Babbitt column | Cai Weide: 2 development routes of blockchain and misunderstandings caused by different routes
Blockchain Misunderstanding Series 1
Since 2008, humanity has opened up a new era, the blockchain era. If you don’t believe that a new blockchain era will be opened in 2008, you should take a look at the 2019 United Nations Digital Economy Report. In the "Digital Economy Report", some of the emerging technologies are ranked first in blockchain technology. Blockchain has changed the world, but the history of blockchain is indeed full of contradictions and chaos .
History of the gray part of the blockchain
Let me talk about the history of the blockchain gray. The gray representative means that it is not legal or illegal. Because in some countries, digital tokens can be made but not public, which is gray; some countries are banned. After Bitcoin came out in 2008, after many times of big rises and falls, everyone's views on digital tokens have produced many differences. Ethereum appeared again around 2013. Some regulators believe that Ethereum is the “source of evil” (not bitcoin), because Ethereum has made an ERC20 coinage mechanism, so that everyone can freely issue coins. Most of the ICO chaos was later based on Ethereum.
Originally, it was only a digital token for payment purposes, which was later used for financing. Because the tokens are out of nothing, the flowers are fierce, so that the ICO price rises linearly, causing the digital tokens to rise in an unreasonable way. Almost no-use tokens have received more than decades of research and development from US high-tech companies. This caused economic irrationality and market confusion. The US regulators finally took the shot in 2018, and the token market fell sharply.
- The market value of Bitcoin is over 70%. Han Feng: Bitcoin has a solid position and is optimistic about the new wind in the industry.
- PwC encryption investment report: Eurasian UP, US DOWN
- Russia's largest bank buys $15 million in debt through blockchain, achieving a “seamless connection” between banks and companies
But Bitcoin is the asset with the highest value-added rate in human history. It is bigger than gold, stocks, real estate, etc. Bitcoin has risen at least one million times in ten years, which is a surprise. Former Microsoft President Bill Gates said it is very appropriate, saying that Bitcoin does not have a company, legal person, chairman, general manager, even employees, no address, no customer service, even calling Bitcoin companies is impossible. In this situation of no one to serve, there are people who pay tens of dollars, hundreds of dollars to thousands, tens of thousands, millions, and millions of dollars every day to make payments and transactions. I can't see who is doing the transaction later, and there is no government or bank guarantee, but everyone believes that bitcoin is not afraid of risk, paying safely on it, and transferring money from one place to another. And cross-border payments are much faster than current bank remittances!
Because it is anonymous, Bitcoin has become a money laundering tool that undermines the national foreign exchange system, so Bitcoin has been suppressed by many countries and classified as black technology. Although the government has been suppressing, but a group of people who believe in bitcoin, they have always considered this to be an era. So they are bitcoin believers.
After several gains, Bitcoin finally rose to its highest point in 2018. From the highest point, there was a very long-term decline. During this time, there have been articles saying that Bitcoin will rise to one million. US dollars, these digital tokens were originally made for cross-border payments, and later became the capital for investment. ICO, which is listed as a financial chaos by many countries in the world today, uses these tokens as capital. Then it becomes a legal gray economy.
In 2017 and 2018, this gray economy actually created some miracles, which surprised the world's investment funds, and all of them entered the market. Even JPMorgan Chase Bank, which has always had no value in bitcoin, changed its official in February 2018. Speak and start to admit that this may be valuable.
Some people think that bitcoin has no value behind the mortgage, no central bank guarantee endorsement, no value. But Bitcoin has been rising again. It is believed that although there is no collateral or central bank support, people have confidence in the system (and the blockchain is the core technology of the system). It can be said that the value of Bitcoin is the confidence of the participants in it, and that this is the "hard truth". The high bitcoin price means that someone is confident to be willing to pay a high price to buy.
In 2018, the US regulatory agency SEC cracked down on digital tokens, causing digital tokens to plummet. However, it was particularly tolerant of Bitcoin and Ethereum, and listed them as financial products, which were finally legalized in the US financial market. But in addition to Bitcoin and Ethereum, US regulators did not classify other digital tokens as legitimate financial products.
Assuming that Bitcoin's big rise is a last word, is the fall of Bitcoin and other digital tokens in 2018 also the last word?
In 2019, some public opinion found that some ordinary people would rather believe in bitcoin than financial institutions. The American people still remember the large-scale cheating incidents of Wells Fargo in the past few years. People would rather trust the blockchain technology behind Bitcoin because the blockchain is mathematically guaranteed to be free of cheating, not by the system.
Blockchain regular army history
This history is from 2015. We call it the history of blockchain white roads. The Baidao block link line began to be the efforts of the Wall Street Journal, the Bank of England, and the UK's chief scientist.
In January 2015, the Wall Street Journal found that there was no bank guarantee, no government support, no customer service, no chairman, no bitcoin, and it would allow others to make billions of dollars in payment. The technology behind this system must be very powerful! And this powerful technology is the blockchain. The Wall Street Journal believes this is the biggest financial technology innovation in 500 years.
The Bank of England began to introduce digital currency based on blockchain in 2015 and 2016. The reason for their digital currency is to take back the regulatory power in order to crack down on third-party payment systems like Alipay and WeChat .
In January 2016, the UK's chief scientist again suggested that the blockchain could be used in all walks of life, including energy, medical, government, taxation, etc., and the term “revolution” was used many times to describe the changes brought by the blockchain. The chief scientist of the United Kingdom is the highest official scientific unit in the United Kingdom. His words have always been conservative, but they have chosen to use the "revolution" to represent their subversiveness in the technology, and they have repeatedly used the readers to notice and represent their urgency.
By 2018, there was another brand new development, which was supported by the government but the emergence of stable coins issued by technology companies. This is an epoch-making event. In 2015 and 2016, the regular army began to study the use of blockchains. But it is still necessary to wait until 2018, when the government comes forward to support the issuance, circulation, and payment of these stable coins or digital legal coins, and the blockchain begins to enter the government-backed currency world.
In 2019, the world's first bank publicly entered the blockchain financial market, which is JPMorgan Chase Bank, which used to be a bitcoin. This is of great significance. The blockchain is no longer just a technology that wants to evade supervision. Banks that have been strongly regulated have also entered the blockchain financial market, and the blockchain officially entered the banking sector.
In 2019, financial institutions such as VISA also joined the blockchain finance, and the blockchain officially entered the credit card financial world.
In 2019, Facebook's Libra coin shocked the world, and the world's central bank and government suddenly realized that the blockchain has changed the world and changed the financial market . In the past two months, many banks (including US banks, Bank of England, Bank of Europe, Bank of Africa, Bank of the Middle East, Bank of Asia) are talking about how to deal with the stable currency of Facebook. The bankers originally thought that the technology of the flood beasts is in these two. The month gave the bankers a big baptism.
In many financial technology reports, the blockchain was not listed as a technology. In 2019, the United Nations Digital Economy Report ranked the blockchain as the first of emerging financial technologies. This is consistent with the author's past five years that the blockchain is the largest financial innovation in 500 years, and this innovation should last for many years to digest.
The value of this formal route will far exceed the gray route. In 2016, the author talked about this in London and the financial city economist Michael Mainelli. The author believes that the formal route value will be 10,000 times larger than the gray route value, which he thinks is 1 billion times. Many economists now predict that the value of digital stocks will exceed the multi-million dollar market, far greater than the current stock market value.
The two routes have been in parallel
For a long time we have seen two routes development, one is the gray route, Bitcoin as the representative, started in 2008 until now, and there are still many believers in the circle of bitcoin and digital tokens. And because the regular army came in, they were even more ambitious. Because they were suppressed by the state, the current activities are smarter than before. The road show is not called a road show but is in the form of an academic conference. Sometimes even the project parties are anonymous. And when there is no public money, some people have made big money. Because the value of this currency varies from the original price to the price of the last currency, so much that someone has made a lot of money when the price of the currency is later.
Because in the media supporting digital tokens, they use a variety of opportunities to promote digital tokens. For example, if digital tokens replace the national central bank, Bitcoin will become the universal currency of the world. Of course, this is impossible, but when there was a white paper on Libra in Facebook on June 18, 2019, there were people who said that the Libra project would become the world's central bank . Some people believe that these digital tokens have completely changed the world and overthrown the central bank's currency. This is of course impossible.
In order to promote these theories, many ideas and opinions have been introduced in various media, and these views have been swayed by orthodox financial scholars and economists, so from the end of 2018 to 2019, the author encountered some bankers and economics. Home and financiers are contemptuous and even hostile to the blockchain. They believe that any relationship with the blockchain is to disrupt financial, which is not allowed by the state and cannot be touched. This has caused a bad phenomenon. The currency people are holding their coins. Some financiers are fascinating, hostile, and devalued by blockchain technology.
These ideas finally changed after June 2019. Modern economists also recognize that the economic and financial benefits of blockchain are enormous. Before August 2019, the term "digital currency" could not appear in the media. It was considered to be a black technology that ruined the country and disrupted the financial market. After August 2019, it could be publicly developed in Shenzhen, and the government encouraged it because the technology could " Prevent the economic crisis."
First of all, we must understand that the blockchain technology is neutral. Any neutral technology can be used by the gray road or by the white road. It is like we can take the car as an ambulance and fire truck to save people and put out the fire. The same can also drive a car to rob the bank as a thief.
So for a technology, we don't need to give it an ideology. It is a tool in itself, a gray road can be used, and a white road can be used. Those who evade supervision and disrupt financial use can use it, and can also be used by governments, banks, and financial institutions. Isn't it a pity that such a powerful technology is not used?
However, in order to promote his ideas, the use of a lot of nouns caused some confusion. We started such a series of misunderstandings, hoping to turn such a chaotic situation into an orderly environment. The first thing we have to have a correct discussion of nouns, if we can not even have a unified view of the nouns, it is difficult to make in-depth talks, this is the purpose of writing this series of articles.
Myth 1: Blockchain is equal to Bitcoin or other digital tokens
- “Blockchain changes finance” is misunderstood as “Bitcoin changes finance” or “Ethereum changes finance”;
- “Digital tokens disrupt financial markets” is misunderstood as “blockchain disrupts financial markets”;
- Many countries have misunderstood the “repression of digital token development” as “repressing the development of blockchain” in these countries;
- Many countries have encouraged the “blockchain research and development” to be misunderstood as “encouraging digital token development” in these countries.
- Bitcoin and other digital tokens have financial risks, money laundering, and disruption of the history of financial markets, so various blockchain applications (such as digital currency) can also have money laundering and various financial risks that disrupt financial markets.
Positive solution error zone 1
Blockchain technology originally originated in Bitcoin, but the blockchain is just a technical component inside. As a neutral technology, blockchain can be used by many applications, including legitimate or illegal applications. For example, the United States believes that most digital tokens are illegal, and only Bitcoin and Ethereum are legitimate financial products. But whether it is legal or illegal financial products, they are not technology.
Engine theory and design are technologies, but Toyota cars are products, Tesla is products, and technology is not products. The most important technology of a car is the engine. The most important technology of digital tokens is the blockchain, but the engine is not a car, and the blockchain is not a digital token.
If one application of the blockchain committee is a digital token, you can also use the term digital token to discuss the blockchain. However, blockchain applications are too broad. Digital tokens are just one type of blockchain application. Digital tokens are unlikely to represent blockchains. Here is a list of blockchain applications:
- Digital tokens: including no legal digital tokens and fake tokens;
- Digital stocks (security tokens);
- Digital real estate, digital real estate management, digital architecture;
- Digital medical, digital medicine;
- Digital energy and energy trading;
- Digital court, digital arbitration, digital evidence;
- Digital government, digital taxation;
- Digital education, digital human resources.
In addition, the financial risks of many blockchain applications are quite different. For example, digital tokens and digital forex financial risks are just the opposite. The main purpose of the Bank of England's original development of digital legal currency is to take back the regulatory power. Since the regulatory power must be taken back, the financial risks must be reduced. The Bank of England cannot use blockchain technology to increase financial risk. Therefore, the issuance, circulation and payment of digital legal currency must reduce financial risks. In addition to the Bank of England, Japan also believes that the establishment of blockchain-based cross-border transactions will reduce financial risks and anti-money laundering.
- “Blockchain changes finance” is not “Bitcoin changes finance” or “Ethereum changes finance”, blockchain changes finance because it is stable currency, digital legal currency, cross-border payment, cross-border trade, and other applications change finance;
- “Digital tokens disrupt financial markets” is not “blockchain disrupting financial markets”;
- "Repressing the development of digital tokens" is not "repressing the development of blockchains";
- “Encourage blockchain research and development” is not “encouraging the issuance of digital tokens”, not “encouraging speculative currency”, not “encouraging roadshows”, but encouraging blockchain research, such as research on digital currency, digital assets, digital transactions, Digital government, digital society, digital court.
 Cai Weide, He Juan. "The application of blockchain is not a wolf but a tiger is coming",2019.06.17.
 Cai Weide. "The dollar digital law currency turned out, are you ready ?" , 2011.09.01
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 Cai Weide. "How do foreign countries see China's response to Libra and the current layout of foreign countries", 2019.08.23.
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