Jan, Chief Architect, Nervos: Disenchanting Bitcoin

2021-04-28 11:58

Read this article in 110 Minutes

Because of its combination of cryptography, finance, computing and other technologies, Bitcoin is often shrouded in a veil of mystery that keeps people away for fear of its charms.

原文标题：《祛魅比特币》

原文作者： Nervos中文社区

Recently, Jan, lead architect and researcher at Nervos, was a guest on the podcast "Night Breeze Talk" to "disenspirit Bitcoin."

Disenchantment comes from what Max Weber called "disenchantment of the world". Because of its combination of cryptography, finance, computing and other technologies, Bitcoin is often shrouded in a veil of mystery that keeps people away for fear of its charms. In the podcast, Jan explained the technical connotation of Bitcoin and Ethereum, what blockchain is and what blockchain can do in plain and clear language, and disenchanted and re-enchanted coexist. Welcome to the program.

The conversation lasted for more than two hours. The following is the text version of the conversation organized by the community partners "Walk". Welcome to check it out

Xie Han sword:I was introduced to bitcoin around 12 years ago. I was working for an American company at the time. The company was open every Friday afternoon. Zoom chats, each time with a different theme. Once, a colleague introduced us to Bitcoin. At that time, everyone worked remotely, and he suddenly said that Bitcoin was very interesting. He also made a PowerPoint presentation, explaining why Bitcoin is great and why it is like currency.

This aroused my interest, because Bitcoin is a software, and as a programmer like me, I often think about how to make a mobile APP, how to make a website. Now to come out with a project that says it's going to be a currency, whether it's actually going to be done or not, is a step beyond what programmers used to think about designing products, so I think it's very interesting.

It happened that in 12-14, Bitcoin had a sharp rise, which made more people know about it and came into my sight for the second time. I think this thing is actually a bit real, not quite a hoax, and it's starting to get in the news.

That's when I really started investing time into bitcoin.At that time, ASIC mining machines had come out, which was attractive to people who were doing technology, because it was related to hardware. For a piece of software like Bitcoin, someone would actually invest the resources to build a piece of hardware specifically to run it. It's more like the real thing, and it's professional.

Programmers love professional things, like looking at the parameters when buying a phone.

After I put in the time, I came across a question on Quora asking whether Bitcoin was worth anything at all. One person answered from a technical point of view:

Regardless of whether Bitcoin is a currency, it must be a distributed database in a way that has never been distributed before. Because previous distributed databases are running in a "greenhouse" environment.For example, Ali has a large internal database, there may be a thousand, 10,000 servers behind the support operation. But no matter how many servers are in the back, they all belong to one company, Alibaba.Amazon, Google are the same.

Before 2010, this was the assumed pattern. Everyone would have thought that was a given. There is no other possibility. The answer on Quora also says:

Bitcoin shows us a new paradigm, one that is different from previous models.There might still be a thousand servers, ten thousand servers, but they're controlled by different people. Although different people can have different demands, different interests, and even some people spend all day thinking about how to sabotage the whole system. But these servers can still operate harmoniously, serving everyone on the network.

I was very impressed with this answer. It tells people where the technological innovation of Bitcoin is. You don't have to worry about what Bitcoin actually does, but it's an advance and innovation from a purely technical point of view. So there is a lot of interest to study, so I am attracted by bitcoin.

Wind said:Before that, was BT distributed data?

Xie Han sword:BT is. But unlike Bitcoin, BitTorrent doesn't have a common state, or a common database.

BT is like an archipelago of machines in a distributed network, each person maintaining his or her own machine.Every day there was a piece of data on the machine, and no one knew what all the data on the archipelago added up to. The system doesn't care about the sum, it just cares about some set of things in the system. Let's say three CDs are on this server and five CDs are on another server. But it doesn't make for something common.

For Bitcoin or blockchain, the most important thing is to have something in common.There may be a thousand servers, 10,000 servers in a blockchain system, and all the servers know that we maintain a common database, database 1, 2, 3, 4. I know other people know about it, too, and that's an important distinction.

Wind said:Did you ever think about being a part of it, being a part of it?

Xie Han sword:There is. In fact, when you try to download a Bitcoin client, run it is the node. Before you realize you're doing the node, you download it.

The thing that struck me the most, or the thing that surprised me the most, was that the nodes didn't have to be running all the time, and the bitcoins that I had would still be there. Your node doesn't have to run, and someone else can transfer money to you.

Bitcoin is very different from any distributed system we've seen before.If you have contact with previous software, it will require that the local client is running in order to operate. But the Bitcoin client doesn't have to be running, and others can transfer money to you. Your money is out there somewhere, you don't know where it is, it's there magically, and it's safe.

It is now commonplace for people in the blockchain world. But a decade back, it would be a very different system. It's an amazing feeling.

Wind said:You don't have to have everybody running all the time, but somebody is always maintaining it, is that through a hash algorithm?

Xie Han sword:It's a little bit more complicated than hashing. So let's take bitcoin as the distance, first of all the first feature is fully copied.

A collection of data in a network needs to be present at every node to be called a full copy. For a collection of shared knowledge, each node has 100% data. That's a huge difference, and it means that Bitcoin's network is highly redundant. If there are 1,000 nodes in the system, that means 1,000 copies of all the data are made, and 10,000 copies if there are 10,000 nodes. Bitcoin becomes more and more redundant as the number of nodes increases.

This is why even if a node is shut down and the data is deleted, the data will not disappear. Because there are 9999, 99999 nodes in the network that still have all the data, and they back it up.

The second feature is that Bitcoin's full-volume replication network will have consensus mechanisms to sustain it. Consensus can be simply understood as a set of algorithms in the consensus system that ensure that all nodes see the exact same copy, every byte is the same, 100% the same, no matter how the database changes.

Let's say Alice wants to transfer 100 coins to Bob. Alice will lose 100 coins and Bob will gain 100 coins. The same changes will be made by all nodes and will be made in locally maintained data. That's why people can transfer money to you even if you're not online.

You don't even use bitcoin, but as long as you have a bitcoin address, that's fine. When someone transfers money to you, they don't actually send instructions to you, they broadcast them to the entire network. The whole network knows that Alice is going to transfer 100 bitcoins to Bob. Consensus ensures that everyone will make the same changes. Because there are replicas, there are consensus mechanisms, and even if you're not online, there are many nodes that work together to maintain an imaginary database.

When you return to the chain, others will tell you that, for example, Alice transferred 100 coins to you three days ago. We have checked and found that there is no problem with the transfer. Please synchronise it. You can use the newly received money transfer.

Wind said:Is it through multiple games, where there are other people out there to make sure that the people who keep the records tend to keep the facts and not lie about them?

Xie Han sword:This relates to the specific consensus mechanism of Bitcoin. Bitcoin's consensus mechanism is proof of work, and it's designed with a game mechanism.

Specifically, when Alice wants to transfer money, she broadcasts the instructions to every node in the network. Each node processes transactions all the time. The way to process a transaction is to wait for a fixed interval, which is ten minutes for Bitcoin.The node will collect the transactions it hears during this ten-minute period, when a large number of people may have initiated a transfer. The node might receive 30 transfers and bundle them together.

The set of transactions collected in the ten minutes is called a block. Once a node has generated a block, there is a mathematical problem to solve. Only when this problem is solved can the newly generated block be broadcast to other nodes. If my node doesn't solve this problem, I give up. You may receive blocks generated by others before you have calculated them. This means that someone else has worked out the problem first.

Every ten minutes, a mathematical puzzle is automatically created in the Bitcoin network. All the nodes in the network will work together to solve the problem faster than anyone else.

The method of solving the problem is basically guessing. There are no special shortcuts. I'm going to have to guess at random to see if that's true. If not, change the answer. So there will always be one person who is extremely lucky, just by sheer luck, and gets it right on the first guess, or gets it right on 3,000 guesses versus 10,000 guesses.

The lucky guy, having hit on the answer, simply broadcasts his block, which is a collection of ten minutes of transactions, along with the answer he has guessed to all the other nodes in the network. Some nodes are still guessing because of others, but they're also constantly checking to see if someone else has figured it out. When they receive new blocks, they verify that the guess is correct. If they are right, they will accept the block. The block of transactions is processed, and you wait another ten minutes to receive new transactions.

Why do we call this system blockchain? Because over time, on average, a new block is created every ten minutes. New blocks always point to the preceding block with a pointer or arrow, as if a string of blocks were constantly being added to the next block. The process is very much like a chain.

Why does this involve games?The game is because there are 10,000 nodes where there are people who follow the rules and there are people who don't follow the rules. People who follow the rules think, I've been given a new block, I've verified it, and I'm just going to follow the rules and dig a new block.

But for those who don't play by the rules, receiving your block also verifies that the block is indeed correct.But I choose to throw your block away, pretend not to see it, and continue to dig on the last block.Why would you do that? There is a reward for finding new blocks (currently 6.25 BTC per block -- walk note). That's a big prize. That means the 10-minute prize goes to the person who gets the math problem right. Nodes that don't guess correctly have an incentive to throw out the correct block.

Of course you as the node can do this, but if you are the only bad guy in the network, everyone else is the good guy. If everyone else accepts the new block and they all dig behind the new block and you are the only one digging behind the old block, it will be different.The consensus on the Bitcoin network is that everyone recognizes only the longest chains. This is the most important and simplest rule.

If only one person wants to be bad and dig behind the old block, the others all work together to dig behind the new block. The chain behind that new block must grow faster than you do. Because there's more digging behind there, and you're the only one. And the process of solving a mathematical problem is a random process, and everyone is guessing. There could be 9,999 guesses on that side, and only one guesses on that side. So you must be slower than others.

And to derive a more extreme case,As long as more than half of the people are good, the right chain is bound to grow faster than the evil chain.

Let's say there are 10,000 nodes in the network. I control 4,999 nodes, and the other 5,001 nodes are controlled by good people. The speed at which I guess is 4,999 machines at the same time, and the speed at which the good guy guesses is 5,001 machines at the same time. As long as the time is long enough, the probability that the good guy's chain length is longer than the bad guy is increasing.

This is where the "51% attack" in Bitcoin comes in. And what it means is that if you have the computational forces, technically not the nodes but the computational forces. If the good guys have more than 50 percent computing power, the network is safe. If the bad guy has more than 51 percent of the computing power, it can do all kinds of bad things.

I just said that the good guy has 5,001 nodes, which is a simplification. You have to do more than half the math. Because each node has a different force.

Calculating force is power, right?

Wind said:Is that why computing power is power in virtual currency?

Xie Han sword:The saying that computing power is power cannot be completely wrong.But it's very misleading.

It makes people feel like the miners are in charge in the Bitcoin network, because they have the most computing power and can do whatever they want. But that's not the case.

There's a lot of angles.First of all, even if you have 51% computing power, the worst thing you can do is a double blow attack.Take the example of the transfer just now. If Alice is the bad guy and wants to transfer 100 dollars to Bob, the transaction of transferring 100 dollars is created and sent to the whole network, and it is packaged into the block and dug out. If Alice has more than 51% computing power, she can transfer money to David as well as to Bob. Alice only has 100 yuan in total, but she transfers money to two people at the same time.

Either of these deals must fail. But because Alice has 51% computing power, she can first ask the good guy's chain to package the transaction of transferring 100 RMB to Bob. If you pay this 100 RMB, you are buying a mobile phone recharge service. Bob gives Alice top up, and we have a deal. Alice can start playing the devil's game and start digging a fork out of more than 51 percent of the computational power. The point that forks is the block before Alice transfers money to Bob. Alice will dig a new chain along the old block. The new chain contains the record of Alice transferring 100 RMB to David, but does not contain the record of Alice transferring 100 RMB to Bob.

And because Alice's computing power is more than 51 percent, one day Alice's chain will be longer. One day all the nodes in the network will decide that Alice's ledger of chain records is correct. It's essentially rolling back Alice's transfer to Bob, and it doesn't exist anymore. But Bob has already topped up Alice's credit.

51% power allows you to perform double - flower attacks. What Bob can't do is spend the $100 he has on the chain. This is protected by cryptography and has nothing to do with consensus.

The second is that there will be different types of nodes in the Bitcoin network. The nodes that package and trade blocks are called "miners". There are also nodes in the network that do not mine, but just synchronize blocks. It's like volunteers, willing to save copies, adding redundancy to the network. The volunteers are also a firewall. If the miners were to act evil and simply spend other people's money on the Bitcoin network, the whole node would reject the transaction and consider it illegal.

It is impossible to spend other people's money in the Bitcoin network because it has full nodes as firewalls that block illegal transactions from being broadcast. So even if a miner makes a bad deal, it won't be accepted by the network.

Hard bifurcate | block chain system is a social consensus

Wind said:Suppose that if the villains did a double blow attack with 51% computing power, the equivalent of Bitcoin's credibility as a virtual currency collapsed? Is that also a risk? Calculation is power, but it is also wealth. If the credit and value of Bitcoin collapses, 51 percent of the people with the computing power will actually have their coins worthless.

Xie Han sword:Yes, credit risk is one thing,It takes more time to educate.Until this happened (double flower or some other 51% power attack), people had to assume that Bitcoin was particularly safe from attack. The expectation for Bitcoin's credit is at a very high level.

But attacks are possible. There are people or organizations in the world that control 51% of the computing power of a network. For example, in the literature, one form of attack that is often discussed is state attack. When a sovereign attacks a network, it has a huge amount of resources to control the computing power. At this point it is possible to do a 51% attack.

The first thing that happens is a credit collapse. The market is bound to crash once. But does it just go to zero after the crash and Bitcoin is dead? I don't think so.After an attack like this, you have to think about what the next steps are.

Blockchain is not only a purely technical system, but also a social consensus system.When an attack occurs, even though the old chain is technically temporarily unusable, we can still fork it. Because the Bitcoin code is open source, no one can stop us from making improvements to the code and making changes to the consensus rules. And then if everyone in the world accepts this new chain, then there will be a new social consensus.

For example, in the ecosystem of Bitcoin, there are many service providers, such as wallets, exchanges, and those who do payment services on the Bitcoin chain. Service providers provide services to tens or even hundreds of millions of users.What matters is the attitude of the ecological participants when an attack occurs.

First of all, we can make technical consensus rules and even mining algorithm modification, so that the technology can be used to attack the old chain, or hardware, mining equipment, can not be used to attack the new chain. This is technically protected.

Second, the data is open and transparent. Users on Bitcoin have not been kidnapped by anyone, and they can migrate freely, transferring copies of users to new chains.

Third, everyone can agree that the new chain is Bitcoin, and that the old chain is not. It's just bitcoin's adolescence. Now that Bitcoin has grown up, it has suffered a 51% attack. Everyone is using new chains.

Wind said:It feels like retail versus Wall Street. The triumph of the plebeian.

Xie Han sword:It feels that way. The difference is that the process of selecting a new chain is more open and transparent. In the case of retail versus Wall Street, the data is not really transparent. We don't see the data. But with Bitcoin, everyone has a very clear view of the data on the chain, and they can see exactly what's going on, whether I want to choose a new chain or not.

Such a thing is called a "hard fork." That's why there's a lot of discussion in the blockchain community about hard forks versus soft forks, who we're going to follow after the hard fork, and whether it's going to go left or right.

You'll find a lot of discussion and instances [of hard forks] in Bitcoin's ten-year history. It really is a social consensus. Every time you have a hard fork, you essentially have one person feeling left and one person feeling right. They are all desperately trying to convince the community to agree that it is true to go left or right. They are also desperately trying to persuade all the actors in the ecosystem, exchanges and wallets, to follow their lead.Your ecology is alive and sustainable only when someone is following you.

It's really easy to Fork bitcoin. The code is all open source. The data is all open source. Only one person can Fork, but the problem is that no one will pay attention to you.

Wind said:What a democratic feeling. Did your example of a hard fork actually happen on Ethereum?

Xie Han sword:It happened on Ethereum. But the philosophy on Ethereum is not quite the same as Bitcoin.

Wind said:What was the cause of the new consensus on Ethereum?

Xie Han sword:Let's start with the big picture. Ethereum is a new blockchain after Bitcoin, which is more optimized for decentralized applications. Because Ethereum is designed to host different applications, there is no way to anticipate what applications will be in the future and what technical support will be required for those applications. So at the beginning there is no way to think of all the design well. There is bound to be something unimaginable at first.

So Ethereum has to take a different approach than Bitcoin.Bitcoin was conceived from the beginning as a payment system. All the functionality is there, just do what it's supposed to do, and nothing changes after that.

Ethereum is thinking that you can't think of everything at first, so you have to keep changing, and keep changing through hard forks.So Ethereum has a history of a lot of hard forks. We can think of hard forking as an Ethereum technology upgrade. Most hard forks are technology upgrades. Hard forking is adding this and that to Ethereum's virtual machine. These features can only be deployed across the entire Ethereum network, to all nodes, via hard forks. These new features are really for the better of the network, for the longer term. So we coordinate together, hard fork together, such a hard fork will be more smooth.

But there are exceptions. Ethereum has a history of serious thefts. There was an app on Ethereum called The DAO, and it was kind of like people crowdfunding a venture capital fund. There was a guy who was very famous in the Ethereum community, and he said you can put all your money in my management, and I can help you invest in all kinds of new projects, which may have higher returns. People felt that this way had never been done before, and it was so awesome that they all got involved.

The project raised about $150 million. It's a crazy idea. It was one of the top three or five crowdfunding projects in history at the time. They found that it was possible to do on blockchain what crowdfunding sites had taken years to do. Everyone was so excited, they were pouring money in. But there was a problem with the app's contract. As a result, all the money was stolen. The Dao lost a lot of money.

Wind said:There also seems to be suspicion that the team did it themselves.

Xie Han sword:Very unlikely. But the theft of the money affected basically everyone in the Ethereum community at the time. Not just for everyone, but for the long-term planning of Ethereum. The long-term plan for Ethereum is to move from PoW to PoS in a few years. PoW is the consensus mechanism just introduced for Bitcoin, proof of work.

But many in the blockchain world are enthusiastic about the new consensus approach, the Proof of PoS stake. As many tokens as you own on the blockchain, you have the right to make blocks.

In PoW, it's the probability of getting the next block based on how much computing power you have. The number of tokens in POS is the probability that the next block will come out.

Ethereum has long planned to move to POS. But The problem was that a lot of people were putting their tokens into The DAO, and The DAO collected about 10% of The tokens in The entire Ethereum ecosystem at The time. The tokens were again stolen by someone. The natural consequence is that if Ethereum switches from PoW to PoS in the future, this person will have a big say. This is a big problem for the long term.

The community debated for a long time whether to hard fork to get The stolen money back, or to follow The "code is The law" and steal it, because The DAO project programmers were bad. In the end, it was decided that a hard fork should be made to get the money back without letting him have a longer influence.

So there was a hard fork. But there was a lot of debate, which was different from what I was saying about hard forks for technology upgrades. In order to upgrade the technology hard fork everyone will agree to upgrade the node, the technology upgrade is good.

But The DAO's hard fork has been rejected by some as a violation of The spirit of The blockchain. This group of people will not accept the new chain. As I said, hard forking is creating a new chain. These people don't agree that the new chain is orthodox, they think the old chain is orthodox, we need to develop the old chain, we need to continue to develop it, continue to mine on it, to make blocks on it, continue to package and trade. We want to carry forward the spirit of Ethereum when it was founded. The project was ETC, and it went down the old road.

Bitcoin's new narrative

Wind said:Back to Bitcoin's proof of work. The original mining was designed to reward the miners for working together to maintain the books, giving them an incentive to continue to maintain the books and keep track of the real data. That is to say, at the very beginning, the role of Bitcoin is not to let itself rise many times, to let people to mine coins and mining coins.

In fact, Bitcoin was originally intended to be a payment system, right?

Xie Han sword:Yes, the white paper on Bitcoin is all about making a payment system.

Wind said:So this is one of the biggest differences between today's real bitcoin and its original design.

Xie Han sword:There are a lot of differences. And that's where it gets really interesting.

You will find one thing that changes itself over the course of history.Bitcoin was originally intended to be an anonymous payment system. Bitcoin's Narrative is no longer intended to be a payment system. The Bitcoin community has basically reached a consensus that Bitcoin is not reliable as a payment.

First, prices fluctuate a lot, and second, with so much money now, the fees for making a transfer are skyrocketing. Too expensive, do pay fundamentally can not afford, and pay treasure is far from.

So what is Bitcoin good for?Now the new narrative is that Bitcoin is gold, and it has the characteristics of digital gold.Bitcoin is extremely expensive. Its price fluctuates, and so does the price of gold. People don't touch it, which is the exact opposite of paying. Payments are flows that come and go every day. Gold is an asset that sits there untouched, just stored in value.

The code that includes Bitcoin has also been modified many times. For example, Nakamoto just released the version of the Bitcoin code, in fact, there are a lot of bugs, many functions are not perfect. Over the course of a decade, bugs were slowly discovered, either through attacks or by the security team itself. Each of these bugs has been fixed.

Second, the function has also been expanded. For example, the important change is segregated witness, with segregated witness, more can be done. Lightning networks and things like that. It's still evolving, but in general, Bitcoin is very, very, very conservative in technology.

Bitcoin is a system that is already loaded with so much value that no one wants to change it. So Bitcoin is going to evolve very, very slowly.

Wind said:So do you personally subscribe to the current Bitcoin narrative?

Xie Han sword:I agree.

The leap of Ethereum

Wind said:So when did you start paying attention to Ethereum? Became a very early champion of Ethereum?

Xie Han sword:I was already in the loop when I focused on Ethereum. I was working on an entrepreneurial project of my own. Because of my work, I have to research many blockchain projects. In 2014, 2015, Ethereum white paper came out and started crowdfunding. With the introduction of friends around, I went to pay attention to. People talked about it and found out that Ethereum was really a big step forward, so it was very confusing.

Wind said:Is Ethereum an improvement compared to Bitcoin?

Xie Han sword:Compared to Bitcoin and many other projects, Ethereum is a step forward. There were a lot of star projects that people don't know about now. Like NXT, Litecoin, BCH. But what you'll find is that before Ethereum, you could call it the shanzhai era.

We can divide it into the age of Bitcoin (and only Bitcoin), the age of shanzhai and the age of Ethereum. We should still be in the Ethereum era.

In the shanzhai era, most projects were released by copying the Bitcoin code and making minor changes to become new projects. These copycat projects are all similar. I've just talked about projects that have changed a lot. An example of a small change is Litecoin, which has essentially stayed the same, changing just a few parameters for Bitcoin.

Wind said:Are there any changes to shanzhai currency that you feel are valuable? Or will they basically disappear over the course of history?

Xie Han sword:There is. Some shanzhaocoins just change their parameters, such as Litecoin.Some shanzhaocoins came with a brainwave, like Peercoin Peercoin, which is where POS came from. It was a brilliant idea.

More interesting is NXT, which technically selects the account model, unlike Bitcoin's UTXO model. NXT also allowed people to issue their own tokens, which was already available at that time.There are also shanzhai coins that allow people to create their own DEX. That includes projects to create coins with stable value that can be used for payments and everyday life because of Bitcoin's volatility.

These ideas have been around since Shanzhai Coin, and many of them have survived. For example, the idea of stablecoin was incorporated into Maker DAO, the largest coinage platform on Ethereum. Many ideas have been passed down from the Shanzhai era.

Wind said:So what are the fundamental differences and leaps of Ethereum?

Xie Hanjian: Ethereum has created a new system. It makes it easier for users and developers to implement their ideas on the new architecture. The way to implement these ideas before Ethereum was to create a copycat coin.

For example, if Bitcoin were Nokia, shanzhai coins would feel like smartphones before the iPhone.Can change Nokia's mobile phone, installed on the chips of MediaTek, built-in a few small games is the new and Nokia has different functions of the mobile phone. But it doesn't have an abstract platform.

If you wanted to add new features, you just redesigned a new phone. But Ethereum is about building a new architecture, like iOS. Ethereum doesn't focus on what applications to make, but developers can make all kinds of applications on it. And if you want to add new features, you don't have to "build a phone, build a hardware", you just need to develop apps. This is the biggest difference between Ethereum and Ethereum.

Wind said:How old was Vitalik when Ethereum came out?

Xie Han sword:He was younger than 20.

Wind said:Are you curious about the founder? This kid made Ethereum.

Xie Han sword:It was really cool. He was so young. But he didn't do it all by himself.

Vitalik was already a fairly well-known figure in the Bitcoin community before he worked on Ethereum. He was one of the main writers at the Bitcoin Journal. I think he wrote half of the articles on that site. He writes very high quality articles and is very technical.

Vitalik first gave a suggestion to the Bitcoin team, which is the feature machine I just mentioned. If you have these features, why not abstract them and make a platform? He was upset when the people on the Bitcoin project didn't give him a damn. But he thought he could, so he made Ethereum himself.

Vitalik is actually more of a theoretical, protocol design and research person. The idea is there, the general framework is there, but he needs someone to help him do the engineering. So he went around and he brought a team and a bunch of people together to do this.

What's remarkable about Vitalik is that he was someone who started doing things very early in the industry. He didn't come up with Ethereum out of thin air. He did a lot of things at a very young, very young age.

Wind said:I thought you had to come out and do things when you were rich and free.

Xie Han sword:One of the most attractive things about the circle is that many people still have ideals. Although wealth and freedom are all hoped for, many people really do things based on interest at the beginning, without thinking that they can achieve wealth and freedom by doing this in the future.

Like Ethereum, which was founded five years ago, nobody knows what the future holds for blockchain.

Wind said:So you were the only Chinese in the Ethereum community at the time?

Xie Han sword:There are some Chinese in the Ethereum community. I wouldn't say I was the only Chinese, but I was probably the only Chinese developer on the team.

PoW vs. Po

Wind said:Although Ethereum has many features, the similar debate and focus at the time was on the consensus mechanism, PoS versus PoW. Vitalik has also written a number of papers on PoS and the various consensus versions of shanzhai coins that have followed.

Do you think POS is better than POW?

Xie Han sword:This issue is very controversial and has a long history. It's been around for over five years since PoS was born.

Now I think it's a very close, very controversial issue. I am a very strong supporter of PoW.

The core difference between PoW and PoS is based on what resources to allocate the rights to the system. The difference is whether rights are allocated based on resources within the system, or on resources outside the system.

PoW It relies on resources outside the system -- computational force and energy -- to distribute power. Whoever has more computing power, who can find cheaper electricity, who can produce more efficient mining machines, who can find cheaper energy, has more power over the system.

While & have spent PoS Whoever can control the more tokens in the system will have the more power over the system.

Why do I like or prefer PoW ? Because & have spent PoS The problem with this approach is that PoS The system is much more fixed, monolithic. Since the day the system was created, I've owned 10% of all tokens. PoS It's all set up in the system,That 10 percent of the Token could be Staking, or mined with tokens. This means that 10% of all new tokens created in the system will be yours, which is a perpetual entitlement.

Wind said:This is very capitalist.

Xie Han sword:Say strictly & have spent PoW And & have spent PoS Both are very capitalist. PoW If you have more personnel or hardware, you will have a bigger say and earn more money. There is no essential difference between the two.

The difference is, PoW The resources are anchored outside the system, and the distribution is more equitable and even than the resources within the system. Because the distribution of energy is evenly spread across the earth, it is outside the blockchain system.

We have thermal power, we have hydroelectric power, we have clean wind power, and we may have nuclear power in the future. This is not a myth, but there are real teams that are following this path. All the energy from the scientific analysis is the cumulative solar energy on the earth. So it's a very balanced feeling.

Just to see who has the technology to convert energy into bitcoin. But for the POS system, it's not so uniform.PoS The allocation of all depends on how the system is allocated at startup. For example, I was an investor when the system started. I invested in a project, and in the first block I was naturally allocated 30% of the token. Then I can have this much for the rest of my life, not far away.

But in the beginning of Bitcoin, who owns how many tokens. Or a PoW Who owns how many tokens at the beginning of the blockchain, and even who owns how many tokens later on, are not so fixed. It's a more open system. As new miners can always find new sources of energy, electricity can be cut in cheaper ways than others and can have a comparative advantage. Or if you find a new technology that produces mines that are 20% more efficient and have a comparative advantage, you can join the game. It's going to be an open, long process. The process is constantly being joined.

In & have spent PoS Here, it doesn't make sense to have a new technology or a new energy source if you want to come in later. As long as there is no token, there is no advantage at all. And there will be no incentive for newcomers to join in.

Wind said:How much did Vitalik issue to itself initially?

Xie Han sword:He started with 1% of the coins in the Ethereum system.

Wind said:PoS Besides not using so much electricity, what are the advantages?

Xie Han sword:I don't really agree that less electricity is a benefit, it's a very hypocritical idea.

Many supercomputers are also very power-hungry. Should we stop all supercomputers? For example, planes in the transportation system are also very polluting and need to burn diesel. Should we stop all the planes?

Don't just look at PoW How much resource is consumed depends on how much benefit it brings. The benefits are the costs and benefits, and comparing the benefits is the way to see if something is worth doing.

Think & have spent PoW It takes a lot of electricity, so it's not good. That's not true. Because it's just looking at the costs and not looking at the benefits, I would think. PoW The benefits are far greater than the costs. And technology will develop and human beings will move forward. We also have clean energy. Bitcoin mining machines have also proved increasingly efficient. PoW Are solvable.

Ethereum was hoping to convert. PoS Because, PoW It will affect the design of future capacity expansion.Capacity expansion is to increase the volume of transactions the system can handle per second. Bitcoin can process an average of seven transactions per second, while Ethereum can process an average of 15 transactions per second.Such a system is not adequate for the entire world. Alipay can process 100,000 transactions per second. The gap is too large, so capacity needs to be expanded to increase the volume of transactions it can handle.

Ethereum was envisioned as a sharding design. But the sharding design in PoW Is more difficult to do, will involve all kinds of problems. But in & have spent PoS Many of the problems don't exist, you can go around.

PoS First, you can claim to save more electricity. The second is to better serve Ethereum's long-term goal of capacity expansion. And the third is that it was probably five years ago, right. PoS The discussion was not as rich as today, there are a lot of things are not thought of.

At that time & have spent PoS It's something new, and people think it's inherently a step forward. From the look, feel and. PoW It should be more or less achievable. PoW All kinds of benefits, but also save energy. People will naturally find it good.

But over the years, there have been all kinds of papers and studies. We'll find out. PoS cannot replicate the security features of PoW. This is purely from a technical point of view and cannot be replicated from a security point of view. PoW The safety of.

PoS It's about sacrificing something, giving up something in order to get the desired performance boost. From today's point of view, And & have spent PoS It's more like people are making different tradeoffs. There are ten things in all, but it is impossible to get them all. You always have to give up two or three, you're just making different tradeoffs.

Blockchain landing application

Wind said:Leaving aside the two projects of Bitcoin and Ethereum, what is a blockchain and what are the characteristics that define a blockchain?

Xie Han sword:In its narrowest definition, it is a system maintained by consensus. The system is technically in the form of data and links. In a broader sense, blockchain is a decentralized system. Under the new security model, in an open network, the actors in the network have their own agendas, some good guys and some bad guys, but the decentralized system is still able to accomplish specific tasks. This is a blockchain in a broad sense.

Wind said:After the three phases you mentioned: Bitcoin phase, Shitecoin phase and Ethereum phase, and all the discussions about publicity, technology, computers, cryptography, economics have become more and more mature, it seems that blockchain has entered a dilemma.

It attracted a lot of attention for 17 years, and people were very enthusiastic about it, and even attracted some very good entrepreneurs. At the time, people realized that they still didn't know what blockchain could do.

This disillusionment with blockchain, which I have experienced myself, is probably a more traumatic process for many people than the Bitcoin bubble. We have studied a circle, holding Akagi's heart, and finally feel that they do not know what blockchain can do.

Xie Han sword:My feeling is the same, 18, 19 years is actually quite boring.

In the early days of the field, new ideas were plentiful. My own distinct feeling is that in the early days of my browser, the pages were full and there was always more to look at. But these two years, and especially this year, will feel like there won't be that much fun. I think I've seen it all.

It is true that most people in this community are primarily profit driven. I'm not saying it's bad.Blockchain and economic incentives tied very tightly is a double-edged sword. It will catalyze the development of the industry faster, because there are benefits.But on the other hand, the core of the community is diluted by the interest that attracts many people very quickly. This is the path that any Internet community must take. But it will happen faster in the blockchain industry.

This is true of any community. There are always core people in the early days who share a common culture, topic and temperament. Later, it became famous because of this thing, and gradually more people came in, which diluted the original things of the community. There are plenty of examples on the Internet.Tianya, B station is very typical. The blockchain community is much more ferocious after going through such a process.

There will always be some people who are more idealistic. I have such people around me, the most typical is Vitalik. I think he is very idealistic, and I have been dealing with him a lot before. There are people who do things with the mindset that they want to make a difference in the world, and they want to see a different future. It's pretty exciting.

You just said that blockchain has never seen the scene, which is true. I think there is a big reason for this because the industry is developing too fast, beyond the development of The Times.

Bitcoin jumped out from the beginning to be a currency, to be a payment system.This is above all anachronistic. Who came out and said they wanted to be a currency before Bitcoin? It doesn't exist. Bitcoin is beyond most people's wildest dreams. Will private money be allowed to exist in existing countries? Can we even talk about it? So it's obvious that this is out of time.

Beyond The Times, it needs the whole society to follow it, it can slowly play a role.For blockchain, and for a lot of things on the public chain, it's clearly out of touch with reality. We have thought of various scenarios and methods to put reality on the chain and tokenize it, but it is still disjointed.

First of all, it's not technically loadable, because the performance requirements of real life are very high.

Secondly, the system can not bear, we can not find a way to compliance. Most of the applications in this space don't have a way to comply or how to comply. This leads to a lot of wild ideas that never get off the ground.

But 19, 20 years, 20 years ago is kind of a gestation period.Before, the legislation, compliance and supervision of various countries in the world are slowly approaching to the block chain and the public chain. Especially in the United States, the Securities and Exchange Commission, the SEC and other institutions have started to study blockchain, started to try to build a track, let the things on the public chain operate on the track.

20 years is clearly the outbreak of DEFI. Many of the tools in traditional finance are slowly being moved to Ethereum. It's decentralized finance running on a decentralized network, different from traditional finance in every way.Defi will take the instruments and derivatives of traditional finance and put them on a decentralized network so that more people can access these instruments and use them.

Good or bad we will not say, but at least it is done. Many would argue that because so many people are unfamiliar with these tools, they will be hurt by exposure, and that's true. But DEFI does provide tools that were previously out of the reach of ordinary people.

Dex decentralized trading, lending, insurance, futures, options are all here in 2020. All of this is happening because regulation has moved forward, and these are the kinds of innovations that can be justified. What you'll find is that the first wave of DEFI projects, they're all compliant in the United States, they're all regulated.

The investment community in the United States has also built mechanisms around DEFI. And that's all before 2020. So it was only natural that 2020 would usher in the DEFI outbreak. The number of users, the amount of usage, the amount of data, the amount of money locked up, all kinds of data are growing.

But I still say that DEFI is still out of touch with the real world. We can clearly see that DEFI is actually a castle in the air, its own ecology in idling.

As I understand it, finance should serve the economy. For example, I want to borrow money. The reason for borrowing money is that I have opened a factory and need to borrow money to carry out production and buy materials and raw materials.

"The loans on the DEFI are all used for speculating on coins," said the night wind.

Xie Han sword:It's all for levers. While the entire closed loop works, it has little to do with the real world, which is the biggest problem with DEFI.

But going one step further, why doesn't DEFI have much to do with the real world? I think it's the same two reasons.One is technical. How to create credit on the blockchain is a huge problem. Because lending on the blockchain is not credit lending but collateral lending. Many things cannot be played without credit.

Second, compliance considerations. Will governments be allowed to do financial business, such as lending, through blockchain?

Defi's obstacles will be technical as well as practical, and there are still big hurdles to climb.

Wind said:Except in the sensitive financial sector. Blockchain should have non-financial, less sensitive applications, such as crypto cats. There was also a wave of research into games and art.

Xie Han sword:There are some applications. But what's really interesting about these apps is that they have a token, they have a financial nature. For example, why crypto cats were hot at that time was because people were frying them, because a crypto cat can sell for a very high price.

Even looking to the future, you can use your digital collection as a counterpoint. Then the collection becomes meaningful. Just like the collection of calligraphy and painting now, when the emergency can be pawned for money. We want to do the same thing on blockchain, like using crypto cats as collateral, like mortgaging DAI stablecoin in Maker DAO, and then using stablecoin to meet all kinds of needs in the real world.

The core is that these apps have a financial nature. And even the infrastructure of the Internet, such as the DNS domain name. If you know anything about the Internet you will know that the domain name service is quite centralized, it is controlled by international organizations, how many units are in the United States, Europe, China. America may have the biggest voice, but it is generally quite centralised.

If we have a blockchain domain name system, we can completely move the root server of the domain name to the blockchain and do not need to maintain the root server. This is a solution to a very central problem of the Internet.

It also includes PKI certificates.When we visit a website, it is basically HTTPS, and the data between the user and the website is encrypted.You can avoid a lot of attacks. But the only way to use this encrypted connection is if the site has a certificate proving that it is real, and not a fake. Who issues the certificate is now also centralised. This, too, could be transformed by blockchain.

These are all things of the Internet infrastructure level. If the Internet infrastructure is centralized, it can be very dangerous to be controlled by one group or one country. Blockchain creates the possibility to solve these deep problems.

But the nature of these applications is still related to economic incentives and financial properties.Domain names are an asset, and the transfer of domain names under the current system is complicated. Under the blockchain system, the transfer will be easier and the domain name club can become a more liquid asset. Domain name can also do mortgage, do lending, is not only the domain name sold for money. You can even crowdfund domain names, you can buy a domain name together, divide it into 10,000 shares, and each person gets 1/10,000 of the domain name.

When we put assets on the chain, there are a lot of additional services derived, and the additional services are naturally built in. Because Defi is naturally running through the chain. But it's very difficult to do that with the existing system on the Internet.

Wind said:Do you think it's a matter of time?

Xie Han sword:It's a matter of time.

Rethinking Crypto Bull Market & NBSP;

Wind said:Will you feel uncomfortable if you see some people around you who only focus on the speculating money and are not so fond of the industry itself?

Xie Han sword:There was a time when I was like that, but I'm past that now.I'm in a state where I feel like this is the way the world is.

Without actually jumping into the water in the real world before, a lot of things are seen from books or movies, you might not see these. So it's really good. Blockchain has helped me understand the real world.

Wind said:Do you think it is difficult to get out of the mud without being stained?

Xie Han sword:First of all, I don't think it's silt. If the world is the way it is, you may be the one with the wrong mind.

I think it has a lot to do with personal experience and preferences. Different people have different choices.

Wind said:Are Bitcoin and Ethereum prices now a bubble?

Xie Han sword:I don't think bitcoin is a bubble. Considering the macro environment in 2020, the epidemic situation, the release of water is very obvious. Water can flow to U.S. stocks, or it can flow to virtual money.

Bitcoin has its own logical basis and value basis. In all respects, Bitcoin is sound in theory and value. There will be a place for it in the global asset system, and it will always capture some of the traffic.

Maybe prices will go down or up in the future, but there will be a value basis.

Wind said:What about yourself? Will you continue to invest in Bitcoin or Ethereum?

Xie Han sword:I will. I actually believe more in Bitcoin, but the issue is more complicated. It's not a simple question of which to believe, but which to believe is the right choice for a certain period of time.

From a research perspective, I would say that both Bitcoin and Ethereum have their own problems. Bitcoin's economic model continues on its current trajectory, and I think it's okay to go through another halve, but beyond that it's harder to say. Between 2025-2030, bitcoin's uncertainty risk will increase dramatically.

Ethereum also has big problems.Its expansion plans, including plans for 2.0, have been pushed and pushed, and are still labouring.Because Ethereum doesn't really have any serious competitors right now. The projects that claim to be replacing Ethereum are too early, so Ethereum can keep moving forward.

It depends on the next two or three years, whether Ethereum can complete ETH 2.0 before 2024, whether it can be successfully upgraded. If we get over that threshold, we can still look ahead. If we don't get over that threshold, and at the same time other projects are developed, there will be uncertainty. The uncertainty of Ethereum will remain for years to come. The uncertainty about bitcoin will remain for years to come.

So for now I would be more inclined to bitcoin.

Wind said:So what would be the incentives for miners if all Bitcoins were mined out? Does it pose a security risk?

Xie Han sword:That's the main problem with Bitcoin in the long run. Because bitcoin halves every four years. Miners who dig a block get half the bonus. This means lower and lower profits for miners, whose profits are directly related to the security of the network. The higher the profit for the miners, the higher the cost of attacking the network.

If a miner can make $10 a block, I'm willing to spend $10 on mining machines and $10 on computing power to maintain the network. If I reduced the reward for digging a block to $5, I might only be willing to invest $5 to maintain the network. The attacker may pay as little as $5.1 to buy more power than you to attack you.

So the only way to keep halving and maintaining the security of the network is for the currency to keep rising. For this reason, people think the price of Bitcoin will still go up, but that's problematic. The price of a coin cannot go to infinity.

There will always be a turning point in this process when it stops going up. At this time how to do, the security of the network will be a problem. It's something none of us have ever experienced. You can think of it as Satoshi set up a bureau, we all play in it, no one knows what the future will be.

But the general feeling in the Bitcoin community is that something is wrong. Many papers also analyze the safety problems caused by insufficient excitation after halving. But no one is coming up with a solution. Some people say they could change the offering to a secondary offering, not half as much, or another 21 million Bitcoins. But that's moving a lot of people's cheese. But there is no unified plan.

Wind said:So that's the biggest risk you can see in bitcoin.

Xie Han sword:I think so.

Don't buy bitcoin,

Bitcoin is a scam.

What I just said is not true.

End

It's not easy to really see the road ahead. We are all too easily seduced by profits, money and power. On the other hand, it's giving up when it's true that the road ahead is full of obstacles, mud and impossibility.

And the greatness of the real entrepreneur is: not only can not be deluded by the outside world, know what they want, what ability and resources, down-to-earth work. At the same time, I can see the road ahead clearly, and I can still move forward firmly despite the correct prediction of dangers and challenges.