Source: Interface News , this article is a speech given by Huobi China CEO Yuan Yuming at the “Interview of Blockchain in China” held on January 12. Original text
The content of today's speech includes three parts. The first part introduces several major technological innovations of the blockchain. The second part introduces some of the major opportunities for the development of the blockchain industry. The third part is how to accelerate the implementation of blockchain applications.
Some people point out that blockchain is not really a technological innovation, because it is actually a combination of multiple technologies. Those technologies may have existed decades ago, but the blockchain has put it together. Indeed, the blockchain is more of a business model and business paradigm innovation, which is actually a very big breakthrough.
We understand that there are four main areas of innovation. The first is from single-point double-entry accounting to multi-point distributed accounting. At the beginning, everyone kept their books, using their brains or paper notes; the double-entry bookkeeping method appeared 800 years ago, which is actually a very big breakthrough. In the double-entry bookkeeping method, there must be loans and loans, and the loans must be equal, which is equivalent to each account being reviewed in two places. This way is to ensure that the entire account is relatively clear and not easy to be tampered with, so at that time This is a very big progress and breakthrough. However, the entire society and economy have undergone great changes in the past 800 years, and technology has also made great progress. In this case, the double-entry bookkeeping method of the year and a series of clearing and settlement methods derived from the double-entry bookkeeping method have also been used. In fact, the system has a lot of problems and has accumulated some disadvantages. The multi-node distributed bookkeeping method of the blockchain will be more effective.
Others say that the two things of single-point double-entry bookkeeping and multi-point distributed bookkeeping are not in opposition, not mutually exclusive. That's right, in fact, you can still carry the double-entry accounting method in distributed accounting. You can do this, but it is not necessary, because the blockchain has already implemented mutual review, so there is no need to do another cleaning Settlement. Therefore, the blockchain can improve the overall efficiency and reduce the cost.
The second point is from the traditional account system to the asymmetric encryption system of public and private keys. If there is a third-party intermediary in your account and password, the advantage is that whenever you lose your account password, you can get it back, you can get it back with your ID card or mobile phone. The downside is that all of this information is in the hands of third-party intermediaries. There have been many leaks of information on Internet websites in the past. On the blockchain, you control your account through asymmetric encryption and a system of public and private keys. The private key is in your own hands, but the disadvantage is that once you lose your private key, the gods can't save you. It must not be returned. The advantage is that you can guarantee the security and reliability of information.
Bitcoin uses a public and private key system to store coins. You can also store some other information with a private key, which cannot be stolen by others.
For example, in November, People ’s Network launched an application “On the Chain”, you can put your original intention when you joined the party on the chain, and then use your own private key to encrypt. This is an interesting application, which has applied many of the characteristics of the blockchain. One kind of situation is that after this initial heart is on the chain, others on the chain will not be able to see it. Only you can see it. You can check your own original heart when you join the party every year to see if it is consistent with the time. In the second case, if you are particularly frank, you can also choose to directly open your original intention and put it on the publicity wall, and everyone can see it. The third way, at a certain point in time, for example, decades later, you may have retired at an older age. Looking back, you can automatically release the private key at that time. In short, this is an application of very interesting information sharing. The original intention of joining the party is a kind of data. There are many other kinds of private data, confidential data, sensitive data, etc., which can be combined in a variety of ways. It may be public, can be shared directly, or it may require a private key. Keep it safe and protect its privacy. It can also be accessed with limited permissions. Some people can access some information or keep it confidential for a limited time and decrypt it after a certain period of time. These things can be achieved through the blockchain.
The third aspect of blockchain innovation is from traditional databases to chain storage. The traditional database and blockchain models have their own advantages and disadvantages and challenges. The traditional database method is definitely faster and more efficient. But the benefit of the blockchain is that it cannot be tampered with through hash values. The hash value is equivalent to a summary of the content. As long as the content changes a little, the entire hash value will be completely changed, and the process is irreversible. You cannot find out exactly what has changed from the change in the hash value. The method of grasping the hash value of the previous block by the next block ensures that it cannot be tampered with or can be verified. The distributed accounting of multiple nodes ensures mutual verification and confirms that there is no Tampered, so this is a big improvement.
Of course, it needs to be explained that the blockchain does not completely need a traditional database. You can store a large amount of data in the database and store it as long as its hash value is on the chain. You can go to school. Check whether this data has been tampered with. Therefore, it is not necessary to put a large amount of data on the node, otherwise it is indeed a very large storage redundancy.
The fourth aspect is from manual execution to smart contracts. In fact, smart contracts are neither smart nor a contract. They are more an automatically running program. In fact, smart contracts appeared much earlier than the blockchain, but smart contracts have gained a great deal of development since the blockchain came out.
Because the blockchain is a distributed ledger, it does not have an authority to say who must perform it, so what should I do? It can be executed automatically through smart contracts. Previously, we performed it manually. The two parties signed and sealed the contract and then executed it. When a problem arises, a court may need to arbitrate, or a third-party appraiser will need to decide. Now through the smart contract method, there is no need for a witness, and it can be executed automatically at a time or meet a certain condition, which is more suitable for the distributed scenario of the blockchain.
To sum up, the innovation of blockchain includes four aspects: single-point double-entry accounting to multi-point distributed accounting; traditional account system to asymmetric encryption system; third is from traditional database to chain-type data storage. The fourth is to manually execute to smart contracts. We consider these four aspects to be the most important technological breakthroughs of the blockchain.
These four technological innovations will have a very big change in the entire business paradigm. What new industrial development opportunities will it bring?
The General Secretary mentioned in his speech on the collective study of the Politburo that blockchain has five functions. We understand that blockchain is most suitable for multi-party collaboration scenarios. It is a distributed ledger without a single authoritative intermediary, so it is more suitable for multi-party scenarios how to collaborate. The first is to promote data sharing. Because many parties did not trust each other before and were unwilling to share the data, they can first use the blockchain to share data. The second is to optimize business processes. In the past, everyone worked independently, so the processes were serial. You and I can work together in parallel on a unified platform. The third is to reduce operating costs. Because the complex double-entry bookkeeping method and the large and complicated clearing and settlement system derived from it can now be implemented in one step through the blockchain, the cost is reduced. The fourth is to improve synergy efficiency and establish an effective reward and punishment mechanism to fully mobilize everyone's enthusiasm and prevent the occurrence of evil behavior. In the words of the General Secretary, it is to ensure the orderly and efficient flow of production factors, and finally to build credibility System, to achieve mutual trust on all sides of the chain through a system that cannot be tampered with on the chain.
In his speech, the General Secretary mentioned six major application scenarios of blockchain, including blockchain + finance, blockchain + commerce, blockchain + people's livelihood, blockchain + smart city, blockchain + inter-city connectivity Blockchain + government affairs. These six aspects are all scenes of multi-party collaboration.
Taking finance as an example, there is a big problem now that it is difficult for SMEs to obtain financing and it is difficult to obtain loans to accelerate development. In fact, the core company owes a lot of receivables to small enterprises, and he will definitely pay them, but the account period may be very long, and it may be delayed for several months, six months, one year, or two years. Then, at this time, the survival of the enterprise is very problematic. The small business went to borrow money from the bank, and the bank dared not lend it to him, because he had no net assets and no brand, and he was worried that he would not pay it back. Then he would tell the bank that you see that the core enterprises owed me so much receivables and they would definitely pay. But banks still dare not borrow, why? Because the bank will worry about whether the receivables are still there and whether they have been repeatedly loaned, this is a risk. If the entire process of receivables is chained through the blockchain, whether there is a loan or not, the receivables have indeed not been lent out during the guarantee process, then this thing can be accepted. It's a bit like a check, a check is a bank acceptance, so this thing is equivalent to a core corporate acceptance, but the check is digitized on the chain. This can speed up circulation. Of course, the actual scenario may be more complicated, not necessarily a tier one supplier, and it may be a tier two, tier three, or even tier four supplier, and it is not clear at all who owes me money. Only through a digital certificate on the chain can we ensure that there is indeed such a receivable, and the bank can safely loan me. In this way, small and medium-sized enterprises have obtained financing and accelerated development. The bank can put the money out, and the bad debt rate can be relatively low. The core company can also let him rest assured that he owes the supplier money. Better development, this is the typical multi-win situation.
To extend it further, this is actually a step from the information Internet to the Internet of Value. In the past 30 years, the information Internet has been greatly improved. First, it greatly improves the efficiency of information transmission and reduces costs. We are now sending a message to someone from a foreign country and can send it in a second, which is basically zero cost and very convenient. On the other hand, the convenience for people to obtain and express information has increased significantly compared to the past. In the past, only the princes and aristocrats were able to acquire a large amount of knowledge, but at this stage, a very ordinary person, as long as he has a smartphone, may obtain much more information than the ancient princes and aristocrats. The same is true for obtaining information and expressing information. Now as long as you register for a public account, you may have the opportunity to become a 100,000+ author. This is the meaning of the information Internet, which makes people's information transmission, information acquisition, and information expression more convenient than in the past. Inclusiveness can basically be said to everyone.
However, the transmission of value at this stage is still very difficult. For example, if you want to transfer money to someone from another country, it may take a long time and the handling fee is expensive. There are still 1.7 billion people in the world who do not have bank accounts. They simply cannot make bank transfers.
Including enterprises, SMEs clearly have receivables, and others owe him money, but he cannot get loans, which is an unsmooth flow of value. Therefore, through the blockchain, we can build an Internet of value, so that the flow of value is as convenient and efficient as the flow of information. This is the main value of the blockchain.
Then let's imagine the future of the blockchain, the development of technology often exceeds our expectations. To borrow the words of Kevin Kelly, the author of Out of Control, he believes that the future world is a virtual world, plus a real world, which is the popular word now called digital twins. Everything in the real world is mapped to the virtual world one by one. Every table, every chair, every bottle of water will be mapped to the virtual world, and they will all be digitized. At that time you were not a single server. It is impossible for an Internet company to control, master, and manage the entire system. If it cannot, it will definitely need a distributed system and distributed scheduling of the entire digital world. Therefore, the blockchain will be the entire digital society. cornerstone.
Finally, how to accelerate the implementation of blockchain applications?
So far, we feel that the blockchain is very good, and it is so powerful that it can change the world in this way. So why is the application so far sporadic, or local, and has not formed a large scale?
How to accelerate the implementation of blockchain applications, we understand that there are three main paths: the first is to strengthen the technical infrastructure. At this stage, the technical infrastructure is still not perfect. Now the blockchain is more like the Internet in the 1990s, the network speed is very slow, and the user experience is poor. The problem with the blockchain is that the first efficiency, such as TPS, is not high enough. For example, Bitcoin has only 7 transactions per second, Ethereum only has 20 or 30 transactions, EOS is faster, and TPS can reach 4,000 or 5,000. Now there are many other chains that can have faster TPS. In fact, they all strike a balance between distribution and efficiency. The so-called scalability impossible triangle cannot go to the extreme. Do n’t go to one corner of this triangle. To achieve a balance between this triangle, this is a technology path that many public chains are currently exploring. Including different application scenarios can adopt different balancing methods. The second is security. At the current stage, many smart contract vulnerabilities and many malicious attacks are also reported. We can improve the security of the network and code from a technical perspective, including mobilizing the community from a mechanism perspective and ensuring the early warning mechanism. And so on to improve security. There is also interoperability. Interoperability includes several aspects. One is inter-chain communication, because now there are many public chains, many alliance chains are not open, and there are isolated islands of information between each other. This is not a good one. Phenomenon, the ideal situation in the future is definitely a very good connection mechanism between chains. Cross-chain technology is still not that mature. The other is the exchange and verification of information off-chain and on-chain, which is a big problem. At this stage, offline information on-chain is a very big challenge. In many cases, the information may be tampered with as soon as it is on-chain. Although it can be guaranteed to be tamper-proof after the chain is up, how to make it immutable immediately through the chain is guaranteed by the witness mechanism and the development of some technologies such as AI and the Internet of Things. These are all challenges and issues.
The second is the ecosystem of the construction industry, which is often not a technical issue, but more a governance issue. Now many blockchain applications are from a certain giant, and they really do a good job, but the problem is that he is unwilling to participate when he initiates others, and feels it is a competitive relationship. Why should he participate in you? One way is to involve all parties through the alliance, but the problem with the alliance is that it is often a loose organization. In the end, no one contributes, and people are superfluous. Therefore, we need to build a governance system that can involve multiple parties, so that everyone can have a better reward and punishment mechanism, can all play a role, have rights and obligations. This process also requires the establishment of industry technical standards, industry specifications, etc., so that companies can still effectively and orderly communicate with each other. At this stage, many people are doing their own things, forming their own chains, and they are not connected to each other.
The third is to promote education and training in the industry. Many people in China still don't know much about the blockchain. They may only know the concept or even the concept, and they don't know how the blockchain can be used. In this process, it is necessary to promote the popularization of industry knowledge. Lectures, news media, popular science books, etc., so there will be a book list released today, there will be ten excellent books for everyone to learn in a faster way.
In addition, there should be training courses, online or offline courses, corporate training and so on. More effective are demonstration projects, which are done through government-led or capital-driven demonstration projects. One or two demonstration projects come out to see the effect, which can promote the whole society to make applications better. The path in three aspects includes the consolidation of technological infrastructure, the construction of the industry's ecosystem, and the promotion of education and training in the industry. Huobi China has been building a one-stop platform for blockchain + industrial services in the past two years, helping the real economy and helping enterprises and governments use blockchain to develop better. We have consulting, research, training, technical services, etc. We have research institutes, universities, industrial empowerment centers, and have done a lot of application landing work. It also cooperates with many universities for education and training, compiles a series of textbooks with the Machinery Industry Press, formulates standards for personnel training with the Talent Exchange Center of the Ministry of Industry and Information Technology, and establishes a blockchain engineering technology research center with Hainan University. and many more. thank you all.