Editor's Note: This article comes from36 kryptonEditor's Note: This article comes from
, Author: Kevin Werbach, Editor: Hao Pengcheng, published with permission.pointed outEncrypted digital currency and blockchain led by Bitcoin are one of the most hyped technologies in the past 1 or 2 years, and there are rumors that these technologies can change everything. But there are also more and more voices questioning that these are deceitful, useless and dangerous things. Kevin Werbach, professor at Wharton School of Business and author of "Blockchain and New Trust Structures"
pointed out
, when discussing things in this area, you must first realize that there are three phenomena, and these three phenomena are related to the three Ts: encrypted digital currency is related to trust-minimizing (Trust-Minimizing); blockchain and Tracking is related; encrypted assets are related to trading. We're talking about two major innovations and a promising idea that's still far from a technological revolution.
It’s hard these days not to hear statements about how cryptocurrencies and blockchain technology can change everything (or at least create a lot of wealth). But labeling these things massive scams, useless, and dangerous is just as loud. A surprisingly large audience still doesn't understand what happened. A big reason for this confusion is that we're not talking about the same thing.
In fact, there is more than one blockchain phenomenon that everyone agrees with or against. Instead there are three.
The three communities share the same set of design principles and technical foundations—but their people, goals, and vision are almost entirely different. Just constantly receiving bits and pieces about which is the "real" movement doesn't really help much. So, I want to clarify something here.
One is cryptocurrencies: the idea is that networks can transfer value securely without a central point of control.
One is the blockchain: the idea is that the network can reach consensus on information across trust boundaries.
The first is a truly revolutionary concept...but the final verdict on whether the revolution will succeed is yet to be revealed. The second and third are game-changing innovations that are on their way to mass adoption... nonetheless, evolutionary in nature.
For the convenience of memory, it can be regarded as 3 "T": trust minimization (Trust-minimizing), tracking (Tracking) and trading (Trading).
first level title
"Trust Minimization" - Encrypted Digital Currency
Encrypted digital currency is probably the one you hear the most, the earliest and most famous of which is Bitcoin. The easiest way to understand Bitcoin is not to brood over the details of mining or the digital currency. Instead, the focus is on the decentralization of trust.
Many activities require trust. A $20 bill is just a piece of green paper, a ballot in an election is a meaningless ritual, and someone who puts me in the car is a potentially dangerous stranger. Traditionally, trust has meant relying on partners, institutions or intermediaries. Those centralized trust structures are powerful, and they, among other things, brought us modern civilization. But trust has a downside. Trust implies vulnerability. For any number of reasons, the people, governments, and companies we trust may indeed not be trustworthy. Bitcoin demonstrates that a thing of value - money - can be trusted (especially in transaction verification) without trusting anyone.
Cryptocurrencies promise to reap the benefits of trust without the drawbacks of trust.
Its ideas, if fully realized (which is a big question mark), have the potential to transform society. We'll have transparent corporations that truly reflect the wishes of shareholders, governments that truly reflect the will of citizens, an internet free from corrupt and powerful gatekeepers extracting value, an end to fake news, and mass automation designed to improve everyday human life. Or at least, we can find solutions that significantly improve the status quo. The value of decentralization can be reflected in various aspects.
There is one more thing to note. What works for small groups, limited applications, and idiosyncratic users may not work for the mainstream. And if it does go mainstream, it tends to become something else entirely. Until Facebook came out, we didn't know anyone could make real money from social networking, because it was just a boring pastime for kids. Facebook can go all the way does not mean that this is inevitable.
Some bets on the cryptocurrency revolution may prove to be right. It's an exciting bet, with all kinds of potential upside, but it's still a gamble. There's a reason true revolutions don't happen very often. And when it does, there is often serious collateral damage.
first level title
"Tracking" - Blockchain
The blockchain phenomenon has the same roots as cryptocurrencies — the 200-year-old Bitcoin white paper and its predecessors — but it seeks something very different. The blockchain is not trying to do it on the basis of no trust, but based on the premise that our trust is too limited. We really only trust ourselves, or our own organizations. But no person or company is an island. Even for that matter, the government of an island is not an island as long as it needs to trade and interact by water.
The world is full of processes, especially in large companies and governments, where the flow of things from one trust zone to another trust zone must be tracked. Organizations around the world spend $10 trillion a year on "logistics" (putting things onto transportation systems controlled by others). Manufacturers, distributors, and retailers all keep their own trusted (yet independent) records of the same items as they move through the supply chain. When you walk into a new hospital or clinic, your medical records don't necessarily come with you. Even less likely to bring it out along with your newly generated medical records. All these disruptions to the flow of information are feeding that monstrous dragon called transaction costs. According to mainstream economics schools, the effort to kill the dragon is an essential driver of the economy.
A significant portion of transaction costs between (and sometimes within) institutions is a result of limited trust elasticity. If all participants in a transaction trust the information involved, even if the two parties do not trust each other, the cost will drop dramatically and the performance will improve drastically. This is the essence of the blockchain vision.
Trusting your own records on the blockchain is equivalent to trusting someone else's records, because those records are the same. A copy of the settlement, a copy of the next reconciliation, and a copy of the next audit, and a copy of the regulatory statement, these can be merged into the original transaction. The world's best-known companies are participating in various blockchain pilots and alliances because they all see the huge potential in it. Decentralization is one of the design goals, but not a basic requirement like cryptocurrencies. So these systems are usually "permissioned", with basic functionality limited to identified participants.
Like cryptocurrencies, there are parts of the story that remain questionable. However, since blockchain theory does not assume any radical market or business model changes, this is only a matter of degree. Cryptocurrency advocates nitpick that any of these things don't require a blockchain. Well, but you don’t have to use a blockchain to create a digital currency. Bitcoin has a purpose only if you want to add conditions where banks can't access it, governments can't block transactions, and nobody can influence the money supply. Similarly, blockchain theory is also oriented to a specific type of scenario. Traditional database solutions fail to solve these problems because the people and companies involved disagree in practice, not because they fail in theory.
first level title
"Transactions" - Cryptoassets
Cryptoassets turn cryptocurrency tokens into instruments of exchange, which in turn evolve into more complex financial instruments through the threads they spawn. The potential size is so large that even a trillion-dollar market is not uncommon. This one departs from the first in that it sees cryptocurrencies not as a means of facilitating activities that do not require centralized trust, but as a new type of investment asset class. Because cryptoassets are inherently digital, transactions could theoretically be more efficient than existing tools. Cryptoassets are inherently flexible and global. Almost every mainstream Wall Street player is eager to get in on the action, as are the institutional investors who provide the capital. Regulatory concerns over its exclusion are also gradually being addressed.
Encrypted assets are encrypted digital currencies, but remove all revolutionary attributives
Once the fundamental value of a digital token on a decentralized network is established, why can't it be used to make money? (“Participate in the formation of socially optimal capital”) Cryptoassets depend on the fact that cryptocurrencies exist because there needs to be something of value to trade. Safety must be ensured. But cryptoassets ignore or reject the idea that cryptocurrencies consider trust "almost obscene." (This sentence comes from the person who originally conducted a security audit on Bitcoin). For crypto asset traders, both trust and lack of trust are just means to the end of liquidity.
Another way to think about this is that cryptoassets separate the transactional and utility functions of cryptocurrencies. If you want to use Bitcoin to pay merchants, use Ethereum's ether to buy computing power for distributed applications, use Filecoin to buy cloud storage, or use Augur Rep to verify the results of prediction markets, you are based on what you get from the application. assign value to them. In theory, greater demand for app usage means less supply, which drives prices up. But in reality, none of these applications have significant adoption, so the value of the token is highly speculative. Of course, this is not necessarily a bad thing, but risk appetite is driving financial markets. But sometimes that kind of speculation can push the market over a cliff. The key question for crypto assets is whether and how the speculative instinct will be mobilized.
If a market for cryptoassets were to take shape, the "tokenization" of entities such as commodities and real estate, digital things such as intellectual property, and other types of rights would have a variety of benefits by leveraging the financial engineering and analytical tools that Wall Street has developed over the years. possibility. The necessary foundation has already been established.
first level title
don't cross the line
Determining who is the "real" phenomenon can be an interesting parlor game, but ultimately not enlightening. Any judgments about success or failure of blockchain-related technologies need to be made in the relevant subcategories. When observers point to the high prices of corporate adoption and crypto asset transactions as evidence of the viability of cryptocurrencies, it is crossing the line. The existence of massive fraud and theft in the ICO world does not mean that government action on distributed ledgers has changed. Whether or not getting banks to use blockchain (or something like it) is a good business says little about the prospects for decentralized automated organizations.
Original link:https://medium.com/s/story/blockchain-isnt-a-revolution-it-s-two-big-innovations-and-one-promising-idea-988fca6b0fca
