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(1) What is the impact of the rise of blockchain on future finance

On August 6, 2018, Mr. Cai Yi, the financial industry consultant of Huawei, founder and CEO of Huaxuan Technology, was in DAGA | Blockchain & AI (core group) made a special sharing on the topic: the current situation and prospect of blockchain finance. The following text is organized according to the speech of the lecture and has been reviewed by the author.

Cai Yi: Financial industry consultant of Huawei, founder and CEO of Huaxuan Technology, founder of Sharing Book Club, member of China Writers Association, engaged in financial technology research for more than ten years, is a senior expert in the digital transformation of banks .

Good evening everyone, I am very happy and honored to share some thoughts with you here.

First of all, a brief self-introduction: My name is Cai Yi, I was a writer in the green years, and I wrote some books, publications and novels in the 1990s, when there was no Internet. After working, he has been engaged in informatization work in the financial industry, from financial channels to data centers, from outlets to technology, witnessed the development of financial technology, and found some problems. After 2014, he worked as an investment partner. In recent years, he has also worked as a financial industry consultant at Huawei. From a cognitive level, he has been a consultant for the development of talents in the digital transformation of the financial industry.

When I came into contact with blockchain in 2015, I founded Huaxuan Technology and Shared Book Club. At present, we mainly focus on the cognition of blockchain and the implementation of financial technology solutions. At the cognitive level, interactive sharing and knowledge management are carried out in the form of book clubs. At the technical level, technologies such as blockchain, big data and AI are used to reshape the processes and scenarios of the financial industry, starting from a local perspective. Getting to know the blockchain comes from my own interest in the blockchain, and I often study and conduct research with some friends. Of course, some views are still superficial, and I hope you will share more criticism and corrections.

U.S. elite think tanks once believed that the core of maintaining global leadership is technology, technology must rely on the economy, and the core of the economy is finance. So what is the future of finance?

Today’s topic is: Current Situation and Prospects of Blockchain Finance. I would like to introduce mainly from three aspects:

  • A brief introduction to finance and the financial system;

  • The current situation of blockchain finance ;

  • Prospects for blockchain finance.

  • I. Finance and the financial system

    1The concept of finance

    First of all, let’s talk about the concept of finance. The word “finance” comes from Japan after the Meiji Restoration (1868) is somewhat related to the gold standard established by Japan in 1897. It was introduced to China from Japan in the early 20th century. It was first proposed by Minister of Finance Liang Qichao in 1902, and Zhang Zhidong raised objections at that time. Therefore, China has remained on the silver standard after the Sino-Japanese War, but this also allowed China to escape the 1929 decade of the Great Depression.

    The original meaning of finance is “money financing”, which refers to the circulation of funds in the society. Later, the meaning was expanded to represent transactions and economic activities related to currency and credit. There is actually another reason for the translation into “finance”: gold used to be the only medium in international trade, and value and wealth were based on gold. Therefore, when people make standard gold bars, they need to melt the gold into shape, which may be the original meaning of the word “finance”, that is, to melt the metal.

    Finance is the general term for currency circulation and credit activities and the economic activities associated with it.

    Let’s look at our definition of finance later: Finance is currency circulation and credit activities and related economic activities. The general term for the related economic activities. In a broad sense, finance generally refers to all economic activities related to the issuance, custody, exchange, settlement, and financing of credit currency, and even includes the purchase and sale of gold and silver. In a narrow sense, finance refers to the financing of credit currency.

    Simply speaking, the content of finance can be summarized as the issuance and withdrawal of currency, the absorption and payment of deposits, the issuance and recovery of loans, the trading of gold, silver and foreign exchange, the issuance and transfer of securities, Insurance, trust, domestic and international currency settlement, etc. To put it more bluntly, finance is a two-way feedback. The institutions engaged in financial activities mainly include banks, insurance, securities, trusts, and financial leasing. We all know this relatively well and have been in frequent contact with them. Therefore, to understand the meaning and institutions of finance, you also need to understand China’s financial system.

    2China’s financial system

    The development stage of my country’s financial system is roughly divided into five stages:

  • The initial stage, the first stage Five years (1948-1953): the establishment of the People’s Bank of China (1948), the People’s Bank at this time was far from what we imagined now. But it marked the beginning of a new Chinese system of financial institutions.

  • The “big unification” system in which the central bank unifies revenue and expenditure, the second five years (1953-1978): The People’s Bank of China is the only one in the country to handle various banking businesses A financial institution that integrates the central bank and the ordinary bank. The unification is actually our photo��For foreign models, I won’t mention the specific countries.

  • Initial reforms and breakthroughs in the “uniform” financial institution system, the third five-year period (1979-August 1983): Bank of China (established in 1912), China The Agricultural Bank (established in 1951) and China Construction Bank (established in 1954) have been restored or established one after another, but the People’s Bank of China still integrates currency issuance and credit. We have seen that after the reform and opening up, China’s financial industry has developed very rapidly.

  • The diversified financial institution system has begun to take shape. In ten years (September 1983 to 1993): the People’s Bank of China was formed as the core, with industrial and agricultural institutions as the core. A financial institution system with four major professional banks as the main body and various other financial institutions coexisting and cooperating with division of labor. After 1987, Bank of Communications, China Merchants Bank, Shenfa, CITIC and Hengfeng appeared successively. In 1988, Ping An, Guangfa and Xingye appeared. In 1992, China Everbright, Huaxia, and Shanghai Pudong Development Co., Ltd. appeared, and the China Securities Regulatory Commission was established in the same year.

  • The stage of building and improving the social market financial institution system (from 1994 to the present): formed a “one bank and three associations” as the leading role, with large, medium and small commercial banks as the main body , A relatively complete financial institution system with a variety of non-bank financial institutions as the auxiliary wings. In 1994, three major policy banks (China Development Bank, China Export-Import Bank, and China Agricultural Development Bank) were established; in 1995, the first private commercial bank, Minsheng Bank, was established (this is of great significance); And set up the Insurance Regulatory Commission. The China Banking Regulatory Commission actually appeared relatively late, only established in 2003. From then on, the pattern of one line and three meetings was formed. However, not long ago, the China Banking Regulatory Commission and the China Insurance Regulatory Commission merged into the China Banking and Insurance Regulatory Commission. You can pay attention to it.

  • From an evolutionary perspective, normative research in finance is often linear.

    That is, we often use a certain evolutionary form as a standard (usually developed market economic systems, such as the Soviet Union, Germany, the United States and even Japan, etc.) to describe the financial system from non-market-oriented to market-oriented, from financial The progress path from inefficient allocation of resources to high-efficiency allocation, and explain the GAP of the standard form and the reasons.

    Actually, we can find from the development history of China’s financial system just now: since 1978, China’s financial system has evolved in the direction of marketization, standardization, diversification and internationalization. Both the scale and the degree of complexity are rising rapidly and non-linearly:

  • All kinds of financial institutions are showing a “networked” and “strongly connected” business format, that is, the current banking and The degree of correlation between banks, banks and other financial institutions and various financial sub-markets has increased significantly, and the credit links have become increasingly close, intertwined and intricate.

  • There have also been some significant changes in the ecological environment of the financial industry. On the one hand, traditional formal financial institutions seek to accelerate transformation and innovation, and strive to seize opportunities in innovations such as business strategy, market positioning, management structure, business format, and products. On the other hand, various emerging financial institutions have emerged in large numbers.

  • The financial industry also presents new features such as real estate financialization, “banking” of non-bank institutions, and asset securitization.

  • These changes are beyond the general imagination of industry, regulators and policymakers, and will have a range of impacts:

    Positively, the size of the financial system Both the financial and the composition have expanded, the business expansion and financial service capabilities of financial institutions have been improved, the financial market has been developed, and innovative payment has developed rapidly. This is the case with fintech, which we will talk about later.

    In a popular saying, there are all kinds of birds in the forest. Then, the negative aspects are mainly reflected in the following aspects:

  • The interaction between the financial system and the real economy tends to be complex, and the role of the financial system in generating and amplifying asset bubbles is underestimated.

  • The reticulation and strong connection of the financial system have widened the gap between the financial industry and financial supervision and weakened the effectiveness of traditional supervision. my country’s current financial supervision system has only been in operation for more than ten years.

  • The path and mechanism of monetary policy transmission through the financial system have changed (the transmission chain of monetary policy has been elongated or deformed, and the transmission and effectiveness have decreased), and the regulation has become proactive and effective. Sex faces new constraints. The current monetary policy framework has been continuously improved in response to economic and financial market developments since its establishment in 1996, but the complexity of the financial system in recent years has brought new challenges to it. Broad money M2 was also impacted by financial deepening, electronic payment and other factors, and was further weakened by the shadow banking system.

  • Various cross-market, cross-business, and cross-border behaviors that evade supervision interweave various risk factors, such as: capital pool operations with serious mismatches in terms of terms and products are relatively hidden. Large liquidity risk, product nesting leads to risk transfer, insufficient supervision of shadow banking, and local debt, real estate, etc.�External shocks and other factors have brought great challenges to the stability of the financial system.

  • There is no harm without comparison, and my country’s financial system as a whole is still relatively backward. This lag is mainly reflected in the lag in bank innovation: the People’s Bank of China announced in October 2015 that it would cancel the “interest spread protection”, while the United States had completely marketized interest rates as early as April 1986, and China was nearly 30 years late.

    3The institutional framework and basic problems of China’s financial system

    Of course, my country’s current financial system is built on three basic institutional frameworks:

  • One is relying on the commercial trust existing in the legal provisions, that is, policy orientation;

  • The other is that the third party acts as a credit intermediary to guarantee the realization of asset transfer transactions;

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  • Third, a centralized clearing institution is the center to process the completed transaction settlement and clearing.

  • Based on this, four problems are also derived:

  • 1) The problem of integrity system and trust mechanism. Traditional finance must have strict transaction records to accumulate credit. Without transaction records, it is difficult to achieve financing or loans, because there is no technical means to ensure the safety of transactions between both parties.

  • 2) The transaction settlement time is longer. The traditional financial transaction time has been accelerated, but the settlement time is still relatively long, especially for cross-border transactions, which often cannot be reached immediately.

  • 3) The cost of intermediary services is high. An important source of income for the traditional financial transaction system is the collection of transaction fees or loan interest; in cross-border transactions, the cost caused by exchange rate changes must be paid.

  • 4) Poor security. There are many human involvement in traditional finance, which means that the probability of human errors and omissions is also higher.

  • Faced with this series of problems, financial institutions have been looking for solutions. When we communicated with ICBC and China Merchants Bank two years ago, they were already exploring big data, artificial intelligence and blockchain. And its sense of crisis is very strong.

    4 Fintech

    As the positive aspects just mentioned, financial institutions have been seeking solutions to financial informatization and financial digitization.

    So, let me mention what’s going on with fintech. Whether it is FinTech proposed by JD.com or TechFin proposed by Ant Financial, I think it is essentially a better combination of technology and finance, just like how we will discuss how to better integrate finance and blockchain.

    Era of Fintech 1.0

    At this stage, the financial industry and the technology industry exist side by side. change. Since the Second World War, the rapid development of communication technology and information technology has made finance break national borders, and the cross-border investment of financial institutions has also greatly accelerated. The providers of financial services in this era are mainly banks.

    Era of Fintech 2.0

    Technology is promoting the globalization of finance and making financial services more and more digital. The financial industry realizes the electronic and automation of office and business through the application of traditional IT software and hardware, thereby improving business efficiency. During this period, financial institutions have greatly increased the adoption of IT technology in internal operations, and have successfully achieved paperless office in many processes. The core system, credit system, clearing system, etc. that are often discussed in banks and other institutions are the representatives of this stage.

    Era of Financial Technology 3.0

    In the stage of Internet finance, the main force of financial technology at this stage is the entrepreneurial enterprises of non-financial institutions, relying on Internet technology and information communication technology to provide financial services or Cooperate with financial institutions to launch financial services. By building an online business platform, the financial industry uses the Internet or mobile terminal channels to gather a large number of users and information, and realize the interconnection and interoperability of any combination of the asset side, transaction side, payment side, and capital side in financial business. Changes in financial channels to achieve information sharing and business integration.

    Era of Fintech 4.0

    The financial industry has changed the traditional sources of financial information collection and risk pricing models through new IT technologies such as big data, cloud computing, artificial intelligence, and blockchain. , the investment decision-making process, and the role of credit intermediary, so it can greatly improve the efficiency of traditional finance and solve the pain points of traditional finance. The representative technologies are big data credit reporting and robo-advisory.

    Speaking of this, let me summarize a little: Finance is an intermediary of credit, and finance is a two-way feedback. We talked about China’s financial system and learned that ICBC, China Merchants Bank and Ping An were established at the same time, so we know why ICBC is more active and innovative than the other four banks. Then we talked about the development of financial technology, which has led to the better development of financial technology in informatization and digitalization.

Excerpt and: Article: Current Situation and Prospects of Blockchain Finance

(2) What are the innovation and development of blockchain?Encounters and challenges are what we must seize

In this new era of the 20th century, there are many opportunities that we need to seize, not only for us personally and for our country, but also for seizing opportunities. a very important thing. The new century is a new opportunity and challenge for the whole world. The new technology and economy have many impacts on all aspects of our life. And the latest “digital economic development,” has made an important foreshadowing for the development of today’s era. So what is the development and innovation of blockchain?

The world is innovating and developing, we need to seize the opportunity at the right moment, and the opportunity is reserved for those who are well prepared.

(iii) What are the large blockchain companies in China

The large blockchain companies in China include Xinchen Technology, Yinjiang Co., Ltd., Great Wall of Culture, Guangdian Express, Hang Seng Electronics, etc. .

1. Xinchen Technology

The company is mainly engaged in application software development business, software and hardware system integration business and professional technical service business. In recent years, Xinchen Technology has made bold attempts in innovation. The company has made certain progress in the application of new technologies such as cloud computing, big data, artificial intelligence and blockchain in the financial industry. The domestic letter of credit business system based on blockchain technology has been successfully launched in the bank, and is expected to gradually become a new growth point for the company’s software solution business.

2. Yinjiang Co., Ltd.

The company mainly provides intelligent system engineering and services to users in the transportation, medical, construction and other industries. “Yingcai” has tracked and reported Yinjiang shares many times. In recent years, this company has made in-depth development of smart cities, involving fields including transportation, medical care, construction, environment, energy, education, finance and other aspects of urban residents’ life.

The company is a key software enterprise in the national planning and layout, a key high-tech enterprise in the National Torch Program, a top 100 enterprise in China’s software business revenue, a top 100 high-tech enterprise in Zhejiang Province, and one of the top 100 high-tech enterprises in China by Forbes in 2010. It is one of the top 100 potential small and medium-sized enterprises and an outstanding contributor to China’s informatization construction in the past 30 years of reform and opening up.

5. Hang Seng Electronics

On June 1, 2016, Shenzhen Financial Blockchain Cooperation Alliance was established, and Hang Seng Electronics was one of the 25 sponsoring members Use the blockchain technology to realize the digital bill system based on the alliance chain.

㈣ The first blockchain scoring trophy appeared in this European Cup. Who has the best chance to win this European Cup? The champion Portugal is also out, and the German team also lost to England. At present, it is Italy and England that have the hope of winning the championship, but there may be a dark horse team. After all, in the history of the European Cup, this kind of situation has often occurred , but after the elimination of France, Italy and England are the biggest favorites, and these two teams have the hope of reaching the top of Europe.

The final should be England against Italy, and it is more optimistic that England will win the championship.

㈤ Which is the best blockchain financial system development enterprise

Blockchain finance is the application of blockchain technology in the financial field. The pace of innovation and model innovation will accelerate, and with the accelerated expansion of applications from financial to non-financial fields, blockchain will gradually become an important part of the future Internet, laying an important cornerstone for building a value network. In the application of blockchain technology, Yingtang Zhongchuang’s blockchain system development is currently a major platform.

㈥ What role does a foundation play in a blockchain project

Compared to a company, it is more appropriate for a blockchain to establish a foundation. Blockchain is a decentralized technology, and a company is a power center organization. The foundation’s finances do not require a legal person and are self-monitoring. Foundations raise initial funds for blockchain projects, but for non-profit matters.

㈦ What are the six stages of blockchain use case development?

Blockchain is a peer-to-peer digital distributed ledger that records all transactions, information, and It cannot be tampered with, it can only be appended. The following are the six major stages of the development of blockchain use cases analyzed by Jinwowo Network Technology:
Analyze services and processes → define technical blueprint → develop concepts → policy and regulatory framework → develop pilots → scale

㈧Why the blockchain will redefine the world

The technology behind Bitcoin has established a reliable ledger, thereby changing the lives of many people, and its significance goes far beyond the scope of cryptocurrencies.
1. Mariana Catalina Izaguirre had been living in the dilapidated house for more than 30 years when Honduran police stormed into the house one day in 2009 and wanted to evict her. Unlike her neighbors, Mariana Catalina Izaguirre even has a governmentHowever, unfortunately, according to the information from the local government Housing Authority, the Housing Authority and another person, the “homeowner”, applied to the court for an eviction order, and Ms. Lzaguirre was eventually forced to leave.
This kind of gossip is common all over the world due to poorly registered or lost records. The lack of homeownership security is also a source of injustice. It also becomes difficult to use houses or land as collateral for financing and so on.
Bitcoin can make such problems disappear. Bitcoin is a “smart” currency based on encryption algorithms. What we should pay more attention to is the technology behind Bitcoin: blockchain. It means much more than money or cash. It creates a way of accounting that resolves mutual mistrust.
That’s why politicians are consulting Factom, an American startup that provides a prototype for blockchain-based land registries, to clean up Honduran property agencies. There is also interest in Greece, which does not have a proper land registration policy and only 7% of its land is correct on the map drawn.
2. Other applications of blockchain and similar “distributed ledgers” can be extended to stop diamond theft and supermarket assembly lines. The NASDAQ exchange will soon use a blockchain system to record transactions of private companies. The Bank of England dislikes technological civilization, but it also appears to be stimulated: it wrote in a research report last year that distributed ledgers are a remarkable innovation that will have far-reaching implications for the financial industry.
Politicians think further: when partners and the left gather at this year’s OuiShare Fest in Paris to discuss how grassroots companies are shaking up big data companies like Facebook, blockchain is in every speech . In the world’s dream of freedom, more governmental norms are replaced by private contracts between individuals – encryption algorithms that strengthen themselves.
Blockchain was envisioned by Satoshi Nakamoto, the remarkable and so far only identified founder of Bitcoin — “a fully peer-to-peer electronic currency,” he wrote in a 2008 article. In order for it to act like a currency, bitcoins must be transferred from the claimed account and can be spent twice by the same person. In order to realize the dream of a decentralized system like Nakamoto, Bitcoin must avoid any reliance on third parties, such as banks hidden behind ordinary payment systems.
The blockchain can replace the third party. It can hold the transaction history of each bitcoin, providing evidence of any person at any time. The distribution system can be replicated across thousands of computers — Bitcoin’s “nodes” — everywhere in the world and made public. But even with that publicity, it’s still credible and secure. The sophistication of the mathematical algorithm and the computational brute force built into its “consensus mechanism” – where nodes agree to upgrade the blockchain’s processing based on the circulation of bitcoin – ensures this.
For example, Alice wants to pay Bob for a rental service. They all have bitcoin wallets — a piece of software that goes directly to the blockchain, not like a browser to a web page but doesn’t identify users within the system. The transaction starts when Alice’s wallet starts to apply, and the blockchain starts to change to show that Alice’s wallet is less and Bob’s is more.

The network needs to go through several stages in this process to complete the change. When the application passes through multiple nodes in the network, check the ledger to see if Alice has the bitcoin she wants to spend. If all seems to be ok, the specific node will instruct the miners to bind Alice’s request to other similar reputable transactions, creating a new module in the blockchain.
This involves the need to decompose the module into a series of data of a specified length by giving the encryption a hash function (see diagram). Like many encryptions, this hashing is a one-way street. Decentralization of data is possible, but conversely it is impossible to aggregate data by decentralization. But even though the hash does not hold the data, it is still unique. Change the incoming module by either method – changing the transaction by simply a number – the hash will be different.
3, along with other data, the hash will be placed in the first (header) of the specified module. The first went on to become the basis of a practical mathematical puzzle, once again involving hash functions. Puzzles can only be solved by test and error. Through the Internet, miners have to experiment with hundreds of millions of possibilities to find answers. When a miner finally figures out the answer, the other nodes quickly check (again one-way street: solving is hard, but checking is easy), and each node confirms the solution and escalates to the blockchain. The first hash will be the confirmation line for the new module, which is now part of the ledger. Alice pays Bob, and all other transactions contained in the module are confirmed.
Decryption stageDuan introduces three things that greatly enhance Bitcoin’s security. One is chance. You can’t predict which miner will solve the puzzle, and therefore who will upgrade the blockchain at a given time, except that it must be the most hardworking miner, not some other random slack. This makes cheating difficult.
The second point is history. Each new first bit holds the hash function of the previous module’s first bit, which holds the hash function of the latter’s previous one, and so on and so forth until the starting point. This association makes modules a circular chain. Starting with all the data in the ledger, regenerating the top of the latest module is a trivial matter. While making a change anywhere – even going back to one of the earliest modules – the changed module will be different in the first place. This means that the same goes for the next module, and all subsequent modules. The ledger will not pass the latest module identifier and will be rejected.
Is there a solution? Imagine Alice changing her mind about paying Bob and trying to rewrite history so that the bitcoins are still in her wallet. If she is a competent miner, she can solve the puzzles that need to be solved and produce a new version of the blockchain. But in the time she does this, the rest of the network will have extended the original blockchain. Nodes will always work on the longest version of the blockchain. This rule prevents a situation where two miners find a solution at the same time and leads to a worse outcome than a temporary fork in the chain. It also stops cheating. In order for the system to accept her new version, Alice needs to extend it faster than everyone else. Without being able to control more than half of the computers—the technical term for it is “51 percent attack”—that should be impossible.
4, not to mention the possibility of subverting the above-mentioned network, another deep-seated question is: why become a member of this network? This answer is the third “decryption” step, and there is still a reward, each new block has a new bitcoin, and the person who solves the puzzle will be rewarded with 25 bitcoins, or about $7,500.
All of the above-mentioned ingenious designs are not what makes Bitcoin really attractive. Its value lies in instability and unpredictability, as shown in the chart below, but the total amount of Bitcoin is certain. The mechanism of the blockchain also works well. On average, more than 120,000 transaction records are added to the blockchain every day, according to a website called blockchain.info, which translates to about $75 million in transactions. There are currently 380,000 blocks, and this ledger is nearly 45GB in size.

Most of the data that resides on the blockchain is in Bitcoin, but it doesn’t have to be. Mr Nakamoto also created a distributed system and wrote about it. Tech geeks call it: an open platform. This platform is modeled after the Internet, and also includes operating systems such as Android or Windows. Developers can develop applications based on the basic functions on the blockchain without anyone’s permission. Chris Dixon of Andreessen Horowitz, who has invested in several bitcoin startups, said the network will eventually become a public database. It is understood that Andreessen Horowitz has invested in bitcoin wallet company Coinbase and mass-oriented bitcoin hardware equipment company 21.
There are currently three major areas of blockchain-based applications. The first is to have all recommendations done through the blockchain. Startup Colu is betting on this model, developing an algorithm to “polish” small bitcoin transactions so that they can represent transactions such as securities and precious metals.
Securing the validity of signatures on land or houses becomes a typical application of the second category. All Bitcoin transactions have their signatures added to the ledger of the blockchain. A startup called everledger protects luxury goods in this way. For example, they record the texture properties of a gem in blockchain data, which can provide the most intuitive proof if the gem is lost. Onename uses a similar way to store personal information; note that since this application is not a pure Bitcoin transaction, you need to give more trust first, such as you need to tell the application developer some accurate information about yourself.
The third application is more ambitious, “smart contracts” can automatically detect whether there are various environments in force. This is because Bitcoin can be programmed so that it is guaranteed to be available or unavailable under specific circumstances.
Lighthouse, founded by a well-known Bitcoin engineer Mike Hearn, is a decentralized crowdsourcing project. If enough money goes into the project, then everything starts, and if the goal is not met, it stops. Heran believes that his project can be cheaper and more independent than those of its counterparts on the Bitcoin protocol.
5, at the New York venture capital firm Albert Wenger ofAccording to USV, the advent of distributed ledgers has opened up an almost entirely new quadrant of possibilities, a company that has invested in several decentralized companies, such as OpenBazaar, which offers peer-to-peer transactions. In addition to cheering the blockchain, some people question its security and scalability. Blockchain is very suitable for Bitcoin, but in some niche applications, it can not carry the use of millions of users.
Although Nakamoto’s blockchain design has proven to be invincible so far, academic research also believes that it is almost impossible to do bad things on the blockchain without controlling 51% of the entire blockchain. possible. In the past, Bitcoin players were confined to small circles. Today’s Bitcoin mining is dominated by various large Bitcoin pools. In this “pool”, small miners share their efforts and receive rewards.
Another concern is the environment. In order to obtain more bitcoins, miners have high requirements for computing power, which also means increasing the power consumption of computers. According to data from blockchain.info, miners make 450,000 computational attempts per second, all of which result in huge energy consumption.
As miners are tight-lipped about their hardware, it is difficult for the outside world to know the exact power consumption of these computers. A rough calculation shows that if everyone uses the most efficient hardware, 2 megawatts per bit of electricity would consume about 15,000 California residents in a year.
But these splurges around Bitcoin have limits. Nakamoto’s design for Bitcoin at the time was about 1,400 transactions per megabyte of data, which translates to 7 transactions per second. Compared with the current 1736 Visa card transactions per second in the United States, Bitcoin blocks can be larger, but larger blocks take longer to generate, which also increases certain risks.
Some previous experience may be a reference. When the invention of the web browser in the 1990s enabled millions of people to live their lives online, many prophets predicted that the Internet would stagnate. But in fact the Internet has been developing all the time, and by the same token, the development of Bitcoin will not stagnate. More computing devices that can be used for mining will be more energy efficient, developers will be more keen to develop applications on Bitcoin-based platforms and use Bitcoin transactions, and faster network connections will also accelerate the expansion of Bitcoin blocks speed.
Many of the problems with Bitcoin are not a lack of solutions, any changes to the Bitcoin mechanism require the permission of the Bitcoin community, and it is not easy to reach an opinion. One side advocates expanding the size of Bitcoin blocks as soon as possible so that it can become a disruptor of traditional payments, but the other side believes that if no adjustment is made, the existing system may collapse next year.
6, Mr. Hearn and Gavin Andresen are two Bitcoin tycoons, leaders of Bitcoin transactions. They called on mining companies to install new versions of Bitcoin that support larger transaction sizes. Some miners have indeed suffered from cyber attacks, and this upgrade and system is being pushed to the limit by a sea of ​​tiny transactions, with the need and danger widely proven.
All of this lays the groundwork for the proposal to build an alternative to the Bitcoin blockchain that optimizes storage of distributed ledgers rather than encrypted operations. Multichain, a custom blockchain platform provided by Coin Science, proves the possible direction. It also provides the resources needed to build a Bitcoin-like blockchain and can be used to build private chains that are only available to specific users. If all users start believing the needs of miners and proof of work is reduced or eliminated, the existing connection to the ledger becomes redundant.
The first business to adopt such a blockchain offspring may be one of those that failed in the first place and inspired Nakamoto: finance. In recent months, enthusiasm for private blockchains to prevent disruptive bank financing has grown. Ironically, one of the reasons is that anti-government libertarian technology was born to allow banks to better comply with government demands knowing their customers and anti-money laundering rules. But there is a deeper attraction here.
Industrial historians point out that new energy sources existed long before the most efficient treatment methods existed. When electric motors were first developed, they were like the giant steam-engine machines that had come before. It took manufacturers decades to see how decentralized electric motors could reorganize any aspect of what they did. The Bank of England wrote in its digital currency report that it sees something similar moving forward in the financial industry. That’s thanks to cheap computational finance companies that have digitized their internal work, but they haven’t changed their organizations enough to match. The payment system is stillDecentralized: The transfer of money goes through the central bank. When financial firms do business with each other, synchronizing internal books is a tedious task that can take days, shackles capital and creates risk.
Distributed ledgers, which complete transactions in minutes or even seconds, could go a long way toward solving these problems and fulfilling the promise of digital banking. Books can also help banks save a lot of money: Santander Bank, which could lower the industry’s books by as much as $20 billion a year by 2022. Vendors still need to prove they can handle the exorbitant bitcoin transaction price; but big banks have already started pushing for bitcoin to standardize on the emerging technology. Among them, UBS Union Bank, has proposed the establishment of a standard “settlement currency”. The first priority of R3 CEV is the launch of the blockchain, the Swiss investment bank has joined with Goldman Sachs, JPMorgan and 22 other banks to develop a standardized architecture for private accounts.
7, the bank’s problem is not the only one. Many companies and public institutions are difficult to maintain, along with often incompatible databases and the high cost of communicating with each other. This is the problem that Ethereum wants to solve, arguably the most ambitious distributed ledger project. The creation of 21-year-old Canadian programming genius Vitalik Buterin, Ethereum’s distributed ledger can handle more data than Bitcoin. It has a programming language that allows users to write more complex smart contracts that automatically pay and print invoices when goods arrive, or automatically send dividends to owners if profits reach a certain level. Mr. Buterin hopes that the formation of such a smart “decentralized autonomous organization” – basically, virtual enterprises just set some rules for the “Ethereum blockchain” to operate.
One of the areas where such ideas could have radical implications is in the “internet of things” — the billions of silent everyday objects such as refrigerators, door latches and lawn sprinklers. According to a recent IBM report titled “Device Democracy,” it would be unwise to attempt to centrally track and manage these billion-dollar devices; such an attempt would leave them vulnerable to hacking and government oversight. Distributed registers seem like a good choice.
The programmability offered by Ethereum goes beyond just letting people’s property be tracked and registered. It has some new uses. Under various method rules, car keys embedded in the Ethereum blockchain can be sold or rented, resulting in a new P2P for renting or sharing cars. Further afield, some people talk about applying the technology to make self-driving cars a social public resource. According to pre-set procedural rules, such vehicles can store some digital money themselves to pay them from renting out fuel, maintenance and parking spaces.
8, Unsurprisingly, some saw the plans as overly aggressive. Ethereum1 (“Genesis”), which was only developed in August, is currently just a small cluster of startup ecosystems. While Mr. Buterin admitted in a recent blog post that it’s a bit short of money, the specific details of blockchain’s eventual prosperity are far less than the broad distributed ledger passions that lead start-ups and incumbents alike, Check their respective potentials. Although society always ridicules the competence of accountants, accounts do matter.
The world today relies heavily on double-entry bookkeeping. Its standardized system of recording debits and credits is an inevitable choice for understanding a company’s core financial health. In the early 20th century, the German sociologist Werner Sombart claimed that whether such bookkeeping is absolutely necessary for modern capitalism to develop deserves a more in-depth discussion. It is also a coincidence that the double-entry accounting system began with Italian merchants during the Renaissance; at that time, double-entry accounting spread around the world more slowly than capitalism, and did not become widely used until the end of the 19th century. But there is no doubt that the fundamental importance of technology is not just in documenting what a company does, but in being able to define the future of the company.
Accounts, which no longer need to be maintained by corporations or governments, are a timely stimulus to new corporations and governments regarding changes in the way work is done, expectations for the future, and jobs that can be done in the present. Systems without centralized records can be just as trustworthy because they can also bring about radical change.
These ideas though are still a novelty that applies only to a few fields, and their ability to spread and the possibility of being expanded. They also faced some unknown resistance. Some Bitcoin critics have been viewing it as the latest attempt at “California ideology.” (California ideology refers to that sense of mission to save the world with technology). It’s just a coded trust mechanism, not democracy, legitimacy, and accountability that’s hard to attract or empower.
At the same time, the entire world will be digitally recorded, which will also�Many benefits. If the blockchain has a fundamental contradiction, that is: even if the same past and present are provided, the future of the blockchain will be very different.
This article is selected from The Economist, compiled and produced by Heart of Machines, and participating members: Huang Zhizhen, Chen, Zhao Saipo
Ritecoin, Litecoin, Dogecoin and other digital cryptocurrencies are also used Blockchain technology.

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