Dr. Xiao Feng's speech
The following is the full text of Dr. Xiao Feng's speech, compiled from the on-site shorthand draft:
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I am very sincere and fearful. I am a financial practitioner and I have entered China Unicom's 5G+IoT IoT Forum today. I still start from my expertise and talk about my understanding of the Internet of Things from a business and financial perspective.
Internet business model
Before talking about the Internet of Things, I would like to talk briefly about personal understanding of the Internet business model. The Internet has a variety of applications, but I think that most Internet companies, even those of the tens of billions of dollars, Internet companies, the core business model comes down to one thing – that is, the user's behavior is easily collected through the Internet. Data, and then accurate customer portraits, and then use artificial intelligence matching algorithms for precise marketing, thereby greatly improving transaction efficiency . Improving efficiency, reducing costs and improving the experience are the core business models of the Internet.
We have seen that tens of billions of dollars of Internet companies basically do their different business performance based on this model. There are also some Internet applications that seem to be cool, but they don't actually form a business closed loop because they don't fit this pattern. The characteristics of such applications are that user behavior data and customer portraits are not important to them. Even the so-called precise matching on the Internet is not important, and may cost tens of billions of yuan a year. Until today, it is impossible to see how such applications can form their own closed loops, thereby converging losses.
Internet of Things business model
The business model of the Internet of Things and the Internet is very different. I personally understand that the Internet of Things is a data-based data network, so its core business logic is to collect device-side data . In some business scenarios, real-time data interaction between devices and devices is very large, such as car networking. With the advent of driverless, real-time, low-latency data exchange is a decisive factor; There is a very large need for collaborative computing. Some time ago, the stock market was hot on the concept of a fringe calculation, indicating that everyone also saw huge market demand in this area.
I understand the Internet of Things from an investment perspective. The business model he brings is very different from the Internet business. The biggest difference is that it gives the machine intelligence . Because the machine has intelligence, people and machines can communicate on an equal basis; the peer-to-peer exchange of human and machine wisdom lays the foundation for a new intelligent society. I believe that the Internet of Things will play a decisive role in the process of intelligent society. The previous speakers also talked about the topic of smart society or smart society.
From a business perspective, there is a very critical issue in the Internet of Things, which is how to upgrade the Internet of Things from a tool-based technology to an institutional technology.
What is instrumental technology? The Internet is an institutional technology that has created many new business models on the Internet and refactored many businesses. In contrast, WiFi is a tool-based technology, and we have not found that some people have created very big business opportunities in a tool-based technology such as WiFi. The so-called subversive technology or great technology will definitely bring about great changes in economic system and economic structure . This is a Stanford University professor who studied complex networks. The professor has done more than 20 years of complex network research, and he found that all economies are some kind of expression of technology. But these technologies, which can affect economic systems, economic structural changes, and the ability to rebuild some new business models, are caused by a combination of technologies, not by a single technology. For example, cars change the way people communicate, but it is not just the car manufacturers that can make such a big change in the way people travel, especially the innovation of production organization, such as Ford's assembly line, Taylor's business. The revolution in management methods, the extraction of chemical petroleum energy, and the hardening technology of roads have even involved the hourly wage system advocated by Ford. The innovation of the wage system ultimately makes people have the money to afford private cars. A whole set of innovations in technology + systems has brought about new businesses, bringing about tremendous changes in the way people communicate, and all these disruptive technological synergies will change the economic system.
The Internet of Things has the characteristics of becoming an institutional technology. To bring about changes in the economic structure, economic system, and business model, not only the technology of the Internet of Things itself, but a single technology cannot achieve such a historic value. We need the cooperation of other technologies, and I think the blockchain is indispensable.
How to close the Internet of Things business
From three levels, I say why IoT technology has to become an institutional technology, and it must complement the blockchain.
Blockchain technology can be very helpful in identifying the Internet of Things. The bottom layer of any value network or any blockchain-based financial system is the identity verification of the device. In the real world, in a people-based financial system, each of us has our own unique identity. Based on this identity, a personal account can be opened, and we can conduct various financial transactions on this account. In the world of Internet of Everything, "equipment" must first be given a credible "identity" that cannot be changed. If the device does not have a trusted identity, assetization of the data and data transactions based on blockchain are unlikely to occur. The identity of digital devices that cannot be tampered with by blockchain technology is the basis of the closed loop of IoT business.
The device is generating and sending data every second. How is the data recorded? How to measure? There are two concepts here, I want to clarify. Distributed databases and distributed ledgers, which are very different. Some might say that we use a distributed database to solve all the problems. Distributed databases do solve problems, but distributed databases do not help us to capitalize and finance these data. A distributed ledger is required to assetize and finance data generated in real time by these device data. A distributed ledger based on blockchain provides a billing method for data transactions, which is not possible with distributed databases.
The blockchain's asymmetric encryption algorithm (private key + public key) is a set of methods for determining the ownership of digital ownership. For example, like the ownership of Bitcoin, it depends entirely on who owns the private key. The private key is the only confirmation technology for digital copyright.
The data is assetized and a clear unit of measure is required at the time of the transaction. First of all, the Token in the computer language plays a role in this. Explained at the financial level, Token is the unit of account for data. Secondly, many algorithms for blockchain plus cryptography also bring the second level of things – privacy protection of device data. If the privacy protection of device data is not solved well, the data property rights cannot be confirmed naturally. This is not the result of the blockchain technology itself, but rather the blockchain-based algorithm. For example, privacy protection like zero-knowledge proof, ciphertext data sharing based on homomorphic encryption, data verification, and even secure multi-party computing. Secure multiparty computing refers to the collaborative calculation of data between different devices after encryption. Simply protecting data does not bring value, and the value of the data must be reflected in exchanges and transactions. But without the blockchain-based cryptography algorithm, it may be difficult to let everyone share and exchange data with confidence. In addition, blockchain technology is a set of technologies that are naturally used to help us capitalize on digital, helping us to identify digital ownership and prevent double-flower trading. From a purely engineering perspective, Bitcoin provides a set of proven ways to prevent double-flower transactions by confirming digital ownership.
All digital things have one of the biggest features, and it is easy to copy and spread at zero margin. How to avoid the number that has been confirmed by the property rights, is not spread out at zero cost. If the data can be copied very easily, it obviously does not constitute a large-scale data market and value system. The experiment of blockchain technology over the past 10 years proves that it can help us determine the property rights of data. In the case of e-mail, in the Internet era, you can send an e-mail of the same content to 10,000 people, while still retaining your original e-mail. If the number becomes a value, then obviously I can only give it to one person, and the person who accepts the price clearly knows that the seller has no (data), and the third person cannot get it again. Otherwise why should I spend money to buy your data?
Data is oil in the era of digital economy , and oil is an asset. The industrial economy brings oil, the real fossil energy, it is also a class of assets, it is not just used to drive cars, it is also a very large class of tradable financial assets in the capital market. Then, in the era of the Internet of Things, equipment generates so much data every second, its new era of oil, driving the development of the digital economy, but also will become a very large, very valuable one in the capital market and financial market. New financial assets. The business of the Internet of Things must be closed-loop. To be able to generate a company with a level of tens of billions of dollars and hundreds of millions of dollars, it is necessary to enter this cycle.
In this closed loop, the business logic must not lack the assetization of assets and the financialization of assets. Without the financial sector, the value of the business model of the Internet of Things will be greatly reduced. I think that the closed-loop business model of the Internet of Things must be the networking of devices -> dataization of the network -> assetization of data -> share of assets -> transactionization of shares -> financialization of transactions. Only a share divided into standards can be easily traded, otherwise the sale of data cannot form a market with good liquidity, nor is it a market with clear pricing. Digital asset-based transactions can provide a very rich financial service, which is my personal business model from the perspective of business and finance.
To sum up, it is the so-called subversive technology, which is marked by the ability to change the economic system and economic structure. This change is embodied in the creation of new business models, such as the Internet. The closed loop of all these business models is lacking in the financial sector. I believe that the Internet of Things is the same. This is what I share today. Thank you.
(Source: universal blockchain)