Read the blockchain in 50 minutes, fertile soil and forbidden area of new technology ｜ Nuggets Lecture Hall
Source: Overseas Nuggets
◎ Author Li Peicai
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First of all, let me introduce myself to you briefly. My name is Li Peicai, and I am the co-founder of Shanghai Digyi. I graduated from Fudan University with a bachelor’s degree, then studied for a master’s degree in Chinese Academy of Sciences. After graduation, I worked as a civil servant for exit inspection and quarantine for six years. After October 2013, I first got to know and contacted digital currency. At that time, together with my college classmates and our only partner, I started with four mining machines. After almost five or six years, at present, Digyi Company has more than 30,000 self-sustaining bitcoin mining machines, more than 60,000 Wright mining machines and 150,000 entrusted mining machines.
I think part of the reason why we can achieve this result is that we have made some correct judgments and investments, but on the other hand, it is mainly due to the fact that the market scale of the whole digital currency or the whole blockchain has increased many times, which is more important than our efforts.
What is a blockchain?
Many people know the blockchain, in fact, it originated from Bitcoin. In 2008, Satoshi Nakamoto published a famous paper: Bitcoin, a peer-to-peer electronic cash system. In the paper, he introduced the blockchain for the first time. Simply put, blockchain is a technology used to realize point-to-point value transmission, and it is a distributed ledger technology.
Literally, it is also very vivid. Blockchain is actually a chain of many blocks. What is a block? Block is a very important concept in the whole digital currency system.
In fact, you can understand it as a page of the ledger. As we all know, a single transaction is an integral unit of the account book foundation, and many transactions together form a block. In the Bitcoin or digital currency system, all the blocks will eventually form a chain. And these chains are interrelated, and the block head of the next block is calculated from the block tail of the previous block.
What benefits will this bring? The entire blockchain chain cannot be tampered with. Once a transaction is added to a block, and then another block is linked, the transaction cannot be tampered with. If anything in the transaction is changed, the end of the second block calculated by this transaction will not match. It is no longer consistent with the previous block, and at this time, the entire blockchain is no longer effective.
If you want to change the previous transaction, you have to change all the subsequent transactions. Once there are five or six blocks, it will become very difficult to change. In fact, he used a technology to ensure the whole block, and he could only move forward in one direction. Once confirmed, he could not be tampered with, realizing such a feature.
Since I’m not actually a technology major, I don’t want to explain the blockchain to you too much technically. I’d rather tell you what kind of power I have seen in the seemingly simple blockchain technology, which has driven the digital currency market based on blockchain to grow to trillions in ten years.
In fact, blockchain is not a single technology, it is a combination of many technologies, including distributed data storage, point-to-point transmission, consensus mechanism, encryption algorithm and so on. But this is not the most important aspect. It is far from enough for you to understand the blockchain technically. It also has strong sociological and economic attributes.
If you want to fully understand the blockchain, you must master a lot of knowledge of sociology, economics and game theory, so that you can truly understand the blockchain technology.
For example, if you want to understand what money is, I dare not say that I know enough now, but at least I don’t think I will think that money is not money as before. What is there to understand about money? I won’t think so again.
Why is the concept of blockchain very difficult to understand?
If you want to fully understand the blockchain and the connotation and potential of digital currency derived from it, you need to deeply understand the five, ten or more related concepts behind it, and you need to make logical reasoning based on these concepts.
Suppose there are five related concepts to understand, and the probability of understanding and agreeing with each concept immediately is 25%, then the probability of really understanding them immediately is very, very low, less than one thousandth. At the beginning, it is impossible for most people to understand and agree with the concept of blockchain from the statistical probability.
This has also caused a phenomenon. Many people have very different views on the blockchain. Some people see digital currency as a scam, a pyramid scheme or a bubble, and it is worthless. There is also another part that sees digital currency as the opposite. He is a value network, an irreversible development, a major innovation in the whole human organizational structure and a major change in the currency issuance mechanism.
Which is right, I prefer my second one.
The value of blockchain
The blockchain value I saw, I understand mainly from the following four levels.
First, the blockchain allows value to truly circulate freely at low cost; The second is that digital currency created based on blockchain technology is the wealth that truly belongs to individuals; The third is that this computer-based algorithm and programming currency system can create more and richer trading scenarios, and it is a truly programmable currency; The fourth is that it will make a social organization form such as self-organization structure more valuable and more vital.
Let’s talk about the first point first, why do you say that blockchain really allows value to flow freely at low cost? You can see that the screenshot in the ppt above is a very common bitcoin transaction. At this stage, a transaction has two inputs and eight outputs, which means that you can transfer the value of this transaction to hundreds of people at the same time, and the handling fee is only as low as one ten thousandth of bitcoin, and it is not restricted by any country, region or institution. Therefore, I said that the blockchain has evolved the Internet from the information Internet to the value Internet.
Why do you say that? We all know that the emergence of the Internet has made the transmission of information between any two individuals in the world unimpeded. No matter where you are, as long as you have access to the Internet, you can receive information at near zero cost. Or you can send information to anyone in the world who has access to the internet, and there is almost no cost.
However, there was no way to transmit the value so efficiently before the appearance of blockchain digital currency, but the appearance of blockchain made it possible.
The second meaning is that it creates real personal wealth. Why is it really personal wealth? Because it has three characteristics, the first characteristic is that its scarcity is based on algorithm and consensus; The second characteristic is that its security and privacy are based on the public and private key system. Digital currency For an individual, you have absolute control and absolute freedom.
Then why is its scarcity based on algorithms and consensus? Take Bitcoin as an example. It has so many degrees. It is a mathematical algorithm and is written in its program. No one can tamper with it.
In other words, if you want to change, you have to make half the people in the whole network agree with this change, but it is very difficult, because if you change its total amount, it is equivalent to diluting all the chains, then I believe this thing is very, very difficult to achieve.
Its privacy is based on the public and private key system, which provides it with very good privacy. You can create your own public key, that is, bitcoin address, while completely exposing your identity information. By keeping the public key anonymous, the public can only see that someone sent a certain amount of money to others, but there is no way to link the transaction to the people behind it.
This one shows how you can get your own address. It’s a very simple two-step process. The first step is to download a bitcoin wallet from a public website. The second step is to get your wallet and generate your own private key.
You can even do it when the network is disconnected, and you can receive your own private key without surfing the Internet. This private key absolutely keeps your privacy for others, and you can generate it without surfing the Internet at all.
In other words, no one can know your private key except yourself if you don’t want to reveal it. Therefore, it has caused privacy. Blockchain, a technology, uses this characteristic of public and private keys to create wealth that truly belongs to individuals.
You have absolute control over wealth. There is no centralized organization. All complete nodes keep all historical accounts. There is no review of the income and expenditure of Bitcoin. No one or organization can stop sending and receiving, freezing and confiscating Bitcoin.
As long as you use this bitcoin private key, you have absolute control over the bitcoin in the public key. It can be said that others can’t get your assets through fraud or coercion.
The third source of blockchain value is the currency created by computer technology, so it is naturally closely integrated with programming, which is what we usually call the concept of smart contract.
Intelligent contract refers to a contract that can be automatically executed on a computer system when certain conditions are met. Bitcoin network and Ethereum network provide an open interface for intelligent contract programming, which can realize decentralized, tamper-proof and reliable chain contracts.
Such a system enables both parties to sign a contract to complete the transaction without trusting each other, as long as they believe in the blockchain system. For example, the mining reward of Bitcoin is a simple and effective smart contract.
If you want to dig bitcoin, you don’t need to ask anyone’s permission, you just have to follow the instructions of the system. Then, as long as you can mine according to the bitcoin system and calculate such a value, you can get the reward of bitcoin. You don’t need to submit this award to any organization for review. You can trust the system. You don’t have to trust anyone.
The fourth value of the blockchain I see comes from its self-organizing structure. Everyone has heard a saying that artificial intelligence and AI can help improve productivity, and blockchain may change loose relationships. In fact, I think it is more because it makes the social organization form such as self-organization structure more vital.
Then, the so-called self-organization structure is the third economic governance force outside the market and the government, and the blockchain can better play the governance efficiency of self-organization in economic activities.
For example, the community of Bitcoin is the greatest experiment of self-organized distributed commerce. All its property rights are open source, all its organizations are non-profit, with no shareholders, no board of directors, no management, and nothing. It is a "eight-nothing" company, but it has been running for nearly ten years, and transactions and remittances are happening every second, but it has never had bad debts.
Moreover, the blockchain can return the value brought by the self-organizing structure to the participants to the greatest extent. For example, the better the bitcoin payment network becomes, all bitcoin holders enjoy the value brought by the growth of bitcoin network. But in the past, many network values were taken away by the company that invented and controlled it.
For example, WeChat, we know that WeChat is a very valuable network, but each of us, as a participant in WeChat network, actually didn’t get much value, and the value of the whole network was taken away by Tencent.
How should individual investors participate?
Next, let’s discuss the next topic, how individual investors should participate. I will talk about it in two levels. The first is why individual investors must also understand and participate in the blockchain. The second is if I want to participate, what kind of participation is better.
Why should individual investors participate? Because whether you participate or not, you are in the tide.
At present, we are experiencing a great shift in the form of wealth presentation. If you don’t participate, you are equivalent to shorting in Man Cang, and you are equivalent to standing on the other side of the trend. Why do you say that? On the one hand, I think that the progress of artificial intelligence and intelligent manufacturing will make the prices of your daily necessities and even some industrial products lower and lower.
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