Basic concept of blockchain
Traditional business network
In the current traditional commercial network, as the participants of the whole commercial network, commercial institutions, government, financial institutions and other parties are independent and systemically disconnected, and maintain their own data. When a transaction occurs, both parties modify their own books and maintain them locally, forming the architecture as shown in Figure 1:
Traditional business network architecture
At this point, we find that traditional business networks as described above will face the following challenges (low efficiency, high cost, vulnerable) :
Each participant has its own account book, which is modified when the transaction occurs. Transaction information is not transparent and shared, which is prone to unilateral tampering.
If the transaction involves multiple parties, additional intermediate work and additional costs are needed to coordinate data consistency between the parties.
Data is repeatedly distributed among the various participants, resulting in inefficiencies in the overall business process.
The entire service network depends on one or several central systems. Once a problem occurs in the central system, such as a network attack or error, the entire business network will be in chaos.
Understanding blockchain
According to the explanation in the White Paper on the Development of Blockchain Technology and Application issued under the guidance of the Ministry of Industry and Information Technology, in the narrow sense, blockchain is a chain data structure that combines data blocks in chronological order in a sequential manner and ensures a distributed ledger that cannot be tampered with or forged by cryptography. Broadly speaking, blockchain technology is a new distributed infrastructure and computing mode that uses chain data structure to verify and store data, uses distributed node consensus algorithm to generate and update data, uses cryptography to ensure the security of data transmission and access, and uses intelligent contracts composed of automated script codes to program and operate data.
Blockchain technology is a collection of technologies, which includes shared ledger, consensus algorithm, security and privacy, smart contract and other technical components, with the characteristics of multi-centralization, consensus trust, tamper-proof, traceability and so on. The blockchain system, which uses the shared ledger of all members, can well solve many challenges encountered in the traditional business network, as shown in Figure 2:
Blockchain system architecture
First, the blockchain architecture enables participants in each business network to share the same ledger, synchronously changing all the ledgers when a transaction occurs.
Second, cryptographic algorithms are used to ensure that participants on the network can only see the ledger content related to themselves, to ensure the security of the transaction.
Third, the blockchain will embed the contract terms related to the transaction into the transaction database to form a smart contract, which can trigger the execution once an event meets the terms in the contract.
Finally, network participants ensure that transactions are jointly verified based on a consensus algorithm mechanism. It also meets the requirements of supervision and audit.
The value of blockchain
Economic efficiency: Build a credible multi-party cooperation platform to reduce artificial disputes and improve transaction efficiency.
Cost reduction: Reduce additional overhead and involvement of intermediary third parties.
Reduced risk: Imdocility reduces fraud and cybercrime.
Increase trust: Shared books, processes, and records increase trust among participants.
Transparent audit: Auditors can audit immutable books at any time.
In retrospect:
