Original author: Meng Yan
In November 2013, Vitalik Buterin published the first version of the Ethereum white paper. Afterwards, people often regard this as the beginning of the "Blockchain 2.0" era, but at that time, it was actually the emergence of Ethereum that made "blockchain" separate from "digital currency" as a separate technology. In other words, Bitcoin was labeled as "Blockchain 1.0" after the fact. Blockchain as an independent field should be counted from November 2013, which is exactly ten years ago.
Blockchain and digital currency should be considered as two different industries, because their goals and value propositions are very different. The digital currency industry, or the "coin circle", creates a unique parallel world, and then creates virtual digital assets in this world, builds a free financial market and trades in it for profit. Because its rules and value system are incompatible with the real world, the coin circle rarely or never considers exerting influence on the real world or the real economy. The blockchain industry is completely different. It aims to transform the real economy and influence the real world. Therefore, people in this industry call themselves "chain circles" to distinguish themselves.
Blockchain was once regarded as a disruptive technology on par with AI and was highly anticipated. However, to be honest, after ten years, the results have been disappointing, which can be said to be a typical high start and low end. Not only has it not made any achievements that shocked the world, but some projects that were once highly anticipated, such as the supply chain management system jointly developed by IBM and Maersk and the on-chain stock trading system of the Australian Stock Exchange ASX, have ended in disastrous failure. Some well-known projects that originally used blockchain as their core have also abandoned blockchain and returned to traditional architecture. These failures have undoubtedly severely hit people's confidence in the blockchain.
What is the problem? Does blockchain still have a future? What should be the next step?
I started learning and studying blockchain in 2015. When I started, I was a typical blockchain person. Since the end of 2017, I have gradually focused on digital assets. But personally, I agree more with the value proposition of the blockchain circle, and I hope to see the new technology of blockchain have an impact on the wider real world, create visible value, and gain recognition from more ordinary people. So as blockchain has been a field for ten years, I would like to briefly talk about my views.
Let me say this with some sympathy. Blockchain is still in its early stages. Many people compare blockchain with AI, electric cars, and cloud computing, all of which were popular technologies ten years ago. Look at how much they have achieved, and look at blockchain, which has not achieved anything. But this comparison is really unfair, because those fields are old and new, while blockchain is really a new and emerging field. Specifically, blockchain is actually an algorithmic solution to a theoretical problem in the field of distributed computing and social collaboration. The problem is: how to generate and spread trust without relying on authority? This problem has troubled humans for thousands of years, but it was not until 2008 that the Bitcoin white paper suddenly provided a feasible solution. In other words, the blockchain industry is still in the first decade or so after the theoretical breakthrough. If we understand the hottest technology industries such as chips, the Internet, AI, electric cars, and new energy, we will know that their theoretical breakthroughs were decades or even hundreds of years ago. When they were in their teens, they may not even have products, and they are not even qualified to summarize lessons. In comparison, blockchain has at least made some things and accumulated some lessons. Therefore, blockchain is indeed still in its infancy, and we still need to be more patient with it.
Despite this, the blockchain industry has had many unsatisfactory aspects and has taken many detours in the past decade. If it had not taken these detours, the blockchain industry would have been better than it is now. Some of these problems are objective and cannot be solved by the blockchain industry itself, but there are also many subjective problems that are worth summarizing.
The first problem is that the blockchain circle forcibly copied the technical tools and ideas of the cryptocurrency circle, resulting in serious "rejection reactions" when they were put into practical use.
There is no doubt that the currency circle has always been at the forefront of blockchain technology applications. However, technologies like Bitcoin and DeFi are extreme means to solve extreme problems. The "cypherpunk" liberal digital jungle environment in which they live is too different from the real world: everyone is anonymous, but everything else is open and transparent, digital identities can be created and abandoned at will, code is law, and there is no law outside of code. All these rules are not only incompatible with the real world today, but also impossible to be accepted by mainstream society in the future. And these rules and ideas have permeated all aspects of blockchain technology. When the chain circle moved these technologies to the real world, there was no serious research and discussion across the industry about which ones could be borrowed and which ones must be adjusted. The result was that they encountered serious resistance when they were implemented.
The second problem is that the value proposition puts the wrong emphasis, the tone is too high, and it is not in the right place.
The core ideology of the currency circle is decentralization and consensus. When the blockchain circle started, it copied this value proposition without scrutiny and promoted it everywhere. It took the unrealistic "decentralization" as its main value proposition and put on a revolutionary posture to replace and subvert the traditional architecture. It made enemies everywhere and it was difficult to gain the understanding and support of users. The proposition of decentralized consensus can only be widely resonated under the condition that the center is doing evil and everyone knows it. In the field of digital currency, this condition is partially true, but in most fields, this condition is not true. In other words, the traditional trust mechanism based on trusted third parties has not exposed serious problems in most cases. On the contrary, it is more trusted by users because of its flexibility and maturity. In this case, if you have to exaggerate and exaggerate the risk of centralization doing evil, and then try to completely replace the traditional architecture with an immature new architecture, users will naturally not buy it.
In addition to considerations based on reality, from a logical analysis, "decentralization" and "distributed consensus" should not be the core value proposition of blockchain industry applications. As mentioned earlier, the essence of blockchain is to solve the problem of how to confirm facts, generate and spread trust without relying on authoritative trusted third parties. In the application scenario of digital currency, facts are determined by majority voting. But in most industry applications, facts are either determined by negotiation between relevant parties or by authorized agencies, and it is almost never the turn of a group of irrelevant people to vote and determine. Therefore, the core value proposition of the blockchain circle aimed at industry applications should not be "decentralization" or "distributed consensus" at all.
The third problem is that we have been struggling with basic issues such as "is there currency or not?" for a long time, wasting a lot of time.
For a long time, the blockchain community has been arguing whether pure blockchain applications must have coins. This is a very meaningless debate because the conclusion is very obvious and has long been discussed: blockchain applications must have coins.
Why do you say that? First, blockchain applications are essentially about solving trust issues, and in the business field, 99% of the application scenarios that need to be related to trust issues are dealing with money. If there is no money on the chain, then there is no trust problem to be solved, let alone the necessity of using blockchain. Second, a core skill of blockchain is to program payment. With this ability, many application scenarios are immediately finished. Without this ability, the significance of using blockchain is greatly reduced. Third, blockchain must solve the incentive problem, and there must be money on the chain.
These are all obvious reasons. However, in some countries and regions, the government and the public are very disgusted with the behavior of "issuing coins", so many people in the blockchain circle are under the tight control and try to cater to the so-called "coinless blockchain" and take the initiative to weaken the blockchain into a slow, expensive and crippled database. As a result, they have achieved nothing after working for a long time.
In fact, having coins on the chain does not mean that we have to "issue coins". We can introduce CBDC or compliant stablecoins to bring out the value of blockchain. Instead of wasting time exploring "coinless blockchain" unrealistically, it is better for everyone to work together to fully communicate with the government, regulatory authorities and the public, clarify the pros and cons, and realize the implementation of compliant digital currency on the chain as soon as possible.
The fourth problem is that the potential of “tokens” has not been fully explored.
"Token" is a new word that Mr. Yuandao and I created in 2017, corresponding to the "token" in blockchain. At that time, our observation was that although blockchain can do other things, there is only one thing that it is best at and does best, which is the management and programming of tokens. Therefore, the expansion and exploration of blockchain applications is largely reflected in the expansion and exploration of the potential of token applications. From another perspective, the core value of blockchain is to solve the trust problem, and trust requires a certificate as a carrier. In the real world, certificates, seals, badges, signatures, bills, currencies, and contracts are trust carriers, while in the digital world, blockchain tokens are the best trust carriers at the current technical level. The tokens on the chain have unparalleled advantages in verification, circulation, transaction, and programmability that other trust carriers cannot match, and can well reflect the use value of blockchain. Therefore, tokens should become the core of blockchain applications.
However, judging from the practice of blockchain circles in the past few years, this has not become a broad consensus. Many blockchain projects have a serious lack of understanding and application of tokens, which is manifested in the use of only a few very basic token standards, such as ERC-20, ERC-721, etc., and then making the business logic very complicated. This reduces the understandability and functionality of the solution.
The fifth issue is that no industry practices are proposed to address data privacy issues.
In the cryptocurrency applications, users are anonymous, but all the data and behavior history behind each address are open and transparent. This is exactly the opposite of the real world. In the real world, users need to use their real names to participate in commercial activities and accept supervision, but their business data and business behavior are private and do not need to be disclosed to the public unless there are special circumstances. In this way, there is a contradiction between the attitude of blockchain technology from the cryptocurrency circle towards privacy issues and the needs of the real world. How to deal with this contradiction in industry blockchain applications is a fundamental issue related to whether blockchain can be implemented. However, some blockchain projects not only do not face this problem directly, but also try to persuade users to accept the concept of data privacy in the cryptocurrency circle, which is neither reasonable nor possible. Of course, I also know that some projects are committed to solving this problem, each with their own tricks, but there is no industry-level standard practice, and even there is little horizontal discussion on this issue. It can be said that if this problem is not solved, blockchain will definitely not be implemented in the real economy.
There are certainly some other reasons why the application of blockchain industry has not been implemented for a long time, but I think the above five are the most worthy of mention.
Based on the above analysis, if the blockchain industry wants to achieve breakthroughs in the future, I have the following suggestions:
First, blockchain should be viewed as a solution to specific problems, rather than a "blockchain revolution". It should coexist with traditional architectures, rather than replace and subvert them. We should analyze the real needs of trust issues in application scenarios in a realistic manner, and do not exaggerate the risk of centralization. Problems that can be solved by centralization do not necessarily require blockchain. Problems that can be solved by cryptography do not necessarily require blockchain. Allowing blockchain to play a role in key positions is more conducive to its healthy development than letting it dominate the world.
Second, actively promote the central bank's digital currency or compliant stablecoin on the chain, which is a key step in the implementation of blockchain applications. Don't just see the trees and miss the forest. Don't get entangled in the debate over the value of CBDC. You must realize that the promotion and application of CBDC will prompt hundreds of millions of users to open and accept autonomous identities, and will promote the integration of regulatory technology and blockchain. This is the most important foundation for the widespread application of blockchain. If this thing is done, everything will be done. If this thing is not done, the blockchain circle will stagnate for a long time.
Third, deepen the understanding and research of tokens and bring out their potential as soon as possible. Domestic blockchain developers need to learn to get rid of the misleading word "token" and recognize the rich expressive power and programmable potential of tokens as trust carriers, but at the same time, they must prevent going to the extreme of "everything can be tokenized".
Fourth, in the short and medium term, we will still focus on applications related to finance, trade, and payment as the core breakthrough points, take the expression, circulation, transaction, programming, and supervision of assets as the main value proposition, highlight the efficiency advantage, weaken ideology, and strive to achieve breakthroughs in these areas as soon as possible. Without breakthroughs in these directions, it will be difficult to develop blockchain applications in other fields.
Fifth, how to solve the problem of privacy information protection will be regarded as one of the most important topics, and it will be discussed throughout the industry, and relevant standard practices and tools will be formulated.
Sixth, seriously consider how to motivate users to adopt blockchain solutions. Blockchain is a new tool. Compared with the current mainstream technology, the benefits that blockchain solutions bring to users are not obvious at the beginning. They must achieve network effects before they can show huge advantages. For this type of technology, if you want to develop well, you must think clearly about questions such as "who are our friends and who are our enemies" and get as much support as possible, such as learning about the Internet and the cryptocurrency circle, and considering providing subsidies to early users.
