I discussed blockchain issues with my friends today.
Here are some thoughts from friends:
I have been thinking about the essence of blockchain recently, and I have been inspired by the development of human beings. Human beings are naturally decentralized, but this decentralization is worthless. The reason why human beings can achieve today's achievements is that we have the same consensus and abide by common rules. The country is a kind of consensus, a set of rules, and the government is the maintainer of this set of rules. From this perspective, blockchain is the "government" in the sense of the Internet. The holders of coins are the people, the miners are the maintainers of the rules generated by various means, and the additional issuance rewards and handling fees are taxes. The various consensus mechanisms of blockchain can also find similar versions in the human world. Pow is more like "rule by inaction", DPOS is like the current representative system, and Algorand is like the lottery system in ancient Athens.
Individual decentralization is indeed meaningless. Each individual is a center and there is no decentralization. However, cooperation makes humans more efficient, from individuals to groups, collectives, tribes, clans, nations, countries, etc. Cooperation will produce a series of contradictions. To resolve the contradictions, we must reach a consensus and formulate contracts, rules, and various systems.
The premise of cooperation is consensus. Without consensus, cooperation is impossible. Even when two hostile parties reach cooperation, they have reached consensus in some aspects. But consensus is not binding, so a contract must be formed. As the old saying goes, words are not enough, they must be written down. After the contract is in place, it needs to be enforced. If there is no way to enforce it, there is only moral condemnation. Think about the cooperation between the Kuomintang and the Communist Party, and then the tearing up of the agreement. That's what happened.
So how do multiple people reach a consensus when they are together? This is the problem of consensus mechanism. The most common one is that the minority obeys the majority. Even if the truth is in the hands of a few people, they must obey the consensus of the majority. This is also called "tyranny of the majority."
Let's not talk about tyranny. As far as the consensus system is concerned, many of them are indeed a reflection of real society. The minority obeys the majority. The simplest one is that everyone has the right to vote, one person, one vote. Because this voting method is relatively inefficient, other systems have been extended.
POW is distribution according to work, relying on more people and more computing power to reach a consensus. POS is distribution according to capital, which is equivalent to a shareholding system. DPOS is a representative system, a system of people's congress representatives, electing a member of parliament or a representative to vote for me. The advantage of the representative system is that it is very efficient.
As for which system is better, let’s not argue about it. This kind of argument is a matter of the buttocks deciding the head. If you hold a certain coin, you will think that its consensus mechanism is better, and the argument becomes meaningless. However, the decentralization of blockchain is meaningful. It is not the decentralization of individuals, but the decentralization of data, contracts, and judgments.
The essence of blockchain is the ledger. In the past, everyone kept their own accounts and did not trust each other. For example, if the Supreme People's Procuratorate lost files, they could not get them back. Now everyone keeps accounts, and it becomes meaningless if a few people lie. This ledger is open, transparent and verifiable. All data from the date of its creation can be found in the ledger. It is clear who is lying, so it is credible. Based on the long-term trust in the past, trust in the present and the future will be generated, which forms trust in the ledger, the entire chain, and the entire system.
Based on the data in the ledger, smart contracts are developed. This is a contract. This contract is also decentralized, open, transparent and verifiable, so smart contracts are also trustworthy. Speaking of the execution of smart contracts, this is equivalent to the court's ruling. In the past, judges, juries, etc. were required, which were subjective and human. Now the contract is completely executed by the program automatically. Code is law. This is also trustworthy and cold.
If mapped to the real world, evidence is credible, rules and contracts are credible, and rulings are credible, so the entire system is a perfect trust system that does not require a third party. Trust is transmitted from the ledger to the entire system, becoming a trust machine.
Therefore, the biggest role of blockchain is to remove trust. Removing trust is not trustlessness, but the greatest trust. What is removed is the third-party trust. Of course, some experts say that blockchain is not trustless, but strong trust. In fact, the meaning is the same, just from different angles. Perfect value transfer can be achieved on the basis of trust. Without a third party, the cost of value transfer is perfectly reduced. Take Bitcoin as an example. In the past, when I transferred money to you, I had to go through the bank, and the bank would deduct a handling fee. If I transfer Bitcoin, no institution is required, and no handling fee is required. The handling fee now is due to network efficiency issues.
So I said that the traditional Internet solves the problem of information transmission, and blockchain solves the problem of trust. It is a perfect solution for the value Internet, and a perfect value transfer.
Blockchain does not solve the problem of efficiency, but the problem of trust. If you want efficiency, you don’t need decentralization. The centralized system is the most efficient. So don’t use the efficiency of the centralized system to question blockchain. The two are not solving the same problem.
From another perspective, you can regard efficiency as productivity and trust as production relations. So some people say that blockchain is the production relationship of the future society, solving the relationship between people. Of course, Marx tells us that production relations will also push back productivity.
If you recognize that blockchain is the solution to the value of the Internet, then look at the direction we are taking now, Dapp decentralized applications, Defi open finance, you will find that Dapp is not competitive, while blockchain and Defi are a natural fit, and both solve value problems.
Therefore, blockchain is born to solve financial problems. It will reconstruct the entire traditional financial system. Bitcoin created a new currency, and Libra and others are all aimed at finance. Now Defi is being talked about more and more, and Dapp is being talked about less and less. I am more optimistic about the development of Defi in blockchain. We have also seen more banks and financial institutions participating in blockchain. It is said that 80% of Wall Street people have already
Entering the blockchain industry, the question is, what is the essence of trust?