Industrial blockchain: the source of power

This article aims to explore the nature of blockchain and the power generated by it. We believe that the truth (essence) of things can bring power, truth is power, and truth is the source of power. Our conclusion is: from the perspective of technical realization, the essence of blockchain is “distributed ledger”, which is static and has the beauty of endogenous structure; from the perspective of application, the essence of “distributed ledger” is a set of “economic system” , This is movement, presenting the dance of external change. The statics and dynamics are different and related to each other. They are gathered on the ontology of “distributed ledgers” to achieve integration and unity. This is integration and the road to industrial development.

—–The full text is about 13,000 words, it is recommended to read it after collection—-

contents:

1 Prospects and reflections

2 Blockchain: Ripples stirred up by BTC

3 Static: the beauty of structure

3.1 Thinking framework: the ternary structure of “physical use”

3.2 The Body of Blockchain: Distributed Ledger

3.3 Phases of Blockchain: Three-tiered Technology Stack

      3.3.1 The original paradigm

      3.3.2 Innovation based on three-tier structure

3.4 The use of blockchain: structure determines function

      3.4.1 Blockchain 1.0

              3.4.2 Blockchain 2.0

      3.4.3 Blockchain 3.0

4 Movement: Dance of Change

4.1 Distributed ledger is an “economic system”

4.2 The world is being “explicitly” presented in a way that technology can achieve

4.3 New trust model to build an efficient collaboration network

4.4 Organizational restructuring promotes optimal allocation of resources

4.5 Building a digital economy infrastructure based on “distributed ledgers”

4.6 “Three-Dimensional Integration” Boosts the Network Effect of Digital Economy

5 Convergence: The Road to Industry

references

.1.

Prospects and reflections

This world is imagined, the so-called “man-made world”, people are constructing this world according to their imagination; and the reality we perceive is presenting scene by scene in a way that can be realized by technology, like a movie.

Blockchain (or BTC) is like a golden key “sealed” on the timeline of human development. It accidentally opened the “Sesame Gate”, but it was destined to open a new world and start a new journey. With the advent of the Internet era, the cost of information transmission has become zero, which has profoundly changed the economic pattern of society and everyone’s life. With the advent of the blockchain era, it is very likely that the cost of value transmission will tend to zero. What changes will happen to the entire world economic pattern and social structure?

We need to take time to present a larger vision and gradually become clearer, but the reality of “changing winds and clouds” has forced us to attach great importance to this industry and examine it in a three-dimensional manner. Open source technology breaks boundaries and accelerates iteration and innovation; agreements define currency and assets to realize the borderless transfer of value; data right confirmation, circulation and transactions promote the transformation of data production elements; organizational collaboration methods change, and production efficiency is greatly improved; technology and applications Constantly innovate and promote the integrated development of the industry. Under the fusion of various elements, the World Competition Qualification Bureau has shown “a major change unseen in a century.”

We can’t help thinking, under these colorful, complicated and dazzling appearances, what is the truth of things? What are the inherent qualities and connections?

In order to go back to the source, we need to go back to where the story began.

.2.

Blockchain: ripples stirred up by BTC

The birth of BTC has its profound background factors. In September 2008, starting with the collapse of Lehman Brothers in the United States, the financial crisis broke out in the United States and spread to the world. In response to the crisis, governments and central banks around the world have adopted unprecedented fiscal stimulus programs and expanded monetary policies, and provided emergency assistance to financial institutions. [1] Under this situation, wealth accumulates in the rich and institutions, while the wealth of the poor has shrunk significantly. These measures have caused widespread doubts. Among them is the Bitcoin white paper “Bitcoin: A Peer-to-Peer Electronic Cash System” published by Satoshi Nakamoto in October of the same year .

It can be said that the birth of Bitcoin directly stems from the questioning of the state-led monetary and financial system-this model of digital currency based on a “trusted third party” has its insurmountable “endogenous weakness”, just like Nakamoto Cong said in the white paper: “The most fundamental problem of traditional currencies is that they must be based on trust to operate. The central bank must make people believe that it will not devalue the currency, but the history of legal currency is full of destruction of this trust. Banks must be trusted to hold our currency and make it circulate in electronic form, but they use waves of loans to create a credit bubble with almost no reserves.” Therefore, “trust” is regarded as traditional currency. The crux of the system. 【2】

How to solve the problem of trust, this thinking has been deeply rooted in the design of Bitcoin from the very beginning, and has become the original intention and cornerstone of the Bitcoin design concept: “We need an electronic payment system based on cryptographic principles instead of trust, so that Any two parties who reach an agreement can directly conduct transactions without a trusted third party.” [3] Therefore, the most fundamental purpose of Satoshi Nakamoto’s creation of Bitcoin is to use cryptography principles and a set of pre-set computers. Algorithms are used to “replace” people’s trust in banks, financial institutions, and governments and other third-party authorities, and realize an electronic cash system based entirely on “technology” instead of “trust.” 【4】

At that time, there were dozens of digital currencies based on cryptography and other technical principles. For example, David Chaum, a cypherpunk “bishop”-level figure at the time, created a digital currency system to realize how to share and transmit financial information, and manage the confidentiality of different identity information, called Ecash, UK Cryptographer Adam Back (Adam Back) invented hash cash (Hashcash), which used the proof-of-work system (POW); Haber and Stornetta (Haber and Stornetta) proposed a method to guarantee the use of timestamp A protocol for the security of digital files; W Dai invented B-money, emphasizing point-to-point transactions and unalterable transaction records. In short, these cypherpunks have done a lot of practical exploration in the field of encrypted digital currency, and they have also become the earliest disseminators of digital currency.

Among the many encrypted digital currencies, why can Bitcoin stand out? After analysis, we concluded three main factors:

  • Firstly, in terms of experience, the design of Bitcoin has borrowed heavily from the contributions of cypherpunk members, such as the proof-of-work mechanism, the principle of time stamping, and peer-to-peer transactions, making Bitcoin more blue than blue;
  • Second, in terms of concept, the design of Bitcoin has grasped the crux of the “endogenous weakness” of the traditional currency system from the very beginning-the problem of “currency trust”, which is the root of all problems, and a feasible solution has been given. ;
  • Thirdly, in terms of implementation, it is the first to use blockchain technology to “liberate currency from the control of the state and banks, and at the same time, it does not need to rely on any specific center, but is completely based on a distributed network operation, thus truly achieving The “decentralization” of the electronic currency system” [5] became the first “decentralized digital currency” in human history.

BTC is like a stone thrown into a calm lake. At first, it only made small ripples. However, as the situation develops, it has set off turbulent waves, attracting widespread and in-depth attention and participation from all walks of life. The blockchain realizes BTC, and attention to BTC must also involve the blockchain, so the blockchain is also under the spotlight. More and more people are beginning to think: What exactly is a blockchain? Why does BTC based on it have such a huge impact? What else can the blockchain do and where will it go…

With thinking about a series of issues related to the blockchain, we will start more explorations next. “The Analects of Confucius · Xueer Pian” reads: “A gentleman is based on his basic principles, and he is based on his own principles.” If you can grasp the essence of things by pulling out the cocoon and investigating layer by layer, you can discover the logic of things’ inner operation and reveal the laws by focusing on the research of essential affairs, and the reasoning behind it will naturally appear. This is the quietness of things, the beauty of an endogenous structure.

At the same time, we have also found that the rapid, violent, and thorough changes in the blockchain industry are really “rising up to 90,000 miles in one day”. Under these violent turbulent changes, there must be tremendous power. What is this power and where is the source of power? What kind of characteristics does it have and what trajectory does it deduct? What will be the result of its changes? This is the movement of things, a dance of change that arises from the inside and emerges from the outside.

We try to start thinking from both static and dynamic aspects. The static and dynamic are the two sides of the whole thing. They are different, but also related to each other. They come together, and finally present a perfect integration and unity. This is integration: the road to industry.

3.

Quietness: the beauty of structure

3.1 Thinking framework: the ternary structure of “physical use”

In Buddhism “Mahayana Awakening of Faith”, the three-dimensional structure of “body-phase-use” is discussed as a very important theory. This kind of “extension and use” theory provides us with a framework of thinking that can be used for reference in actual practice.

What is “physical use”? Take an example, for example, bamboo. “Tall arbor-like grass plants” are the body and the main substance of bamboo; bamboo poles, bamboo pulp, bamboo tubes, and bamboo strips are the various “phases” of bamboo, according to different “phases.” , With various functions such as water carrying, paper making, handicrafts, mats and so on.

What is the logical relationship of the ternary structure of “substance to use” For example, in the first volume of “Xuan Ji” of “Xuan Ji”, it is said that “the body is used separately, not the same as the other” [6]. It means that “body” is not directly realized as “use”, but “body” first manifests as “phase” and then as “use;” only through “phase” can “body” produce its “use”. [7 From this perspective, we can deduce a conclusion that the “phase” determines the “use” of the “body”, and different “phases” determine different “uses”.

According to the view of “Mahayana Awakening of Faith”, the existence of all things in the world (in Buddhism generally uses the “ten thousand dharmas”) is manifested as “substance and function”. In order to better understand the ternary structure of “bulk use”, we take graphite and diamond as examples.

Graphite and diamond are “allotropes” of carbon, and they are both composed of carbon atoms. The properties and functions of the two are compared, as shown in Table 2-1:

substance

nature

Function

graphite

Dark gray, metallic luster, opaque, fine scaly solid, very soft, slippery, conductive

Make pencil leads, lubricants, batteries

Diamond

Colorless and transparent, solid octahedron shape, very hard, non-conductive

Diamonds, knives, drills

Table 2-1: Comparison of graphite and diamond

We found that both graphite and diamond are composed of carbon atoms, but they are quite different in terms of performance and function. why is that? Next, we use the ternary structure thinking framework of “Body Phase Use” to analyze at the molecular structure level, as shown in Table 2-2 [8]: 

body

Mutually

use

Molecular Structure

nature

carbon

Original

son

 

picture

Graphite is a layered structure. As far as a layer is concerned, each carbon atom will be closely combined with the 3 carbon atoms around it through strong interaction. The distance between the two carbon atoms that are “closely bound” is about 0.142nm. The distance between the graphite middle layer and the layer is 0.335nm. Due to the relatively large distance, the interaction of carbon atoms is weak, so it is easy to slide and crack along the direction parallel to the layer, so the graphite is very soft and has a slippery feel.

Dark gray, metallic luster, opaque, fine scaly solid, very soft, slippery, conductive

 

graphite:

Make pencil leads, lubricants, batteries

 

picture

Each carbon atom of diamond is closely bound to the surrounding 4 carbon atoms through strong interaction. The distance between the two “closely bound” carbon atoms is about 0.155nm, thus forming a dense three-dimensional structure. It is this dense structure that makes diamond the hardest substance in nature.

Colorless and transparent, solid octahedron shape, very hard, non-conductive

Diamond:

Diamonds, knives, drills

Table 2-2: The ternary structure of carbon atoms for “bulk use”

Through the above analysis, we come to an important conclusion: structure (phase) determines function, which is consistent with the previous deduced conclusion: it is the “phase” that determines the “use” of the “body”, and different “phases” determine different “use”. This is also very consistent with the assertion in Buddhism that “the body can only produce its use through the form”.

Next, we will apply the ternary structure of thinking framework of “physical use” to the analysis of the blockchain to deconstruct technology, applications and industries, refine key elements, clarify logical relationships, discover the trajectory of action, and find out the ways of change , Explore the law of operation and find the source of strength.

3.2 The Body of Blockchain: Distributed Ledger

What is the essence of blockchain? 

The birth of BTC is based on the long-term development achievements in the fields of applied mathematics, cryptography, computer science, software engineering, etc. However, the revolutionary innovation that truly makes Bitcoin unique does not occur in these basic scientific and technological fields. It is through the clever combination of existing technologies to create a new “bookkeeping” method-the “distributed ledger” of the blockchain… Most traditional institutions tend to think that even if Bitcoin is really a revolutionary innovation , Its contributions and results should all be attributed to the distributed ledger technology of the blockchain. 【9】

In Section 4.3 of “Industrial Blockchain : The Future Is Coming”, we quoted the definition of blockchain in the “Regulations for the Evaluation of Financial Applications of Blockchain Technology” issued by the Central Bank in July 2020: Blockchain as A technical system that is jointly maintained by multiple parties, uses cryptography to ensure transmission and access security, and can achieve consistent data storage, tamper-proof, and non-repudiation. The central bank’s definition of blockchain emphasizes that the essence of blockchain technology is a decentralized depository database and a distributed accounting system.

Therefore, when we talk about blockchain, its essence also refers to the “distributed ledger” technology, which is a fundamental factor that distinguishes Bitcoin from all traditional currency systems. The blockchain technology architecture is shown in Figure 3-1:

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Figure 3-1 Security system framework of financial distributed ledger technology [10]

This technical architecture mainly includes node communication layer, ledger data layer, consensus protocol layer, smart contract layer, cryptographic algorithm layer, identity management layer, privacy protection layer, and off-chain extension. Here we are not going to do in-depth research on technology, but to realize that behind this architecture is actually an information interaction and authentication system that the whole network participates in the construction and maintenance of the whole network, which makes people do not need to rely on any specific third-party organization , You can also exchange point-to-point information through the Internet, and reach a consensus on the content and changes of all information. 【11】

The process of forming this consensus is actually the process of keeping accounts. In the blockchain system, the core is how to solve the problem of decentralized bookkeeping, and the competitive bookkeeping mechanism has become the key to solving the problem. As shown in Figure 3-2:

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Figure 3-2: Competition-bookkeeping-reward mechanism [12]

The so-called competitive bookkeeping is a mechanism in which each node’s computing power (computing power) is used to compete for the right to bookkeeping. In the Bitcoin system, a round of computing power competition is conducted approximately every ten minutes. The winner of the competition obtains the right to keep accounts, that is, write a new block to the general ledger of the blockchain, and simultaneously add new blocks to other nodes in the entire network. Ledger information, this process is the process of block generation, which is vividly called “mining” by people. Nodes that win each round of competition and complete their bookkeeping will receive a certain amount of Bitcoin rewards from the system.

This reward process is also the process of Bitcoin issuance. This design is quite clever-it perfectly combines the competitive accounting mechanism with the issuance of currency. While introducing competition, it solves the problem of issuance in the decentralized currency system. 【13】

3.3 Phases of Blockchain: Three-tiered Technology Stack

  • 3.3.1 The original paradigm

In “Industrial Blockchain: The Future Has Come”, we mentioned that the emergence of BTC has two major historical contributions. One is the first decentralized distributed ledger, namely blockchain technology; the other is the currency field Innovation, the first programmable currency, namely BTC. The realization of both comes from the same technology stack, which includes the three levels of blockchain, protocol, and currency. The definition of each level is in section 3.1.1 of “Industrial Blockchain: The Future Has Come”. The detailed description will not be expanded here, and its structure is shown in Figure 3-1:

 

picture

Figure 3-1 The technology stack level of the Bitcoin blockchain [14]

The three-layer technology stack architecture of the BTC blockchain can be subdivided. The blockchain layer can be divided into a network layer, a consensus layer, and a data layer; the protocol layer corresponds to a smart contract; the original BTC currency implements this layer, which corresponds to the application layer. As shown in Figure 3-2:

picture

Figure 3-2 Comparison of blockchain architecture systems [15]

  • The network layer is at the bottom of the blockchain , using the P2P protocol to connect nodes in different geographic locations to ensure the transmission of transaction data and block data between nodes.
  • At the consensus layer , different distributed consensus algorithms are used to continuously record transactions in public blocks, and the blocks are connected in series through cryptographic means to finally form a block chain structure to ensure the security of data records and nodes Data consistency.
  • The data layer includes data structure, data model and block storage. The main function is to efficiently organize various data in the block chain.
  • Smart contracts are digital protocols that are deployed on the blockchain and can be automatically executed according to rules. The smart contract layer is mainly used by users to define a set of rules to generate data that conforms to specific logic.
  • The application layer has different application programming interfaces, including contract call interfaces and network communication interfaces, to provide various services to the outside world.

It should be emphasized that for all modern encrypted digital currencies, the three levels of distributed ledger, protocol and currency are a common structure. The technological stack level of the Bitcoin blockchain establishes a common structural paradigm for encrypted digital currencies to achieve the characteristics of “openness and transparency, immutability, anonymity, and decentralization”. This is the original intention of creating BTC, which is called As “fundamentalism”. Subsequent changes are basically based on this structure and internal elements, making changes and innovations with different emphasis, thus presenting different functional characteristics.

3.4 The use of blockchain: structure determines function

  • 3.4.1 Blockchain 1.0

As a “fundamentalist” public chain, BTC has the simplest paradigm of public chain. Simple enough means that it is difficult to dig out loopholes. For digital currency, this is a deliberate arrangement, which can guarantee stability and security. BTC’s data model is based on UTXO’s transaction model, because it focuses on currency transactions and transfers; scripts only support simple contract functions, such as secured transactions, joint accounts, and delayed payments, so for the BTC blockchain, Its core feature is its decentralized payment function, and its goal is to achieve currency decentralization. Therefore, as the first “decentralized digital currency”, BTC is the first application of the blockchain and the most successful application at present. This is blockchain 1.0. As shown in Figure 3-3:

 

picture

Figure 3-3: Blockchain 1.0 application architecture

For the application of blockchain 1.0, there are other digital currencies. Litecoin is positioned as a substitute for BTC, and it is also implemented based on the architectural principles established by BTC, with only some parameters modified. Compared with BTC, Litecoin is a lightweight asset. Its algorithm reduces the cost of hardware, and ordinary computers can participate in mining. Dash positioning is a digital currency that supports instant transactions and protects user privacy. Dash is developed based on Bitcoin, but has made improvements in two areas, one is transaction speed; the other is anonymity.

  • 3.4.2 Blockchain 2.0

ETH is positioned as a smart contract and a decentralized application platform. Hyperledger is a consortium chain for industry applications. Both support a richer general application. Corresponding to functions, Ethereum and Hyperledger have different innovations in their implementation structures.

Compared with BTC, Ethereum provides Turing’s complete scripting languages ​​Solidity and Serpent, as well as the sandbox environment Ethereum Virtual Machine (EVM) to help users write and run general smart contracts and execute complex control logic. Ethereum is a transaction-based state transfer system. The ledger records transaction data and the total state of the global ledger, so it has two types of accounts, namely external accounts and contract accounts.

In order to achieve better security, transaction efficiency, and meet the needs of commercial applications, Hyperledger aims to build a consortium chain, establish open source specifications and standards, and build a transparent, open, and decentralized development platform for cooperative enterprises. Hyperledger uses GO, Java programming language and Docker sandbox environment, allowing members of the alliance to create custom distributed ledger solutions.

These structural changes and innovations have a universal law, which also verifies the conclusion that structure determines function. A large number of blockchain systems for the purpose of issuing digital currencies are designed based on the blockchain data structure of Bitcoin, such as LTC and DASH; and the blockchain systems that support smart contracts are often based on the data structure of the Bitcoin blockchain. On this basis, some adjustments were made to the data structure. The most representative system is Ethereum, which represents blockchain 2.0. As shown in Figure 3-4:

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Figure 3-4: Blockchain 2.0 application architecture

  • 3.4.3 Blockchain 3.0

Based on the structural characteristics of different blockchains, BTC has realized currency innovation; Ethereum has supported smart contracts and realized decentralized application innovation (Dapp). The emergence of Polkadot is a larger-level adjustment of the blockchain structure, achieving an expansion of the “chain” level. We call this architecture innovation “blockchain 3.0”, and its abstract architecture is shown in Figure 3-5:

 

picture

Figure 3-5: Blockchain 3.0 application architecture

Polkadot’s core idea of ​​constructing a network is heterogeneous sharding, that is, linking multiple chains to build a multivariate heterogeneous network. This network is mainly composed of three parts: relay chain, parallel chain, and transit bridge. Polkadot takes the relay chain as the core, and the relay chain retains the first layer of the blockchain architecture in the implementation structure, namely the blockchain layer (network layer, consensus layer, data layer) to ensure the entire network Consistency, security and interoperability; above the blockchain layer is no longer the protocol layer and application layer in the three-tier structure, instead a complete set of independent chains, that is, countless parachains, implemented by parachains Application expansion to achieve rich usability. Polkadot’s structural design separates the consistency and validity in the consensus structure, and solves the problem that the existing blockchain architectures (such as BTC, ETH, EOS, etc.) have extensibilty (extensibilty). ) And scalability (scalability). The realization of this structure laid the foundation for Polkadot to realize cross-chain and 10,000-chain interconnection. The technical architecture of Polkadot is shown in Figure 3-6:

picture

Figure 3-6: Polkadot’s technical architecture diagram

Based on the analysis of the corresponding blockchain architecture systems of BTC, ETH, Hyperledger, and Polkadot, we found that the functions and performance characteristics they can carry are closely related to their internal structural characteristics. And this structural feature is the different phases of different blockchains, and different phases present different functions, that is, “use”.

Understanding this will help us deconstruct the positive and negative directions and deduct the trajectory of action. When we see something presents its “use”, we can deconstruct its “phase” and discover the “reason” of its function; when analyzing the “phase” of something, follow the principle of “structure determines function” and go Deduct the development and changes of things and discover their potential capabilities.

.4.

Movement: Dance of Change

4.1 Distributed ledger is an “economic system”

Based on the above analysis, we find that the blockchain is not only a distributed ledger realized by “technology”, but more importantly, the process of creating a ledger is actually a process of creating an “economic system”. Through the rules of “mining”, “accounting”, “currency reward”, etc., from the very beginning, many elements such as the main body’s behavior, economic activities, currency and finance are brought into the process of creating a “distributed ledger”, and technology, currency , Subject behaviors and relationships, trust models, incentive mechanisms, etc. are organically integrated to build a new trust mechanism (consensus mechanism) of “decentralized trust”, creating a positive cycle of “competition-accounting-reward” Economic system. Therefore, the essence of distributed ledgers is an “economic system”, and different blockchain distributed ledgers are different economic systems. For example, the BTC blockchain ledger is a set of electronic cash transaction systems around “BTC”; the ETH blockchain ledger is a set of industry application systems based on different smart contracts, currently mainly financial application systems.

Recognizing this point is very important and is a major turning point. The connotation of “distributed ledger” extends from the scope of blockchain technology to the scope of economic systems. Blockchain has changed from a computer science and technology concept to a social and economic phenomenon of global concern.

In order to have a deeper understanding of the extension of the connotation of “distributed ledger”, it is necessary for us to briefly state the role of “accounting technology” on social progress. German sociologist Max Weber, who is also known as the three founders of sociology along with Karl Marx and Emil Durkheim, believes that people’s “bookkeeping” is not just the result of meeting the needs of social and economic development, but It has shaped human economic activities and the social economic order itself to a large extent. Weber believed that “double-entry bookkeeping” represented a “rational spiritual temperament” and shaped the rational values ​​of modern capitalist society and promoted the development of modern capitalist society. It can be said that without “double-entry bookkeeping” there would be no capitalism, and there would be no establishment of a joint-stock company system.

The blockchain “distributed ledger” has the characteristics of distribution, digitization, encryption, sharing, and transparency in the whole process. It is an innovation in the concept and connotation of the ledger. It is a new type of ledger and has significant changes in the “bookkeeping method”. Such ledgers have become the basic elements of economic activities and social economic order, and they will inevitably lead to reshaping from the bottom and promote major changes in human economic activities and social economic order.

In this way, blockchain technology, through the expression of “distributed ledger”, has succeeded in naturally linking human economic activities and social economic order from a set of technologies, and has even begun to shape them. People were surprised and surprised to discover that blockchain is not only the productivity of “distributed ledger” technology, but also represents an advanced production relationship. Perhaps this is the most revolutionary innovative force of the blockchain, and this is the starting point to open a new paradigm of an economic system that integrates technology, currency, and economic behavior, and promotes the vigorous dance of change in this era.

4.2 The world is being “explicitly” presented in a way that technology can achieve

Technology is accelerating to change the physical world, the virtual world, and the world of spiritual consciousness, and is “explicitly” presented in a visible way.

  • The emergence of the steam engine brought about the first industrial revolution, and large-scale machine production replaced the handicraft industry in the workshop;
  • The invention of electricity brought about the second industrial revolution, and the development of electrical invention and industrial upgrading centered on electricity;
  • The emergence of computers has brought about the third industrial revolution characterized by informatization, and mankind has entered the era of information and mobile internet from the industrial age;
  • The emergence of the blockchain , coupled with emerging technologies such as big data, artificial intelligence, the Internet of Things, and 5G, has set off the fourth industrial revolution and brought us into the digital age, which is a greater industrial upgrade.

As the primary productive force, science and technology continue to promote the development of mankind, from the gross physical world to the virtual side. Perhaps this is a more advanced form of human existence. The physical world and virtual world, material form and ideology are constantly blurring boundaries and immersing themselves. Technology is using a kind of “obvious” power to let us see the two sides of things, especially the “non-obvious”, “virtual”, “spiritual” or “conscious” side. Coming more and more into a “subtle” world. Focusing on and tapping the potential of this side may be able to explode even greater power.

 

As a kind of technology, the block chain exerts the power of “significance”, but as a “distributed ledger”, the block chain will become the basic element of the bottom of economic activities, reshaping human economic activities and social economic order.

Organizational forms and collaboration methods have also changed because of blockchain technology, and “decentralized autonomous organizations” have emerged. On the basis of the same “economic game and incentive” rules, the “global community of interests” breaks the boundaries of regions, companies, and even countries, and conducts efficient division of labor and cooperation.

People’s consensus, values, and expectations are also “explicitly” presented because of the blockchain “distributed ledger” technology. The ledger is the consensus reached, and the process of bookkeeping is the mechanism of consensus formation. The presentation form of the ledger is actually a decentralized idea and human expectation.

4.3 New trust model to build an efficient collaboration network

Yuval Harari, author of “A Brief History of Mankind”, believes that collaboration is the most important difference between humans and other species. And trust is the foundation of collaboration. Having trust can promote the deepening of people’s collaboration; lack of trust will bring high trust costs, such as eliminating the labor costs, time costs, supervision costs, and decision-making costs caused by mistrust, thereby reducing the efficiency of collaboration, or even no longer cooperation.

Blockchain technology builds a new trust model and forms an efficient collaboration network. Blockchain technology allows unfamiliar subjects to share a shared ledger. People trust the data and information in this ledger not because they trust the person, institution or country that provides the information, but because the ledger information itself is public, permanent, and anti-lost. , Traceable and immutable recorded on the blockchain.

From this point of view, the blockchain is a machine that “makes trust”. It uses technology to change the way people trust and expand the “object of trust”, from people-to-person, person-to-organization, organization-to-organization trust, to code trust, algorithm trust, and machine trust. “Distributed ledger” means “distributed consensus” and “decentralized trust”. The trust model is rebuilt. The trust between unfamiliar subjects will be established instantly because of “code, algorithm, machine”, the cost of trust is greatly reduced, positive traction is established, and more subjects with “peer status and common interests” are gathered to collaborate and build Create an efficient collaboration network and promote it as the basis for the development of social and economic organizations.

4.4 Organizational restructuring promotes optimal allocation of resources

Through the distributed accounting mechanism, the blockchain technology has improved the trust between unfamiliar subjects, and an efficient and brand-new collaboration method has emerged. On this basis, the organizational form has changed, and a kind of organization called DAO has been developed ( Decentralized Autonomous Organization, decentralized organization).

The so-called DAO organization:

  • It is a form of organization that encodes the management and operation rules of the organization on the blockchain in the form of smart contracts, so as to operate autonomously without centralized control or third-party intervention;
  • It is an organizational form spontaneously produced by groups that have reached the same consensus based on the core ideology of the blockchain “co-creation, co-construction, co-governance, and sharing”;
  • It is a brand-new way of human organization and collaboration, and it is a subsidiary product of blockchain that solves the problem of trust between people. It is expected to become a new type of effective organization to deal with uncertain, diverse and complex environments. 【16】

The DAO organization is different from the traditional pyramid structure of corporate organization, and has the typical “distributed and decentralized” characteristics. There is no central node and hierarchical management structure in the DAO organization. It achieves organizational goals through the interaction, competition, and collaboration between bottom-up network nodes. Therefore, the business exchanges between nodes and between nodes and organizations in the DAO organization are no longer determined by administrative affiliation, but follow the principles of equality, voluntariness, reciprocity, and mutual benefit. Driven by mutual benefit. Each organizational node will effectively collaborate under the action of the incentive mechanism based on its own resource advantages and talents, so as to produce strong synergies. 【17】

The formation and functioning mechanism of this organizational form will help optimize the allocation of resources. The main body of collaboration not only exists within the enterprise, but also exists in the market in a distributed manner. With the help of blockchain technology, this distributed and decentralized feature helps to dismantle the “horizontal” existing in the traditional enterprise system. Separate from the “vertical”; under the common rules and incentive system, it is driven to break the boundary between the market and the enterprise, efficiently mobilize internal and external resources, and greatly improve the efficiency of precise resource matching; optimize resource allocation and greatly improve production efficiency.

Nobel Prize winner Glass North believes that efficient economic organization is the key to economic growth. For most traditional enterprises, breaking the original organizational boundaries and building and operating a value network will become the core strategy of the enterprise facing the future. 【18】

What kind of development and changes the DAO organization will present in the digital economy era, we are full of expectations.

4.5 Building a digital economy infrastructure based on “distributed ledgers”

Blockchain is a “distributed ledger”, and its connotation continues to expand and change with the deepening of the digital revolution. In reality, the main body and physical unit of the collaboration will be mapped to the digital world, and a digital ID and digital account will be obtained. The collaboration between the subjects becomes the collaboration between the accounts, which is reflected in the asset changes of different digital accounts, which will be reflected in the digital “ledger” as a kind of data. In this sense, as long as the objects can be “blockchain ledger”, they can be digitized into a “distributed ledger”. As the digital economy researcher Zhao Dawei said, an enterprise is a “ledger” and an industry is also a “ledger”. Markets, countries, and even the world economy are all “ledgers”. [19] The connotation of the ledger has become extremely rich and has become a basic element of the digital economy.

The foundation of economic activities is “exchange” and “production”. Economic activities in the digital age are digital “exchange” and digital “production” activities. On the one hand, based on these “ledgers”, a full amount of big data will be generated. These data have the characteristics of “loss-proof, tamper-proof, traceable, and verifiable”, forming the “data” foundation of the digital economy. Secondly, the use of blockchain and encryption technology solves the problems of data privacy, security, credibility, and pricing. The transaction and circulation of data become feasible, laying the foundation for digital “exchange”. Third, the transaction and circulation of data will promote the transformation of data from social resources into quantifiable digital assets; and then through financial innovation, it will evolve into productive digital capital, realize the elementalization of data production, and lay the foundation for digital “production”.

4.6 “Three-Dimensional Integration” Boosts the Network Effect of Digital Economy

Network effect is a basic concept of the Internet economy, also known as “Metcalfe’s Law”. The law states: the value of a network is equal to the square of the number of nodes in the network, and the value of the network is proportional to the square of the number of users connected to the network.

Therefore, the network effect refers to a scale effect . One refers to the exponential growth of the number of nodes that constitute the network as a carrier; the second refers to the exponential growth of the number of “transmission objects” in the network; With the growth of the network scale, the transmission cost tends to zero, while the marginal benefit increases.

We know that the Internet and the mobile Internet are the Internet of information, enabling zero-cost transmission of information. The larger the scale of a network, the greater the number of users, the greater the amount of information that the network transmits, and the greater the value of the information. For example, a mobile phone has no value if only one person uses it, and the more people use it, the greater the range of interpersonal communication established, and the greater the value of the network resources. Just as the six-person law says, the president of the United States can be contacted by six people. . This is the “information network effect.”

The block-based chain “distributed books” to build a network , first of all it is still the Internet , not only to transmit information, with the “information network effects”, while it is more a value of the Internet, with “value network effect.” Earlier we mentioned the “three-layer technology stack” of the blockchain. On the basis of the underlying “distributed ledger”, the third layer of digital currency, transactions or applications is defined through the second layer of protocol software (scripts or smart contracts) . Here is to pay special attention to the “digital currency” implemented in the third layer, or called “Token” or “pass certificate”. Because this is the first time in human history that a protocol standard such as ERC2.0 has been used in a real sense to realize “currency agreement.” Since then, a “paradigm” has been opened, that is, currency can be negotiated, and contracts can also be “contracted (ie smart contracts)”, or a protocol standard such as ERC721 can be used to digitize assets in the physical world into a different Qualitative “Token”, that is, the current hot NFT. As long as they follow the same standard and the same protocol, this value-carrying “Token” can be circulated and stored on any networked mobile phone or computer in the world, so as to realize the efficient and borderless transfer of value and form a “value network” effect”.

In addition, as mentioned earlier, when everything is a “ledger”, a full amount of data is formed on the ledger. These data are “validated, valuable, verifiable, traceable, anti-lost, and anti-tampering”, and have “security, privacy, and availability”. “Invisible” and other characteristics, then such data will become a kind of “data capital”, which will surely derive credit. Then each “ledger” is not only producing data, recording data, transmitting and exchanging data, but also continuously producing “credit”, recording “credit”, transmitting and exchanging “credit”, forming a “credit network effect”.

Therefore, the three basic elements of information, value, and credit are “three-dimensionally integrated” to jointly promote the formation of the network effect of digital economic growth. Through the above analysis, we have reached a very important conclusion: “Digital economy network effect = information network effect X value network effect X credit network effect”.

.5.

Convergence: The Road to Industry

Professor Zhu Jiaming believes in the “Future Determines the Present” that the essence of the blockchain is a cluster [20]. Understanding the blockchain requires the introduction of the concept and thinking of “clusters”. His interpretation of clusters is: a state where the same or similar elements are closely aggregated in one place. In this sense, the blockchain really has the characteristics of a cluster. And “the state where the elements are tightly gathered in one place” is actually “fusion”. For the “cluster” or “convergence” characteristic of blockchain, Professor Zhu uses a structural diagram to show it, as shown in Figure 5-1:

 

picture

Figure 5-1 Blockchain cluster

Professor Zhu believes that blockchain is firstly science, followed by technology, and then infrastructure. But more than that, blockchain is still law, economy, value, experiment, etc. Numerous features are fused together to form a unique innovation of blockchain.

As a new thing that has never existed before, it will bring two major changes to the future:

  • The first is to change the operating rules of the economy and society, especially the rules of competition;
  • The second is to change the interaction mechanism between the market, the country and the enterprise.

How to change it? Professor Zhu believes that the blockchain will have a significant impact in two aspects, which are actually the road to industrial development. On the one hand, all these characteristics of blockchain integration, whether it is science, technology, law, economy, values, etc., ultimately need to be implemented through products or services to achieve the transformation and upgrading of existing industries. For example, using the technical features of the blockchain such as “anti-tampering, anti-lost, and traceability” to transform the traditional supply chain, realize all data on the upper, middle and lower links of the entire supply chain, form a “distributed shared ledger”, and realize anti-counterfeiting and traceability the goal of. On the other hand, create new industries. For example, Metaverse, an artificial space that runs parallel to the real world, has a strong sense of immersion and participation that narrows the distance between virtual and reality. There is a trend that draws people from real life into virtual space, which is considered the Internet The “ultimate form.”

Technology and application will eventually be implemented through industrial development to promote the ecological development and innovation of the industrial chain, and continue to improve and mature, expand the scale, complete industrial upgrading and industrial innovation, form an industrial cluster effect, mass-produce digital products, provide digital services, and people’s lives Food, clothing, housing, transportation, and social and economic activities in China present a “digital” normal. The integration of the two industries of “established industries” and “innovative industries” will enable the integration of “digital economy” and “digital economy” to welcome the arrival of the digital economy era.

Professor Zhu believes that the role of blockchain is far beyond people’s imagination. Like many things that have a role in history, they do not depend on people’s understanding, they have their own vitality.

Blockchain as a kind of “distributed ledger”, “distributed ledger” as a kind of “economic system”, this internal “ontology” has its inherent “vitality”, through its “intermediary” three-tier structure ” Phase”, deduces different “uses” at the top level, which has also become the “source of power” for the extended development of the industrial blockchain from bottom to top.

When human vitality and blockchain vitality merge together, we will create a better future!

 

Written at the end of the article

After we released “Industrial Blockchain: The Future Has Come”, we discovered some piracy without any permission, such as Tencent’s “Xunjie Blockchain”. BML is very happy to see the recognition of our articles by many users, but here we appeal to respect the copyright of the original work and return a piece of pure land online.

At the same time, everyone is welcome to reprint our article, contact Wr10290137 for reprinting, and reprint the whitelist for remarks.

Remarks: The content of the full text only represents the views of the author of this number, and is not used as the basis for any investment decision. Thank you for your correction. The citations involved in the article are listed in the references. If there is any omission, please contact this number, and we will adjust and modify it in time.

references:

[1] [12] [13] Zhang Jian, “Blockchain Defines the New Pattern of Future Finance and Economy”, first edition P24, P41-43, March 2018

[2] [4] [5] [9] [11] Wang Wei, “Trust Revolution-The Rise of Bitcoin and Decentralized Digital Currency”, first edition, June 2020, P35, P37, P63, P66- 67

[3] Satoshi Nakamoto, “Bitcoin White Paper: A Peer-to-Peer Electronic Cash System”, 2008, https://bitcoin.org/bitcoin.pdf

[6] “Dharma Hui of Master Sui Xu” “Part III”, Zhan Shan Temple, Hong Kong, October 1999, p. 256

[7] Journal of “Buddhism Studies” of Shandong University, 2006; author Chen Jian, “Not “physical use”, but “physical use”-Rethinking the theory of “physical use” in Chinese Buddhism”

[8] Author Zhang Xuzhong, editor in charge: Li Hao, “Science China-Science Principles” http://www.xinhuanet.com/science/2018-05/15/c_137179618.htm

[10] The People’s Bank of China “Financial Distributed Ledger Technology Security Specification”, JR/T 0184-2020

[14] Melanie Swan (United States), “Blockchain New Economy Blueprint and Guide”, first edition, January 2016 P45

[15] He Hao, “The Beauty of Blockchain Architecture-Blockchain Architecture Design from Bitcoin, Ethereum, and Hyperledger”, 1st edition, June 2021, P3

[16] [17] Baidu Encyclopedia:

https://baike.baidu.com/item/DAO/55746378?fr=aladdin

[18] [19] Zhao Dawei, “Distributed Commerce-Blockchain and Digital Economy Open up a New Era of Large-scale Group Collaboration”, September 2020, 1st edition, P70, P15-16

[20] Zhu Jiaming, “The Future Determines Now”, 1st edition, August 2020, P31-33

 

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