Distributed ledger

Distributed ledger means that transaction bookkeeping is jointly completed by multiple nodes distributed in different places, and each node records complete accounts, so they can participate in the supervision of the legality of transactions, and can also jointly testify for it [12].

Different from traditional distributed storage, the uniqueness of distributed storage of blockchain is mainly reflected in two aspects: First, each node of blockchain stores complete data in a block chain structure, while traditional distributed storage generally divides data into multiple parts according to certain rules for storage. Second, each node of the blockchain is stored independently and in the same status, relying on consensus mechanism to ensure storage consistency, while traditional distributed storage generally synchronizes data from the central node to other backup nodes. No single node can record the ledger data independently, thus avoiding the possibility of a single bookkeeper being controlled or bribed to falsifying the books. Also, because there are enough accounting nodes, theoretically speaking, unless all nodes are destroyed, the accounts will not be lost, thus ensuring the security of the accounting data [12].

Asymmetric encryption

Transaction information stored on the blockchain is public, but account identity information is highly encrypted and can only be accessed with the authorization of the data owner, thus ensuring data security and personal privacy [13].

Consensus mechanism

Consensus mechanism is how to reach consensus among all accounting nodes to identify the validity of a record, which is not only a means of identification, but also a means to prevent tampering. Blockchain proposes four different consensus mechanisms, which are suitable for different application scenarios and strike a balance between efficiency and security [13].

The consensus mechanism of blockchain has the characteristics of "minority rule majority" and "everyone is equal". The "minority rule majority" does not refer to the number of nodes entirely, but can also refer to the computing power, the number of shares or other characteristics that computers can compare. "Everyone is equal" means that when nodes meet the conditions, all nodes have the right to give priority to the consensus result, which is directly recognized by other nodes and may eventually become the final consensus result. In the case of Bitcoin, proof-of-work means that it is only possible to fake a record that does not exist if you control more than 51 percent of the network's accounting nodes. When enough nodes join the blockchain, this is almost impossible, thus eliminating the possibility of fraud [13].

Smart contract

Smart contracts are based on trusted, immutable data that automate the enforcement of predefined rules and terms. Take insurance as an example. If everyone's information (including medical information and information about the occurrence of risks) is authentic, then it is easy to automate claims in some standardized insurance products. In the day-to-day business of insurance companies, though trading is less frequent than in the banking and securities industries, the reliance on reliable data is increasing. Therefore, the author believes that using blockchain technology can effectively help insurance companies improve their risk management ability from the perspective of data management. Specifically speaking, it is mainly divided into the risk management of policyholders and the risk supervision of insurance companies [13].