Blockchain technology will change everything

A new report from Wall Street giant Goldman Sachs says that blockchain , the underlying technology of Bitcoin, is ready to “ disrupt everything . ”

Although the Bitcoin hype has come to an end, the " blockchain " technology behind it has become a hot topic recently. Goldman Sachs believes that blockchain technology can completely change the traditional payment system and can be used in a large number of things including issuing securities and smart contracts. Compared with the traditional trading system, blockchain technology can make transactions faster and at a lower cost.

Blockchain technology originated from Bitcoin and is a general ledger maintained collectively by participants in the Bitcoin network. Each participant in the blockchain network is a node , and all nodes store a complete set of ledgers that record all historical account information. When any node needs to initiate a transaction, it needs to pass the transaction information to every node in the blockchain network to ensure that the ledgers stored on all nodes can accurately update and verify the transaction.

In order to encourage all nodes to provide computing power to record transactions occurring in this block network, nodes will have a certain probability of being rewarded with a new Bitcoin. This behavior of pursuing Bitcoin rewards is usually called mining , and all nodes that provide computing power are figuratively called miners .

Blockchain realizes the self-certification function within the entire network in a decentralized manner, rather than the traditional form of unified account book updates and verification by a centralized third-party organization. Therefore, some experts say that blockchain technology can be said to be a technology that collectively maintains a reliable database in a decentralized and trustless manner, and Bitcoin is only the first application of blockchain technology.

Goldman Sachs is very optimistic about the future application of blockchain technology . Robert D. Boroujerdi , an analyst at the bank , said in a recent report:

This decentralized, cryptography-based solution removes the middleman and has the potential to redefine transactions and back-office operations across multiple industries.

Boroujerdi said that once the underlying technology of Bitcoin is understood, it can usher in new tools to cut costs, challenge the profit pools of those middlemen , and hopefully make these centralized institutions obsolete. This solution promises opportunities not only for consumers, but also for those businesses that are more interested in profit.

Cutting out the middleman means blockchain technology can operate more efficiently, more reliably and at a lower cost than current systems, Boroujerdi wrote, adding that it can reduce counterparty risk and has the potential to provide instant feedback on transaction risks and costs.

Boroujerdi also highlighted some use cases for blockchain technology in his report, ranging from payment systems to banks’ back-office ( such as accounting, HR, settlement, etc.) and regulatory paperwork, to notarization of alternative assets (such as works of art), voting systems or vehicle registration, and can also be used to provide records of academic certificates.

However, the report also points out some potential problems with blockchain technology, such as the limited transaction throughput issue often discussed in the community . Currently, the Bitcoin blockchain is limited to 7 transactions per second, which is no advantage compared to the 47,000 transactions per second supported by VisaNet .

In fact, a recently disclosed patent application shows that Goldman Sachs has developed its own " super bitcoin " for a settlement system - a digital cryptocurrency called SETLCoin , which is used to trade stocks, bonds and other assets. Although this currency is not Bitcoin, the blockchain technology behind it is exactly the same.

Goldman Sachs' patent application for SETLCoin may indicate that as banks and financial institutions become more familiar with the technology themselves, they may increase their independent development of blockchain technology.

Goldman Sachs also earlier participated in a $ 50 million investment in payment app Circle , which uses Bitcoin's blockchain technology.