What do you think about ‘blockchain can subvert the information world’?
When it comes to the blockchain, the first reaction to many people outside the circuit is bitcoin or a high-price cryptocurrency. Due to the excessive heat of digital currencies, many speculators and fraudsters took advantage of the opportunity to seize this problem, so many blockchain experts are trying to clarify its relationship to cryptocurrencies.
As blockchain technologies and products are increasingly favored by markets and investors, the focus now shifts from cryptocurrency to the blockchain technology itself.
You will hear exaggerated news from many sources that may make you worry, such as ‘ the blockchain can destroy the current financial industry’, ‘the blockchain eliminates banks, Alipay, WeChat’, etc.
However, is the blockchain really so magical? How much can the blockchain change our lives in the future? Can it bring a new technological revolution? This article aims to explore the true value and actual status of the blockchain.
Everyone knows that decentralization is the core and the greatest attraction of blockchain. Decentralization means that even if a single node fails, the data stored on the blockchain will not be lost. In other words, no one has the power to profit from modifying data.
The untampered and traceable attribution of decentralization is the biggest advantage of blockchain technology. However, the blockchain is by no means the cure for all problems. These benefits are not that the blockchain is generated from nothing. Decentralization is, of course, useful but maintaining this decentralized system requires high costs.
Now there is a trend that is to seize the blockchain advantages and to turn all the traditional centralized methods into decentralized ways to serve users, but avoid the cost that may be paid, as if the blockchain is a magical device that brings all the benefits we want.
The reality is that there is no comprehensive real solution. When chosen ‘quantity’ (distributed) and ‘quality’ (traceable, untampered), we have to make compromises of ‘fast’ (performance) and ‘efficient’ (consumption).
Let’s briefly analyse the possible problems of centralization.
The first one is technical constraints. There are many blockchain nodes, and each transaction must be consistently updated by all nodes. In addition, the blockchain storage capacity is not high, and once the information is uploaded, it will permanently save and it is difficult to slim down.
Under this premise, it takes a certain amount of time to reach a consensus, which largely restricts the processing speed of the blockchain. We know that Bitcoin handles 3–7 TPS on average, while Ethereum is only 20–50 TPS which is big different from VISA which can do 440,000 TPS.
In the commercial market, any application that wants to be large will include huge traffic, and how to solve performance problems is a great test for blockchain experts.
Secondly, the general user acceptance of the blockchain is not high, which also restricts the promotion of blockchain applications. We know that for blockchain applications, once the private key is lost, the user loses control of their assets.
For users who do not have the concept of the blockchain, it is natural to think that the private key may be similar to the ID card or business license. In fact, this is simply not possible. Because the loss of the private key causes problems in the future and become a major obstacle to the blockchain to the general public.
In contrast, the mobile phone verification code is not safe in the strict sense. When it comes to keeping low-value assets, people prefer to make security compromises for convenience. There is no advantage of blockchain here.
Third, with regard to blockchains, energy consumption is a problem that is often overlooked. Under the PoW mechanism, it is necessary to use the computing power to compete for the packing right of the blockchain, which will cause huge energy waste.
In the case of Bitcoin, although bitcoin mining does not require helmets, drilling and explosives it is still a process that requires a lot of energy.
According to the report of the US digital currency platform Digicocomist, from May 17, 2017, to May 18, 2018, the power demand of Bitcoin has reached 67.9TWH (1T=12th power of 10, 1TWH is 1 trillion / kilowatt hours) exceeded the national electricity demand of the Czech Republic for one year.
It has been suggested that, according to this trend, up to 2020, Bitcoin mining power consumption will be equal to the current global electricity consumption. Although this conclusion has been questioned by the other fields, in terms of the existing energy supply, the application based on the PoW consensus mechanism is unlikely to be hot in the future.
Many people eulogize the blockchain, in fact, they express their dissatisfaction with regulation through the praise of centralization. Many people think regulators are stupid and think that they don’t know technology. This idea is very popular, and the blockchain satisfies their illusion of an unregulated world.
There are still some people who say that blockchain, artificial intelligence, and cloud technology are used to package themselves into cutting-edge technology. In fact, they don’t really understand the technical details and application scenarios, but they will appear to be very trendy. The more they say the more exaggerated as if the blockchain is the key to subvert the world.
After that, many people will wonder what the blockchain is for? In which areas can it make the most progress?
We talked about the high cost of blockchain maintenance, the current speed is limited, and the scalability is weak, which determines that the blockchain cannot subvert everything. The reason for using the blockchain in the future is mainly for trust and security.
The blockchain is a relatively inexpensive infrastructure for building complex trust relationships. Data validation is a major direction of blockchain application. Whoever moves data can be clearly reflected in the blockchain.
As mentioned above, when keeping low-value assets, people tend to pay more attention to convenience and keep high-value assets. Blockchains can be useful, such as medical case sharing, auditing, notarization, supply chain finance, real estate confirmation, voting systems, etc., blockchains are likely to establish new business models.
In addition, the blockchain also has its own financial attributes, which can generate certain tokens in the process of executing the algorithm, in order to motivate more people to participate in such a decentralized construction. This is very meaningful.
From a technical point of view, the blockchain may not be the best of all technologies, but in general, it is a very good development direction.
In summary, different products have different market needs. Not all products need to be decentralized. The future of blockchain cannot subvert everything.
Although the blockchain has taken a step forward in solving multi-party cooperation and trusted processing, for a long time, the blockchain and the existing system must be long-term cooperation and coexistence.