Xue Hongyan: what does it mean to appear and bitcoin blockchain

Xue Hongyan: what does it mean to appear and bitcoin blockchain

Any kind of new technology, new formats, in the not by the public attention and understanding, enthusiastic supporters and practitioners usually head part of such propaganda: This is the technology, progress, mode of a landmark, will significantly enhance the efficiency, subversion has “anachronistic” old, old giant model. The rise of electricity providers, so; the rise of Internet banking, so too; shared economic rise, but the outcome is not so.

At this stage the block chain and bitcoin, also at this stage. The former is regarded as the fans after the steam engine, electricity, information and Internet technology, the core technology has the potential to trigger the fifth round of subversive revolution; the latter was regarded as fans a new global currency, can effectively break the dollar hegemony system, will also impact hammer currency issued by the central bank. Is this really the case? How to know restraint.

There is no electricity supplier to eliminate line supermarkets, its development has already stepped into the integration of online and offline retail Internet financial new stage; never have the ability to subvert the traditional finance, is also actively with the traditional financial openness and cooperation and win-win development; while sharing economy, never seem to who can subvert. The block chain and bitcoin? Is the impact, or subversion, cooperation and innovation?

Dialectical blocks to the center of the chain”

Block chain to the center of the people talked about behind to the center is to trust, and trust is behind the consensus algorithm and cryptographic function of blessing. Since the block chain can largely solve the trust problem, those institutions rely on center “to solve or alleviate the problem does not trust” and the existence and format will no longer have the existence? The reality is not so. Take a simple example, such as the application of intelligent technology based on block chain contract in automobile trading area.

In this example, the transaction is written record vehicle real-time block chain, smart car uninterrupted accept new block block chain, and update the electronic lock and the public key in the car in the remote signature key. When the car ownership through block chain transfer, remote control before the owner of the car to work, get a main remote door and start the engine power, realizes the ownership and use of the equivalence, which can be achieved to the center.

From a technical point of view, this process is very efficient and does not require dealers, don’t even need the registration department. But the problem is, if we only said confidential private key ownership, then the digital encryption becomes very important. Even if the technology itself is difficult to break, but the man himself is most likely to be a breakthrough, which in turn makes digital security encryption is suspect. At this point, the user how to save one’s key? Electronic filing, illegal software or phishing software it is possible to steal the car to the public; the third party storage, how to avoid insider collusion? Or take a small note, when the user lost the car, will become a pile of scrap metal.

Also, if the deal had a dispute, who will make the final arbiter? Technology or rules? The technical aspects of the people tend to regard law as a set of logical rules and algorithm consists of the system, the system must be able to get a clear verdict; however, the reality of the legal provisions and rules is not only long, there are people based on the understanding and interpretation of social development, in order to better to solve the original formulation of the law did not expect a more complex case.

Therefore, it is not completely rely on the block chain to the center, and completely to the center may not be our pursuit. In fact, in our real world, no system is completely decentralized, there is no one in the system is completely decentralized. Such as e-mail, anyone willing to, can design your own email server, but the actual situation is that only a small number of e-mail service providers to occupy the core dominance in this area.

So is the application of block chain technology in the financial industry, not the center of the traditional financial system and the giants down, but as a kind of new idea and technology innovation, to improve the traditional financial system in the part of the business process and solve the potential problems of traditional financial system over the center brings, promote it better the center and to the center of the balance, and ultimately enhance the efficiency.

After all, just can’t deal with the complexity of technology, human society has to adapt to this, the complexity of the traditional models and formats, but could not only improve, subversion.

Bitcoin as an alternative currency “defect”

Has a strong significance bitcoin concept of existing money issuance and circulation system, but bitcoin itself is not a substitute currency, which is due to whether the government allowed more source internal restrictions on its own.

Transaction processing capacity. The size of each block is defined in the 1M, each transaction is about 250 bytes, so each block for a maximum of 4000 transactions. Because each recognized block average generation time was 10 minutes, mean only 7 transactions per second.

This means that, along with the block chain transactions unpopular, many transactions have to wait in line waiting to be written into the bitcoin blockchain. Transaction processing capacity constraints which in turn will affect the scope of bitcoin as a digital currency and scene.

The underlying cryptographic algorithms may be compromised. The hash function bitcoin selection has a collision resistance, but there is no hash function with anti collision characteristics of the true probability, just a compromised low. The problem is, once breached, means that the security of the whole bitcoin will be a fundamental threat, the bit currency may be not worth a hair. In fact, the only concern itself, it will affect the confidence of people for bitcoin.

In addition, the total amount of bitcoin, segmentation and block chain reward structure, will be in a certain stage of bitcoin development has become a constraining condition. To solve these problems, need to publish a new version of the foundation, but in the distributed framework, and can not ensure that all nodes are able to update the latest agreement, the release of a new version will bring the bifurcation problems.

Of course, through the introduction of strict verification mechanism, can be done in a certain period of time to achieve the soft bifurcation of the tolerance of the underlying protocol update brought fundamental impact will not bitcoin value, but instead of non equal to its currency indeed.

At present, the positioning of bitcoin, the industry consensus is the “digital gold” or “quasi digital currency”, rather than digital currency, through the third party intermediary platform standardization and supervision, will effectively focus on trading, can become a new type of investment assets. The “quasi digital currency” feature is more digital on the evolution of legal tender to provide ideas and technical implications, what about the alternative.

Finally, about bitcoin anonymity and money laundering risk, has been controversial. Indeed, don’t ask you to join in the true identity is one of the core concepts of the bitcoin system, but bitcoin transactions do not truly anonymous, a user with a different identity to do different transactions to be eventually tracked; and through the bitcoin wallet, exchange and other three party service institutions do transactions, by the anti money laundering regulatory agencies, are in fact behind the real name system.

The impact and subversion, or cooperation and innovation?

When we discuss the use of technology innovation means to replace or partly replace traditional system, we are discussing how to in the old law, social and financial institutions in the redistribution of power.

For the block chain and bitcoin and other new technologies, new things, open or closed attitude we should take after all, also depends on how they fit into the existing pattern of economic operation and financial formats. Speed and step into the new technology and is closely related to its own characteristics, but also depends on the existing economic activities and regulatory agencies to effectively control and management, so as to achieve such an ideal state: innovation is necessary to effectively lead the new technologies, but also control the risk in an acceptable range.

The second half of 2015, the Internet financial regulators will “limited to a small” inclusive field, will control the new financial potential risks in a reasonable range. At the same time, the Internet Finance and traditional finance business slowed down to grab the rhythm, accelerate the pace of financial technology investment and exploration, mutual fusion of gold and traditional financial development, open cooperation began to enter a new stage.

For the block chain and bitcoin, if so, the side to side regulatory intervention, to encourage and support, promote cooperation and integration of new technologies and old formats.

After all, in the long run, block chain is likely to become a universal technology in global financial markets, to further promote the opening and globalization of the financial market, and based on the digital asset block chain technology is expected to change the current global assets territory. To seize the opportunities and grasp the technology chain blocks the development of digital asset pricing, to focus on the long-term national financial security and financial strength, might be another opportunity.

Author: Xue Hongyan (director of the Internet Suning Financial Research Institute of financial center)

Source: people.com.cn

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