lehman Brothers, which have shone down the giants of the global financial community one after another. The clerks who once built a wealth harvesting machine with just one command ran the door at the headquarters of the 7th avenue near New York's Times Square in Manhattan, loosely tiered and dragged their boxes out of the building.

With the fall of the giant, there is trust.

Disappointment, doubt and pessimism about the real financial system have spread everywhere. European marketer Emmerich starred in this year's disaster blockbuster "2012", became the most direct projection of the financial turmoil of the year.

It was at this juncture that Nakamoto made a brilliant essay that created a bitcoin utopia based on a blockchain technology system.

There is no central bank here, no International Monetary Fund. No authoritarian. No center.

Tom Ding, CEO of StringLabs, a Silicon Valley blockchain technology company, was "too excited to fall asleep" for a week after reading the 3000 words. He thinks "This is a great essay."

Anyone who copied the text along the Nakamoto can continue to write down. Never change, never delete. The contents of these written into, after being packaged into a block, the block is linked to form a system called blockchain.

Pandora's box was opened.

On the rubble of a financial giant, bitcoin, a virtual currency consisting of 33 letters and numbers, came out of the fragmented real credit system.

In the real world, the financially advanced economies such as the United States and Europe took years to repair or rebuild the trauma caused by the financial crisis. Soon, everything is past. Curious, rational, speculative, greedy, impulsive ... With the endless stream of innovative technology, once again return.

Many have forgotten Nakamoto, but he started raging on bitcoin created by the blockchain technology system.

Adventurers, investors, entrepreneurs, banks, governments, regulators, have set their sights on the utopia built by Nakamoto.

China soon became the largest bitcoin exchange in the world, after data from some trading platforms showed that Chinese bitcoin transactions accounted for more than 80% of the world's total. The trading platform and the various currencies used for investment transactions are constantly emerging. They are all virtual, but almost all the prototypes can be found in the real world. The Bitcoin exchange, modeled on the initial public offerings of the stock market, has cloned an Initial Coin Offering (ICO) mechanism for financing virtual currency to finance blockchain projects. Makers, boons, brokers, miners, these have hundreds of years of history occupy the bitcoin's virtual world.

On September 4, 2017, seven central banks and other ministries halted all ICO activities. Since then, the Chinese financial regulator announced the closure of all domestic bitcoin trading venues.

Crazy boiling bitcoin for nearly 20 months of craze, abrupt cooling back from the public view back under the tide of enchantment. But the price of bitcoin is still climbing all the way. On November 28, 2017, the bitcoin price exceeded $ 10,000 in some overseas trading platforms. 
Bitcoin for the blockchain, like architecture in the palace. Deep hidden fog palace, attracting the Nuggets adventure. Architecture is beginning to swell beyond dense fog. 
Foxconn, Deloitte, MIIT experts, Citigroup, HSBC, Ping An. From manufacturing to financial institutions, from service industries to government agencies, from investors to entrepreneurs, the blockchain is magnetically entwined with all this. 
The story of the blockchain has just begun.

A: The inevitable shot
Dispute always exists. The same is true of Tom Ding, who is excited about seeing Nakamoto's paper about the blockchain. "The blockchain is about doing the same thing with 10,000 or more computers, down by 10,000 or more units per unit," says Tom Ding.

In almost all geeks, the advantages and disadvantages of the blockchain are all obvious. "The security of the blockchain has always been based on a computational redundancy, so in the current technical framework, the security and efficiency of the blockchain is like the two ends of a seesaw," said Tom Ding.

At the same end of the seesaw, there is also the efficiency of everyone and every company in this day and age, with the high-speed flow of technology and information, but it also brings with it more insecurity to fill these Distressed trust agencies, however, proved vulnerable in the wake of the financial crisis.

Based on this block chain was born, chose the security.

Blockchain itself does not have a clear technological breakthrough, and it is more like a set of technology-based logic systems that concatenate a series of technological breakthroughs with tight logic and ingenious design that culminates in the formation of special "numbers Book ". The term "book of accounts" can be a shortcut for people to understand blockchain technology: "Bookkeeping" is a tool for human beings to record the transfer of wealth and mobility. It provides extra support for human's limited memory, but it is not a source of trust per se - You can calmly complete a bank transfer, not because you trust the bank's transfer technology system, you trust is the bank's "credit endorsement."

What a blockchain hopes to become is a "book" that itself provides a basis of trust that comes from the blockchain's many attributes: it is almost impossible to tamper with the input data and irrevocably manipulate the system without requiring a "center "Dominate.

Blockchain believers carry the idea that this "digital book" will eventually become a "machine of trust," and that all things recorded in the blockchain, along with the chronological order in which they were entered, will be in an immutable form Existence in digital space, in which trust in the authenticity of the data is considered as an endorsement without any "intermediary," as no one needs to "fall for shot shots" (within certain environmental and speed ranges) This physical phenomenon is responsible for the same, it means a decision and necessity.

People have simplified the characteristics of the blockchain to: decentralization, deauthorization, automatic generation, unchangeable, non-destruction.

Blockchain such characteristics, so that people have enough trust in it, and thus feel safe.

Since 2015, the market has been paying more attention to blockchain technology. Especially the United States and Europe. This is the place where finance and information technology are most developed. It is also a place where crises often happen.

In early 2016, the report on blockchain technology released by central banks and consulting agencies in many countries such as Britain and Germany further pushed the market for curiosity and desire for this new technology. Chinese officials have not made a clearer view on the blockchain. But the market has already begun brave attempt.

For a time, the specific case of blockchain seems to be surging, especially the private chain and the coalition chain technology in the blockchain technology - the blockchain contains three types, the publicchain, the coalitionchain and the privatechain, which The core criterion of differentiation is whether the participating population is a specific population, the public chain is open to the unspecified population, the Bitcoin-based blockchain is a shared chain, and the coalition chain and the private chain are open to specific people. Privacy, efficiency and many other considerations, more commercial applications are alliance chain and the private chain.

Zhang Jian, chief technology officer at Boshen Technology and Zhang Jian, a member of expert committee of China Blockchain Technology and Industry Development Forum, Ministry of Industry and Information Technology, said that the current application of blockchain can be divided into two major fields, one is the application in the financial field, mainly the various transactions Liquidation, settlement and audit and supervision; the other is non-financial applications, mainly information sharing and including property rights, copyright and other rights and interests of the confirmation and record.

Two: "Everyone is inserted into the tube to blow bubbles"
In fact, blockchain and can not be considered as a ground-breaking technology innovation. It is the result of a logical combination of a series of technological innovations.

The blockchain can be split into two major sections: one is a point-to-point decentralized electronic bookkeeping system; the other is an incentive mechanism to maintain the system. The former is used to build the block chain castle; the latter is hired guards to maintain the safe and normal operation of the castle, the current market can see a variety of "coins" is the system product.

A point-to-point decentralized e-book system is the core of blockchain technology and is also the key to blockchain business applications. In a blockchain system, a single transaction is broadcast to a sufficient number of nodes. A broadcast node can use some cryptographic principles to confirm that the transaction is valid and valid.

This process can be understood as, after a transaction is completed, the need for accounting and other personnel on the effectiveness of the transaction, the authenticity of transaction values.

When enough deals have taken place, it's packaged together, the so-called block. A well-packaged block can be understood as a traditional book that has been filled in with accounts.

At the same time of packing, the blockchain system will use encryption algorithm to form the so-called timestamp. The data of each block will form a random hash value through encryption algorithm to be projected into the next block. This continuous superposition of scattered Column value will be the same as the chain, the packaged block in chronological order in series, the so-called chain. 
This process can be understood as accounting when the accountant is full of a book, accounting will be the number of this book, and the book in chronological order into the bookcase, such as the 01 book, 02 book ... ... a chronological order Accumulative ledger sets form the so-called chain. At the same time, each ledger records the ledger amount formed by a ledger. This value constitutes the correlation of internal information in the ledger.

The result of this series of operations is that the blockchain can prove that any transaction is a valid transaction at a particular time. However, unlike traditional books, there is no "accountant" in the blockchain that can control the overall situation, the so-called "center." 
This also means that ideally, when unfamiliar people come together to trade, trust and confidence in the safety and effectiveness of the transaction can be generated by means of a blockchain system without having to incur substantial costs or take huge risks Risk trusts an authoritative "accountant." 
These natural characteristics of the blockchain have attracted technical researchers in the financial sector.

Of all the areas in which blockchain might be applied, finance is generally considered as the area most likely to land first and will bring the greatest value.

Zhang Jian, chief technology officer at BOC Chen and Zhang Jian, a member of expert committee of China's blockchain technology and industry development forum, said that the financial industry is more compatible with the security and stability features of the blockchain and that a large amount of informational systems already in place in the financial field are easier to construct Above the blockchain technology, there is much room for utilization from some bank liquidations to non-bank institutions including insurance and securities.

Overseas, a number of commercial banks and financial institutions have successively conducted research on the technology of blockchain by forming alliances-for example, the R3 Alliance established by financial institutions such as Citigroup and HSBC in 2015; the Japan-UK The central banks also launched research reports on the blockchain system in succession to evaluate the possibility of the current application of the blockchain in the banking system.

Many financial institutions such as Bank of China, Minsheng Bank, CITIC Bank, Zheshang Bank, Ping An Group and other financial institutions all announced the application scenarios of the blockchain application with relevant blockchain application. Among them, Minsheng Bank, China Ping An and many other financial institutions have also joined the R3 Union, including the blockchain, including general ledger technology research and development. 
Ping An Bank applied the blockchain technology to Ping An Group's interbank asset trading platform and SME loan platform. At present there is a security team hired from the United States technical team to make some changes to the blockchain, there are already more than 100 banks, non-bank institutions using inter-bank asset trading cloud platform, the bottom of the platform using blockchain technology, the cumulative Down more than 5 trillion transactions.

Chen Xinying, chief operating officer and chief information officer of Ping An Group, said that because of the blockchain technology, 85% of the reconciliation issues can be found in real time and the efficiency has been greatly improved. 
Some non-bank financial institutions are also trying out blockchain technology. On September 7, 2017, Deloitte established an Asia Pacific Blockchain Laboratory in Hong Kong, the third blockchain laboratory Deloitte established around the world. Qin Yi said that the main purpose of setting up this laboratory is to take advantage of the enormous market space in the Asia Pacific region for some of the more mature blockchain technology to find the right scene.

Currently, Deloitte is working with related companies to develop a blockchain template for the audit scenario, which is expected to make some aspects of auditing, such as testing, more efficient and convenient. 
Although blockchain technology has a high voice in the financial sector, the number of real effective landing cases is still relatively small. Even in some cases, most of them are at some marginal level.

A commercial bank technology sector stakeholders said that at present many banks within the block chain applications are actually internal points, customer management, these scenes do not actually need blockchain technology can be achieved, has been unable to achieve results The reason is not technology, but business logic itself is not rationalized. 
At present, the application of blockchain at the banking business level is mainly in the field of cross-border liquidation or individual cross-bank collaboration. These areas are generally involved in multi-party collaboration, regulatory restrictions and other conditions, these areas are themselves the weak links in banking, business efficiency is low, so the blockchain technology instead can reduce the transaction costs of these businesses, it can be faster However, in the main business, due to the high efficiency of traditional technologies, there are not many scenarios where blockchain can be used.

Li Changyin, a postdoctoral research workstation at Huaxia Bank, used the metaphor of "slaughtering chicken and chopper" to describe the dilemma of such a blockchain application.

Qin Yi said there have been many banks or financial institutions to Deloitte seeking blockchain cooperation, but they are not interested in the specific application scenarios and technical efficiency, they only ask for a faster landing, for these agencies Blockchain is more of an advertising system.

Qin Yi said, "We all plugged into the tube blowing bubbles, which is terrible."

Three: "Credit Penetration Machine"
Foxconn, with more than 1.2 million employees, is the world's largest electronics foundry. On the television screen, millions of young employees struggled to work overtime day and night, but this may be the last and easiest part of the operation of this huge company.

Supply chain management and supply chain finance business, Foxconn has become able to maintain the competitiveness of the key. "We have spent two or three years trying to find new technologies to help further improve the efficiency of the current supply chain system.From 2016, after a long period of discussion and running in, we think the blockchain can bring many changes, It is more suitable for the manufacturing complex supply chain upstream and downstream particularly fragmented scenes, "Li Renjie said.

Li Renjie was born in the financial industry, has worked for the United States JP Morgan Chase Investment Banking, Citibank Capital Markets. In 2015, Foxconn set up HCM Capital, an investment platform dedicated to global blockchain technology companies. Li Renjie is founding managing partner of HCM. He is also the founder and executive director of Fujinon, the financial platform of Foxconn, a member of Foxconn A financial technology company founded specifically for the supply chain finance business.

Li Renjie convinced that blockchain technology can significantly improve the efficiency of the supply chain and provide technical support for the implementation of supply chain finance. More than a year after the establishment of HCM, HCM has invested and co-operated more than 10 blockchain-related companies.

HCM is currently in the field of supply chain e-ticket to promote the application of blockchain technology. In short, HCM is trying to electronicize the accounts payable notes of a core enterprise in the supply chain and flow between upstream and downstream suppliers through the underlying technology blockchain-based system.

Facilitating the circulation of bills is only one of the functions of this system. The logic behind it is a complete reflection of the core function of blockchain - a credit mechanism.

Li Renjie said that small and medium-sized suppliers in the upstream and downstream of core manufacturing enterprises generally face the problem of financing difficulties and high financing costs. However, on the other hand, some core manufacturing enterprises have 1 billion or 10 billion credit lines at banks, Cost a lot of money.

"The substantial proportion of these suppliers relying on core enterprises are actually high-quality financial clients, but their financing is very difficult because the credibility of core enterprises is hard to penetrate the complex and huge supply chain system," said Li Renjie.

Currently HCM is advancing the system that wants to solve this problem, the system will be opened up with the payment system of the core business, through the blockchain can not be tampered with and decentralized - this decentralization allows the core business not to the entire system In the role of "shadow bank" - a system that is expected to become a "credit penetration machine" that will penetrate the credit of the core business all the way to suppliers in all chains.

The essence of financing is the lack of credit, high interest rates are compensated for the risk. According to Li Renjie's vision, under the ideal condition, this "credit penetration mechanism" can provide some of the supply chain enterprises with financing channels close to the core enterprise's capital costs.

Four: a thick wall
But these are just tests or ideas.

Technical efficiency is a thick wall across the blockchain technology and the business scene.

Li Changyin, a postdoctoral research workstation at Huaxia Bank, said that at present the blockchain technology is still an immature technology and that the blockchain itself is not a technology aimed at solving the problem of "technical efficiency," as it is related to previous technological innovations There are obvious differences. "It actually provides a mechanism whose core is the philosophy and rules of design." The 
technology's immaturity and its "natural defect" in efficiency have led large organizations to double the blockchain technology Gradually held after the evaluation is the wait and see attitude.

In a joint statement in September this year, the central banks in Europe and Japan issued a statement saying that while distributed ledger technology such as blockchain has the potential to improve system resilience, it is not yet mature enough to support the world's largest payment system .

In September of this year, Lu Lei, director of the Research Department of the China's Central Bank, also responded to the blockchain and digital currencies in the "2016 China Forum on Financial Innovation." According to Lu Lei, first, he did not dare to talk about the information technology that has now been observed Means that the top of the financial information technology available in the future or has reached maturity; second, can not be sure that the current information technology on the financial business processes, financial markets and currency transactions constitute a real and effective impact, there is no accumulation of historical data . Third, we are not sure whether the influence of the blockchain, decentralized and distributed books on the current links and situations at the center of transactions is improving or disruptive because, so far, there is no effective or Best practice

A bank official told the Economic Observer that banks previously had also considered using a blockchain system to build a clearing platform, but after testing, they found that the current blockchain technology is not enough to support a large number of settlement transactions. If necessary, To increase the speed, we need to pay higher security costs at the same time. Compared with the traditional technologies, there is no obvious advantage. After considering the overall consideration, we decided to temporarily abandon the original plan.

Li Changyin said that the current blockchain technology can be applied to many scenarios have long been the formation of the more mature traditional technology, unless the blockchain can bring new advantages, or else only such a systematic replacement cost will block the blockchain Application of technology in business scenarios.

This swing between efficiency and security and de-centralization has become a problem that can not be solved within the technical framework of the current blockchain.

"Either pursuing efficiency or pursuing a secure pursuit of decentralization are more difficult to reconcile in the current technical framework," said Tom Ding.

One technologist who is more radical about blockchain technology even said that the whole concept of blockchain is a misunderstanding: "We can completely separate the concept of blockchain, and the distributed ledger technology it symbolizes is not to be framed. So-called 'blockchain' concept framework, "the technologist told Economic Observer. 
But for most of those involved in the blockchain research, the future of blockchain technology remains to be expected.

In the current direction of the blockchain, smart contracts are considered as a key breakthrough. The so-called smart contract is implanted in the contract some preprogrammed conditions, when the conditions are met, the contract will be automatically executed. This concept was proposed as early as the 1990s and the current blockchain technology offers the possibility of implementing this concept. 
Tom Ding believes that the maturity of the blockchain technology, including smart contracts, such as the completion of the perfect shape will change the entire business environment.

"The core function of the blockchain itself is to reduce the previous significant costly costs people have to pay for the normal exchange between strangers. The more organizations and people involved, the greater the 'trust cost' of reducing the blockchain. "Said a blockchain technology researcher.

Five: another scene
On the other scene, people will evolve their "trust" in the blockchain to another extreme. This is bitcoin, as well as the various virtual innovations that are triggered by it.

A simple metaphor helps to understand the similarities and differences between the blockchain and bitcoin. Bitcoin is a palace built by Nakamoto and blockchain technology is a refinement of the castles that have been spectacular to this castle The principles of architecture.

Due to the existence of the castle, one can clearly see that when the bricks are stacked in what form, a solid wall can be built and in what form the walls are combined, a large palace can be constructed. Therefore, the blockchain can be regarded as a technical system in which the principle of application and re-refinement first appears.

In fact, not every blockchain application will certainly produce some kind of "currency". In fact, in many commercial scenarios that utilize only the technical system of "decentralized peer-to-peer electronic books," there is not necessarily a need for some kind of "coin" generation and participation.

The various digital currencies that make the investment world crazy, including bitcoin, Litecoin, Ethereum, and so forth, are actually the product of incentives in blockchain technology.

However, the various "coins" derived from the incentive mechanism have become the most direct and easiest-to-cash "applications" of the blockchain. The wealth effect brought by it has become a sudden burst of blockchain technology from the second half of 2016 to the end of 2017 Frequently the most important reason for public concern.

A Silicon Valley blockchain technology investor said blockchain technology is in fact only known to a small extent as computer-technology researchers and enthusiasts until the digital currency, led by bitcoin, soared this round, However, with the demonstration effect brought by the rising price of 2016, some financial institutions, investment institutions and large corporations are beginning to pay attention to this field. 
After the bitcoin price rose sharply in 2016, some large overseas companies began to take this as a gimmick, one after another announced that they would accept bitcoin payments and Japan passed the "Payment Services Amendment Act" in 2017, which means that virtual currency such as bitcoin will be paid Means have a legal status in Japan.

Further boosting the popularity of the blockchain is the spread of a means of financing known as the ICO. As their name suggests, ICOs have a high degree of similarity to stock market IPOs: A project party raises digital virtual currency in the hands of users via the Internet - these virtual currencies have better liquidity and are sold on the market to get the project needed The funds.

The original intention of developing blockchain technology was continually distorted under the threat of wealth. Some projects with extremely low technological content or even unrelated to blockchain technology began to emerge - Li Changyin said that a considerable proportion of the so-called "technology R & D "is just" copy and paste "code only.

In September 2017, Chinese regulators stopped all ICO activities. Since then, the Chinese financial regulator announced the closure of all domestic bitcoin trading venues.

The blockbuster story of crazy beings based on blockchain, which runs around bitcoin, penetrates the two worlds of virtuality and reality. It is constantly being interpreted, curious, controversial, distorted, insane, progressive, and nature has been refracted one by one.

And its essence is a contradictory body based on efficiency and sense of security. At the first human cross-border "gene trust mechanism", walked outside the tribe to complete with an entirely stranger When a "barter" transaction, the choice of this contradiction never stopped. Nick Harvey, a cryptographer, points out in his article Monetary, Blockchain and Social Scalability the value essence of the blockchain, "that it is cheaper but more expensive institutionally, with a computationally expensive and automated security Calculation of power ". He referred to the socio-economic function brought about by the sacrificial efficiency of the blockchain as "social expansion."

TomDing said that this social expansion can be understood as a block chain can reduce the human cost of maintaining credit, which to some extent at the expense of technical "efficiency", but increased the level of social interaction "efficiency" . Nick Saab talks about the dilemma and the future of the blockchain in his essay.
"Utopian programs are very popular in blockchain communities, but they are not viable options," he said, reversing our highly evolved traditional body to wake it up completely new, much better than redesigning it from scratch ... Nakamoto confirmed an important strategy that can be achieved: sacrificing computational efficiency and scalability to reduce the cost of human resources that modern organizations spend to maintain relationships between strangers. "