Sees Blockchain Story

The Dawn of Blockchain

Blockchain is a cryptographic technology used for electronic transactions that became widely known to the public with the birth of Bitcoin.
The concept of electronic transactions in cryptocurrency began in early 2008 when Satoshi Nakamoto published a "Paper on Cryptocurrency," a mailing list on crypto theory within "metzdowd.com".

To summarize Satoshi Nakamoto's paper, "Commerce on the Internet currently relies on financial institutions as trusted third parties to handle electronic transactions without exception.　Financial institutions do not handle completely irreversible transactions to arbitrate disputes.　Arbitration costs drive up transaction costs and thus the possibility of small transactions is lost.　What is needed is for the parties to be able to transact directly with each other without the need for a third-party institution.　In this case, there should be a decision-making system based on cryptography, not trust.　A P2P distributed timestamp server is used to protect cryptocurrencies from fraud such as multiple uses.　If the good nodes have more CPU capacity than the malicious nodes, the system is security secure".

In this paper, a specific system design was presented as a system that allows normal transactions to be conducted directly between parties on the Internet without the need for financial institutions or other arbitrators, and this is the electronic transaction system that was subsequently established, known as the blockchain.
In January 2009, "Bitcoin," the world's first cryptocurrency, was born as a currency traded on the basis of a distributed processing transaction system between multiple computer providers using blockchain technology described in Satoshi Nakamoto's paper.

Fundamentals of Blockchain Technology

Blockchain has three main characteristics.
First, let me say that "blockchain does not = cryptocurrency", cryptocurrency is simply one of the DApps (distributed applications) of the blockchain.

In terms of technical categories, the characteristics of blockchain can be narrowed down to the following three.

• 1. Autonomous decentralized system (P2P network)
• 2. Cryptography (Hash Function)
• 3. Consensus Algorithm (Consensus of the deal)

Many organizations have begun to verify that the blockchain in cryptocurrencies in existence may be solving issues in decentralized systems that have not been clarified until now.

Today, this technology is attracting attention as a technology that can be applied not only to financial institutions, but also to the medical field and the IoT field (technology to remotely operate machines via a network).
However, at least the legitimacy of the blockchain as applied to cryptocurrencies is supported only by Bitcoin's "uninterrupted" operation for more than a decade, but paradoxically, the blockchain itself has never been hacked or interrupted, making it a perfect system. Sometimes cryptocurrency fraudulent outflows make the news, but this is not because the blockchain itself has been hijacked, but because the user terminals connected to the blockchain have been hijacked.

It is very important to note that blockchain technology has not been theoretically verified and established by a third party, which means that cryptocurrency, one of the decentralized applications created by blockchain technology, is still in the process of evolution, being repeatedly improved by many engineers. It is still in the process of evolution, being improved by many technicians.

Let us now discuss the three main areas of blockchain technology.

Autonomous decentralized system (P2P network)

Peer to Peer (P2P) in autonomous decentralized systems refers to a style of network connection in which multiple terminals communicate directly with each other on a network to which they are connected, and in which no management server exists at all.

In contrast, public blockchains, as typified by cryptocurrencies, are not operated by a central processing server with central authority, but are based on the premise of building and operating an autonomous decentralized P2P network that does not centralize authority in specific terminals. In contrast, public blockchains, such as cryptocurrencies, are based on the premise of constructing and operating an autonomous decentralized P2P network that does not centralize authority in a specific terminal.

This decentralized network is supposed to be less costly and maintain transparency, so why haven't autonomous decentralized networks been built in the financial and other systems?

This is because there is one major problem that cannot be solved, and that is the "Byzantine General Problem," the question of whether a correct consensus can be formed within a network when false information can be communicated through malfunction or willful misconduct.

Bitcoin attempts to solve this problem through a consensus algorithm called PoW (Proof of Work), which attempts to legitimize transactions in an autonomous decentralized network by incorporating the approval of multiple nodes in a mining process. PoW is an attempt to legitimize transactions in an autonomous decentralized network by incorporating multiple nodes' approval of mining.

This authorization method is a computation that requires enormous computer processing power, and the time and financial burden of this work is what makes the system resistant to malicious attacks, and this is what digital signatures and hash function encryption technology are all about.

In contrast, a consortium-type blockchain with an intervening administrator is a blockchain of only an electronic transaction ledger with an administrator, and is suitable for applications where an administrator always intervenes in the operation and autonomous decentralized P2P transactions between users cannot be conducted, thus eliminating the need for mining to show the legitimacy of the transactions. Therefore, the mining process is not required to prove the legitimacy of transactions.
Instead, there is a proprietary consensus algorithm that ensures the legitimacy of transactions.

Private blockchains, which are becoming more popular for industrial applications, are even more flexible and employ a self-mining system to ensure the legitimacy of transactions.
This private blockchain is currently attracting a great deal of attention as an extremely superior blockchain that allows for autonomous decentralized P2P transactions even when there is an operator.
In recent years, private blockchains have come to be known as "industrial blockchains" or "enterprise blockchains.

With the aim of applying this private blockchain to all fields as an advanced data security solution in IoT and M2M (Machine to Machine), Sees Co., Ltd. started research on a proprietary method of private blockchain in 2016 and Sees Blockchain was spawned in 2018.

Cryptography (Hash Function)

The blockchain is protected from tampering by a cryptographic technique called juzu-tsunagashi, which consists of a digital signature and a hash function.
The blocks that contain the ledger of electronic transactions are strung together in a hash function sandwich fashion, hence the name "blockchain" because of its structure.

For example, when a block is formed, a hash function generates data (hash value) that summarizes all previous transactions.
The next block generated is formed by containing summary data and transaction data, and the next block generates those summary data.

Since a single block thus contains a summary of all transaction data, all blocks after the tampered transaction must be rebuilt in order to commit fraud.
In addition, a consensus algorithm (agreement by the participants) is designed so that the one who produces a calculation result faster wins the right to create the block.

In other words, tampering requires computing faster than other nodes and using multiple computers with enormous computing power in parallel, which is the basis for the blockchain's tampering impossibility.
This technology is the basis for blockchain's legitimate claims of security, transparency, and traceability, and is also a key technology.

Consensus Algorithm (Consensus of the deal)

Bitcoin uses a consensus algorithm called PoW to guarantee the content of electronic transactions.
In order to generate a block containing transaction data, a hash value using a hash function is required, which can only be derived from the hash value of the previous block by a difficult calculation. The nance must be used to form the hash value of the next block.

Only the node that finds this nance the fastest can generate the next block, and Bitcoin adjusts the computational difficulty so that this calculation can be completed in about 10 minutes.
Also, because Bitcoin employs a long-lasting chain of these blocks, tampering to generate them would be extremely difficult in practical terms, as it would require far more computing power and time than usual.

However, there is a danger that these systems can easily collapse because the malicious ones will outweigh the competent ones if there are more malicious miners than the benign ones that exist, or miners with huge computing power.

In contrast to public blockchains in cryptocurrencies, private blockchains for industrial applications guarantee the validity of transactions by means of self-mining.
This self-mining method is a consensus algorithm that is also used in the Sees Blockchain, and has established its own method of self-mining by multiple nodes as representative mining = self-mining by multiple nodes. This method is a consensus algorithm also used in the Sees Blockchain.

This allows users to conduct autonomous decentralized P2P transactions with peace of mind, with transaction details guaranteed to each other, even though there is no actual administrator.
The Sees Blockchain is an advanced private blockchain that automates P2P transactions and guarantees the transaction details, making it a superior, future-oriented blockchain.

What is the Byzantine General Problem?

As an aside, I would like to briefly touch on the "Byzantine General Problem," which has often been an issue facing P2P networks since the onset of the network.

The question of how to authorize the correct transaction when a malicious party is present in the network has long been a major challenge in building distributed systems, known as the "Byzantine General Problem.

This "Byzantine General Problem" is "a scene in which several generals surrounding an enemy country must agree on a simultaneous attack operation, and how to determine the correct information and get everyone to agree when there is a possibility that one of the allied generals may be a traitor, a messenger may be captured, or false information may be spread. How do you determine the correct information and get everyone to agree on the correct information?

There are always malicious people on the Internet, as represented by hackers, and no communication environment is perfect or stable.
For example, the "two generals issue," which is a two-party agreement on the Internet, exists separately from the "Byzantine generals issue.
This is currently considered to be completely solved by the TCP/IP (Internet Protocol Suite), the world standard communication protocol for networks, however, there is no perfect logic or IT system in the world.

For example, even in the case of TCP/IP, the world's standard communication protocol for networks, if two computers are hacked at the same time, there is no way to detect this, and the two computers will continue to communicate illegally as if nothing had happened, without any change from normal communication.
The problem of whether other nodes can agree on the same correct information under such circumstances has long been a challenge in building distributed systems.

However, seeing that bitcoin is actually maintained for a long period of time by a decentralized system, people began to say that "bitcoin is solving the Byzantine general problem.
However, it is not resolved in reality, but only by the speculative theory that "even if there is a malicious entity, it will not dominate unless it has more than 50% of the computing power.
Recent studies have shown that even with 41% computing power, a new block can be generated with a probability of 1/2.

In conclusion, it is correct to say that Bitcoin and other distributed processing systems out there have not solved the "Byzantine General Problem", rather they have found ways to "avoid" having to solve that problem.

In contrast, the Sees Blockchain is a private blockchain ideally and optimally designed for industrial applications, and employs a unique consensus algorithm of representative mining by multiple management servers.

However, private blockchains are an excellent technical solution for guaranteeing transactions while ensuring data security, enabling autonomous decentralized P2P transactions without the need for a third party, and maximizing the security of the data transmitted. Private blockchains, however, are an excellent technical solution for guaranteeing transactions while ensuring data security, enabling autonomous decentralized P2P transactions without the need for a third party, and maximizing the security of the data being transmitted.

If it is clearly defined that it is not a blockchain because it is not decentralized, then I think it is safe to say that the Sees Blockchain is not a blockchain as we know it, but an evolutionary data security system.

Private-type blockchain management servers do not require human administrators; public-type mining is made automatic by the mutual decentralization technology of multiple representative servers (nodes).
What is happening there is no different from the consensus in a public blockchain, where "only a limited number of nodes are granted mining rights.

Why is blockchain secure?

The reason why Bitcoin has been able to continue to operate normally without any system failures is that it is a "no gain" situation, where the malicious actors' rationale for taking over the system is economic.

Bitcoin rewards all nodes participating in the network (the servers that make up the system and the computer terminals of the participants) for mining.
In order to compete in the mining competition, it is necessary to have computers with faster computing power than other nodes, and there is also the economic burden of equipment and running costs, such as electricity, to operate them.

With so many miners mining using their own computing power, a computer with more than 50% of all participants' processing power and its operation costs more than the mining rewards.
The balance between the difficulty of the 10-minute calculation and the reward in bitcoin is that it somehow ensures safety by producing a "no gain" result for the malicious participant.

Other public blockchains use consensus algorithms called PoS (Proof of Status) and PoI (Proof of Importance) instead of Bitcoin's PoW (Proof of Work) to automatically analyze the number of holdings and the degree of contribution and pay rewards. This creates a situation in which cooperation is more beneficial than cheating, and is intended to ensure safe operation.

Private blockchains for industrial use, such as the Sees Blockchain, are free from the threat of being hijacked by a malicious third party because they are self-mined by representative nodes.
Therefore, private blockchains designed for industrial applications are the most efficient and secure blockchains available.

Self-mining uses proprietary algorithms that enable extremely fast transactions, and incidentally, in IoT applications, it has achieved transmissions in a few milliseconds.
The fact that blockchains take a long time to transmit is true for public blockchains that are mined, and does not apply to private blockchains.

Challenges facing public blockchains

As is true of all public blockchains, including Bitcoin, anti-fraud measures such as mining rewards and contribution-based rewards only work for those who want to gain by cheating.

The possibility cannot be denied that even a public blockchain could be intentionally destroyed or taken over by someone with malicious intent to disrupt or destroy the electronic transaction system without regard to its economic value. The collapse of Bitcoin and other cryptocurrencies in global circulation would now have far-reaching consequences for the economy.
The bitcoin blockchain records all transaction data in a distributed manner across participant nodes, but there is no denying that all of this could be rewritten by a malicious participant with more than 50% of the computing power.

The fact exists that even if tampering is discovered because there is no one authorized to manage it, it is not possible to recover it.
When a public blockchain with new logic is created, it is possible that participants who have accumulated expertise in Bitcoin and other blockchains will participate in mining the new public blockchain and instantly dominate it with their overwhelming computational power. One such example is the existence of a huge pool of miners that conducts mining in a large global organization.

Thus, the biggest challenge is that Bitcoin and other existing public blockchains have not solved the "Byzantine General Problem," but are merely systems that happen to be running well, and the system could collapse or be taken over at any time. The biggest challenge is that the system could collapse or be taken over at any moment.
The private blockchain for industrial use, which has been repeatedly used as a contrast, will have none of these threats.

The Rise of Blockchain for Industrial Applications

The world is full of people who support de-centralized transaction systems based on public blockchains without question. Einstein famously said, "To pay homage without questioning is the greatest blasphemy against the facts.

As this quote suggests, many IT-savvy people see many dangers in public blockchains, as evidenced by the fact that financial institutions have also begun to conduct blockchain transactions in recent years, all using centralized consortium blockchains. The fact that all of them are using a centralized consortium-type blockchain is also clear.

In fact, this advantage of the public blockchain is also its biggest drawback: "It has low labor costs and is transparent.
One of the problems I fear with public blockchain is that it appears that the safety of the ledger at the node is assured, but if the user's terminal suddenly fails, for example, the transaction ledger cannot be transacted even though it is guaranteed between nodes unless the access key, such as a password, is backed up. In this case, the transaction ledger may be secured between nodes, but if the user's terminal fails unexpectedly, he or she will not be able to make transactions, effectively losing his or her assets.
The same is true if the terminal is hacked and the wallet is stolen, a problem that the current public blockchain cannot even find a solution for.

The other is scalability, the flexibility of the blockchain to accommodate changes in the size of transactions. However, the slow transaction speed is a problem, and sometimes it takes several hours for the transaction to be approved.

As a response to this problem, the developers tried to introduce a technology called Segwit (Segregated witness), which was described in the original Bitcoin paper (Satoshi Nakamoto, 2008) but has not yet been implemented.
This is an upward-compatible update to the system, which can be done while maintaining compatibility with the existing specification, which is to manage the digital signature portion separately from the block with an apparent increase in blockchain capacity.

In contrast, AntPool, the world's largest mining group, supported a solution that would increase the transaction capacity of each block unit of the blockchain itself.
The Bitcoin blockchain block holds approximately 3,000 transaction records and has a capacity of 1 MB, but this capacity is to be increased to 8 MB, which would effectively create a completely new blockchain that does not reflect the blocks (transaction ledgers) created under the existing specifications. In effect, a completely new blockchain will be created.

Updating the former with compatibility is called a "soft fork," while creating a blockchain with the latter's new specifications is called a "hard fork," and it is undeniable that public-type blockchains are subject to conflicts between soft and hard forks.
In fact, the same problem as with Bitcoin has occurred in the past with Ethereum, which split into two blockchains due to a hard fork.

With all these inevitable technical challenges, and the major security issues that can arise from not having a centralized authority, one cannot easily say that a decentralized, public blockchain is superior if one is familiar with all of this, can they?

As a final note, private blockchains, which can be consented by only a limited number of nodes, have a de facto operator, a real management server, and can guarantee a high level of security and operation in terms of scalability and various maintenance issues.

It is inevitable that the blockchain for industrial applications in the new era that will permeate society will be concentrated in the private type that not only allows secure P2P transactions, as typified by the Sees Blockchain, but also has no worries about expansion.

Public June 2018
Updated September 2025