A blockchain is a machine that creates trust”, and emphasizes that “the extension of the meaning carried by the technological innovation of blockchain goes far beyond the cryptocurrency itself”.
“Block A chain is a machine that creates trust” and emphasizes that “the extension of the meaning carried by the technological innovation of the blockchain goes far beyond the cryptocurrency itself.”
To put it simply, blockchain enables people to cooperate with each other without trusting each other and without the endorsement of a neutral central authority. Therefore, we can indeed regard it as a machine that creates trust. But how does this “trust machine” change the world?
The “trust issue” has always been a crucial issue that has plagued the coordinated development of human society. However, this problem was not without solutions in the past.
For people or organizations that do not trust each other, if there is a need to cooperate, there are usually two modes in the past.
One is that we use the reputation system to try to trust first. If there is no problem during this period, we will accumulate reputation and we will continue to cooperate next time; if there is a problem and we do not keep our promises, then there will be no next time. This kind of trust mechanism is indeed useful in unlimited games, but once the number of games is known, problems are likely to occur. For example, we often see news about “tourist attractions slaughtering customers”. The main reason for this is actually that locals know that most people may come this time in their lives.
The other is to rely on a third party that everyone trusts, that is, the “guarantor model” or the “trusted third party model.” For example, A and B need to cooperate, but they do not trust each other, but A and B trust C, then C can act as a guarantor. If there is a transaction between A and B, if either party violates the contract, then C will pay. When we buy things on Taobao, Alipay actually plays the role of “C”. Or more directly, A and C trade directly, and C trades with B. At this time, C is called the central counterparty.
Compared with the former, the latter model does not have the problem of “non-infinite game failure”, but it is not perfect. Because in this model, everything depends on “C is reliable.” If C wants to run away or open a convenient door for himself, then the whole model will collapse.
In our current real society, the ubiquitous and operating trust mechanism is mainly the latter “trusted third-party model.” Just like, we trust WeChat Pay, essentially trusting Tencent; we deposit money in the bank, essentially trusting the bank; we believe that the stocks we buy are really stocks because we trust the state-guaranteed exchange and the legal system.
In short, the current operation of our entire society is filled with a large number of trust models of “trusted third parties”, relying on trusting individuals, companies, organizations, governments, and mutual restraints and guarantees, notarization, laws, and regulations between individuals. A series of explicit rules, unspoken rules, such as procedures, procedures, and the combination of these trust factors.
Of course, this kind of trust mechanism is considered to be well-tested and works well so far. Although there may be various flaws and loopholes in the middle, they can all be improved through the improvement of the trust factor and iteratively upgraded. For example, certain types of contracts are prone to default, and the risk can be controlled by increasing the mortgage guarantee ratio.
However, in addition to relying on third parties naturally, this trust model still has certain limitations and deficiencies in some broader issues.
Such as currency. As we all know, a human currency currently follows the latter type of trusted third-party model and is essentially a central counterparty model, so it is inevitable that the central counterparty will break the trust. For example, the fiat currency issued by the central bank tends to depreciate in the long run and is always inflated. This is actually stealing everyone’s wealth, and countless A and B who trust C have suffered losses. . This is actually the concept of “seigniorage” that we often hear.
Another example is the cooperation between some large companies, especially those involving information and data. Just like mobile phone manufacturers, they each have some blacklist information about harassing calls, but they basically do not share each other. But we know that the more complete this kind of data, the greater the value to customers. The problem is that it is difficult for everyone to find a suitable “trusted third party” to share information and data.
There are many such problems. In short, the same is true between people, enterprises, and countries.
Iis there a third model?
The original intention of this design is that no one can be trusted to play the role of “C”, and all transactions must be under everyone’s eyes. All in all, the goal of the design is to make everyone’s benefits of not cheating higher than the benefits of cheating, so as to encourage everyone not to cheat.
Bitcoin is the verifier of this model. At least for now, this experiment is still successful.
In short, blockchain technology provides a new solution model, without any artificial trust factors, a completely machine-based trust model. It replaces the role of a trusted intermediary with a machine and uses a set of mathematical algorithms to ensure that two parties who do not trust each other can still complete transactions or achieve cooperation without resorting to a third party. This also makes it possible to achieve broader social collaboration and even large-scale global production collaboration.
Just like the issue of information and data sharing between mobile phone manufacturers mentioned earlier. Everyone can create a consortium chain and make all the use of information public to all parties, so that not only do you no longer have to worry about the leakage of third-party information, but you can also avoid intrigue with each other, so as to achieve win-win cooperation.
In addition, the trust model created by the blockchain can greatly save costs compared to the traditional “trusted third party” model.
The modern economy is built on multiple levels of trust. We trust technology giants, banks, insurance companies, governments, and many more institutions every day. But as everyone knows, the cost of trust in our society is extremely high. In the case of banks, in order to allow us to trust and deposit money with confidence, they spend trillions of system maintenance costs (backstage, front desk, and facade) every year. At the same time, banks can also make trillions of dollars in profits. . However, from the perspective of users, these are actual costs. In order to save and withdraw money with ease and peace of mind, we have to spend trillions of costs every year to support the banking system.
We trust so many institutions that we take it for granted that the economy is built on multiple levels of trust, and therefore often overlook the high costs behind these trusts.
And because the blockchain can replace the role of trust intermediary with a fully mechanized trust model, it can also greatly reduce the credit cost of our entire society.
All in all, the birth of blockchain technology has provided a more exciting solution to the long-standing trust problems and information asymmetry problems in our human society. In the future, as the application of blockchain technology penetrates into all walks of life, blockchain technology will greatly reduce the transaction costs of the entire society, improve efficiency, and create a better future for us.