About Blockchain | An Introductory Overview

Sayings:

Recent thoughts—not necessarily right.

An Explanation of Blockchain

This explanation isn't my own; a friend sent it to me. The example is concrete, visual, and easy to grasp, so I'll just use it directly.

Imagine you're a woman. One evening, your boyfriend tells you, "I love you for all eternity." Then you share this message with your bestie, your parents, your social media feeds, public accounts, WeChat groups, and so on. Your boyfriend can never deny having said it. You tip a small reward to thank them for remembering and bearing witness—that tip is the token. You, your boyfriend, the words "I love you for all eternity," and details like when and where they were said are bundled together into a structured data packet, called a "block." Meanwhile, your bestie, your parents, your social feeds, public accounts, WeChat groups, and other nodes form the "chain." Finally, if your boyfriend later claims he never said it and becomes a scoundrel, you can open that ledger to confront him and give him a good dressing-down. That's blockchain in action: an irreversible proof of information.

Oh, and if your network connections are strong enough, your boyfriend's node will be permanently kicked off the network—meaning that guy might never find a girlfriend again?

On Applications of Blockchain

From this straightforward analogy, we can see that one of blockchain's key functions is decentralization. No single party acts as a central authority vouching for your boyfriend's loyalty, saying he wouldn't betray you. In this process, your social feeds, your bestie, and other nodes all serve as witnesses. He can't refute this irreversible testimony. In other words, blockchain's core value lies in solving trust issues and ensuring information authenticity.

Now, turning back to the cryptocurrencies that have been wildly hyped in recent years: because blockchain is more open and relies on public scrutiny, it doesn't require national credit as a backstop. Many people believe that tokens created by blockchain are trending toward replacing the state's power to issue currency and supplanting national currencies worldwide.

That's likely why crypto is so hot.

But there are problems here.

First, without national credit backing, can these tokens actually be exchanged for real physical goods? Alipay balances are linked to bank accounts, enabling digital currency to be converted into the real universal equivalent—the Chinese yuan—which bridges online and offline circulation. Tencent's Q-coins work on the same principle: Tencent built its own ecosystem and used its own credit to back Q-coins as a universal equivalent for exchanging across Tencent's various services. But with blockchain tokens, where everyone participates and everyone monitors, how do you make them circulate genuinely?

If they can't circulate in reality, then they're little more than abstract financial instruments like stocks—mere playthings for capital, lacking true value?

For them to circulate, several questions must be answered: What's the right issuance volume? Who controls the minting in a fair way? How do you enable exchange and circulation between virtual digital currencies and the real economy? How can the many different tokens on the market be exchanged with one another? Will they all be recognized? Even in a sufficiently open capitalist market economy, national backing and macro-level oversight are needed for relatively healthy development. So what about these blockchain-based market tokens?

So, I'm inclined to doubt that many of today's crypto tokens have truly solved these problems. They've been issued, but they can't yet circulate in reality. To a large extent, their character as speculative playthings for capital is far stronger.

At the same time, because of the impartial and irreversible nature of information, blockchain has significant value in areas such as credit risk control and contract signing. I believe those fields have far richer application scenarios and are much more reliable than issuing tokens.

I want to show you how beautiful the rest of my life can be.

The value of blockchain is undeniable, but issuing tokens is a shaky proposition.