The most recent buzzword is undoubtedly "blockchain." Whether you're having a meal or sitting at a table, everyone seems to be talking about it. However, despite the widespread curiosity, many people are still in the early stages of understanding, often jumping on the bandwagon without truly grasping its essence.
Recently, I've been diving deeper into blockchain research and have had conversations with some industry insiders. Based on my limited understanding, I'd like to share this information with you. If you come across any misleading claims, I’d be grateful if you could point them out.
1. An Unexpected Revolution
Starting in 2018, blockchain quickly became a hot topic, sparking excitement and confusion. It was seen as the new "window" to the future, accompanied by bold predictions. One such statement claimed, “In twenty years, people will talk about Bitcoin as they do about the Internet today, and 100% of transactions will be done on the blockchain.†These optimistic forecasts spread rapidly, creating an unexpected frenzy.
Some even called blockchain the “ninth wonder of the world.†No other technology has promised such transformative potential for society. The capital market couldn’t resist the hype. In the U.S., companies like Kodak saw their stock prices surge by over 245% after announcing blockchain initiatives. Similarly, companies like Thunder, Ninth City, and Renren.com experienced massive gains.
In Hong Kong, there was even a bizarre case where a company named “Pingshan Tea†rebranded itself as a “blockchain group,†leading to a 23% increase in its stock price. While the enthusiasm was justified, it wasn't entirely baseless. According to McKinsey’s blockchain roadmap, 2017–2020 marked the shaping phase of blockchain infrastructure. Major banks and tech companies were accelerating their investments.
The core of the blockchain economy isn’t just about technology—it’s about rethinking business models. This is not just a technological shift but also a cognitive one.
2. Blockchain Isn’t New
The concept of blockchain dates back to late 2008 when a mysterious figure known as Satoshi Nakamoto published a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.†This was the first time the idea of blockchain was introduced. On January 3, 2009, the first block of the blockchain—called the “Genesis Blockâ€â€”was created.
Bitcoin was the first application to leverage blockchain technology. As Bitcoin gained popularity, especially in 2017, it brought blockchain into the mainstream spotlight.
3. The Essence of Blockchain: Everyone Is a Database
At its core, a blockchain is a distributed public ledger that connects blocks into a single chain. It can be described as a system where a group of computers securely maintains a shared record, with each computer acting as a database (server) without needing a third-party server.
Therefore, blockchain isn’t a specific software. Like the concept of a database, it's a design idea behind a particular technology. Just as most people don’t need to understand TCP/IP to use the internet, ordinary users don’t need to know how blockchain works unless they’re directly involved in it.
4. Three Key Features of Blockchain
Compared to traditional centralized systems, blockchain has three main characteristics:
Decentralization: In a blockchain network, all nodes have equal rights and responsibilities. Each node can vote based on computing power, ensuring that decisions reflect the majority. Even if the system is attacked, as long as the attacker controls less than half the nodes, the system remains secure.
Trust Building: Blockchain allows people to collaborate without mutual trust or a central authority. It could potentially eliminate the need for intermediaries like WeChat Pay or Alipay.
Cost Reduction: Unlike centralized systems that require expensive maintenance, blockchain networks allow anyone to participate. Nodes verify and record data, improving efficiency and reducing costs.
In short, blockchain touches on money, trust, and power—three pillars of human civilization.
5. Its Development Has Gone Through Three Stages
1. The Brewing Period (2009–2012): Dominated by Bitcoin and its ecosystem.
2. The Emerging Period (2012–2015): Blockchain entered public view through Bitcoin, with new payment companies emerging and financial applications expanding.
3. The Development Period (2016–Present): Blockchain began exploring industry applications, leading to the rise of ICOs and increased attention in 2017.
6. The “Blockchain 2.0 Era†Is Coming
Blockchain applications are moving beyond Bitcoin (Blockchain 1.0) into more complex areas:
Blockchain 1.0: Programmable Currency – Digital currencies like Bitcoin, not backed by any government or institution.
Blockchain 2.0: Programmable Finance – Introduces smart contracts, allowing blockchain to handle equity, property, and financial contracts.
Blockchain 3.0: Programmable Society – Expanding into identity verification, voting, logistics, and more, making blockchain a foundational protocol for the “Internet of Everything.â€
Currently, we are transitioning from the 1.0 era into 2.0, with blockchain entering the financial sector. In the next few years, it may expand into social and legal fields.
7. Disadvantages of Blockchain
Despite its promise, blockchain has several drawbacks:
Low Efficiency: Transactions take time to confirm, with Bitcoin taking around 10 minutes per transaction. Central Bank Governor Zhou Xiaochuan noted that blockchain currently consumes too much computing and storage power.
High Energy Consumption: Mining requires energy-intensive calculations. By 2020, Bitcoin’s energy consumption could match global electricity usage.
Privacy Issues: All transactions are transparent, making it difficult to protect sensitive data.
Regulatory Challenges: Decentralization weakens state control, which could lead to misuse in illegal activities.
8. Five “Big Pits†in Blockchain Investment
Investing in blockchain can be risky. Here are five common pitfalls:
1. ICO Scams: Many projects focus on marketing rather than real value. Investors should carefully evaluate projects before investing.
2. Buying the Wrong Coins: Many investors buy coins based on trends, not fundamentals. Focus on projects with real-world applications.
3. Falling for Fake Exchanges: Some exchanges are unreliable or fraudulent. Stick to reputable platforms.
4. Following “Gurusâ€: Don’t blindly follow others’ advice. Educate yourself and make informed decisions.
5. Letting Emotions Drive Decisions: Fear and greed can lead to poor choices. Stay rational and avoid impulsive trades.
9. Conclusion
Finally, it’s important to clarify a few things. First, blockchain is still in its early stages. There are many limitations, and the challenges outweigh the benefits for now.
Second, maintain a balanced perspective. Avoid overly optimistic or pessimistic views. Use words like “may†or “hypothesis†when discussing the future.
Overall, blockchain is still in its infancy. It needs time to mature. Technology is neutral, but its impact depends on how humans choose to use it. The future of blockchain and digital currency will depend on the values and civilization of those who control it.
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