ZHANG Yizhe

Many people, especially those who have technology research experience, are disappointed after a thorough understanding of blockchain technology. The reason is that the technical concepts applied in blockchain, including Cryptography, Distributed System, Peer-to-Peer Networks, Consensus Algorithm, Digital Signature, Timestamp and Decentration are concepts that practitioners are quite familiar with and have been using for years. How can it be so attractive since it is merely assembling old technologies?

Actually, blockchain was never invented to solve technical problems.

Back in April 2007, the second largest U.S. subprime mortgage company New Century Finance filed for bankruptcy. Three months later, the U.S. government took over Freddie MAC and Fannie Mae at a cost of $200 billion. However, risks continued to spread from the real estate industry to the finance industry, and financial institutions profited from fraud paid the price for their irresponsible behavior of underestimating risks.

In September 2008, on the tottering Wall Street, Lehman Brothers went broke. Those gold collars leaving 745 Seventh Avenue with packed-up boxes made headlines in almost every newspaper. Despite of the 65% public objection, the U.S. government allocated $700 billion to help the financial giants out. Following the practice of America, other western governments also took measures to save their financial giants. JP Morgan, AIG, Bank of America, Citigroup, Bear Stearns, Merrill Lynch, among others, were all on that ignoble list.

On November 15th 2008, G20 leaders listed some reasons for the previous crisis: “market participants, blindly pursuing higher returns, did not have sufficient knowledge of the risks and thus failed to fulfill their obligation to do investigations. Meanwhile, fragile solvency standards, unsound risk management practices and increasingly complex and opaque financial products jointly resulted in a high financial leverage. These factors collectively led to the vulnerability of the entire financial system. Some decision makers, administrators and supervisors in advanced countries failed to keep up with financial innovations, to fully understand and to timely handle the   risks lurking and breeding in the financial market. Moreover, they were inconsiderate about the systematic influence of their domestic regulation behaviors”. Consequently, a global economic recession started.

In 2009, Satoshi Nakamoto published a thesis named BitCoin: a point-to-point electronic cash system. In his thesis, Mr. Nakamoto described a system that is able to deal with Internet transactions without greedy third parties like those in the subprime crisis. With the technology of blockchain, people discovered for the first time the method of cryptography that can replace the “credit” foundation. He redefined the equal transaction among people using a sophisticated code philosophy which, in a sense, revolutionized the production relations.

As WikiLeaks founder Julian Assange claimed, Satoshi Nakamoto is indeed a “cyberpunk”. The concept of blockchain was born to solve the problem where the financial system could no longer adapt to the new era, which just happened to be using old technologies in many other subjects. It has been nearly a decade since the birth of the idea of blockchain. Most people began to pay attention to it since the explosion of digital currency in 2016, which is why this great notion has been narrowed.

In the blockchain industry, only focusing on digital currency is like ignoring the steam engine’s kinetic energy but focusing on the steaming white fog. In fact, after some research, many blockchain practitioners consider that digital currency technology is the main achievement of blockchian 1.0, marked by Bitcoin. In blockchain 2.0 which is marked by Ethereum, programmable blockchain technology is the main creation. Regarding blockchain 3.0, though controversial, many people believe that blockchain is eventually to solve real-life problems in the current financial and Internet systems.

Therefore, ideologically, we can go on to subdivide blockchain into fundamentalist blockchain ideology and pragmatism blockchain ideology.

People upholding fundamentalist blockchain ideology believe that virtual currency is the only value of blockchain. They hold high the idea of Satoshi Nakamoto’s original paper, restricting in the narrow understanding of blockchain as a decentralized consensus that is unable to compromise with the society. The blockchain in their idea represents the future, which is why they tend to ignore the countless real-life problems. Practical blockchain ideology believers, however, mainly think that blockchain marks the developing direction of the advanced productive forces. that can solve the existing problems in the realistic society, thus is able to reduce various costs of enterprise practices, to form a new global industry format. They also consider blockchain a representative of the future. But it is more focused on the fundamental issues of the development.

The founder of the Quantum Theory Planck once said that “A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it”. However, in a strange twist, Planck eventually went to the reverse side of the theory. Like the Quantum Theory in the field of Physics, blockchain has huge influence as a new idea in the tech world. Also, it depends on our deep understanding and application of it, that is, our behavior decides the future of it. With the practice of “becoming practical” being the theme of our time, the application of the Internet is about improving people’s living standard, so is blockchain.It is glad to see a quickly growing number of applications of the blockchain technology in security, traceability, approval, financial and game fields. It is new, but full of vitality. At its initial stage, blockchain is already extraordinary.

Just as those managers said, as a representative of a new generation of information technology, blockchain, together with AI, quantum information, mobile communications and Internet of things, has a marvelous strategic significance. ” A new round of technological and industrial revolution is reconstructing the global innovation map and reshaping the global economic structure”.

After its 10th birthday, we really should break the shackles of conceptual and technical barriers, peer thought the mist of its application and development, staty away from the shadow of bubble and speculation, and begin to pay attention to blockchain’s development and how it can change the world.