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The third truth of the blockchain: Why is the blockchain not equal to decentralization, immutability, and trustworthiness?

What you should know is that most people have a little understanding of blockchain, and they often generate excessive expectations and myths. Intellectual chief executive officer Qu Jianzhong explained that the blockchain certainly has its application value, but the development of disruptive new business models based on this is the true meaning of the blockchain.

Last week, I told you about the mining principle of Bitcoin and the slow transaction speed in Blockchain Truth 2, so it is not suitable for small payments. That blockchain has the characteristics of being decentralized, non-tamperable, and trustworthy, and it is always useful, right? Why is it wrong again?

Consortium chain is suitable for various business models

The blockchain Cryptopunks established and participated by multiple specific enterprises or organizations is called the “Consortium blockchain”, which is suitable for applications such as transactions, settlements, and clearing between organizations, so that specific organizations can trust each other Basic information. For example: Facebook’s Libra coin, Taiwan’s financial letter blockchain, etc., because the participants of the alliance chain have been screened and have a high degree of trustworthiness, there is no need to use Bitcoin’s energy-consuming mining operations. You can use “Practical Byzantine” instead. Fault tolerance (PBFT)” or other algorithms improve efficiency, coupled with a small number of nodes, so the transaction speed is faster, suitable for application in various business models.

But pay special attention to the fact that the alliance chain is divided into true and false. “True alliance chain” means that the members of the alliance are completely independent of each other and have equal status. No one member can dominate other members. For example: the Libra Alliance established by Facebook, Taiwan’s finance in the case of blockchain, the participants are all large enterprises; the “fake alliance chain” means that alliance members have close relationships with each other, which may be branches, subsidiaries, or affiliated companies. A parent company can control more than 51% Node (51% rule), the blockchain will lose its effectiveness. At present, the blockchain used by many companies is a “fake alliance chain”, so be careful when judging. (Related report: Bitcoin returns to US$10,000, is virtual currency related to Generation N? | More articles)

Cryptopunks : Private chains are useless waste

The blockchain established by a single enterprise or organization is called the “Private blockchain”. Only certain people can read, send, and confirm transaction data, participate in the consensus process, and can be manipulated and modified to change the original simple data structure. It is complicated and completely violates the 51% rule, so it is useless waste. Its only function is to “bluff laymen.”

Let us recall, how many payment methods are used in life today? In addition to Cryptopunks, there are traditional physical credit cards, stored-value cards, gift certificates, and various non-physical online financial management and mobile payment programs. Have you discovered that banknotes and coins are no longer necessary for life, and they are not portable enough for small transactions? In large transactions, money becomes numbers that come and go.

We are all accustomed to the value system based on the existing financial system and the distribution of political power. We believe that money is a reliable way to preserve property, but we are actually in a passive position. The issuance of each general currency is determined by the bank and the government. Appreciation and devaluation are all affected by the global economy. Even if you buy physical objects with money to maintain their value, why is the value of gold and real estate not determined by the economic environment?

As a result, some “currencies” that are independent of the existing system began to appear. People who use these “currencies” have a consensus on the value of each unit, and both parties in the transaction can agree to change information in the same database. With the advancement of information technology, These independent systems can be expanded in scale and greatly improved the security level, which is enough to challenge the existing system.

The foundation of blockchain

First of all, blockchain is not directly equal to Bitcoin, but a way to store information. Blockchain, as the name suggests, is composed of a series of blocks, which are tightly linked together like a chain.

The information in each block needs the corresponding password to modify, the blocks with new information will be lined up at the end of the queue one by one, and the information in the previous block will not disappear. Each string of blocks has a checksum. Once the information of the block in the blockchain is changed, a new checksum will be generated. Unless the password of all blocks can be obtained, the checksum must be escaped. The inspection is impossible. In addition, there is more than one piece of blockchain information, but it is stored in multiple hardware backups around the world, which makes the security level of the blockchain higher and more reliable, so it can become a carrier of cryptocurrency.

Pros and cons of Cryptopunks

There are many types of cryptocurrencies in circulation. The value of each Cryptopunks currency unit can rise or fall. However, since the total issuance is limited, it will not depreciate for a long time like a general currency, and it will not be affected by bankers. And regime control.

Take Bitcoin as an example. There are now 18 trillion Bitcoins in circulation. There is only one way to increase Bitcoin, which is to use a computer to “mining” with a specific algorithm. When the number reaches 21 trillion, it will be capped. Increase again. Bitcoin holders can still continue trading with these 21 trillion Bitcoins, and their consensus will determine the price of each Bitcoin.

However, Cryptopunks still has shortcomings. It is precisely because it is completely separated from the existing system that cryptocurrency has become an illegal act, such as a medium for transactions on the dark web. On the other hand, as mentioned above, to use a bitcoin, you need the password of that block. These passwords are long and complicated. If you forget or remember it incorrectly, you will lose the right to use it. In the same way, anyone gets it. The password can directly use that bitcoin. Although the cryptocurrency will not be physically robbed, it becomes a matter of cryptographic security.

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