The third milestone in the history of blockchain: Libra

Libra's release is bound to attract a lot of attention, because it comes with the "traffic" that all blockchain applications are dreaming of, and the number of Facebook users is enough to make it the "killer" application that the world is looking forward to. However, Libra is much more than that.

If in the past decade, everyone who tries to understand the blockchain must seriously study the Bitcoin and Ethereum white papers, then those who try to understand the future core values ​​of the blockchain must study more. The Libra white paper "The Third Milestone".

Is Libra really worth looking forward to? Is it considered innovation? What other issues need attention? This paper attempts to interpret the dazzling "new upstart" of the blockchain family from three aspects of business, technology and challenges.

First, the business side

(1) Libra regression classic

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At the beginning of the Libra Business White Paper, the vision is to "create a simple, borderless currency and financial infrastructure for billions of people." Some people may think that this sentence is too ambitious. Based on the various "dilemmas" of the current blockchain application, some are unrealistic. But in fact, this is a classic return to the blockchain.

What is the goal of Bitcoin? It is a pure electronic cash system. Putting aside all kinds of speculations about "Zhongben Cong"'s distrust of financial institutions, it is certain that "Zhongben Cong" has created a pure electronic network that can be safely and does not rely on financial institutions as a third party for peer-to-peer payments. Money can better support the development of Internet trade. In the Ethereum, "V God" expands the application space of blockchain technology, which makes people expect more types of applications, but the road to expansion is not smooth. The “chain of alliances” will push the blockchain technology to the To B application. As a result, the main battlefield of the blockchain will be transferred to the “big factory” with abundant funds and the winter’s “big factory”. This trend has been further promoted. However, the “chain of alliances” is “criticized” because it is often unrelated to the “coin”.

Finally, Libra returned to the blockchain's “beginning heart” and created a licensing chain that is dedicated to improving the financial infrastructure. This is like a decade of reincarnation, which finally brings the attention of the world back to the district. The starting point of the blockchain.

(2) Committed to improving financial infrastructure

Blockchain is capable of improving financial infrastructure, but talking about this issue is about turning around to talk about the nature of finance.

The essence of finance is financial services, serving the real economy, and the core of this service is two words: integration and communication. "Finance" refers to the adjustment of funds, that is, from the surplus of funds to the lack of what is called, the so-called borrowing; "pass" refers to the actual flow of funds, whether for the purpose of borrowing or paying. Financial services are the process of coordinating the needs of the surplus and the lack of funds and delivering the funds. This is the core function of finance, and other functions are based on this evolution.

“Tong” is the financial infrastructure. The scope and capabilities of “Tong” determine the scope and cost of “Finance”, so why does the Libra White Paper say that more than one billion people do not have access to financial services because they do not have an environment in which they live. Infrastructure for financial services. Because of the increasingly complex business, modern finance has far more than the narrowly supported infrastructure to support the flow of funds, but also the supporting environment such as the credit system, but “pass” is still the most important part, and it is very expensive, don’t underestimate Remittances, especially cross-border remittances, are the “Huitong World” that all banks in the world have struggled for for 200 years and spent huge sums of money.

The creativity of blockchain technology is here, and Bitcoin is built on a “low-cost”, maintenance-free distribution system for infrastructure. The reason for this is that it relies on reliable "electronic money." When traditional banks handle remittances, the real object of processing is physical currency. Electronic accounting is only the mapping of physical currency in computer systems. “money” and “account” are separate. Therefore, it is necessary to rely on margin and complicated multi-level liquidation. To ensure the authenticity of funds, that is to say, the fundamental reason for the financial system to be close to the upper limit of the processing capacity of “communication” is the monetary form. Under the existing monetary pattern, greater improvement is not easy. Bitcoin adopts the electronic money inside the network, which directly realizes the point-to-point transfer. It does not need the bank's multi-level clearing system to support it. This kind of "money" and "account" integration is the advantage.

Libra fully recognized the importance of this advantage and re-emphasized the core value of blockchain technology. Some people may also have "regret" about the use of stable currency as an electronic currency form. However, considering that Libra has to serve more than one billion people, stable currency is already the most acceptable for persuading various regulators and users. The form, stable currency has the advantages of both the convenience of electronic money and the stability of the mainstream "funded currency" value, and is the most suitable transitional form between physical currency and electronic money. For the discussion of stable currency, please refer to the author's "New "Huitong World": Realizing Cross-Border Payment Scheme with Stable Currency", which will not be repeated here.

From a business perspective, Libra is back to the classics and is committed to improving the financial infrastructure. This is an attempt to bring blockchain technology back to the "initial heart" and an opportunity to re-certify the core value of the blockchain.

Second, technical aspects

Recently, there have been articles saying that there is not much innovation in Libra technology. In fact, the degree of innovation is not important in itself. The key to technology is to support the business, that is, whether Libra has technically supported the necessary changes in its business vision.

(1) Storage aspects

As we all know, the blockchain technology exchanges trust through computing power and storage. Although the form of multiple copies is beneficial for verification, it is quite expensive to store, and it is also a problem in the alliance chain. Including the author, there are also many people who propose to only hash the hash, store the hash, the chain, the data center to save data and other ideas to ease storage problems. For Libra's idea of ​​serving more than one billion people, the storage bottleneck is not resolved and the platform simply cannot operate.

As can be seen in the technical white paper, Libra adopts a design that can delete data, but retains the hash, and resubmits the data through hash verification in the ledger; by using the Merkle tree accumulator implementation, it simplifies the new transaction to the old state. Dependency, only the current state is the only information the certifier needs to process the transaction; the account has a recycling mechanism and may introduce a leasing mechanism for the storage resource to limit the "abuse" of the storage resource.

According to Libra's calculations, its verifier node can store 4 billion accounts.

(2) Consensus efficiency and throughput

In fact, Libra is faced with a big challenge in this regard. It provides the scope and capabilities of the non-licensed chain in the form of a license chain. Therefore, it adopts the BFT-like consensus mechanism at this stage, and selects each round of consensus leaders through random functions. The random function helps to improve selection efficiency and security. Considering the network delay problem of the public chain that needs to be faced by its worldwide service scope, the "3-chain" submission rule is adopted. It is similar to the six blocks of Bitcoin to confirm that the accounting is correct. Libra uses three blocks of QC. Confirmed submission mechanism.

Finally, the BFT protocol selects the Hotstuff paradigm to support 100 verification nodes and ultimately supports 500-1000 verification nodes. I remember that when I first studied Fabric, I learned that the BFT consensus mechanism would have a significant drop in efficiency when there were more than 20 verification nodes. EOS originally only selected 21 super nodes. Considering that Libra is global, supporting 100 verification nodes and achieving 1000TPS is still a good efficiency improvement. In the application scenarios predicted by the white paper, offline payment is still the main method, so 1000TPS, which is close to two-thirds of Visa's actual business volume, can still meet the initial demand.

(3) Resource structure design

The Move language provided by Libra supports the ability to customize resource types. The module is responsible for defining the structure. The structure is divided into resources and non-resources. The resource class can describe currency or other assets. Libra currency is a resource type. This model allows the Libra platform to freely define a variety of resources that can be consumed in a quantitative manner, that is, Libra can easily support multiple types of "coins" or services. Libra itself has no special status on the platform, but if there is only one Libra coin on the platform, or if Libra is widely trusted, Libra will be a measure of all other resources on the platform.

According to Libra's definition, each resource is a classified address, and all accounts that store the resource are in a unified path, which is equivalent to each resource having a clearly defined "warehouse", which also makes the assets on the Libra platform. And the account is easier to manage.

(4) Resilience

It should be said that Libra has used its own license chain form and made some improvements in resilience to make the platform easier to use.

The Libra platform allows users to change the key used for transactions without changing their address, and to solve the problem of asset loss caused by key loss; the platform supports the transaction history of the blockchain from the founding block to re-execute the current The status of the ledger; maintains security when the verifier crashes and restarts, even if all certifier nodes are restarted at the same time. These resilience are very important to a mature financial system.

Through the study of the technical white paper, we can find that Libra's innovation is based on how to realize its business vision. In addition to the above points, including the consideration of the security of smart contracts, the Move language is designed and adopted. The code verification ensures security and avoids problems such as the compiler being bypassed.

Libra strives to reduce the hardware performance issues that its verifier nodes must face through technical efforts to create conditions for a future transition to a non-licensed chain. It should be said that the team of Xiaozha made sufficient technical preparations for key issues before launching the white paper.

Third, the challenge

Despite the readiness, Libra still faces a lot of difficulties.

(1) Regulatory attitude

Since Libra still retains the pseudonym and does not connect the account to the user's true identity, there is a direct challenge in terms of KYC (know your customer) regulatory requirements. In addition, Libra's vision of a "central bank" feature will make many regulators feel "difficult."

(2) Move language

The "soft rib" of Ethereum was from the writing of smart contracts. Although Libra has learned a lot of lessons in this respect, the Move language may still become a relatively vulnerable point in the Libra platform.

(3) Authorized dealers run

This is quite like a traditional financial institution. The Libra platform uses the way to sell Libra to authorized dealers and also destroys coins by redeeming them by authorized dealers. Since Libra's reserve structure is still somewhat complicated, there will still be fluctuations between Libra and the actual value of the reserve that cannot be maintained at 1:1 level, and then, if there are some financial games in the Libra ecosystem. As a result, the credit creation is actually generated. Then, some complicated exchange mechanisms may induce the phenomenon of authorized dealers to run under special factors, which leads to the “instant exhaustion” of liquidity.

Regardless of the embarrassment of each family, Libra is firmly on the road to return to the classics, setting a third milestone in the history of blockchain. It promises to practise inclusive finance around the world, and it is still worth pondering in the blockchain industry.

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