When it comes to blockchain, there are always a series of professional terms such as “decentralization”, “immutable”, “smart contract” and “transparency”. Talk is more in the clouds and fog, as if the communist society is about to achieve general!

Block chain has also stepped onto the “altar” in the public’s crazy praise. Many people’s over-interpretation of blockchain has become a normal situation in the circle.

However, in my opinion, blockchain is mainly about information sharing based on a transparent trust system in which everyone participates. So as to realize the transfer of value and affect the change of production relations. But at this stage, this can’t be done by blockchain technology alone.

The future of blockchain has a lot of imagination, but it is definitely not as miraculous and omnipotent as you imagine.

1

Decentralization ≠ No center

The spirit of blockchain is “decentralization”. Thus “decentralization” is one of the most talked about and misunderstood blockchain concepts.

Decentralization is misinterpreted because many people interpret it too narrowly. Some even interpret “decentralization” as disorganization. None of this is true.

The technical logic is to turn a highly centralized center into a distributed system with many nodes. Each node is highly autonomous, and any node may become a stage center. Therefore, a “decentralized” network is a distributed network; “Decentralized” applications are distributed applications.

“Decentralization” is definitely not the same as no center. Instead, the original center was removed and a new center was formed. Or break the original center to form multiple centers.

The commonly accepted terms are “disintermediation”, “weak centralization” and “multi-centralization”. This understanding is right and wrong. It is the most reasonable to analyze and understand the specific application scenarios.

“Decentralization” does not mean abandoning the existing organizational structure, because organizational department-oriented is to complete the division of tasks designed for various goals of the company, so there are sales, RESEARCH and development, planning, personnel, finance, IT and other departments. The combination of blockchain technologies will make these organizations more optimized, more efficient and less costly.

Blockchain networks will not be completely decentralized, they are distributed networks that retain a degree of centralization and will have new centers.

2

Non-tamper ≠ Non-tamper

When blockchain technology first came out, it was meant to be tamper-proof. The development of blockchain technology and its application so far, including its use in bank security settlement, is due to its external claims to be immutable, that is, safe.

Each block records the hash value of all the information in the previous block, so that if the data in the previous block changes, the hash value verification of the next block will not pass, thus ensuring that tampering is not possible.

Even if this happens, it will be automatically detected by the blockchain system, which will kick the tampered record off the chain and synchronize the healthy transaction data from other storage nodes.

But immutable is not the same as immutable. In blockchain terms, the term immutable is technically impossible, Forrester analysts said. There are at least two main ways to make changes to a blockchain.

“One is to recalculate the entire chain, or recalculate the chain before an adverse event occurs. This will erase and recreate history. That’s what happened in the early days of Bitcoin. The other is a fork, which preserves historical code and transactions but means the software now works differently. Probably the most famous example of this was the introduction of the Ethereum hard fork for dealing with DAO disasters.”

Take bitcoin. It is possible that the algorithms chosen by Bitcoin can be attacked, and there are mining programs that can crack bitcoin.

But mining is guaranteed by trading chains, and once a trade is made, it must be forged by trading chains that can be quickly calculated before a new trade is made, something that cannot be done with existing computers. Unless quantum computers are used, they can “crush” the computing power of existing computers, so as to realize tampering.

Another possible way to tamper with a bitcoin is to forge a fake bitcoin algorithm, which requires ownership of more than 51 percent of the nodes.

In fact, finding and collecting more than half of the nodes randomly scattered across the network is a very difficult task, especially for the earliest bitcoin.

3

To trust ≠ no credit risk

Consensus and trust are two very important basic concepts related to blockchain. It looks beautiful to reach a consensus and eliminate a crisis of confidence. But at present, it is the initial stage of blockchain development, and people’s cognition of consensus and trust is too optimistic. Some people exaggerate it.

For example, consensus is equated with the elimination of information asymmetry or the realization of shared beliefs, distributed ledgers and their variations are equated with assets and related transactions, and lack of trust is equated with the absence of credit risk. These misconceptions underestimate the difficulty of implementing blockchain and make it difficult to have a rational and constructive dialogue about blockchain.

To trust is not to have no credit risk. Detrust stems from an arrangement in which accounts are maintained and settled simultaneously when assets are traded within the blockchain. But if it’s not synchronized, trust issues can arise.

Imagine A buying A commodity from B in Bitcoin. The payment of Bitcoin from PERSON A to person B can be guaranteed within the blockchain without any understanding between the two. This is the real meaning of trust, but trust is only applicable to this kind of transaction scenario and should not be generalized. But what if B delivers unqualified goods to A? As long as transactions involve assets that are off-blockchain and not delivered in real time, there is a credit risk that cannot be ignored.

In addition, lending activities based on assets in the blockchain also involve credit risk. If there is no understanding between the two parties, their assessment of each other’s credit risk can be at a very high level, raising issues such as adverse selection and moral hazard. Many transactions can only take place if credit risks are identified, accurately assessed and effective risk prevention measures introduced.

Another is that consensus mechanisms are built by people. Whether the consensus-building crowd is comprehensive or professional is unknown. It takes time to perfect and correct. It’s hard to build trust in that context.

In this sense, trust between people, between people and companies, and between people and government still needs to be established in the most traditional and classic way. What blockchain can guarantee is that nothing goes wrong in the middle process.

4

Smart contracts are not laws

At present, when designing blockchain-related solutions, it is easy to introduce the concept of smart contract, hoping to build automatic business logic through smart contract.

Smart contracts are all about process automation, encapsulating business rules in code that events trigger to perform functions that trigger other events.

In other words, a “smart contract” must come from a pre-edited “digital language record” of a business or individual, followed by a set of trigger conditions that will automatically enforce the contract once a set condition is triggered online.

Because blockchain is decentralized, immutable, transparent and traceable, digital contracts can operate safely and efficiently.

But smart contracts are not equal to laws; in the world of blockchain, they are merely a constraint on behavior. Smart contracts also require real-world contracts to be legally binding and enforceable.

Moreover, blockchain itself does not automatically generate contracts; it requires “people” or deep-learning ARTIFICIAL intelligence in the enterprise to do so.

It can be said that part of the current construction of smart contracts is not satisfactory, so smart contracts cannot better meet people’s intelligent needs, and the functions of blockchain do not necessarily need smart contracts to achieve.

5

Total knot

Blockchain is not a panacea. Today we should be more aware that blockchain has its limits. It is neither designed to transform business processes nor to automate the work of different functions. Although it has a lot of imagination in the future, for those who deliberately exaggerate the advantages of blockchain, xiaobian has to say, you have gone too far.

Source: internal parameter in chain

Author: Internal reference jun – chain internal reference

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