Babbitt Column | Cai Weide: The entire financial system can be replaced by blockchain

Editor's Note: The original title was "What is the core technology of the Internet?" 》

The “Internet Link Summit” was successfully held in Hangzhou International Expo Center. Professor Bei Wei, a guide from Beijing Airlines, was invited to attend and delivered a keynote speech on "Internet Link: An Important Breakthrough in China's Science and Technology." The following is the speech content:

Chinese blockchain needs innovation

Blockchain is an important breakthrough for China's science and technology, and it must be innovative. If we are in Hangzhou today, we are using a super ledger, or Ethereum, then this is not innovation at all, but foreign technology. We can't always learn foreign chains, we must have our own innovation, and we must innovate from the bottom to the application layer.

How to make the blockchain technology play a more important role in building a strong network nation, developing the digital economy, and helping economic and social development requires attention to the current status and trends of the development of blockchain technology. So, what is the current status of blockchain development? It is undeniable that the current state of development of China's blockchain is that fake chains, weak chains and coin-issuing chains are everywhere. This is a very serious problem, and these fake chains are also used in public inspection laws and financial systems. When the chain fails, it can be very serious. Therefore, we need to develop new technologies so that fake chains and coin-issuing chains do not develop in China.

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The Internet architecture is now like a Dumbo

Many blockchain Internet (inter-chain) systems have been proposed, but almost all are built on the existing Internet. What does this look like? Like the small Dumbo next to it, it is large and heavy and still flying at high altitude. Just like the current structure of the Internet, the blockchain (large and heavy) is completely released on the existing Internet (high altitude), which cannot be afforded.

The architecture of all blockchain systems on the Internet is not an Internet network, but (Blockchain + Internet). The two technologies are not integrated, and traditional networks and servers are used.

China can only develop a regulated chain

First of all, we know that the interconnected network needs high performance, privacy, fault tolerance, multi-chain architecture, interoperability, extensibility, and changeability. In addition, all participating chains must be supervisable. Evasion chains such as Ethereum cannot be used in China. China does not need to develop a chain that evades regulation, but rather a chain that can be regulated, expanded, and high-performance.

Let the data speak

The PFMI used by the Bank of Canada in evaluating the blockchain is an evaluation standard for financial systems in which many central banks in the world, including the People's Bank of China, participate. Using this evaluation standard, it is found that many chains (including Corda's chain) have not passed, which should be the strength of the blockchain but have failed (such as security and reliability). Therefore, if such a chain is used in China's financial or public inspection laws, it will be very dangerous.

The European Central Bank and the Bank of Japan have published many experimental reports. The knowledge of chains mentioned above is different from that described in general white papers. Many people today take it for granted that the above technology is scientific when reading the white paper, which is not reliable. For example, according to the experimental data of the European Central Bank and the Bank of Japan, the performance of a similar chain will now be very poor.

The server and network do not support Internet

How should we design a blockchain? First, we see the performance of current network protocols. The figure below is a bit old, but it is basically correct, that is, the more the delay, the worse the protocol performance. This is a problem that network protocols have always existed. But if we can balance latency and performance, the entire network structure and the structure of the network company will be greatly changed. Many network applications and architectures are changing because of this, such as edge computing.

We have done many blockchain experiments and reached such a conclusion. Once we achieve a high-speed blockchain, the server spends most of its time doing encryption and decryption and consensus. 90% of the time and 90% of the computing power are used as the basic functions of the blockchain, while the application time and computing power are very small. This means that the current server is not suitable for the blockchain, and the current network does not support the inter-chain network. So this is why blockchain technology is an important breakthrough in China, and it needs to be changed from the bottom to the top.

China needs to develop a regulated internet

What kind of Internet network does China need to develop? The first is that China needs to develop a supervisable inter-chain network. The government can supervise at any time and financial institutions can supervise in real time. What is a regulated internet? It can be monitored before, during, and after trading:

• Pre-transaction supervision and post-transaction, such as user ID, account, related transaction information, KYC, AML;
• The transaction is the compliance of matching transactions. For example, the trading software used in many currency circles today, after evaluation abroad, said that it cannot be used on digital assets, because there are too many loopholes and there are many things that need to be changed;
• The transaction is followed by clearing and settlement, and the transaction must be rollable. Because all financial regulations now allow transactions to be rolled back, the current blockchain design cannot be rolled back. Therefore, the financial blockchain and supervisable blockchain data cannot be changed, but must be able to be rolled back. Such a chain architecture is different from the current chain architecture. In addition, because it requires high performance and high fault tolerance, it must be changed from the bottom to the top.

The top picture on the right is the panda model I proposed in 2016. The panda model separates the transaction of the chain from the account. When you separate the chain from the trading account, you can expand infinitely. Later in 2019, I arrived in the UK and found that the Bank of England also used the same technology. Therefore, this new architecture has been recognized abroad. Below is the golden monkey model I proposed in 2017, which is a completely distributed architecture.

New Interchain Network Architecture Appears

On the left is the current block diagram of the blockchain and the inter-chain network. Below is the Internet, and above are some applications of the blockchain. In fact, we can change to a brand new Internet network architecture. This Internet network architecture is to push down some of the underlying applications of the blockchain and place it on the network and on the server. When we push these things down, a new type of Internet architecture will appear, including servers, networks, and applications above. The above application may establish a chain in one or two minutes, and this chain can be traded at any time. This network is safe and reliable, unlike the 2017 Bank of Canada assessment of some current blockchain systems. This new architecture is different from the traditional architecture, the operating system will change, and it will be a new type of operating system.

New operating system supports blockchain

Some people now propose that blockchain is a network operating system. But in fact this definition is the exact opposite of the traditional operating system. The operating system is a system that represents the bottom layer, not the application layer. We need a new type of operating system to support the blockchain. Therefore, in the future, the new system will be based on security and privacy, and the underlying security will be added with the function of the blockchain. Consensus encryption and decryption, and supervision are placed on the server, and anyone using any blockchain cannot escape supervision. The new system is not only compatible with new applications, but also with existing systems, otherwise it would not be able to enter the market.

New high-performance network protocol

When it comes to networks, many people say that this network protocol has been used for 40 years and can be said to be very mature, but in fact this network protocol can have huge room for improvement. This is the technology we have made. MEF (Cubic is the most commonly used TCP technology today, BBR is the best network protocol in the United States now.) You can see that the MEF performance is Cubic and BBR when the network delay is 200 ms. Many times. So a new network infrastructure is possible.

When the TCP protocol delay increases or the packet is dropped, the performance will go down, and CDN and edge computing will be greatly affected. However, in the MEF protocol, the performance of the entire network does not change in the environment of dropped packets or delays.

Internet application in transaction clearing and supervision

This is an experiment we conducted in Guangzhou in 2017. Multi-chain architecture is used for transaction settlement, which can be monitored in real time. The multi-chain architecture (Panda model) is used, which is the prototype of the Internet of Networks. This is the world's first blockchain-based clearing application.

The entire financial system can be replaced by blockchain

Some people ask whether the blockchain is really useful? I now give an answer. The following is the British company Fnality, which is also a company guided by the Bank of England. It has developed a structure that can be changed by the blockchain, whether it is payment, exchange, or CSD. Blockchain changes.

Blockchain is an opportunity for technological breakthroughs in China

In 2018, I participated in the Cyberspace Office's discussion on the blockchain conference. I asked how the blockchain should develop in China? They said Professor Cai, you write the Chinese dream of blockchain. So I wrote four Chinese dreams, the first of which talked about blockchain as a major breakthrough in Chinese science and technology, from network design to applications.

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