Blockchain is a decentralized distributed ledger technology that ensures the security and immutability of data through cryptography and consensus mechanisms. Here are its core points:
1. Basic Concepts
- Digital Ledger: Blockchain consists of blocks linked in chronological order, with each block recording transactions or data, all nodes jointly maintaining the same ledger.
- Decentralization: No single central authority controls it; data is stored on nodes in a global network (e.g., the Bitcoin network has tens of thousands of nodes).
2. Core Technologies
- Hash Functions: Each block contains a unique hash value, like a fingerprint; any data change will result in a hash value change, ensuring data integrity.
- Consensus Mechanism: Nodes reach agreement through algorithms (e.g., Proof of Work PoW, Proof of Stake PoS) to prevent malicious tampering. Bitcoin mining is a typical application of PoW.
- Smart Contracts: Platforms like Ethereum support automatically executing code contracts, such as systems for automatically paying rent without third-party intervention.
3. Classification
- Public Chains: Completely open (e.g., Bitcoin, Ethereum), anyone can participate.
- Private Chains: Strict permission controls, suitable for internal ledgers within enterprises (e.g., Walmart's supply chain management).
- Consortium Chains: Co-built by multiple organizations, such as the R3 Corda banking consortium chain handling cross-border settlements.
4. Practical Applications
- Cross-border Payments: Traditional bank transfers take 3-5 days, while blockchain (e.g., Ripple) can achieve settlement in seconds, reducing costs by 70%.
- Food Traceability: IBM Food Trust records the entire process of agricultural products on the chain, reducing the recall time for problematic products from weeks to seconds.
- Digital Identity: Microsoft's ION project utilizes blockchain to manage decentralized identities, allowing users to control their personal information autonomously.
5. Current Challenges
- Performance Bottleneck: Bitcoin processes 7 transactions per second, while the Visa system has a practical throughput of up to 24,000 transactions per second.
- Energy Consumption: Bitcoin's annual electricity consumption is about 110 terawatt-hours, exceeding the total electricity consumption of the Netherlands.
- Legal Vacuum: 50% of countries worldwide have not yet established clear regulatory frameworks for digital assets.
6. Development Trends
- Cross-chain Technology: Polkadot and Cosmos enable interoperability between different blockchains, revealing the prototype of the value internet.
- Regulatory Technology: China has launched a blockchain service filing system, with over a thousand projects already filed.
- Web 3.0: Decentralized storage (Filecoin) and distributed computing (Golem) are building the next generation of internet infrastructure.
Blockchain, as a value transfer protocol, is reshaping the infrastructure of finance, supply chains, government affairs, and more. According to Gartner's prediction, by 2025, blockchain will create over $176 billion in business value for enterprises.