With the value of Bitcoin and various cryptocurrencies soaring, blockchain technology has attracted a great deal of attention. Most of us believe blockchain technology is revolutionary, but virtual currency is considered as speculation or multi-level marketing with no essential value. But in my opinion, blockchain is a distributed ledger technology through which data and information can be recorded by users in a decentralized way, it is naturally protected from falsification, and a lot of outstanding functions, including multi-place backup, can be performed automatically.

The key to comprehending how blockchain functions, is knowing that a ledger is reserved at each node, participating in the consensus to maintain and save information. The consistency of these ledgers is maintained by the consensus mechanism, defined by an algorithm. This consistency is global and fault tolerant. For example, if 49% of the ledgers go wrong, the operation will not be interrupted, but the other 51% of the ledgers would still be conformable.

Virtual currency is essentially a value recorded in the decentralized ledger, including addition or subtraction operations on this value. It is the first stage of blockchain technology. The blockchain developing stages are introduced in MOAC Introduction Series — Evolution of Blockchain Development and AI Technology. With that being said, how is one to see for themselves how blockchain technology and virtual currencies (tokens) are put into action?

There is nothing deep or complicated in blockchain technology itself. It is more or less still an advancing technology. But I think blockchain technology may only contribute 5% to the whole blockchain revolution process. The essence of blockchain is actually the value system and the series of subversive ecological changes arising from it. Tokens play an important role in this revolution.

This role can be interpreted in three levels:

1.

The progress of blockchain technology is actually for engineers, just like the progress of NOSQL for mysql.

This foundation allows you to build a more powerful application on it. But if this is merely all, then we cannot say the blockchain technology is a revolutionary technology, rather we can only say it is a small part in technological progress. Not only that, the user will never be concerned whether the lower level technology is mysql or NOSQL, their only concern is its functionality and ease of use. Therefore, as for the outstanding performance of blockchain technology, the blockchain only matters for engineers and software managers, etc, and only 5% of the blockchain is utilized.

The first key point in the blockchain revolution is the use of tokens, allowing blockchain to become known by the consumer. This is a great change. Decentralizing and creating a trustable token circulation can be easily actualized thanks to blockchain characteristics, making the blockchain advantages better found and available by consumers.

2.

The second key point of the blockchain revolution is that objects, information and flows which cannot be appraised in a traditional way can now be priced with tokens, and the value can be circulated conveniently.

For example, Google Maps has a very capable feature which allows them to display traffic conditions of each road. This function is not realized by deploying sensors but by each map user who uploads his/her mobile information to the Google server, then a series of processing actions are taken to determine the road conditions. The position and mobile information of each user is valuable in this process, but the value cannot be accessed in the traditional manner; it is for free use by Google with great profits made. In the blockchain, the position information can be easily priced with token, and the value can be owned by each user. After that, the user is able to control how they use the valuable information. In this way, blockchain technology will overturn the current mode that giant companies obtain information and make profits for free.

If it is generalized, all users’ information can be priced, circulated and exchanged easily with blockchain technology, and many current business modes will be challenged and rebuilt.

3.

The third key point is that the application program logic, game development, production flow and business operation are under a predefined rule.

These rules can be deemed as a driver to transform a state machine from a specific state to another one, as well as the centralized decision predefined by a programmer or a manager. In the blockchain mode, the state machine transformation can be driven and the resource configuration can be optimized with tokens by each individual participant who obtains the token for pricing the information or resource in the nature of pursuing profit. As a result, the power transformation of the whole system will be changed, many modes will be reconstructed, and society will be impacted significantly.

Of course, the blockchain technology is applicable in its scope, but is not all-powerful. Please refer to MOAC Technical Column — Blockchain Applicability.

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