Is the blockchain a reform or a revolution? Internet giants have deployed blockchain

2018 is the year of the landing of blockchain applications. Previously, the society was shrouded in the enthusiasm for the blockchain, and the technological maturity curve of the blockchain is approaching the highest point of expansion. This means that blockchain technology has come to the most critical moment-either large-scale popular commercial applications have entered the stage of mature development; or it has fallen into a bubble bursting period, industry applications cannot be implemented, and the technology heat quickly fades.

Major Internet companies such as BAT, JD.com, and NetEase have all deployed in the blockchain. They concentrated on entering the game from the end of 2015 to 2016, when the blockchain was in a "technological expansion period".

After 2 to 3 years of accumulation of technology research and development, the blockchain application products of large companies have gradually produced results, becoming an important force to promote the blockchain from the 2.0 era to the 3.0 era.

However, in the era of blockchain 3.0, the online blockchain will be anchored to the physical world, and greater challenges will follow. Blockchain can only deal with the problems after the chain is on the chain, and the realization of offline consensus and the game between stakeholders cannot be solved by the application of blockchain technology.

"Understanding blockchain technology, knowing how to use blockchain, and being able to make good use of blockchain are three completely different stages." Zhang Zuoyi, head of blockchain application innovation in JD's Y division, told the reporter of Caijing.

Big Internet companies are still stuck in the "innovator's dilemma" in the blockchain era. As the vested interests of the Internet monopoly model, large companies can only use blockchain technology to reform the problems under the existing business system. Therefore, they often choose the 2b model of providing customers with blockchain technology services, and are more cautious in the 2c model. Be careful.

But another subversive effect of blockchain is precisely to break the existing Internet monopoly model and rebuild the consensus ecosystem of interests under the concept of blockchain.

Think of the blockchain as a reform, not a revolution-this concept is likely to prevent large companies from becoming the ultimate winners in the blockchain era.

Start a new era, or fall into a bubble?

Blockchain 2.0 is still limited to digital virtual goods, and blockchain 3.0 will enter the era of industrial blockchain

The birth and application of any new technology follows a set of curve changes from budding and expansion to bubble bursting and mature development. The "2017 Global Emerging Technology Maturity Curve" published by Gartner, a global information technology research company, shows that blockchain technology is approaching the peak of the expected expansion period.

Is the blockchain a reform or a revolution? Internet giants have deployed blockchain

2018 is a key stage for the commercial application of blockchain technology. Whether to start a new era or fall into a bubble period, this period is crucial.

Major technology giants, including BAT, JD, and NetEase, have been in the blockchain for several years. Alibaba has established a blockchain technology committee. Now blockchain applications cover multiple business areas such as Ant Financial (financial technology), Tmall (e-commerce), and rookie (logistics). The total number of blockchain applications for technology patents in 2017 Ranked first in the world. Tencent has launched the TrustSQL blockchain solution platform, and has tested blockchain applications in many fields such as supply chain finance, taxation, medical treatment, and gaming with partners such as governments and banks. Baidu launched the blockchain BaaS open platform and "super chain" and joined the Hyperledger hyperledger program as a member of the core board of directors. JD.com applies blockchain to logistics and commodity traceability, and launches an open blockchain platform to open technology to third parties. NetEase also launched the "NetEase Planet" blockchain data product.

Most of the time when Internet giants entered the blockchain was at the end of 2015-early 2016. This point in time coincides with the "technical expansion period" of blockchain technology.

"Ant Financial began to deploy the blockchain in 2015 and felt that the future of blockchain is the basic technology of society. Our goal at the time was to understand the underlying technology and further build the underlying platform system." Zhang, head of the Ant Financial Blockchain team Hui told the reporter of Caijing.

The first blockchain application of Ant Financial was born from a bottom-up project attempt by engineers. In the 2016 Ant Financial Internal Hackathon Challenge, a blockchain interest group implemented the POC (proof of concept) of the blockchain charity fund tracking application in 48 hours. This conceptual project quickly expanded into Ant Financial's first attempt at blockchain landing applications-the "Hearing Impaired Children Regain a New Voice" charity fund tracking project. Ant Financial cooperated with the China Social Relief Foundation to use blockchain technology to realize the full information tracking of each donation. The project also became the public welfare project with the highest traffic on the platform at that time, and finally raised 10 hearing-impaired children 198,000 yuan, nearly 50,000 people participated in donations.

Before the end of 2016, Ant Financial's blockchain attempts only focused on projects and were not reflected in the organizational structure. At the end of 2016, the blockchain architecture changed from virtual to real, and the Ant Financial Blockchain team was formally established.

In February 2017, Jiang Guofei, former vice president of NEC, joined Ant Financial as the vice president of Ant Financial and established a technical laboratory. The blockchain team has also been incorporated into the system of the "Ant Financial Technology Laboratory" that focuses on cutting-edge technology research.

JD.com established a blockchain laboratory in 2016. Zhang Zuoyi, head of blockchain application innovation in JD's Y division, was one of the founding employees of the blockchain team at that time. In mid-2016, he and several R&D staff found four computers to try to build the first blockchain network of their own. Soon the blockchain network came out, generating a hash value every 5 minutes. Zhang Zuoyi and his colleagues were very excited at first, and then looked at each other: "The consortium chain is made, but what can it be done? Is there any practical value in getting a kitten or puppy like a blockchain game?" Then they found out The real challenge lies in the fact that it is very easy to put 10 pieces of data on the alliance chain to generate feature values, but what if it is 1 billion?

JD.com applies blockchain to the field of commodity traceability, which requires processing a huge amount of order data. In the early days of blockchain application, Procter & Gamble cooperated with JD.com to use blockchain for anti-counterfeiting traceability of shampoo. Procter & Gamble docked 40 million bottles of shampoo data, and it took Zhang Zuoyi and his team 26 days to write all the data into the bottom layer.

"0-10 billion is not a linear development, but an exponential acceleration. The perfect upgrade of the underlying system of the blockchain, a lot of hard work is really inevitable, and we can achieve it step by step in more than a year." Zhang Zuoyi Tell a reporter from Caijing.

Large Internet companies have entered the game since the era of blockchain 2.0. With the accumulation of technology for 2 to 3 years, their blockchain application research bears fruit in 2018, propelling the opening of the blockchain 3.0 era.

The era of blockchain 1.0 was started by the birth of the first generation of encrypted currency "Bitcoin". From 2009 to 2016, the blockchain as the underlying technology of Bitcoin began to gradually gain attention and entered the embryonic stage of technology.

Then from 2016 to 2017, the era of blockchain 2.0 represented by the "smart contract" of Ethereum, the blockchain technology became popular around the world and entered a period of expected expansion. However, in addition to the large-scale popularization of Bitcoin and ICO issuance of blockchain applications at this stage, there are no other applications that are truly accepted by the public.

2018 is considered to be a critical year for entering the era of blockchain 3.0-blockchain applications have entered a period of explosion. All sectors of society will find the connection point between themselves and the blockchain, and the application of blockchain has quickly landed in many industries. Finance, gaming, digital content and other industries are currently recognized as fast-growing blockchain application areas in the industry. With the rapid advancement of the blockchain application trend, more "heavy" fields such as logistics, real estate, and e-commerce have also begun to integrate with the blockchain.

At present, Alipay's charity donation platform fully introduces blockchain technology, and all donation data is on the chain. As of January 2018, Alipay’s donation information recorded by blockchain technology covers 21 million users’ donations of 367 million yuan, and the number of donations reached 220 million. Ant Financial's blockchain team has also expanded to hundreds of people. JD.com uses blockchain traceability technology to comprehensively record the raw materials, manufacturers, logistics, consumers and other multi-subject full-link information of commodities. As of June 2018, JD’s blockchain traceability has involved hundreds of brands, covering more than 12,000 product SKUs and more than 1.2 billion single-chain information.

"Blockchain 2.0 adds smart contracts, which are still limited to the creation and transfer of digital virtual goods, and it is difficult to support the application of relatively complex industrial scenarios. Blockchain 3.0 will enter the era of industrial blockchain." China Computer Society Blockchain Yu Jianing, a member of the Chain Specialty Committee, told a reporter from Caijing.

Challenges from the digital world to the physical world

What the blockchain can solve is only the problems after the chain, but the achievement of an offline consensus cannot be solved by technology

Nowadays, all walks of life are trying to integrate blockchain applications. Many industry applications are dazzling. Is there a potential law to determine which industry blockchain applications will mature first? In fact, the development of blockchain applications follows a clue from "digital assets to the physical world".

The first areas where blockchain applications began to mature were finance, games, and content. These major areas have a common feature-they are all pure online assets or data, and can form a complete ecosystem.

The emergence of blockchain has solved the trust crisis. In human society where multiple parties participate in cooperation (such as remittance settlement, supply chain finance, etc.), the crisis of trust is the biggest source of cost for cooperation. In order to achieve cooperation, a third-party intermediary is often required to provide a credit endorsement, which is costly. For each additional partner, the cost of trust will also rise sharply. As a distributed ledger that cannot be tampered with, the blockchain uses technology to complete the credit endorsement without the need for a third-party intermediary. Large companies that choose the 2B model use blockchain technology to build alliance chains for multiple combined entities. Its biggest technological innovation function is to be able to quickly realize the linkage between multiple subjects and automatically execute contracts through code.

Cross-border remittance is a typical application scenario for multi-party cooperation. In the past, the process of cross-border remittance was complicated and time-consuming. Take remittances from Hong Kong to the Philippines as an example. After a user remits money from Hong Kong, it needs to go through more than 6 intermediary links: the remittance agency, a bank in Hong Kong, multiple intermediary banks, a bank in the Philippines, and a collection agency. This process often takes several days. Blockchain cross-border remittance eliminates the complicated intermediary links in the middle, and the arrival time of cross-border remittance is shortened to only a few seconds.

At the end of June 2018, Ant Financial and Standard Chartered Bank launched a cross-border remittance service based on blockchain technology. AlipayHK and Gcash have cooperated to become the world's first electronic wallet that uses blockchain in the full chain of cross-border remittances. Standard Chartered Bank Responsible for day-end fund settlement and foreign exchange exchange. Blockchain cross-border remittances can be completed at any time by mobile phone 7×24 hours, and there is no need to wait until the next day for traditional cross-border remittances to operate after 7 pm.

The traditional invoice circulation system is complex, involving four links: invoicing, circulation, bonded, and reimbursement. At the end of May 2018, Tencent cooperated with the Shenzhen Municipal State Administration of Taxation to establish an "intelligent tax" innovation laboratory and developed a blockchain electronic invoice solution. Tencent has achieved a complete traceability of the entire invoice process through blockchain technology. The blockchain connects each invoice stakeholder and has the feature of non-tampering. It can trace the source, authenticity, and reimbursement of the invoice, and solve the problems of multiple invoices, false claims, false claims, and difficult verification of authenticity in the process of invoice circulation. . In addition, it reduces costs and simplifies the invoice reimbursement process. "In addition, there are potential scenarios for tax risk assessment, tax credit, tax registration, and certification processing. This is the direction we will explore together with the Shenzhen State Taxation Bureau in the future." Cai, general manager of Tencent's blockchain business Yi Ge told a reporter from Caijing.

With the development of blockchain technology, the scope of application has begun to expand from pure online assets to the offline physical world-this is the era of blockchain 3.0 that people are looking forward to. But the problem also followed.

"The biggest challenge for blockchain applications comes from two. One is the technology itself, how to achieve a high-performance, high-reliability alliance chain system that can be deployed in cities, the country, and even the world. The other is how to reach a consensus offline and make more Multi-participants join. This kind of offline consensus incentive mechanism design is also a big challenge." Zhang Hui, head of Ant Financial's blockchain team, pointed out to the reporter of Caijing.

The magnitude of data processed by enterprise-level blockchain applications is astonishing, which poses a great challenge to the technical strength of the platform. Large companies use a layered architecture to solve this problem. The blockchain infrastructure platform they build is often divided into a three-tier architecture-"bottom layer + platform layer + application layer".

Zhang Hui told the reporter of Caijing that Ant Financial mainly undertook the development of the underlying blockchain technology of the first layer, and defined the underlying standards of blockchain technology through the core technology of independent property rights. The second layer up is the blockchain BAAS platform layer, which is jointly built by Ant Financial and Alibaba's Tmall and Cainiao. The platform layer belongs to the blockchain service system, which allows various enterprises to quickly develop and deploy blockchain services on it. The third layer is the application layer, which combines merchants, logistics, customs, and users to develop specific blockchain applications.

Tencent has also built a similar three-tier blockchain business architecture. The bottom layer is the underlying technology platform of the TrustSQL blockchain, which lays a solid foundation for the entire blockchain business. The second layer is the platform product service layer, which is open to business fields such as digital assets, authentication services, shared ledger, and sharing economy. The top layer is the application service layer, which provides specific blockchain applications and industry solutions including digital bills, institutional clearing and settlement, and intellectual property protection for banks, insurance, securities, etc.

When the application of blockchain expands from online data assets to the offline physical world, the problem becomes more complicated. What the blockchain can achieve is the non-tamperable and distributed storage of online data, but once it is handed over to the physical world-whether or not the game between stakeholders is on the chain, whether the data on the chain is true and reliable, these troubles are not application blocks Chain technology can solve it.

Take blockchain traceability as an example. Before the popularization of blockchain technology, the commodity traceability industry has always existed, but conflicts between several major e-commerce platforms have slowed the popularization of commodity traceability. Alibaba once built a set of anti-counterfeiting and traceability "Gypsophila" system. In the end, due to the contradiction between platforms, it was difficult to implement it.

"E-commerce has not tried anti-counterfeiting traceability before the blockchain, but found that there are limitations. My products are not only sold on Tmall, but also on JD.com and No.1 stores. If you can only scan the code on you , Other platforms must disagree. In the end, there is no way. I only posted this batch of goods to Tmall. I became a merchant in order to gain a marketing position, and the motivation was not strong." Founder of TAC Traceability Chain who has been in the field of product traceability for many years Wang Pengfei told the reporter of Caijing.

Even after the application of blockchain technology, conflicts between platforms still exist. Therefore, how to solve the problem of multi-agent cooperation under the blockchain and build a consortium chain system in which all parties participate equally is still a challenge for blockchain applications in industries such as traceability and supply chain.

"An important role of blockchain technology is to help establish a relatively equal and cooperative relationship. How to coordinate the relationship between multiple links is actually required offline." said Cai Yige, general manager of Tencent's blockchain business. Zhang Hui, head of Ant Financial’s blockchain team, also believes: “The best solution is offline consensus. The design of offline incentive mechanisms draws multiple parties together. The roles and interests of all parties are clearly stated, including on-chain Responsibilities outside the chain and the benefits received."

The prudent 2C model and the dilemma of innovators

Projects based on the concept of blockchain and facing users directly will often subvert the existing Internet business model

2B or 2C is the first business model choice every company faces when entering the blockchain. At present, most technology giants tend to be cautious when innovating on blockchain applications. Their choice tends to be based on 2B, providing enterprise customers with blockchain technology. However, there are also some large companies that are experimenting with the 2C model, directing blockchain application products to users.

NetEase launched the blockchain product "NetEase Planet" in early February 2018. This is a product that looks like a nurturing game on the surface. Users can reap the force value by completing different tasks every day in their own "planet". The higher the Force value, the faster the black diamond will grow. After users have harvested black diamonds, they can be used to redeem corresponding rights, such as auctioning black pork, sweeping robots and other physical products, or participating in lottery activities.

After the "NetEase Planet" internal test went live, it triggered a round of viral spread among major communities, exceeding one million DAU (daily active users) in the first month. This effect did not even occur to the founding team itself. "At that time, only a few invitation codes were thrown in the company's internal group, inviting colleagues to forward. I also set a limit of 5 times to control the number of people. The result was a growth of tens of thousands of thousands at the beginning, then an exponential growth, and finally transmission It was banned by the communication platform too soon. But users will still come in after bypassing the communication platform." Gu Feiyong, the head of NetEase Planet, told Caijing reporter.

Netease Planet's product and technical teams had differences of opinion before they went online. The product team is cautious about the internal test results, but the technical team is generally optimistic. Gu Feiyong and the team finally decided on the idea of ​​launching MVP (Minimum Viable Product) to test user feedback. If there are no waves on the line, the team will change direction. If the effect is good, continue to expand. The unexpected internal test results gave the team a lot of confidence. "The magic of the blockchain is still great." Gu Feiyong said.

The essence of NetEase Planet is not a blockchain game, but a blockchain data ecological value platform. In the current Internet ecosystem, data is monopolized by major Internet companies. The data belongs to the user in name, but the user has no way to use it. In fact, it only belongs to the Internet company. Gu Feiyong had participated in the era of big data and had direct feelings about the drawbacks of this model: "I was in charge of several big data teams, but I couldn't do it at that time because the companies didn't share the data."

Blockchain has cracked the data monopoly of Internet companies. In the era of blockchain, data belongs to users. In a decentralized blockchain data ecosystem, user data can be collected and exported to any blockchain at any time. At the same time, users can freely use their own data and profit from their own data.

NetEase Planet is trying to get more companies to join in, business and data on the chain. Data ownership belongs to individual users. Enterprises purchase data from users and provide various services for users to consume, and jointly create a blockchain data ecosystem. The content model and the e-commerce model are the two directions they have recently tried, but they still haven't fully worked through.

The 2C model products designed entirely based on the concept of blockchain, such as NetEase Planet, belong to the minority among large Internet companies. Large companies often see blockchain as a means to improve existing businesses. They try to embed blockchain technology into the existing business system, only to solve one or some problems in the existing system.

Tencent announced in April 2018 that it would launch the game "Catch the Demon Together". Although the promotion is a "blockchain game", the gameplay is mainly based on AR technology, using the phone camera to capture AR monsters that appear in the user's environment. Blockchain is only used as virtual asset management in games to protect users' virtual digital assets and solve the problem of over-issued virtual items in traditional games.

Some large companies adopt the 2B2C model, first serving companies and organizations with blockchain technology, and then facing consumers with corporate services. Ant Financial and the Xiong'an government cooperated and launched the first blockchain application rental platform in Xiong'an in February 2018 to solve the problem of false listings and chaos in the rental market. The platform consists of three sub-platforms, including rental management platform, integrity points system, and blockchain unified platform. Through blockchain technology, the listing information, the identity information of the landlord and tenant, and the information of the house lease contract will be synchronized on the chain, verified by multiple parties, and cannot be tampered with.

"We can use the blockchain analogy to the Internet. The infrastructure of the Internet is undertaken by large companies, and the web and mobile Internet innovations on the infrastructure are endless. As far as the blockchain is concerned, we are positioned as a large technology company in infrastructure , The above allows various start-up companies to innovate.” said Zhang Hui, head of the Ant Financial Blockchain team.

Harvard Business School professor Clayton Christensen pointed out in the book "The Innovator’s Dilemma": "Mature companies cannot cope with disruptive technological innovation, not because the new technology is too complicated, but because they spend more resources on maintaining and competing for current implementations. A large number of profitable mainstream businesses."

The birth and rapid development of the blockchain has forced Internet companies to face this dilemma. "BAT has large-scale application scenarios. The weakness is that traditional Internet monopoly is the biggest beneficiary. Blockchain is about to revolutionize, and they have concerns when making decisions. The weakness of startups is that they need to find application scenarios and users, but they There is no historical burden." Professor Cai Liang from the Blockchain Research Center of Zhejiang University pointed out to the reporter of Caijing.

Is the blockchain a reform or a revolution? This is the biggest difference between big companies and startups when facing blockchain, and it will determine their future destiny at the same time.

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