Editor’s note: This article from the blue fox notes (ID:lanhubiji), realthinkbit translator; from the original JonChoi.com, author JonChoi; authorized reprint by Odaily daily planet.
This is the time from the myth of technology coming out. Block chain to succeed to the mainstream crowd, eventually cannot do without the real needs of users. Then, we block chain project, whether you are male chain, or DApp, or other, ultimately, in the real needs of network users, is the foundation of value. This paper puts forward some thoughts deeply, do the project should start from the basic logic, to return to what the world really needs, rather than purely technical superiority or powerful game mechanism.
This is the early stage of the game world encryption, ideological maze can help us further explore and identify the striking path or a dead end. The first is bitcoin followed by Ethernet widely to stimulate the public square is excited about the “encryption world”, the industry is “credible monetary debate”, “Web3” and “open financial advantages”.
Although the three have the same disintermediation spirit, but they need different functions to achieve success, they compete in different choice. Not only inherit to the center of the spirit, but also inherit the advanced technology, leading to a potential cognitive dissonance.
The solution of the disorder is to forget the familiar narrative, concentrate on the technology: what are the new features, who is the core of customer, who was not able to provide good service to customers, why today can launch new competitive products. Let the world thought into the maze of encryption.
Thought of the maze
Thought the maze metaphor stems from the fact that the technology trends have different paths lead to different degrees of success (h/t Balaji Srinivasan and Chris Dixon).
Good idea is perfect, has many years of planning, considering the path as much as possible according to the way the world changes.
In a vibrant era, it is usually easy to directly go to the entrance to get ahead, but for those who have the overview map to guide team, the ultimate success of greater probability. As the technology of the students, the history of technology and learning from other maze will help us draw the map, and get out of the maze. It will make the team more clearly to avoid what should pursue or target customers, product features and market strategy.
A good, able to predict which shift will find treasure, what changes will lead to death. A bad founder just went to (for example) “movie / music / file sharing / entrance P2P maze or photo sharing” maze entrance, while the industry history, in the maze game player, the last casualty no feeling, and the obstacle and change the assumption of technology is absolutely ignorant of.
For example, sports fans and experienced coaches watch the same game and see the same input, but their grasp of the details is a completely different level. Although sports fans can feel excited about what is going on, but the coaches can see how to manage the other team, let the team or formation can change what happens, and a positive impact on the process of the game. At this level, and there seems to be no different with what technology.
This is particularly prominent in the crypto currency industry, because it is multidisciplinary, between the need for cross sectoral and regional collaboration of many stakeholders. In addition, in the life cycle of the platform (e.g., network, social media, mobile devices) in the early stage, depict the ideological maze seemed more important. Because of the vision and spirit ahead of the adoption, so from this point of view, it is not clear which method is facing with strong demand and sustainable economic development of the market, and what is dead.
Therefore, here I began to share the idea of encryption maze (all things open!). Now the core assumption of various encryption issues, we will focus on the coordination challenges these assumptions, and we will be in another time save by the path specific (market + position) and depth of application to the application. Therefore, this is not a “complete maze”, but I hope you can take the hand to continue to improve the maze.
In the maze before: bitcoin
At first, a bitcoin.
Bitcoin’s intention is very clear.
Point-to-point electronic cash pure, allowing online payment from party sent directly to the other party, without the need for any financial institution.
This is to create a payment network experiment, the payment network eliminates the need for an intermediary, so that (1) to reduce the number of business expenses, and (2) no longer need to share more identity information.
Because financial institutions cannot avoid the mediation of disputes, thus completely irreversible trading is virtually impossible. Mediation costs increased transaction costs, limiting the minimum actual transaction size, and cut off the possibility of small temporary transactions, and pay higher costs, because the loss of ability to provide payment for the service of irreversible irreversible.
Due to the existence of reversibility, demands more on trust. Businesses must alert their customers to obtain more information than the original need. A certain proportion of the fraud is considered inevitable. Pay these costs and uncertainty can be avoided by using real money, but in the absence of a trusted third party through the communication channels of payment, such a mechanism does not exist.
Bitcoin is created to provide a no identity or trusted intermediary transaction mode. When it began as the currency of choice for technical experts and hackers, liberal, market users, cross-border remittances and inflation national users. In view of the high risk of the bank bailout, which is particularly timely.
Because of no intermediary trust, which has a prominent feature of anti Censorship (change or stop trading very expensive) and can not change the monetary policy (not unilaterally issued more money). In order to do this, it uses a peer-to-peer architecture and a novel economic incentive mechanism (proof of work).
It is worth noting that this innovation clearly weigh the efficiency, so as to provide anti censorship and flexible participation qualifications (anyone can join or leave the network at any time). We will return to this point, but at the same time, some other things caused the attention of the community.
Fair to say that bitcoin is Digicash (Chaum 1989) and Bit Gold (Szabo 1998) on the basis of improvement.
Intelligent platform contract
Intelligent contract is the enforcement of the contract terms of computerized trading agreement. The overall goal is to meet the conditions of the intelligent contract design contract common (for example, payment terms, lien, confidentiality, and even execution), to minimize the abnormal malicious and accidental, and minimize the need for trusted intermediary. The relevant economic goals include reducing fraud losses, arbitration and execution costs and other transaction costs.
The concept of smart contracts has existed for quite a long period of time (by Nick Szabo in 1994 to create and promote, cited above), and by the bitcoin community (RSK staining, coins, Mastercoin), intelligent contract ability demand rise. Vitalik Buterin started to make improvements in the Mastercoin, he thinks the idea extended bitcoin protocol is exciting, but can not release the full potential of smart contracts. Give priority to the development of his ideas and a Mastercoin team is completely different, that there is no way to implement the above, then the etheric Fang was born.
Although the bitcoin transaction ledger state reached a consensus, but this branch of the movement began to try to replicate in global distributed computers in the network state (i.e. distributed virtual machine) to reach a consensus.
It is worth noting that, although cloud computing focused on making distributed computer quickly and efficiently complete the work, in order to set up credible (from a control data center) in demanding applications, but the key to the center of the calculation is to allow don’t trust each other computer agreed to share computer state.
Although the computer will be added to the cloud infrastructure makes the network more productive in Computing (in varying degrees depending on the technical architecture), but to the center of the infrastructure is optimized to maintain a certain degree of “no trust” (or raise the threshold of malicious actors evil). Therefore, to add the computer to the center of the network, but also increase the complexity, but it does not increase the computational throughput of the network (if any).
Despite these limitations, the etheric Fang is still attractive, but for many reasons, in particular: (1) it is easy to create and deploy smart contracts can be anti Censorship (bitcoin mining consciousness is of course the extra catalyst to establish an early active community of the pit) (2) people can now imagine, “if there is no man in the middle can be traded, so, what is the scene without intermediate people directly interact?” A simple analogy is from a party (and therefore have can be cancelled as Paypal) digital “vending machine”, the evolution to a does not belong to any one, will not stop, and any connected through the Internet people can access the machine.
If bitcoin is emerged, the financial crisis in the background, the birth of the etheric Fang to lose the trust of various organizations in the consumer’s time, such as banks and technology companies, etc.. The concept of distributed computer exciting, because the architecture has an opportunity to restore the trust among industries. Some early ideas / example is to the center of the yuho and Airbnb (“Web3”) and to the center of the loans, derivatives and venture investment platform (“open financial”).
Now there are various forms of distributed computing (such as Ethernet EOS, Dfinity square, Tezos, Stellar), they are trying to replace the simple ledger bitcoin trading in the experiment. This has laid the foundation for the idea of encryption (2018 years) maze.
Into the maze: three points
2018 encryption thinking in the world has shown a maze charming part: the surge of smart contracts around the Web3 platform, and open financial excitement, and the integration of bitcoin and bitcoin community around privacy reliable narrative currency.
So what is the encryption of the world? There are 3 different directions.
Reliable money “to trust the money, any third-party can send.
Web3 : “to trust the Internet, the Internet architecture from the center of the data and services business monopoly. The user can better control their data and Internet usage. These networks also compensate participants generated in the network economic value.
The opening of the financial “to trust the financial system”, extended encryption currency, stock, debt, derivatives, checking accounts, remittance, contract work, retirement accounts, property and other open software primitives.
Therefore, the word “Encrypt” means different things to different people, but we will be a term called a cage (sorry, cryptographers! Blue fox notes: the effect that is a frame, different things are installed inside). This for an emerging interdisciplinary community is a good news, but also to see only part on the basis of one-sided viewpoint.
Although the three have the same disintermediation of the spirit (are large banks, Internet giants and commercial banks / financial technology), but we will find that different points have different needs in the implementation, need a set of shared technology this balance, there are significant cognitive disorders.
– cognitive dissonance is inconsistent ideas, beliefs or attitudes of the state.
With the passage of time, more and more people come to realize that, in the same kind of cut technology and reliable currency, Web3 and financial openness is not easy. This may be due to the different basic assumptions of argument.
Question: add this function to optimize the function of the platform to delete
The reason: inherited the trade-offs for another demand design.
Specifically, we are constructing identity and “review capacity” on a platform, and this platform is to optimize the original without identity and without examination. This potential problem is: intuitively, this is similar to the most effective architecture (this is a clear statement, even if the core developers of these technologies also think so).
At a more fundamental level, this kind of not harmonious existence (cognitive dissonance) because many intelligent public contracts balance block chain inherited bitcoin do: network architecture, replication scheme, incentive mechanism. These trade-offs absorbed the inefficient replication by many orders of magnitude and “SLA” (such as throughput, availability, pricing, forecasting) which leads to the following two difficult: (1) do not need the status and (2) to eliminate the central entity needs to review. (Note: This is not the blue fox does not mean that other books distributed technology, such as Holochain will have the opportunity? Worthy of follow-up observation)
Now the question becomes why different users with different goals (Web3 / open financial) should be shared with another product. (you can rely on the money) to balance the technology infrastructure. May still have compelling reasons (because even if a change in assumptions you can quickly change the results), but it is not easy to get.
An objective means
For the use of money in the case, these are great new features. No one can change the rules of the game, no matter who you are, where you are, you have the value are not diluted, because the issuance of money supply is not predictable, will not be any barrier, also do not need to know who you are.
However, the function itself has no value; they are valuable, just to meet the specific needs of users. In fact, these functions depends on a person to provide what kind of service. For example, the introduction of the identity of the disadvantage is likely to produce discrimination, but the benefits of user reputation (credit) is valuable. Similarly, a centralized entity is to review / responsibility, but has brought high quality service and convenience.
Although have all shared prototypes and disintermediation of the spirit, but we will explore in different background, what it means to the end user. This is the key to the maze of today.
Way: customers, alternatives and intermediate utility
Therefore, the importance of independent thinking has never been so high. Every day we Twitter in these narratives bring chatter without stop, contradictory assumptions made this maze become more complex (and to some degree this article also!). The only way out of the maze is independent thinking needed to meet customer needs and the needs of the function.
In the following section we will discuss in more detail, but let us first look at the title of the standard: a guide to the customer as the center.
Who are the customers and stakeholders?
Who is the core of the customer? (the definition of role / market)
How many people in the world are affected?
Everyone is affected by the “pain points” is how much?
How to join the network, why do they stay?
2. the client counterparty
This is the one on one? Or one to many?
Whether the counterparty need to have the same demand for products with major customers?
3. trusted intermediary
You rely on who to implement the rules? Who can be against you?
Such as encryption currency are ambiguous and many aspects of products, it is very important to define the basic definition of customer satisfaction index. For Google, this is a complete search. Excellent step, this is a complete journey. With Apple’s shares, may be the rate of return on equity and earnings per share.
But for the US dollar, what it means? For the encryption currency, what is it? We will discuss below.
Has nothing to do with the social trend of customers (also known as the “most people”) is a new function to attract, because the new function is the next best choice. (Note: Blue Fox whether encryption currency, or block chain, or the other, no matter what your doctrine or based on what the ideal for the vast majority of ordinary people, the real reason is often associated with profit. For example, dash and BTC in Venezuela use because the more can help local people solve the problem of anti inflation. The project has great vision is good, but also have great vision, the foothold is starting point of success.)
For example, to find information from afar, web search provides a more convenient alternative. Google search provides Alta Vista more simple and fast Internet search experience, Alta Vista although powerful and customizable but slower (probably for the wrong direction of the early common user function optimization). An earlier version of Uber provides a convenient way to call a black car to the other place you outside the office, and the fashionable way to travel. Uber Pool is currently providing daily driving or taking a bus / subway (SF) alternative.
To meet the needs of users, and the advantage of the next best alternative is the product needs to be improved and extended to prospective dynamic adjacent service.
The middle of the effectiveness
Intermediate effect refers to the usefulness of the network in the fully saturated before (“if it only accounts for 5% of the target market, then this 5% users can also get utility?”). (blue fox notes: such as social networks, most of the friends if you do not, then the middle of the effectiveness is relatively low. Although if early users are less, but some type of user, then the intermediate utility will be higher).
There are two aspects to help create a network in the early stage: (1) although the network scale is small, but can be found in the active peer, and (2) before the network is fully mature, the experience is how striking. These are the key factors in the early “intermediate network utility”. With the utility of the early path is often the only way to achieve the desired final state. The final contradiction: some expectation is impossible / expensive, because it is difficult to have the function to guide the network center.
What is the example of the effectiveness? For example, when I was at school, Facebook is the use of fun (to communicate, in the school environment to greet and follow state). I didn’t use it much, but enough to keep my enthusiasm. Early case early users’continuance participation, gives Facebook the opportunity to further for these users to provide more services and develop new markets. If we have to wait a few years (or months) to obtain useful, first so we may never make it to the final state of the more successful.
Therefore, a small part of the larger goal network can get utility from the early iteration technique, the fact that there are huge benefits, so that it can maintain the medium scale network, without the need for repeated one-time and viral growth.
The intermediate utility acts as a network “check”, in order to save the progress in its growth “”. More broadly, in the middle of the effectiveness of a series of step functions will eventually gain mainstream / by “crossing the chasm” to create conditions.
Wait for the catalyst: how much they need you?
Although the argument is out of spirit, but the customer demand and the external catalyst will become the biggest driver of the thought of how to carry out the maze. Let us see how the above description standard to three sub branch.
Value proposition: it can be used to purchase goods and store the value of money, is not affected by the special monetary policy (and protected). For example, protecting users from excessive monetary easing, bad economic policy, corruption and any other risk (the issuer risk) effect.
The core of innovation: “the internet currency is generally no longer subject to the physical constraints (Digicash and Paypal also have this property, but they are through the center of the settlement). POW let the settlement layer is distributed, so without any jurisdiction effect.
Customer: could not get the value of the stable storage (such as Venezuela / Argentina / Zimbabwe inflation. Another example is the overseas investors to buy real estate with “parking funds.”)
Counterparty: provide the required goods / services to them (rent, food, other people).
The next best choice: SWIFT / ACH / remittance and cash (transfer). The gold and the dollar (reserves of wealth).
The next best choice of providers: Government registered banks, taking independent monetary transmission, offshore banks (storage and transfer of wealth). The central bank + implementation of government (tools and trust).
Balance in the peer (business / peer acceptance and trust between the issuer).
The success of the atomic units (1): payment for goods / service ability (2) on future goods / services at savings (no loss, low volatility)
Intermediate utility: one need only two party transactions. The storage value requires everyone to passively buy (other people believe), but only “single player mode” (you hold it).
Challenge: Game Theory on the deadlock and supply chain allows businesses to accept new money to buy. Because of the difficulty of monetary policy (supply) and forecast (demand) by curve matching due to the lack of stability.
Value proposition: users have more ownership of their digital data. The user is less vulnerable to the dislocation of value such as Google and Facebook service provider.
The core of innovation: a user is less dependent on the center of the service to protect user data of the Internet, to provide the fastest, most smooth, the most convenient experience, as well as data ownership and service provides decoupled Internet (such as public P2P block chain architecture: Ethernet square (+ IPFS)), “BYOData”: Blockstack gossip, protocol:Secure Scuttlebutt).
The core customers: the current Internet service is not full of people: they want to express, because the review / confused and cannot access all information, and the service provider does not trust the people kept their data (Facebook Cambridge Analytica scandal).
Counterparty: other users online consumption and production data
The next best choice: Google, Facebook, Twitter, Instagram (product).
The next best choice of providers: Google, Facebook, Amazon, Twitter, Tencent, Alibaba, Baidu, (behind their products is to maximize profit entities).
Balance between user experience and trust.
The success of the atomic units: can not be stopped by contact with a wide audience (anti review). The user can better control their data and privacy / commercial.
Intermediate utility: with closed-loop network core customer base (“we are subject to review”) may be very small. More interesting is that existing web2 read the flow in some way to distribute Web3’s written demand. A powerful indicator is to look at the Web3 community to provide much nutrition for their technical and practical (encryption currency industry full-time people still use Twitter and Venmo). (Note: the blue fox mean, do not say first, others use the distributed network Web3 community see for yourself can first use up, still rely on the application of Web2.0.)
Challenge: (1) the cost of Web3 is not to say that just a little more expensive, in fact the storage and service cost much higher level, which means that the price decline is likely to come, but not imminent, and (2) how to let ordinary users choose Web3 instead of the more convenient and familiar with web2 products, this it is a pressing matter of the moment.
The opening of the financial
Value proposition: before only for high net worth individuals and large enterprises to use financial tools and products are now becoming available for everyone to use (or in developed markets available financial products available in the market edge / access). Between the financial service providers to obtain your wealth / assets. Through participation in the financial market, can be no friction to benefit from foreign economic growth, as can now cross-border sharing of data / information as simple.
The core of innovation: a unified data source and agreement across financial institutions. Through a shared data structure / source and management, reduce compliance, background and repeat ledger management cost. More interoperability through other parts of the financial system and the Internet, can better underwriting of financial products. This will help to release the capital cost and the cost of living arbitrage opportunities, which will transfer wealth from seeking to network participants.
Customer: could not get wealth creating core financial products (the price is too high, people can not access or unconscious).
Counterparty: other tried to tell you the future of a bet on people, and hope that the exchange of resources and risk / return.
The next best choice: the existing financial and banking services (which is characterized by higher costs, stronger locking and slower service, trust and have little incentive to improve service fast).
The next best choice of providers: regional banks, national banks, multinational banks, professional financial technology (SoFi, Robinhood, Simple).
Weigh in: (a) the legal protection, performance and compliance (b) and lower cost, less contact intermediary, more and more open access.
The success of the atomic units: today to receive money, promised to pay more money tomorrow. Can loan / investment in today, and in the risk parameter range agreed, to recover the funds in the future financial return.
Intermediate effect: with the development of the market, found that interest rates and the counterparty is getting better, a party from the other party to obtain loans for both immediate benefits, without a mature network. This is very useful for generating intermediate utility.
Challenge: most cases need reputation / identity (for recourse to bad behavior, obtain good historical records) and law enforcement (guarantee property, enforce payment / fines). Specifically, legally enforceable packaging means it needs to have the capital control and identity (AML / KYC). It needs to be able to change the real record in the arbitration (“this is actually a legitimate, but I lost / be black, you can restore it?”).