Perspectives | Cryptoeconomics: Historical Opportunities in Crises

The current global economic crisis is caused by multiple causes of the new crown virus, the Internet business cycle, emerging market economy country dividends, and human social transformation. Cryptographic consensus can solve the information security and information monopoly of the Internet economy, and become a new global economic growth point and promote humanity. Complete the historic transformation from a material society to an information society.

I. Causes of the current crisis

The world is facing a one-hundred-year crisis. The reasons for the crisis are:

1. The fuse (this month) is the outbreak of a new crown epidemic hitting the global economy. This was an accident, but it directly led to a sharp contraction in global economic activity.

2. The short-term (almost 20 years) reason is that the Internet industry, the last global economic growth point, has flourished and declined. This is a normal industry cycle. The transformation of the traditional economy by the Internet has brought about a substantial increase in the global economy, but it has reached a bottleneck. The main problems are information security and information monopoly. Security issues increase operating costs. Giant monopolies weaken the incentive for innovation.

3. The medium-term (almost 40 years) reason is the end of the growth dividend period for emerging market economy countries represented by China. This dividend comes first from the market-oriented reform system dividend, the second from the population growth dividend, the third from the industrial revolution urbanization dividend, and the fourth from imitating the advantages of developed countries. China's experience is the deepest, and the end of the dividend period is also the most obvious.

4. The long-term (nearly 100 years) reason is the outbreak of long-term accumulation of contradictions in the global credit-based financial system and policy system. The process of world industrialization pushed the gold standard to credit currency, and eventually established a global sovereign credit currency system. Credit currency has accelerated industrialization, but it has also caused continuous inflation, economic power concentration, and the global financial bubble. The first three reasons have caused the global economy to shrink, making it difficult to maintain credit inflation and the financial bubble.

5. History (thousands of years) The reason is that human society is experiencing the pain of a major transformation from a material society to an information society. At the technological level, the rise of computers, the Internet, and the Internet of Things has pushed the material economy centered on the production and consumption of material products to the information economy centered on information, but it is rooted in the laws, morals, ideas, and culture of the material economy. Can't adapt, but curb the development of the information economy. This is a millennium-level contradiction, and transformation and breakthroughs are difficult and painful.

Only by finding the cause can we solve the problem. Crisis is the biggest driver of change.

Crypto economy is a global opportunity

The crypto economy based on asymmetric cryptography and distributed consensus mechanisms (ie, crypto consensus) cannot eliminate the new crown virus, but it is the key to solving the other four major causes of the crisis.

1. What the crypto economy directly solves is the information security and information monopoly of the Internet. Asymmetric cryptography was born to solve the problem of digital information security on the network, and distributed consensus can achieve the decentralization of the global economic infrastructure, thereby solving the problem of information monopoly.

2. The crypto economy is at the forefront of world economic innovation. In addition to the continued industrialization of lagging large countries, developed countries and China can no longer rely on demographic dividends, urbanization dividends, and latecomer advantages. Relying on cryptographic consensus mechanisms to build the global economic infrastructure, eliminate trade barriers, open up global markets, and use asymmetric cryptographic technologies to transform the digital economy and traditional economy are the root causes.

3. Decentralized cryptocurrency is the most advanced form of currency. Decentralized cryptocurrency eliminates the physical restrictions of physical currency, as well as inflation and credit bubbles brought by credit currency, and eliminates the sovereignty boundary of currency, accelerates the integration of the global currency economy, improves the efficiency of the global market economy, and dissolves. The roots of the global trade war and currency war.

4. The crypto economy builds the economic foundation of an information society. Crypto economy is a new economic form constructed by making full use of computer technology, network technology and crypto technology. Once established, it will widely change people's economic behavior and naturally promote economic, moral, ideological, and cultural changes at the upper levels with economic benefits. A harmonious and free information society.

Third, the blockchain misleads the crypto economy

The exploration of the crypto economy began in the 1980s. In 2009, Satoshi Nakamoto launched the first crypto consensus system—Bitcoin. The crypto consensus was called “blockchain” around 2014. In 2017, the blockchain was sought after globally . However, the rise of the "blockchain" has misled the crypto economy.

1. Blockchain conceals asymmetric cryptography. In the 2017 wave, people generally pay attention to the "blockchain". Resources are used for on-chain, chain-building, cross-chain, and construction of various public, private, alliance, parallel, and parent-child chains. These have masked the great significance of asymmetric cryptography to solve information security issues and achieve information authorization.

2. Blockchain conceals distributed consensus. People pay attention to the chain structure and ignore the fundamental meaning of distributed consensus or decentralization. Alliance chains and private chains are prevalent. Even the important characteristics of a blockchain that cannot be tampered with due to decentralization are gradually blurred due to performance requirements and information supervision requirements. Decentralization and immutability have become slogans, and blockchain has become a feast for various centers to divide resources and divide new areas of influence.

3. Blockchain wastes economic resources. People use the concept of the blockchain to explain the crypto economy incorrectly. The established blockchain project does not take advantage of the real advantages of crypto consensus, lacks vitality, and wastes a lot of economic resources. What's more, the confusion of the concept logic of the blockchain has been used by pyramid schemes, fund disks, and various financial frauds to become a tool for ringing money and defrauding the crypto economy.

4. Internet thinking restricts the crypto economy. The blockchain misleads the crypto economy, resulting in the vast majority of crypto economic projects failing to grasp the key logic of the crypto consensus. Instead, it uses the idea of ​​Internet products to design and promote crypto applications, hiding the private keys that most require user control, giving users a variety of Accounts, passwords, mnemonics, administrators, etc., dissolve the true power of password consensus.

Laying the foundation for the crypto economy

To resolve the current crisis with a password economy and promote humanity's entry into an orderly information society, it is necessary to get out of the misunderstanding of the blockchain, return to the crypto consensus, establish a decentralized global economic infrastructure, and promote crypto applications from the bottom up. The current priorities are:

1. The starting point returns to the private key. Get rid of the misunderstanding of the blockchain, reflect on the information security issues facing the Internet economy, clarify the basic principles of asymmetric passwords to achieve information security, and start from "owning private keys, private keys controlling information, and information is rights and interests." Password consensus thinking.

2. Popular science password common sense. The basic meanings and simple operations of basic applications of asymmetric passwords, such as private keys, public keys, hashing, encryption, decryption, signing, verification, etc., are used as the entry password economy, and even the content of compulsory education, so that most people learn to use private keys Control information and control rights.

3. Establish basic agreements. Consensus protocols are the key to building a global economic infrastructure and achieving cryptographic consensus. The agreements accumulated by Satoshi Nakamoto for more than ten years have established a decentralized cryptocurrency agreement system. Further decentralized cryptographic identities, file storage, network connection and other infrastructure need to be explored to establish more open basic protocols.

4. Build an application platform. On top of the decentralized infrastructure, various infrastructure application platforms such as shared currency systems, account systems, file systems, and network systems can be created. Users can grasp the basic rights and interests through private keys. The platform no longer competes for and monopolizes the underlying resources and User data can only focus on market demand and user experience, and introduce the real industry and Internet economy into a more secure, efficient, and free password economy.