Everyone says that the underlying technology of Bitcoin, the blockchain, is going to revolutionize everything. However, after years of development and billions of dollars flowing in, no one has come up with a real blockchain solution other than cryptocurrency speculation and illicit trading.
From payment methods to legal documents, from escrow services to voting systems...every existing blockchain use case is trying to integrate distributed, encrypted, and anonymous features. But, have you ever thought about what if distributed ledgers have no value? Ten years after the invention of the technology, there are still no large-scale application cases. Is it because no one actually needs it?
1. Can blockchain really subvert traditional banks?
Blockchain technology was born to endow digital currencies such as Bitcoin with more functions, enabling them to be used for storage, payment, and circulation like traditional currencies, and at the same time solve problems that are difficult to overcome in the legal currency system, such as avoiding large-scale financial crises.
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Killer Feature: Make Sure You Can Get Your Money Back
However, it may not be long before this ideal becomes disillusioned.
First, the low-cost transaction method it envisions for exchanging value without a middleman already exists-cash payment. Bitcoin wants to replace the U.S. dollar, so what are its advantages in competing with the current Visa and MasterCard?
Visa and MasterCard are dollar-based banking transaction systems that provide banks with value-added services such as tracking fraud disputes and verifying the identity of buyers and sellers. When choosing to use a new payment system, payers are most concerned about,Consumers are guaranteed to get their money back if the goods/services are not as described;The most important thing for the payee is that its consumers (or potential consumers) already exist in this payment system and are willing to pay through this payment method.
For example, adding mileage points on United flights, increasing the credit limit, giving free checked baggage, etc. are all products/services that consumers and merchants accept and use. But for the payment method of Bitcoin, no one really needs it, which is one of the reasons why it has not developed rapidly.
Furthermore, Visa can process 60,000 transactions per second, and Bitcoin’s transaction processing speed is 7 transactions per second. At present, Bitcoin is not actually a better payment system. Of course, Bitcoin is also undergoing technical improvements to improve its performance and efficiency, but currently it only has 0.01% of its processing power in clearing transactions. It should be noted that the energy consumption of Bitcoin with a processing speed of 7 transactions per second is 35 times that of Visa, which means,image description
It would take 5,000 nuclear reactors to run Visa on the blockchain
2. Is free trade without government supervision really feasible?
First, in many countries, having something that keeps the government a secret would make society a better place. In Cuba, Venezuela and other places, many people like to use U.S. dollars for transactions. In theory, Bitcoin can also play such a role, but in fact, Bitcoin lacks government checks, that is, in the legal currency payment system, the government controls individuals and responsibility of society as a whole.
When transactions go wrong, a government-backed banking system can provideFDICGuarantee (Federal Deposit Insurance Corporation, Federal Deposit Insurance Corporation), ACH reversibility (Automatic Clearing House, automatic liquidation), identity verification, audit standards and investigation system support, etc. And these, the Bitcoin system does not have.
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BitFinex loses all clients funds
Imagine what the world would be like if there were so many banks that couldnt guarantee the safety of their customers funds?
Bitcoin is much like banks in medieval times, declaring, here is your free paradise, have a good day. However, if groups such as the elderly deposit money into the bank/bitcoin system, they most need The system can guarantee the safety of funds. If their funds are not safe, if they are stolen by hackers, who will help them at that time? Im afraid blockchain technology cant solve it.
Second, the government policy is to prevent the occurrence of terrorist financing and large-scale sexual crimes, and to crack down on illegal industries such as credit card hacking groups and child pornography.
Most people prefer to have the privacy of transactions, but in a guaranteed and discoverable (custodial) state. For example, when asked whether the government has the right to obtain detailed billing information for every transaction of each person, most people objected; when asked whether the government has the right to obtain detailed billing information for every transaction of child pornography collectors , most of them are positive.
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Bank of Mongolia experiences 400% trading volume and new sanctions against Russia. New slogan - Bitcoin: Less Police Than Mongolia.
3. What are the advantages of micropayment and inter-bank transfer?
Micropayments and inter-bank transfers are two cryptocurrency application scenarios that people are particularly excited about.
When it comes to micropayments, Bitcoin transactions are thought to be free and instant. But in fact, they take 8 minutes to process the transaction and charge 4 cents for the transaction. When it comes to typical application scenarios of encrypted micropayments, people usually think that, for example, you can easily pay 2 cents on a music platform to listen to a certain musician’s song, or pay 4 cents to read an author’s article .
But the reality is that if you want to read the article directly without waiting time, the platform needs to be authorized by the source of funds in advance, and the platform infrastructure to achieve this effectively eliminates the need for Bitcoin. Because the user can bind the platform account to the bank card number, and the author subscription/monthly subscription method is provided to do so.
In terms of inter-bank transfers, many people think that Ripple is a better way for inter-bank transfers. In the past month, Ripple processed about $2 billion worth of interbank and person-to-person transfers. But why dont banks like this new technology?
Because after the Ripple interface is opened, it is not much different from the existing system, but a lot of passwords and encrypted tokens that may be stolen have been added. At present, the theft is frequent, but no suitable solution has been found. The current banking system already has a ledger, and there is no need to make it more decentralized, encrypted, anonymous, irreversible, etc.
4. So-called “smart” contracts
A smart contract is a contract written in software, not in paper. Developers can code directly on the blockchain, so the smart contract can transfer value directly according to the contract agreed by the relevant parties, which means that the contract is automatically executed. In addition, the existence of smart contracts means that expensive legal links are no longer required for contract protection and debate, which will effectively reduce the cost of interpretation.
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The DAO lost all of its clients funds
What does this mean?
What does this mean?Even the most devoted blockchain enthusiasts actually want a group of people to get together to discuss the underlying intent behind a contract and then make a decision, rather than letting software do it automatically.image description
Even Crypto Enthusiasts Want to Debate What Their Contracts Mean
The DAO is just a test case, but what would happen if this type of event happened to a large corporate transaction?
Investors and startups included in smart contracts default to the blockchain to quickly perform operations and complete payments. For example, in the healthcare industry, theoretically, the blockchain can achieve instant processing, without waiting for 90-180 days of waiting time, and the hours-long mobile phone payment process. However, this is already implemented in any software-supported purchasing system. For example, Amazons servers automatically/intelligently charge customers service fees based on website traffic.
In fact, people confuse rule programs implemented (manipulated) through software with encoding the rules themselves on the chain. The above-mentioned service link provided by Amazon belongs to the former, not a smart contract that can be executed automatically. The same goes for health insurance bills.
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Can Bitcoin make the process faster?
To sum up, whether it is a blockchain enthusiast or a medical insurance company, many people hope to discuss and interpret business relationships through human language, and then use software to write programs for processing procedures and payment methods. Its a back-and-forth cycle, and theres always been exploration like this.
5. Distributed storage, computing and information transmission
Using blockchain as a distributed storage mechanism is also a bold idea. On the surface, the document is decomposed into blocks (which can be understood as a page), each block is encrypted, and then a large distributed ledger is formed according to the timestamp. This approach will allow all bills to be backed up in multiple locations, which means the ledger is more secure and traceable.
However, there are already good ways to achieve distributed storage of files, encryption and copying them to multiple media in different locations. Dropbox, for example, can encrypt and store files on multiple user hard drives for an inexpensive storage fee. In contrast, the blockchain is an inefficient and insecure way.
Furthermore, there are four obvious problems with the blockchain-driven approach:
1. The blockchain relies too much on the one-way encrypted user private key system, resulting in the lack of functions such as intrusion detection, capacity limitation, firewall, and remote IP tracking in complex systems.
2. The reliability of the price weighing system of the blockchain is very low. Bitcoin consumes nearly 1 billion US dollars of electricity to obtain storage space that is only 1/6 of that of Dropbox, and users only need to pay 10 US dollars per month to use Dropbox.
3. In the long run, it is more advantageous to systematically select the data replication method and storage address, but the default distributed data storage of the blockchain is not the development direction.
4. Dropbox, Box.com, Google, Microsoft, Apple, Amazon and other companies have also proposed many valuable features of the blockchain, but they do not actually want to develop it themselves. Taking Visa as an example, its biggest problem is not storing data, but including management permission settings, how to obtain easy-to-view document records, how to synchronize on multiple devices, etc., and these cannot be solved by blockchain technology. The problem.
In addition to distributed storage, distributed computing and information transmission security are also controversial. Encrypting files, storing them permanently, and replicating them across the blockchain is a lot of unnecessary overhead for the actual work that users are getting done. At present, there are better solutions for information storage, calculation and transmission than blockchain technology in the market. They can meet users needs for information encryption and replication, and also include many additional functions.
6. Issuance of shares
When Nasdaq announced the launch of the first in-house blockchain-powered exchange, it caused a stir. But think carefully, like NASDAQ, DTCC (US Trust and Clearing Corporation), their whole purpose is actually to have a general ledger that records the owners shareholding information, then,Are they worried about not being able to track investors stock information if blockchain technology is not used? the answer is negative.
The blockchain ledger is distributed, which can solve the trust problem in the absence of a trusted intermediary. But NASDAQ companies, trade transfer managers, clearinghouses, and exchanges are all trusted intermediaries and provide value-added services.
Nasdaq has a deep industry accumulation in the compliance and security of trading stocks, and it is only natural for it to intervene in the blockchain. However, in the case of new exchanges that remove intermediate links such as exchanges and governments, users can only choose closed-loop operating companies that comply with the laws, contracts, and tracking systems of the mainstream market. As any non-listed stock trader knows, this situation is actually a best plan for stealing users money.
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Why do I need to file securities instruments when issuing securities?
7. Confirmation of authenticity
Another promising application of the blockchain is to make a public, immutable joint statement that users can post on the blockchain, a distributed ledger. In theory, we can record votes on it, trace the source of goods, verify user identities, resolve domain name ownership issues, host items, perform patent certification, document notarization, etc.
However, these cases do not fully consider the specific implementation details.
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One vote per person, Bitcoin wallets are hard to calculate
In addition, for the traceability and authenticity verification of commodities such as diamonds, traditional companies have launched certificates that can verify the authenticity of commodities, and users can inquire online, while the distributed encrypted blockchain technology does not have much added value. In terms of custody, although the smart contract can automatically complete the payment of goods without third-party confirmation, the supervision of whether the goods are delivered on schedule still requires the existence of a trusted institution.
Finally, it might be said that the blockchain can irrefutably prove that you knew X event at Y time without disclosing the details of X event, as long as you encrypt X information and send it to yourself via email, Hotmail, or post it on bitbucket etc. But how big is the demand/industry of irrefutable proof that you knew X thing at Y time? Can you think of any major companies that offer this kind of service?
It is also said that the smart contract and all-digital recording method of the blockchain can replace the traditional domain name hosting service. However, in reality, after the adoption of blockchain technology, domain name theft and impersonation frequently occur. When DAO or other smart contracts are hacked and the domain name account is stolen, we need a method that can override the blockchain distribution. way over the record.
8. Write at the end
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Washing machines of the future will be able to order their own detergent
In addition, the existing manpower and software systems have advantages in aspects such as identity verification, transaction credible proof, and transaction settlement. Blockchain enthusiasts tend to overestimate the difficulty of obtaining funds and records from A to B, but in fact, fund transfers and records are actually the simplest and easy-to-implement links in a fairly complex transaction system.
So, back to the beginning of the problem, the problem of cryptocurrency speculation and illegal transactions. In recent conversations with bitcoin entrepreneurs, investors, and industry consultants, I found that they often dont know how to accomplish what they want to do, and they dont know exactly what value can be brought to users.
Money is pouring into the cryptocurrency market like crazy. However, no one has thought that after using the blockchain, credit card users will hand over their daily flight miles, and at the same time lose their right to appeal against transaction disputes. Will they?
Indeed, the lawyers and accountants in the middle, the paperworkers, have made a fortune out of the high cost of an IPO and onerous application paperwork. Therefore, some people imagined to remove these intermediate links. We have seen that blockchain entrepreneurs continue to emerge. It seems that a group of smart engineers in their 20s with no industry experience can solve traditional industry problems within a few months with a few million dollars in venture capital.
But at least for now, thats not the case.
I am Zhang Yi, a reporter from Odaily. I am exploring the real blockchain. For breaking news and communicating, please add WeChat ro20110723. Please note your name, unit, position and reason.
