Why Blockchain can Break through the Limitations of Human Nature and How Blockchain Shapes reliability.

National Day& Mid-Autumn festival holiday is coming to an end, during this holiday I read an article at home: The Highest Intelligent is Reliable.

I agree that reliability doesn’t necessarily make you rich, but it can at least lead more opportunities to you. Even Warren Buffet has said something similar: Reliability is more important than intelligence.

So what is reliability? It means that everything is explained, everything has a destination and everything has answers.

For example, when your boss assigns you a task and you can make a clear statement like If you can make it, then how far and how long it will take. Or if you can’t do it currently, but with which support you can make it. Otherwise, if there is nothing can be done, then just say there is no way. In this way, it can be regarded as reliable.

So why are people reliable? A sense of shame may be the reason.

People with a sense of shame will think that it is a sin to not live up to others, so do not easily swallow their words and never loose talk and be late. For example, if I have an appointment at 3:00 and I’m not there by 2:50, I must be very anxious and worried that I will disappoint the other person.

However, people will change and be influenced by others too, so it’s hard to be reliable all the time.

For example, one of my friends is very reliable and never late, but everyone else in the company is late, and there is no punishment for being late. As time passes, he doubts why should he be on time? Then he becomes less reliable gradually.

Thus, this world does not have forever reliability, and no wonder a lot of people say: clever common, reliability rare.

As you know, I love working on blockchain. A lot of people like to flatter it when talking about it. But to my mind, I focus more on its close relationship with humans. What I’ve found is that blockchain technology has reliable properties.

Insiders give blockchain technology a nickname: trust machines. As the name implies, it is a trustable machine. Since it’s born to build trust, can a technology that builds trust be unreliable?

Blockchain understands that human nature is complex, so it assumes that individuals can cheat and its networks don’t depend on individuals, but on the collective.

So, the way that blockchain builds trust, first of all, is to “build a cluster.” Blockchain is a distributed computing technology, which is composed of many computers in different places. The reason for “building a cluster” is very straightforward: it is afraid that a single computer is easy to be attacked by viruses, but it is difficult for many computers to be attacked by viruses.

For another example, if a Weibo user in China, a convenience store owner in France, a Moroccan student and an American student all agree that you are a good person, then you are basically not a bad guy.

Some may say that they would have banded together to lie, however they even did not know each other, and there was no need for collusion. Of course, if there are not a lot of people, it is possible to bribe one by one. In this case, it is better when more and more people joined whether they are familiar with each other or not. Because when there are enough people, nodes are scattered enough, then the cost of fraud will be high and the probability of fraud can be minimized.

The truth is this, but when there are more and more people, the number of dishonest people will also grow. So how to ensure that the final result is convincing?

There has to be a good mechanism, which allows people to reach a consensus that only at least half of the group (the computer) agree, the answer is valid, in this way if a few people do lie, the correct result will not be affected.

In blockchain networks, such a mechanism is called a “consensus mechanism”: each node (person) accepts the rules and fully considers its own interests to be maximized, they would spontaneously and honestly comply with predetermined rules.

For example, the Bitcoin network is composed of nodes (computers) distributed around the world. Only after the nodes confirm the authenticity of transactions, can they be judged as true records and written into the Bitcoin blockchain.

But why do people join the group?

In the blockchain network, although people are assumed to be potentially greedy, they are also collective animals and profit-seeking. There are so many people with common interests that they are naturally willing to work together to safeguard common interests.

For example, square dancing grannies, who spontaneously formed groups, have the same guiding ideology: dancing freely in the square. Being able to dance at the appointed time is the top priority of the group. Square dancing is the common interest that binds them together. If anyone takes up their space, they will fight for it.

However, as more and more grannies join the square dance, there also some non-professional ones, they form a gang or do some private activities, which deviate from the original intention of the organization, and all of these affect the normal holding of the square dance.

Of course, this is very normal because we do not know each other at the beginning. When more and more people involved, it is hard to avoid mixed. Therefore, in the blockchain network, there must be a punishment mechanism to prevent such malicious behavior. The so-called malicious behavior does not mean that it is illegal, but that it breaks the rules of the group and deviates from the original intention of building the group.

For those members who do harm, the frequency of their participation can be limited, or they will be kicked out. The decision can be divided to all, and the punishment can be decided by voting by the majority rule.

Penalties limit bad behavior, and in turn, rewards encourage good behavior.

But why encourage good behavior? Because people are profit-driven, good behaviors may not be consistent, sometimes they happen occasionally and may be spontaneous. Therefore, to ensure the continuity of good behaviors, there must be an incentive mechanism to give positive feedback to good behaviors and encourage the recurrence of good behaviors.

Therefore, the blockchain system takes all aspects into account, from the big to the small, from the collective to the individual, from the consensus to the selfish, using technology to make the society reliable.

Human nature is complex and the cost of reliability is too high. With blockchain, reliability is no longer a “rare resource”.

Article from Liang Wenhui/Translated by Yang(Milian Tech)

To translate some latest policy and issues on blockchain and fintech happened in China