- Blockchain is a new application mode of computer technology such as distributed data storage, point-to-point transmission, consensus mechanism, and encryption algorithm. The so-called consensus mechanism is a mathematical algorithm for realizing trust and acquiring rights between different nodes in the blockchain system.
- Blockchain is an important concept of Bitcoin. It is essentially a decentralized database and serves as the underlying technology for Bitcoin. A blockchain is a string of data blocks generated using cryptographic methods. Each block contains information about a bitcoin network transaction for verifying the validity of its information (anti-counterfeiting) and generating the next block.
- In a narrow sense, a blockchain is a chained data structure in which data blocks are sequentially connected in a chronological order, and cryptographically guaranteed non-tamperable and unforgeable distributed ledgers.
- Broadly speaking, blockchain technology uses blockchain data structures to validate and store data, use distributed node consensus algorithms to generate and update data, and use cryptography to ensure data transmission and access security, using automated scripts. A new distributed infrastructure and computational approach to intelligent contracting of code to program and manipulate data.
- In general, a blockchain system consists of a data layer, a network layer, a consensus layer , an incentive layer, a contract layer, and an application layer. The data layer encapsulates the underlying data block and related data encryption and time stamping basic data and basic algorithms; the network layer includes a distributed networking mechanism, a data propagation mechanism, and a data verification mechanism; the consensus layer mainly encapsulates the network node. Various types of consensus algorithms; the incentive layer integrates economic factors into the blockchain technology system, mainly including the issuance mechanism and distribution mechanism of economic incentives; the contract layer mainly encapsulates various scripts, algorithms and smart contracts, and is a blockchain. The basis of the programmable features; the application layer encapsulates various application scenarios and cases of the blockchain. In this model, time-stamp-based chain block structure, distributed node consensus mechanism, consensus-based economic incentives, and flexible programmable smart contracts are the most representative innovations of blockchain technology.
- Blockchain – The original blockchain, a decentralized database that contains a list of blocks, with continuously growing and neatly organized records. Each block contains a timestamp and a link to the previous block: the design blockchain makes the data untamperable—once recorded, the data in one block is irreversible.
- Blockchain design is a protection measure, such as (applied) to a highly fault-tolerant distributed computing system. Blockchain makes hybrid consistency possible. This makes the blockchain suitable for recording events, headlines, medical records, and other activities that require data collection, identity management, transaction process management, and provenance management. Blockchain has enormous potential for financial disintermediation and has a huge impact on guiding global trade.
- In 2008, the concept of blockchain was first proposed by Nakamoto Satoshi . In the following years, it became a core component of electronic currency bitcoin: as a public account book for all transactions. The blockchain database can be managed autonomously by leveraging a peer-to-peer network and a distributed timestamp server. The blockchain invented for Bitcoin made it the first digital currency to solve the problem of repeated consumption. Bitcoin design has become a source of inspiration for other applications.
- In 1991, Stuart Haber and W. Scott Stornetta first proposed cryptographic protection chain products for blocks, which were subsequently published by Ross J. Anderson and Bruce Schneier & John Kelsey in 1996 and 1998, respectively. At the same time, Nick Szabo conducted a research on the mechanism of electronic money decentralization in 1998, which he called Bit Gold. In 2000, Stefan Konst published a unified theory of encryption protection chains and proposed a set of implementation plans.
- The blockchain format was first applied to Bitcoin as a solution to make the database secure without requiring administrative authority. In October 2008, in the original paper of Nakamoto, the words “block” and “chain” were used separately, and when they were widely used, they were collectively called block-chain, until 2016. Only became a word: "blockchain." In August 2014, Bitcoin's blockchain file size reached 20 gigabytes.
- By 2014, Blockchain 2.0 became a term for decentralized blockchain databases. For this second-generation programmable blockchain, economists believe that its achievement is "it is a programming language that allows users to write more sophisticated and intelligent protocols, so when profits reach a certain level, It is possible to earn revenue from the completed shipping order or the dividends of the shared certificate." Blockchain 2.0 technology skipped transactions and “intermediaries that act as money and information arbitration in value exchanges”. They are used to keep people away from the global economy, to protect privacy, to “exchange information they hold into money” and to ensure that owners of intellectual property benefit. The second generation of blockchain technology makes it possible to store individuals' "permanent digital IDs and images" and to provide solutions to the "potential social wealth distribution" inequality. 14 -15 As of 2016, blockchain 2.0 chain transactions still need to pass Oracle to enable any “external data or events [actually needed] based on time or market conditions to interact with the blockchain”.
- In 2016, the Central Securities Institute of the Russian Federation ( NSD ) announced a pilot project based on blockchain technology. Many institutions with regulatory power in the music industry have begun to use blockchain technology to build test models for royalties and worldwide copyright management. In July 2016, IBM opened a blockchain innovation research center in Singapore. In November 2016, a working group of the World Economic Forum met to discuss the development of a blockchain government governance model. According to a survey by Accenture on the development of innovation theory, the 13.5% utilization rate of the blockchain in the economy in 2016 has brought it to an early stage of development. In 2016, the industry trade organization created a global blockchain forum, which is the predecessor of the Electronic Commerce Chamber of Commerce.
- The concept is proposed in Nakamoto 's white paper, where Nakamoto created the first block, the “Creation Block”.
- On January 3, 2009, the founder of Bitcoin, Nakamoto Satoshi , left a message in the creation block that could never be modified: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks (January 3, 2009, the Chancellor of the Exchequer is on the verge of implementing the second round of bank emergency assistance)."
- At that time, the British Chancellor of the Exchequer Darling was forced to consider the second time to solve the banking crisis. This sentence is the headline of the Times's front page.
- The timestamp service and presence of the blockchain prove that the time of the first blockchain and the events that were happening at that time were permanently preserved.
- In 2015, Bitcoin BTCC launched a service “Millennium Chain”, the blockchain engraving service, which is the above principle. Users can use this service to engrave text on the blockchain and save it forever.
- The blockchain was born from Nakamoto 's bitcoin . Since 2009, a variety of bitcoin-like digital currencies have emerged, all based on public blockchains.
- The status quo of digital currency is a hundred flowers, listed some common: bitcoin, litecoin, dogecoin, dashcoin, in addition to the currency application, there are various derivative applications, such as Ethereum, Asch and other low-level application development platform and NXT, SIA, bit Shares, MaidSafe, Ripple and other industry applications.
- On January 20, 2016, the People's Bank of China Digital Currency Seminar announced a phased outcome for digital currency research . The meeting affirmed the value of digital currency in reducing traditional currency issuance, and said that the central bank is exploring the issue of digital currency. The expression of the People's Bank of China Digital Currency Seminar has greatly enhanced the confidence of the digital currency industry. This is the first time that the central bank's five ministries have issued a notice on the prevention of bitcoin risk, the first time to express a clear attitude towards the digital currency.
- On December 20, 2016, the Digital Monetary Union - China FinTech Digital Currency Alliance and FinTech Research Institute was formally established. Fire Coin is one of the co-sponsors.
- Some areas that can be used with blockchains can be:
- Smart contract
- Securities trading
- Internet of Things
- Social communication
- File storage
- Proof of existence
- Equity crowdfunding
- We can compare the development of the blockchain to the development of the Internet itself. In the future, we will form something like the finance-internet on the internet. This thing is based on the blockchain. Its precursor is bitcoin , that is, traditional finance from the private chain. Starting from the industry chain (local area network), the bitcoin series starts from the public chain (wide area network) and expresses the same concept— digital assets ( Digital Assets ), and finally converges to an intermediate balance point.
- The evolution of the blockchain is:
- Blockchain 1.0 - Digital Currency
- Blockchain 2.0 - Digital Assets and Smart Contracts
- Blockchain 3.0 - distributed applications in various industries
- The blockchain is divided into three categories, the blockchain in the currency issue: defining the new financial and economic landscape of the future. There is a detailed introduction in the book.
- The mixed blockchain and the private blockchain can be considered as a generalized private chain:
- Public blockchain (PublicBlockChains)
- A public blockchain means that any individual or group in the world can send a transaction, and the transaction can obtain a valid confirmation of the blockchain, and anyone can participate in the consensus process. The public blockchain is the earliest blockchain and the most widely used blockchain. The virtual digital currency of each bitcoins series is based on the public blockchain. There is only one blockchain corresponding to this currency in the world.
- Joint (industry) blockchain (ConsortiumBlockChains)
- Industry blockchain: multiple pre-selected nodes are designated as billers within a group. The generation of each block is determined by all pre-selected nodes (pre-selected nodes participate in the consensus process), and other access nodes can participate in transactions, but But ask the accounting process (essentially managed accounting, just become distributed accounting, how many pre-selected nodes, how to determine the biller of each block becomes the main risk point of the blockchain), anyone else can The qualified query is performed through the API of the blockchain opening.
- Private blockchain (privateBlockChains)
- Private blockchain: only use the blockchain general ledger technology for accounting, it can be a company or an individual, and enjoy the write permission of the blockchain. This chain is not much different from other distributed storage solutions. the difference. (Dec2015) Conservative giants (traditional finance) want to experiment with private blockchains, while public chain applications such as bitcoin have been industrialized, and private-chain applications are still being explored.
- Due to the use of distributed accounting and storage, there is no centralized hardware or management organization, the rights and obligations of any node are equal, and the data blocks in the system are jointly maintained by the nodes with maintenance functions in the whole system.
- Thanks to the decentralized nature of the blockchain, Bitcoin also has decentralized features.
- The system is open. In addition to the private information of the parties to the transaction being encrypted, the blockchain data is open to everyone. Anyone can query blockchain data and develop related applications through a public interface, so the entire system information is highly transparent.
- The blockchain uses consensus-based specifications and protocols (such as a set of transparent and transparent algorithms) to enable all nodes in the entire system to exchange data freely and securely in a trusted environment, so that trust in "people" is changed to The trust of the machine, any human intervention does not work.
Information cannot be tampered with
- Once the information is verified and added to the blockchain, it will be stored permanently. Unless more than 51% of the nodes in the system can be controlled at the same time, the modification of the database on a single node is invalid, so the data of the blockchain is stable. Sexual and reliable.
- Since the exchange between nodes follows a fixed algorithm, the data interaction does not need to be trusted (the program rules in the blockchain will judge whether the activity is valid), so the counterparty does not need to open the identity to let the other party trust himself. It is very helpful for the accumulation of credit.
- Ascribe allows artists to claim ownership using blockchain technology, issue numberable, limited edition works, and can target digital forms of any type of artwork. It even includes a trading market where artists can buy and sell through their websites without any intermediary services.
- BitProof is the most advanced of many document timestamp applications that have emerged in recent years and will make the traditional notarization method a thing of the past. Compared to the free versions including Blocksgin and OriginStaemp, BitProof offers more services, including one for intellectual property. Interestingly, BitProof recently collaborated with a San Francisco IT school to place their student's academic credentials on the blockchain, completely refining how diplomas and student certificates are handled and used.
- Colu is the first company to allow other companies to issue digital assets, and they can impress many people with “tokens” of various assets. Although the free bitcoin wallet Counerparty also allows for the issuance of simple tokens and transactions between other wallet holders, Colu tokens can be set up in various states and types to be able to detach or return to the system, and Data can be stored on BitTorrent's network when the data stored on the blockchain is too large.
- They plan to modernize the entire industry chain process and address the various issues that everyone is involved in in real estate, including naming processes, land registration, and agency intermediaries.
- Financial perspective on blockchain.
- The essence of money: money is only a broad-value consensus, and it does not have a value deposit.
- The relationship between assets and money: currency describes assets.
- What is a digital asset: the asset is digitized, subdividable, tradable, and the price is determined by the supply and demand market, not the value intermediary – the currency decision.
- Application scenario analysis
- A possible application scenario is: generating a corresponding behavior through Transaction, assigning an address to each device, injecting a certain fee into the address, and performing related actions to achieve the application of the Internet of Things. Similar to: PM2.5 monitoring point data acquisition, server leasing, webcam data calling, DNS server, etc.
- In addition, with the increase of IoT devices, Edge computing requirements have increased, a large number of devices need to adopt a distributed self-organizing management mode, and the requirements for fault tolerance are very high. The blockchain's own distributed and anti-attack features can be easily tested in this scenario.
- IBM has been investing in the Internet of Things for decades and is exploring the use of blockchain technology to reduce the cost of IoT applications.
- In early 2015, IBM and Samsung announced a joint development of the ADEPT system.
- The supply chain industry often involves many entities, including logistics, capital flow, information flow, etc. There is a lot of complex collaboration and communication between these entities. Under the traditional model, different entities each hold their own supply chain information, which is seriously lacking in transparency, resulting in high time and money costs, and it is difficult to trace and deal with problems (fraud, cargo counterfeiting, etc.).
- Through the blockchain, all parties can obtain a transparent and reliable unified information platform, which can view the status in real time, reduce logistics costs, and trace the entire process of production and delivery of goods, thereby improving the efficiency of supply chain management. When disputes arise, proof and tracing become clearer and easier.
- This area is considered to be a promising application direction for blockchains.
- For example, the carrier can verify that the goods arrive at the designated area by scanning the two-dimensional code, and automatically charge the fee agreed in advance. You can refer to how the blockchain changes the supply chain finance and the blockchain to bring transparency to the supply chain.
- Skuchain creates a new supply chain solution based on blockchain, which synchronizes commodity flow with capital flow while alleviating counterfeit problems.
- Public network service
- The existing Internet can operate normally, and it is inseparable from many near-free network services, such as Domain Name Service (DNS). Anyone can check the domain name for free. Without DNS, various websites are basically inaccessible. Therefore, for network systems, similar basic services must be secure, reliable, and low-cost.
- Blockchain technology happens to have these characteristics. The DNS system based on the blockchain will no longer have various erroneous query results, and it can provide stable and reliable services.
- In the past two years, talking about the most hot topic in the field of technology is inseparable from blockchain technology. This underlying technology derived from Bitcoin has proven its highly secure and reliable architecture and algorithm design with more than 7 years of stable operation. At the same time, it has upgraded industries for multiple industries with innovative technologies such as distributed ledgers and smart contracts. Opened a huge imagination. Even industry experts predict that blockchain technology will set off a second Internet revolution.
- The financial industry has always been most sensitive to advanced technologies. Traditional banking and securities giants have been involved in the blockchain venture capital investment since 2014. The total global investment in the two years is as high as 1 billion US dollars, including more than 60 million US dollars like DAH and 50 million US dollars of Blockstream. Such a huge amount of A round financing. In addition to capital investment, major companies are personally involved in and promote specific business applications: for example, the Linq Blockchain Equity Exchange launched by the NASDAQ Stock Exchange has started testing at the end of 2015; and 43 transnationals across the globe. The R3 CEV Alliance formed by the bank has also been testing and improving the cross-bank clearing alliance chain between banks. The action is fast and the participation is unprecedented.
- Although the insurance industry is relatively conservative in its participation in blockchain technology, it has been actively exploring and researching in the academic field. At the end of 2014, the 50-page “Lifetime Chain” special research report launched by the well-known British Z/YEN Group Consulting Group will bring the blockchain from various aspects to the insurance industry. Innovation and change.
- While studying the blockchain technology, it has communicated with many experts and scholars in the insurance industry in China. From the perspectives of business process and company management, it has deeply discussed the specific location of the blockchain in the insurance business. Now I share the credit with the readers. Some thoughts on risk management.
- Blockchain core technology introduction
- The blockchain primarily addresses the trust and security issues of transactions, so it proposes four technological innovations for this problem:
- The first one is called distributed ledger, which means that transaction accounting is done by multiple nodes distributed in different places, and each node records the complete accounts, so they can participate in supervising the legality of transactions, and they can also be common. Testify for it.
- Different from traditional distributed storage, the uniqueness of distributed storage of blockchain is mainly reflected in two aspects: First, each node of blockchain stores complete data according to blockchain structure, traditional distributed storage Generally, the data is divided into multiple copies according to certain rules for storage. Second, each node of the blockchain storage is independent and equal in status. It relies on a consensus mechanism to ensure the consistency of storage. Traditional distributed storage generally synchronizes data with other backup nodes through the central node.
- No single node can record the ledger data separately, thus avoiding the possibility that a single biller is controlled or bribed to record a false account.Also because there are enough billing nodes, in theory, unless all the nodes are destroyed, the accounts will not be lost, thus ensuring the security of the account data.
- The second is called asymmetric encryption and authorization technology. The transaction information stored in the blockchain is public, but the account identity information is highly encrypted and can only be accessed if the data owner authorizes it, thus ensuring the data. Security and personal privacy.
- The third is called the consensus mechanism, which is how to reach a consensus among all the accounting nodes to determine the validity of a record. This is both a means of identification and a means of preventing tampering. The blockchain proposes four different consensus mechanisms that apply to different application scenarios and strike a balance between efficiency and security.
- The consensus mechanism of the blockchain has the characteristics of “minority to majority” and “everyone is equal”. The “minority of majority” does not refer to the number of nodes, but also the computing power, the number of shares, or other computers that can be compared. Feature amount. "Everyone is equal" is when all nodes have the right to give priority to consensus results, directly recognized by other nodes, and finally become the final consensus result.
- Taking Bitcoin as an example, the proof of workload is used. Only when the accounting node of the whole network exceeds 51% is controlled, it is possible to forge a record that does not exist. This is basically impossible when there are enough nodes to join the blockchain, thus eliminating the possibility of fraud.
- The last technical feature is called smart contracts, which are based on these trusted, non-tamperable data that can be automated to execute some predefined rules and terms. In the case of insurance, if everyone's information (including medical information and risk-generating information) is authentic, it is easy to automate claims in some standardized insurance products.
- In the day-to-day business of insurance companies, although transactions are not as frequent as in the banking and securities industries, the reliance on trusted data is increasing. Therefore, the author believes that the use of blockchain technology, from the perspective of data management, can effectively help insurance companies improve their risk management capabilities. Specifically, it is mainly divided into the risk management of the insured and the risk supervision of the insurance company.
- In insurance business, disputes between insurance companies and policyholders occur from time to time, either by the insured providing false personal information to swindle the insurance, or when the claims are disputed. The key to these problems lies in the lack of a credible data collection and storage method for the insured's personal information.
- With the advancement of national system engineering such as digitalization of medical information and personal credit information systems, more and more data sources have emerged. If these data can be imported and stored in the blockchain, it will become everyone’s. Digital identity, the data above is authentic, can not be tampered with, real-time synchronization, lifetime effective, will bring great benefits to the risk management of policyholders.
- The first is to open up and exchange data between different companies, so as to timely discover information such as repeated insurance and historical claims, and find high-risk users in time. Taking the 40 million accidental injury insurance in March as an example, Zhouzhou of Yangzhou was insured by more than ten life insurance companies, and was not detected until the artificial underwriting. If he records every insurance information in the blockchain, he can quickly find and take timely action.
- Second, the introduction of data from different industries into the blockchain can improve the accuracy and efficiency of underwriting and claims. As an example of a serious illness insurance, if you can find all the medical records of the insured in the blockchain, or even the records of the immediate family members, there will be a first-hand situation for the insured's current physical condition, medical history, and family history. Information, effectively put an end to sickness insurance.
- Insurance company risk supervision
- In the operation process of an insurance company, the risks caused by various reasons sometimes occur, and the regulator can only take measures for prior review or hindsight. However, as the front end of the insurance business is increasingly open, companies participating in the insurance market are becoming more diversified, and the need for supervision in the workplace is increasingly prominent. In my opinion, blockchain technology is one of the effective technical means to conduct supervision in the event. As long as the insurance company moves the daily operational process to the blockchain and develops a billing node (even a read-only billing node) to the regulator, the regulator can observe all the insurance company's business trends in real time. For example, capital flow and investment composition, product underwriting and claims data, major personnel and management operations, etc., do not need to wait until the insurance company to report afterwards, so as to timely identify possible business risks and violations.
- On this basis, regulators can also use big data technology to analyze and forecast the insurance market across the country, detect and prevent possible systemic risks in a timely manner, or identify potential safeguard needs and trends, thereby better The common people provide protection.
- In addition to reducing insurance companies' risk of underwriting and supervision by changing data storage methods, blockchain technology has also activated many traditional security models, such as mutual insurance, and many new security requirements, such as temporary dynamic policies. As the exchanges and collisions in the technology and insurance industries deepen, it is believed that more new applications and companies will emerge.
- Financial industry application
- Blockchain technology will be applied to credit reporting, transaction security and information security in the financial industry. Financial data security, information privacy and network security are suitable for distributed area block technology. The blockchain can form a point-to-point digital value transfer in finance, thereby improving the security of transmission and transaction.
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