By Sajjad Hussain on The Capital
The concept of blockchain first appeared in Satoshi Nakamoto’s white paper on Bitcoin in 2008. Blockchain is embodied in the form of Proof of Work chain (PoW). In 2014, Vitalik Buterin introduced the concept of “smart contracts” in Ethereum, which gradually transformed the blockchain foundation into a universal application platform. According to the definition, blockchain is a new application paradigm based on technologies such as computer distributed data storage, point-to-point transmission, encryption algorithms, and consensus mechanisms.
Blockchain core technology and development status
Blockchain supports decentralized authentication and distributed accounting to achieve non-repudiation proof of behavior and content at the same time, timestamps are used to ensure the traceability of block content in time. Its core technology includes asymmetric encryption technology, hashing algorithm, P2P network, etc. In the multi-node decision-making process, a consensus mechanism algorithm is used to determine the validity of the result. At the technical level, at present, the blockchain is facing the practical dilemma of the “impossible triangle” of decentralization, efficiency, and security. Since this focuses on the application level of blockchain, detailed technical details will not be elaborated. In specific applications, the more important technical characteristics and value of blockchain are mainly reflected in the following four aspects:
1. Distributed ledgers, transaction accounting is accomplished by spatially and physically separated multi-nodes. Each node records complete accounts and can participate in the supervision of transaction legitimacy, from traditional “unique or definite centralization” to “dynamic multi-center” Change.”
2. Asymmetric encryption and authorization. The transaction information stored on the blockchain is public, but the account identity information is highly encrypted and can only be accessed under the authorization of the data owner. Therefore, data security and personal privacy can be guaranteed. Of course, if necessary, the transaction information can also be authorized management.
3. The consensus mechanism. The checkout node votes to reach a consensus in some way to determine the validity of a record. Through this method, it can not only ensure the validity but also serve as a verification method to prevent tampering.
4. Smart contracts. Based on the credible and non-tamperable data on the blockchain, it supports the automatic execution of preset rules and terms.
It is generally believed that, at present, blockchain applications have evolved from the blockchain 1.0 era to the blockchain 2.0 era, and are moving towards the blockchain 3.0 era. Blockchain 1.0 mainly represents programmable currency. Blockchain is mainly used in the field of virtual digital currency such as currency transfer and payment systems; the concept of “smart contracts” was introduced in the era of Blockchain 2.0, which expanded the application of blockchain to equity, The registration and transfer of claims and property rights, the trading and execution of securities and financial contracts, and even the financial fields such as gaming and anti-counterfeiting Blockchain 3.0 is a broader expansion based on 2.0 so that the blockchain can penetrate into social life in many many ways.
“The Economist” mentioned in Blockchain Commitment Trust Machine” that blockchain technology can create trust and has a huge influence on changing social cooperation models and business cooperation models.
A chairman of the world’s biggest bank believes that blockchain is essentially a comprehensive technology based on composite technology and oriented to complex economic and social scenarios. It can reconstruct business forms and profit distribution mechanisms, improve the efficiency of economic and social operations, and promote the establishment of a shared and win-win situation. The industry ecology can also stimulate a new economic format, and make the entire social governance system and credit system develop rapidly. Within the industry, blockchain has received extensive attention, and researchers have conducted many useful explorations, especially in the financial field. What I believe that blockchain is expected to become the core technology of the next-generation infrastructure in the financial industry, and it has achieved initial results in cross-border payment, post-transaction clearing, asset securitization, electronic bills, trade financing, and supply chain finance. At present, the industry generally believes that blockchain technology has had a significant impact in scenarios such as “multiple participation,” “high-frequency repetition,” “long transaction chain,” and “high trust costs,” but its unique and irreplaceable role has not yet been achieved, fully revealed.
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