How to understand blockchain easily?

Blockchain is a technology that solves the core problem of "trust" in a market economy, reducing the cost of trust between strangers to a very low level.

There is one thing that is crucial in a market economy, and that is trust. Without trust, no transaction is possible. You go to the market to buy vegetables, if you do not believe that the pesticide content of the vegetables in the standard, you will not deal with the lei; you go to a small store to buy a bottle of water, if the clerk does not believe that you give the real money, will not sell water to you.

The traditional small-farm economy is an economy of acquaintance, where the scale of transactions is limited to those who are more familiar with each other in the vicinity of where they live, because if an acquaintance cheats you, he loses you as a social relation and spoils his reputation in the whole circle of acquaintances. We believe that acquaintances are less likely to cheat us than strangers.

So, once we go beyond acquaintances, we need to use high cost to recognize whether a stranger will cheat me or not, and how can I avoid the risk of being cheated. This situation prevents transactions and limits them.

Additionally, this trust issue naturally exists across different races, ethnicities, cultures, religious beliefs, and so on.

So how is it that we are now in a market economy that allows for so many transactions between strangers? Because of the birth of new mechanisms that solve the problem of trust between strangers.

By far the most important mechanism for solving the trust problem is the "trust intermediary" institution and model.

As long as you and a stranger trust a third-party organization, you can use this third-party organization to solve the trust problem between you.

This third-party organization, we call it a trust intermediary. The government and banks are trust intermediaries.

Your hard-earned goods are sold to a stranger in exchange for a stack of RMB notes, and you feel fine with that because the credit of the bank that issued the notes, the authority of the government, guarantees the value and validity of the notes. Otherwise, sell something, in exchange for a few ordinary paper heads, who wants?

In the age of the global village, the age of the Internet, the person who buys you something may be a stranger who will not meet, thousands of miles away. Trust is even lower, so Alipay takes on the role of trust intermediary, the buyer first to pay for the goods to Alipay's account, wait until you receive the goods, to confirm that there is no problem, and then agree to the payment to the seller. Taobao and other e-commerce in just a dozen years quickly prospered.

Trust intermediaries in the trading system, in a central position, all transactions, through which to solve the trust problem.

But the cost of the trust intermediary itself, is often huge.

How much transaction tax does the government collect each year as a trust intermediary? Which is the most profitable industry? Financial services. Anthem, which owns Alipay, makes more than $10 billion in annual profits.

What does this mean? Both sides of the market's transactions actually pay an extremely large cost of trust.

If there is any way to eliminate or significantly reduce this cost of trust, then the general public's transaction costs can be reduced, and the profits earned can be significantly increased.

So in the age of the Internet, blockchain technology came on the scene.

It allows counterparties to get rid of intermediaries, solves the problem of trust between strangers, and dramatically reduces the cost of trust.

The concept of blockchain was first proposed in 2008 in Bitcoin founder, Satoshi Nakamoto's paper "Bitcoin: A Peer-to-Peer Electronic Cash System".

Blockchain can be understood as a kind of public *** bookkeeping technology program, its basic idea can be understood as follows: through the establishment of a public *** ledger on the Internet, by the network of all participating users *** the same in the ledger bookkeeping and accounting, everyone (computer) has a same ledger, the system will be automatically compared, it will be considered that the largest number of the same number of the ledger is the real ledger, and a small number of The books that are not the same number as others are false books.

In this case, it doesn't make sense for anyone to tamper with their ledger, unless you can tamper with most of the nodes inside the entire system. At the same time, all data is open and transparent, and does not require a central server as a trust intermediary. Therefore, blockchain technology can guarantee the authenticity and non-tamperability of information, or trustworthiness, at the technical level.

This paragraph is a bit raw, let's make an analogy, it is better to understand.

It's the equivalent of having everyone have a magic little book. When a transaction is made between any two people, the full information about the transaction is recorded in those two people's little book. At the same time, it is automatically copied to everyone's little book.

After the deal is in effect, you want to reverse it. I'm sorry, but you can't renege on this deal because of everyone's testimony. Even if you tamper with the records in your own little book, it's useless. It's impossible to change everyone's book because it's recorded in everyone's book.

Everyone else automatically notarizes your transaction, and no one can renege.

For the blockchain can be massively scalable, the data is open and transparent, the data is consistent for each client, even if some clients are destroyed, it does not affect the data security, these highly reliable technical characteristics, can solve the trust problem between strangers with low cost.

This technology can be extended to all areas that can be digitized, such as digital currency, payment clearing, digital bills, proof of rights and interests, credit collection, government services, medical records and so on.

In the medium and long term, blockchain will be a revolutionary technology that will bring about great social changes like the existing Internet, and is of great investment value and money-making opportunities.

In the future, those companies that can combine blockchain into different scenarios to promote applications may be the next group of BAT, the next Google, Microsoft and Apple.

And Bitcoin, as the first real-world application of blockchain technology, has been widely accepted and used all over the world, with millions of users and tens of thousands of merchants accepting Bitcoin as a digital currency for payment, and the exchange value as a currency is growing, and it has even become a safe-haven asset similar to gold, with skyrocketing prices due to the total amount being fixed and the long term value of the bullish **** knowledge.