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The use of blockchain is not many

Time : 19/12/2021 Author : ij3sbg Click : + -
        There is a saying among people who are keen on cryptocurrency that "the real innovation is not bitcoin, but blockchain". Blockchain is becoming more and more popular. Sometimes, people no longer use blockchain as "blockchain technology", but start to call it "Web3". This implies that blockchain is so widely used that it will replace the existing web. However, blockchain is not a general technology: it only applies to a very limited number of specific use cases. Decentralized currency is the first use case of blockchain, but it is not one of many use cases, but one of a few. It is best to regard the blockchain as a database.
 
        Storing data is their main characteristic & mdash& mdash; The "encrypted" bit is actually secondary. Encryption only changes the shared database from a centralized system to a distributed system. For a long time, the experience of system management tells us that if we can, we should not turn anything into distributed. In my opinion, that makes sense. Old ("web2"?) After all, there are many praiseworthy aspects of non distributed databases. First, they are faster. In popular SQL databases, transactions are on the millisecond scale. For example, it is much faster than Ethereum, and most of the transactions cannot be considered "confirmed" until about 5 minutes later.
 
        Bitcoin takes up to one hour. Although the hardware speed is accelerated, the speed of SQL database will continue to improve & mdash& mdash; However, as the transaction volume increases, the blockchain will only be slower. The running cost of centralized database is also lower & mdash& mdash; With a 400gb database as large as the bitcoin blockchain, on a traditional server, the monthly operating cost is less than £ 100, and the annual power consumption is about 3000 kwh. As a blockchain, it is estimated to consume 91 billion kwh per year. If the energy efficiency of all things can be improved hundreds of millions of times, then mankind need not be so eager to explore space.
 
        Centralized databases can handle much larger datasets. In terms of SQL database, 400gb is a very small database & mdash& mdash; So small that people began to shout "your data is suitable for memory!". However, the 400gb bitcoin blockchain is the source of real pain for all its users, Because to become a "full node" "Yes, all users need to save a copy locally. From this standard, we can see why the first use case of the blockchain is decentralized currency. Bitcoin needs to track what money belongs to who, so it is absolutely necessary to share the database. If bitcoin is not decentralized, it is not convincing for anyone to host the database. They can send themselves a lot of money, while others can only Enjoy inflation.
 
        Finally, bitcoin does not need other functions. It only needs to record what money belongs to who. International bank transfer is quite painful and frustrating. Maybe blockchain can do better. Instead of negotiating with HSBC to remit hundreds of pounds to your grandmother in your hometown, you can remit some bitcoins. The transaction cost of bitcoin is usually 1% to 2%, which is lower than that of HSBC. Moreover, bitcoin does not require you to upload so many scanned copies of identity documents. However, the financial transfer does not meet the first criterion: it does not specifically require a shared database. In the 1100s, the Templars conducted international account transfers throughout Europe and the Levant region.
 
        Customers of the Templars can carry a special piece of paper, for example, from Paris to Antioch, and withdraw his money from the Antioch branch. The order will deduct the transfer balance and transfer the much smaller amount. Since people have been making international transfers for more than 1000 years, why is this business so complicated? This is mainly because KYC / AML, the compliance process used by the global financial system to ensure that you do not transfer funds to individuals, criminals, etc. subject to economic sanctions. The bank will not remit the money to any place at will. They should first check whether the money has the risk of falling into the wrong hands. This can take a long time and often requires the exchange of many complex files.
 
        Any financial transfer system based on blockchain is becoming more and more popular. They will be forced by the government to realize KYC / AML, and then start similar business to traditional international transfer, but with higher fees and smaller economic scale. Many bitcoin brokerage companies have long required authentication of account owners. Some start asking you to provide details of the payee. There is another problem in transferring bitcoin to grandma. After receiving it, she needs to find out how to convert it into local currency, and usually needs to pay 1% to 2% of the fee. Even if she does not do so, compared with using ordinary foreign exchange brokers (much lower than the bank or blockchain fees), the cost of using bitcoin is much higher and more complicated.
 
        Another hypothetical use of blockchain is to replace traditional securities and stocks. Instead of all existing mechanisms related to stocks, the company's stocks are recorded and traded through the blockchain, usually by third parties such as Ethereum. Blockchain stocks do not meet the second standard: there is no trusted party hosting database. The fact is that if you want to own shares in a company, you obviously need to trust them & mdash& mdash; So you should also trust the database hosted by them. For example, you need to believe that the financial statements they publish are accurate. You also need to believe that they will try to bring you a return on your investment. Traditional companies have their own register of shareholders (they just outsource transactions), which rarely becomes a problem, very rare.
 
        Similarly, the transaction cost of 1% to 2% of the blockchain is much higher than that of ordinary stock transactions. Now, some American brokers allow you to buy and sell stocks without any charge. Another suggested use of blockchain is to replace ordinary contracts with "smart contracts". The main idea is to compile the contract into a small program, deploy and store (permanently) on the blockchain. These programs will be executed according to the commands of specific blockchain transactions. Some contracts can be written in pure mathematical form & mdash& mdash; Muddy equation (or "pure function", if you like) & mdash& mdash; But there are not many such contracts.
 
        Most real-world contracts are based on real-world facts. If your contract is to pay 1000 pounds for a batch of rare metal records from the mid-1980s, you need to know whether these precious goods have arrived. The blockchain cannot know this, so they are entrusted to the "oracle". Oracle is a traditional program that runs outside the blockchain, but regularly publishes real-world information to the blockchain. The problem is trust. The Oracle will make the smart blockchain become a meaningless appendage of itself, while it itself becomes more important (more subjective): explain the world and draw conclusions.
 
        As long as the Oracle is used, it can control the facts that the program can understand, and thus control a large part of the system. In this way, you can take it as the central part and completely remove the blockchain. So far, you have found a trusted third party. It is puzzling that in the documents of Ethereum, the motive of introducing the Oracle is to tell the cryptocurrency gambling market who won the US presidential election. Never mind "Web3": This is a real-world problem. The third criterion is that there is absolutely no need for anything other than blockchain. In other words, the blockchain database itself can provide complete solutions to the problems to be solved, which is rare.
 
        There are very few problems that can be solved by moving data alone. Decentralized currency is of course one & mdash& mdash; But it's hard to think of many other scenarios. At present, decentralized currencies such as bitcoin and Ethereum are undoubtedly the most popular blockchain use cases. But how popular are they? Many people are investing in these cryptocurrencies, but not many people actually use them as currencies. I know many people who hold bitcoin, but only one person has paid with it: an elderly relative, who did it largely because of carelessness. Outside the "Web3" fan club, people have basically understood what is investment and what is adoption.
 
        When people buy bitcoin with conventional currency to raise its price, this is investment. When people use bitcoin to buy things, it is adoption. There is a lot of investment at present, but not many people adopt it. This is puzzling, because now seems to be a good time for a decentralized, inflation free currency. Inflation rates are high all over the world, and some areas have lost control. However, it seems that not many people suffering from inflation have turned to bitcoin. It is also surprising that in the past six months, the number and scale of effective economic sanctions have increased greatly. In this case, the adoption rate of alternative financial systems exempt from KYC / AML constraints should at least increase?.
 
        If you have different ideas about this article, please send me an email. If you like this article, you may also like other things I wrote. Chuanmei was blackmailed for tens of millions of dollars and hired security experts overnight; Softbank mortgaged half of Ali's shares. Sun Zhengyi said: "I am ashamed of my greed for profits in the past"; Google data center explosion Q information return to Sohu, see more.
 
        
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