Comments | The "bottom logic" of the 2020 blockchain industry has changed

At the end of the year and the beginning of the year, many media and analysts have begun to make a forward-looking analysis of the evolution of the blockchain market in the new year.

I am very pleased to see that in these trend outlooks, there have been arguments such as "outbreak of application on the ground, popularity of Lightning Network, and halving of market fluctuations."

In contrast, last year, more voices were discussing when the bull market will end in a bear market, what the next hundred-fold coin will be, how to become rich, and the like.

This means that the blockchain industry is gradually shifting from a pure investment speculative market to a value creation market, at least in terms of values.

In fact, since the 1024 countries have positioned the blockchain as a core technological breakthrough, the blockchain world has started a protracted trend of thought.

From the top-down succession of regulatory policies, to the continuous clearing of violating small and medium-sized exchanges, to the successive thunderstorms of air altcoins, the market began to show signs of reshuffle of good coins to drive out bad coins.

The evil platform was slain, the demons ceased, the slogan of the charge blew, and the entire blockchain industry showed a scene of "rebirth and prosperity".

All past are prologues.

In a word, "the" bottom logic "that drives the further development of the blockchain world in 2020 has changed."

01From "Technology Leadership" to "Market Penetration"

In the past 10 years, the first factor that has driven the development of the blockchain industry is "technology". Industry practitioners have continuously sought optimization and iterations around TPS (system throughput), capacity expansion, and speed improvement, seeking better technical solutions.

As a result, "technology" has taken a small step forward, and "market" has lagged a big step.

A few geeks are overly pursuing the ultimate technical performance, ignoring the fact that technology is ultimately verified by the market. Efforts in the smooth integration of technology into the market are clearly insufficient, as shown in:

1) The ultimate pursuit of "decentralization", ignoring the barriers to entry for users

It is important to build a "decentralized" product soul, but it is more important to troubleshoot the user's private key generation, storage, wallet generation, transfer, withdrawal and other troubles that may be encountered during the entire use process, reducing the user's threshold.

I have expressed similar views in an interview with the Planet Daily. At present, most blockchain products completely delegate "private key management" to ordinary users. It seems that the product is "decentralized", but there is no corresponding user to guide the product design, not only blocking some small white users from the door , And also made some users bear the loss of digital assets such as improper private key generation and loss of private key storage.

In the next three to five years, how to balance the Gap between "decentralization" and "private key management", and how to educate and enhance user awareness have become difficult points for the next "market penetration". Only through this step can the blockchain industry introduce new incremental users and add new vitality to the development of the industry.

2) Extreme pursuit of "TPS", neglecting market verification feedback

In the previous article "Boundaries of the Blockchain: The Public Chain and the Alliance Chain Will Have One Battle" , I said that most public chains currently cannot solve the paradox of decentralization and efficiency. Some friends reported that The public chain has solved the impossible triangle problem. I explained that because the market demand has not come up, running a chain of 1,000 transactions and 100 million transactions have completely different system requirements. Some chains in the experimental state say that they have solved the triangle problem on the premise that there are few actual transactions. Now, you can't say he is wrong, but who can say he is right?

The laboratory TPS test under the real market needs is meaningful, but the value still depends on the market. The so-called million-level TPS of EOS once gave the market great confidence, allowing everyone to see the possibility of blockchain electronic transactions replacing VISA cards and Alipay penetration into everyone's life. However, a cruel fact is that Alipay's acceptance by hundreds of millions of users does not rely on its high concurrent processing capacity. The transaction processing speed of 100,000 or 1 million per second does not concern users. Users only consider whether it is more efficient and convenient to use it. Already.

In the next three to five years, while pursuing high concurrent processing capabilities, the public chain must consider the various possibilities of real user needs, and continue to improve in market verification and feedback. Recently, Ethereum was blocked by FairWin funds and EOS was blocked by EIDOS airdrop, which is the result of insufficient consideration of user needs.

In fact, the excessive pursuit of technological barriers will only push the industry to the abyss of "niche", far less than the long-term value of maturity in the continuous feedback of market demand.

Whenever a friend asks me for the concept of blockchain technology with thirst for knowledge, I will say at first glance that it ’s pretty cool, "Blockchain is not a technology, forget" asymmetric encryption, hashing Algorithms, decentralization, mining "and other obscure technical concepts, just remember a few keywords such as" trust connection, privacy protection, digital development wave "at the bottom of the blockchain."

I didn't pretend that the blockchain technology just applied the existing combination of cryptographic asymmetric encryption and distributed data storage and P2P transmission, and there was no so-called cross-era technological breakthrough. To fully understand the blockchain, it is necessary to let go of its obscure and technical side, and strike directly at its essence of "production relations".

Just as the Internet has become highly popular today, there are several people who understand the working principle of the HTTP World Wide Web Protocol. We just need to know that networking can get useful information.

People tend to fall into their own cognition, and then "keep away from things" beyond the boundaries of cognition.

As a new generation of evangelists in the blockchain industry, my personal biggest hope is to transform the obscure blockchain technology into a value understanding that the public can understand and digest, and then promote the popularization of blockchain technology.

02From Token Drive to Value Drive

In the past 7 years, the second element that has driven the development of the blockchain industry is "Token" (tokens-equity circulation vouchers). With that said, many people's eyes are bright, I believe many people will explain the block to me The growth logic of the chain industry is scornful. In their opinion, this industry seems to have only the logic of making money, and the others are nonsense.

As a result, success is Token and failure is Token.

The Token incentive model is a pioneering work that perfectly integrates market mechanisms into technology applications. It combines finance, economics, sociology, and even human weaknesses, making the entire Bitcoin system a near-perfect existence. It is no exaggeration to give Satoshi Nakamoto a Nobel Prize in economics.

As a public ledger, in order to call on everyone to actively participate in bookkeeping (mining), Satoshi Nakamoto designed a token reward for each packaged block to encourage miners to continue to participate in bookkeeping.

The logic is clear. Incentives are the means, and bookkeeping (contribution) is the purpose.

In the years after the popularization of Ethereum smart contracts, large and small public chains, miners' mining pools, DApp applications, etc. built their own system operation mechanisms around the Token model, but most projects turned the cart upside down, and took the token incentive as the target, as shown in:

1) Token is an innovation of investment and financing mode, but it has deviated from the value anchoring scale.

Funding is necessary for entrepreneurial projects. Traditional Internet projects usually rely on business plans to get angel rounds from investment-based finance, and then based on the project's growth and market data performance, further complete Pre-A, A, B, and C until they go public. The 1CO model is creatively inverting the traditional investment and financing sequence. At the beginning of the project, it is equivalent to ringing the bell and going public, and selling its token to the market.

This mode of innovation has activated the public's enthusiasm for entrepreneurial innovation and lowered the threshold for entrepreneurship. The "White Paper" was written, and the industrial chain of Token issuance, exchange listing, public offering, private placement, and investment on behalf of others became lively. However, the value and quantity of Token entering the market did not strictly anchor the staged value of the project. Some projects As soon as it entered the market, it was valued at hundreds of millions or even billions, and issued tens of billions or even billions of Tokens. The token pool was too large and the number of users holding tokens was small. In order to increase liquidity, hype was formed, and the original Token The smooth road of innovation has become foggy.

2) Token originally allocated equity certificates for contributions, but has become a "hype speculation" object

The value of the growth process of the traditional Internet cannot be quantified, and many early users who contributed hugely cannot share the growth dividend after the success of the project. The project's growth process also requires continuous burning of money and subsidies, which is very costly.

The introduction of the Token mechanism can use airdrops to attract early users to participate and help the project achieve a hot start. In the market operation process, tokens can also be used to distribute rewards to active users who have contributed, allowing users to spontaneously join the queue of promotional projects, driving the rapid growth of the project.

The process of renewal, activation, retention, and growth of the entire product can perfectly fit the operation of Token distribution and repurchase.

However, value sedimentation does not take place overnight, but speculation only takes place overnight. Before the role of Token's incentive value was highlighted, its side effects that could be easily manipulated by speculation first appeared. The project market originally wanted to use Token to expand users, expand the market, and accumulate brands. However, it is currently dragged down by Token and is trapped in the abyss of death.

It is foreseeable that in the next three to five years, the currencyless blockchain and the compliant currency blockchain project will become the protagonists, and the issuance of tokens and market flow will also be restricted by corresponding value anchoring standards. Only in this way can the Token economy establish a position in the era of blockchain applications.

Token is essentially the digitization of equity distribution and the quantification of value flow. Tokens that have lost their anchored value, like the rootless duckweed, will eventually be silent in the dark ditch.

To say this, it will inevitably make some speculative people feel discouraged and always feel like blocking others' fortune dreams. However, a cruel fact is that the era of blockchain to rely on Token for speculation may have really passed.

During the development of the Internet, there are many "deterministic" opportunities for entrepreneurial success. For example, early and early domestic Internet projects will move Silicon Valley's market-proven projects to China, and they will most likely succeed; now, when a business model is in the first or second tier When urban market competition is highly saturated, new opportunities can be found by setting up sinking markets in fourth- and fifth-tier cities.

Since the blockchain ecosystem has developed rashly for 10 years, there are also such "high probability" investment opportunities. For example, when bitcoin prices are very low, invest in bitcoin, join the mining industry five years ago, and do project development in 2017. Token, in retrospect, people who are stupid in the era can be successful.

Now that you want to do something in the industry, you find that the Token model has been ruined, the value of bitcoin and other value investment targets is too high, and there is a lack of mature demand and market promotion for product applications. It is inevitable that the model innovation will be engaged by the Wool Party. It's so frustrating, even the uncles and aunts who you think have not touched the blockchain, have been harvested in advance after the funds have sunk. It's hard for your wife and wife!

I often tell my friends that the logic of investing is not to look at the upper limit, to keep the bottom line, and to use the existing industry's cognitive investment as "deterministic" as possible. For example, the bottom-up is much smaller than the risk of chasing up. Getting off the bus in time after Fuying is much stronger than cutting the meat.

The purpose of raising industry awareness is to find the underlying password that drives the development of the industry. Even Bitmain has guaranteed a price of 5,000 for the market. You also think that Bitcoin can fall to 2,000. Most altcoins seem to The building is about to fall, and you can expect them to come back.

Most people are investing in the "uncertainty" fluctuations of gamblers' psychological investment, and only a few value investors have "a sense of certainty" behind the growth of investment projects.

03From Ecological Construction to Industrial Portfolio

The third element that has driven the development of the blockchain industry over the past three years is "ecology." "Ecology" and "industry" seem to be the same "false big empty", but the logic behind it is completely different. "Ecology" pursues closed-loop operation, and "industry" pays more attention to system division of labor and cooperation.

As a result, "ecology" builds a small world, but "industry" builds a big world.

This is a bit abstract, and you must say that I am foolish. For example, in the current Internet world, Apple has built an integrated hardware + software ecosystem based on the closed nature of IOS. We buy Apple's series of hardware and use the AppStore to download software. On the surface, Apple relies on a system monopoly to obtain most of the market's profits, but it also makes it difficult to combat cyclical market risks. Once the era of smartphones is overturned, Apple is likely to fall behind as quickly as Nokia.

And Google built an Android smartphone hardware ecosystem based on the open source of Android. Any mobile phone manufacturer can transform its own proprietary system based on the Android system, licking bricks and tiles for the Android building, and Google is constantly struggling to expand new tracks. , Engage in wearables, driverless, quantum computers, and more. Apple relies on the power of small ecology, while Google has more cleverly used the comprehensive power of the big-time trend, focusing on the combination, division of labor and collaboration of the industry.

The blockchain itself is a small ecosystem and is relatively "closed." For example, Bitcoin, Ethereum, EOS, etc. are all independent public chains and have their own closed systems, including miners, super nodes, developers, audiences, etc. This ensures the security and stability of the system, but causes data islands to form between the chains, the user's threshold for use becomes higher, and the experience is poor.

In the next two or three years, the industry will gradually work towards the side chain, layer 2 network expansion, cross-chain and other directions. Expansion and application based on the existing mature public chain will be the mainstream trend. Taking the current DeFi scenario as an example, based on Ethereum smart contracts, entrepreneurs can combine various fun modes such as borrowing, derivatives, forecasting markets, stablecoins, and DEX to build their own new financial products. That's right, it only needs "combination" innovation. The market has mature media, professional security companies, and authoritative technology outsourcing companies to help you get everything done.

I often tell my friends that the outlets of the Internet era are one by one, such as smart phones, Internet +, push O2O, live video, etc., and there is only one outlet in the era of blockchain technology: convergence, replacement, and digital As the economic tide rises, you will find that the underlying moisturizers of the blockchain technology are silently building ground in all walks of life. There are too many entrepreneurial opportunities here. Of course, it is advisable to discourage the public from issuing tokens on the public chain. It is enough to build an industry combination and model innovation based on the existing ecology, because this is the next wave of trending dividends that even pigs can fly.

If you are still crying for missing the sun, then you will also miss the stars.

Awareness evangelist of blockchain value, senior blockchain practitioner. There is no concept of tallness, no sparse technical description, only the most popular business, the most sensitive perspective, and the most unique insights. I am still a poor elementary school student in the blockchain industry. All the thoughts and thoughts in this article are broken thoughts. If you are in the circle, do n’t laugh. Welcome to discuss.

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