Comment: What value does the blockchain provide?

In the past two years, a magical realism drama has been staged in the blockchain field. It was suddenly sought after and was suddenly swindled as a scam. So, is there any value in the blockchain? What is the value?

The blockchain is a decentralized database that integrates distributed data storage, point-to-point transmission, consensus mechanism, encryption algorithm and other technologies. It has the advantages of decentralization, data not tampering, information disclosure and transparent synchronization, and database security and reliability. However, according to the Occam razor principle (simple and simple for cognition and analysis), the advantages of the blockchain are summarized. In the final analysis, the value provided is expressed in terms of efficiency and fairness. Given that the blockchain is a decentralized solution that replaces the traditional centralization model, this paper discusses the efficiency and fairness with a traditional centralized solution as a frame of reference.

The source of value of the blockchain is efficiency. Blockchain can reduce the cost of trust and increase the efficiency of value transfer, but at the same time it brings additional costs. The value of blockchain efficiency should be considered in several aspects.

One of the reasons for improving efficiency is that the blockchain has great advantages in reducing the cost of trust. The British Economist magazine claims that blockchain is a machine of trust, and the cost of building trust between strangers is close to zero. Mainly include: blockchain reduces search costs, cost of iterative verification, and smart contracts based on blockchain technology that greatly reduce contract signing, management, and payment costs. For example, in 2018, McKinsey & Company measured more than 90 blockchain applications, and the potential value of applying 70% was to reduce costs, including eliminating middlemen, canceling transaction record keeping, checking processes, and so on.

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The second thing to improve efficiency is that the blockchain makes it possible to quickly transfer value from point to point and let value flow by redefining value. The traditional Internet can quickly and easily disseminate information by copying information. However, the Internet cannot solve the problems of book change and confirmation, and cannot carry out point-to-point value transfer. It must rely on third-party institutions to achieve value transfer. The distributed ledger technology and consensus mechanism of the blockchain enable value to be determined first among participants, and in the whole process of peer-to-peer transfer, all participants can synchronize the book update, plus a unique timestamp. Avoiding the problem of double payments makes point-to-point transfer possible.

On the other hand, the distributed ledger technology of the blockchain has many inefficiencies compared to the centralized database. It mainly includes low information throughput, long transaction confirmation delay time, limited blockchain capacity, high energy consumption of POW (Workload Consensus Algorithm), unchangeable blockchain information, and difficult data rollback.

Therefore, judging whether a blockchain application can improve efficiency, both addition and subtraction, blockchain is not suitable for all scenarios, and is more suitable for industries or scenarios with high trust costs.

The source of value of the blockchain, and the second is fairness. First, the fairness brought by the blockchain lies in the redistribution of data ownership and usage rights. Under the traditional Internet platform model, many Internet giants are formed. Whether it is personal or corporate data, the attribution and use after the Internet is often no longer determined by the data owner. After the introduction of the blockchain technology, the transaction information on the blockchain is disclosed, but the account identity information is highly encrypted and can only be accessed through the authorization of the data owner. The data owner actually has the right to use the data, and the blockchain takes the previous Digital resources have become digital assets and become a kind of property rights. The blockchain has established a reasonable mechanism for the data market to “who owns, who benefits, who uses and who pays”.

Secondly, the blockchain enables the realization of individual user expressions in the blockchain. Decentralization, autonomy, openness, and transparency are the underlying logic of the blockchain. Especially in the public chain project, each individual is a node. By participating in community governance, each node can express its own opinions and output influence. force.

So, what kind of blockchain project can effectively provide value and achieve long-term development?

Blockchain project design generally has three purposes: one is to solve the problem; the second is the chain chain, which is the blockchain project implemented to apply the blockchain technology itself; the third is the blockchain project established for the purpose of encircling money. , 沦 is the "chives" harvester.

In the long run, blockchain projects designed to solve problems have the potential to survive and develop. Blockchain projects need to provide solutions in terms of efficiency or fairness. Therefore, blockchain projects must stand out and have several characteristics:

First, the blockchain project needs to be able to solve the pain points of the industry and meet the needs and voices of users. From the perspective of efficiency, the project application scenario is an area with high trust cost, especially for scenarios where multiple strangers participate in high trust. In fact, from the current blockchain development, it also confirms this point. Supply chain finance, asset securitization, cross-border payment, credit management, copyright management, product traceability, etc. are used in many fields. The common feature is that Multi-participation and opaque information, or long-term slow synchronization of business processes, requires real-time synchronization of information to eliminate or reduce information asymmetry.

From a fair perspective, the blockchain is ideal for scenarios that require individual expression and personal data validation.

Second, the blockchain project should be easy to land. In May 2019, the famous consulting firm Gartner released a report that the application of blockchain in various industries tends to be pragmatic. Blockchain technology has shown accelerated testing and application trends in many vertical fields around the world. At the same time, blockchain in 2019 Development companies generally shift their focus to solving direct business problems rather than breakthrough applications.

Third, the blockchain project itself is in line with the logic of business development. In other words, the blockchain project is safe, stable and reliable; it has a clear business ecosystem and target return on investment; it has an effective governance model; it has sufficient financial support; it is also highly adaptable and easy to obtain support from a large number of users. Larger network effect.

Fourth, the blockchain application is the simplest and lowest cost among the various solutions to solve the problem. McKinsey believes that one of the key principles to be followed in the development of blockchain applications is that it must start with a specific problem, and it must be the simplest of the available solutions.

Source: Securities Times

Author: Tu Fei

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