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Blockchain technology now, just like the Internet in 1993
Blockchain technology now, just like the Internet in 1993

Blockchain technology now, just like the Internet in 1993

Editor’s Note: 2017 is a “life and death” year for blockchain technology, and a year when some blockchain solutions are moving from concept to practice. Rachel Botsman believes that blockchain technology is now like Internet technology in 1993, and even if most people don’t understand it today, in ten years it will be completely unimaginable how society would function without it. In addition to all the convenience that blockchain promises to bring, it will also redefine trust because it requires significantly lower trust costs.

blockchain can help reduce the delay in the entire lifecycle of a transaction from days to minutes, or even eliminate it altogether. According to a report by Santander InnoVentures, a Spanish bank fintech investment fund, ledger technology could save banks $15-20 billion annually by 2022 through reduced regulation and lower settlement and cross-border costs.

Digital Asset Holdings wants to be the distributed database that handles these fast transactions, and the largest financial institutions, including Goldman Sachs, Citibank and JPMorgan Chase, have invested more than $60 million in DAH. Speed and efficiency aren’t the only reasons distributed ledgers have become attractive to banks, Masters says: “Blockchain-based transactions enable greater transparency and traceability – an ‘immutable audit trail’ that regulators will love. agencies like.” In other words, it could help eliminate the kind of fraud that is used to cook the books. It’s especially ironic that these words come from a man who was investigated for months by the Federal Energy Regulatory Commission for manipulating the California and Midwest electricity markets. Of course, Masters was not accused of any wrongdoing, and the investigations were not personal. JPMorgan Chase also ended up settling the case for $410 million, without admitting or denying this wrongdoing.

On Wall Street, the curtain has been raised on the competition. Where does the average person keep their money? Is it in a current account at a bank, a regular savings account or a safety deposit box? Blockchain could become a new repository of value. What is the process of a standard loan? Usually a bank evaluates the credit score of an individual or business to decide whether to lend. And blockchain could be a channel to check the creditworthiness of any potential borrower, thus facilitating more and more peer-to-peer financing. What is the process for traditional credit cards and money transfer services? They currently circulate through banks, but blockchain can handle such transactions directly from person to person.

is aware that the traditional accounting industry, dominated by the “Big Four” audit firms of Deloitte, KPMG, Ernst & Young and PwC, is worth billions of dollars. Digital distributed ledgers can report corporate financial transactions in real-time and transparently, reducing the need for traditional accounting operations. That’s why most of the major players in the financial industry are busy investing significant resources in blockchain solutions. They must be proactive in embracing this new approach to ensure it is to their benefit and not to their detriment.

San Francisco-based company Chain is said to have secured $30 million in funding from major firms such as Nasdaq, Visa and Citi Ventures to develop open source code for distributed ledgers. IBM, Wells Fargo, the London Stock Exchange and others like them have begun partnered with Digital Asset Holdings to develop open source blockchain software. The open source project, initially called Open Ledger and later renamed Hyperledger, was launched by the Linux Foundation and includes a dozen different interests, including ABN AMRO Bank and Accenture, with the goal of working together to advance open source projects for blockchain digital technology and transaction validation.

Goldman Sachs recently filed a patent application for its own cryptocurrency, its own version of Bitcoin, SETLcoin, which is used to process foreign exchange transactions. This cryptocurrency is intended to operate on the bank’s own private blockchain, which means that the replicated transaction book remains within the bank’s walls. This seems contrary to the purpose of the technology, which is to create an unquestionable version of the truth that is freely available to all and completely eliminates the need for banks. In the patent application, Goldman Sachs describes SETLcoin as promising to guarantee “instant execution and settlement” of transactions. This means that all the funds that banks need to keep against transaction risk will be freed up.

New York-based blockchain startup R3CEV has launched a blockchain consortium known as R3, which has so far attracted more than 40 banks to work together to create a unified standard for blockchains. R3CEV hopes to bring all banks and regulators together so they can share one ledger, one that is not controlled by any one person or organization, but by many participants at onceIt’s worth noting that R3CEV has hired a man named Mike Hearn, a former engineer at Google and a great figure in the blockchain world, as its chief platform officer. Notably, R3CEV has hired a man named Mike Hearn, a former engineer at Google and a great figure in the blockchain world, to be its Chief Platform Officer. He spent over five years working with fellow Bitcoin Core developer Gavin Andresen, one of the original developer teams that maintained the source code work running the Bitcoin peer-to-peer network.

In January 2016, Hearn publicly denied the future of Bitcoin and said it was inherently doomed to failure. He said, “Bitcoin failed because the community failed. What was supposed to be a new, decentralized form of currency …… has turned into a much worse form: a system controlled entirely by a few. The mechanisms that should have been used to prevent this outcome have collapsed, so there is little reason to think that Bitcoin can actually be better than the existing financial system.” Just days after he made these comments, Hearn joined the R3 coalition. He defended his move by saying, “The current Bitcoin system, and by that I mean the blockchain system that we use today, is not going to change the world because of the 1mb limit (the upper limit of Bitcoin blocks) that exists. So if the choice is between helping the existing financial system build something better than the current bitcoin-like one, and helping the bitcoin community build something worse than the current banking-like one, then I’d rather go where the users are and work with the banks.”

Whether it’s Vitalik Buterin, the founder of Ether, or Hearn, it looks like everyone, no matter how different their motivations, is scrambling to create something like the Satoshi Nakamoto blockchain, and to do it better. For many, it’s the single biggest game in town right now.

blockchain also raises a key question: how much should we pay for the trust issue? Over the past year, I’ve paid my bank interest and some hidden fees to verify accounts and balances so I could pay strangers. I spent thousands of dollars on lawyers to draw up contracts because I wasn’t quite sure how other people would behave in one way or another (it is possible to settle some incidents where trust is broken). I pay insurance companies to monitor risks about my health, my car, my home and even my life. I pay my accountant to coordinate audits and I pay tens of thousands of dollars to real estate agents. So it seems that we really do pay a lot to be in control of our lives and to double check the transactions. All of these “trusted intermediaries” are part of the trust in the world’s institutions and are now being deeply questioned.

Many of the ideas about blockchain sound ambitious, adventurous and radical. Many of these ideas have been hyped up and overfunded, but will likely end in failure. One thing there is no doubt about is that as the cost of trust required for this new technology falls dramatically, the third parties who currently pay into it to ensure our trust (whether agents, attesters or custodians) will increasingly need to prove where their value lies if they don’t want to be replaced by a ledger.

In 1993, a group of people, including Al Gore, were touting to the world the coming “information superhighway” that would change the world. At the time, the Internet was a novel concept that few people really understood and people didn’t know how to take advantage of this new thing. John Allen, an early proponent of the Web, tried to explain to viewers how to use it when he appeared on a CBC television show: “In this world, there’s a table with a big sign on it that says ‘soccer,’ and there’s 150 or 1,000 athletes around the world who want to participate in this meeting and talk about soccer. 150 or 1,000 athletes.” At the time, Mark Zuckerberg was only nine years old, Google was only three years old and it was still unclear whether the Internet and its other products and companies that would potentially commercialize it in the future would emerge. And blockchain technology is now just like the Internet was in 1993. While most people probably don’t know what blockchain technology is, decades or so from now, it will be like the Internet is now: we can’t imagine how society would function without it. The Internet has changed the way we share information and connect with each other; blockchain will change how we exchange value and who we trust.

Translated by aiko, produced by the 36 Krypton Compilation Group. Edited by Pengcheng Hao

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