V God of Ethereum Founder

Someone saw this limitation, and that person is Vitalik Buterin, the founder of Ethereum.
During the research process of Bitcoin, Vitalik gradually realized that the blockchain technology behind Bitcoin could not only be used in cryptocurrencies but also had more possibilities. However, the architecture of Bitcoin hindered the development of the technology. Therefore, he hoped to expand Bitcoin's scripting capabilities to make it smarter. If patches were directly applied to Bitcoin, its scalability would also be extremely limited. Thus, Vitalik focused his energy on how to create an alternative solution to Bitcoin, and soon published the Ethereum white paper.

In the white paper, Vitalik articulated the vision for Ethereum's architecture: to add smart contract functionality on top of cryptocurrency, allowing developers to programmatically anchor all valuable objective/subjective things to Ethereum for transactions, achieving the transfer of value. This is also the origin of the argument that the ultimate form of blockchain development is a value network. How do smart contracts actually work? I will explain using the previous example of property rights registration. With the digital proof from relevant departments, property owners can convert property certificates and other information into tradable digital assets through smart contracts. Of course, this process is long-term and can only be implemented after blockchain is applied in social governance.

On July 30, 2015, the Ethereum mainnet was officially launched, marking Ethereum's entry onto the historical stage. We can consider the core of Ethereum to be the empowerment of smart contracts. Smart contracts are program codes independently written by software engineers based on the Ethereum protocol. However, we all know that there are almost no software systems without bugs, and since Ethereum smart contracts are open-source, anyone can view the source code of the smart contracts deployed on Ethereum at any time and place, leaving room for hackers to exploit vulnerabilities.
The most famous hacking incident occurred in April 2016, when hackers stole about $60 million worth of Ether locked in The DAO contract, immediately selling it on exchanges, causing irreparable losses to the entire cryptocurrency market. After the hacking incident, there was intense discussion within the Ethereum community. Some advocated for rolling back the Ethereum mainnet to before the hack; others believed in non-intervention and argued that established facts should not be interfered with by external forces. This can be seen as a significant test of blockchain faith. However, after community discussions, on July 20, 2016, Ethereum underwent a hard fork, splitting the Ethereum mainnet into two networks: ETH and ETC. ETH erased all traces of the hack and returned the stolen Ether to the original owners; what we refer to as Ethereum now refers to this rolled-back branch. ETC, on the other hand, retained all transactions, including the hack, to maintain the fundamental principles of decentralization and immutability that underpin blockchain.

Cognition and Impact of Blockchain: From Niche to Mass Adoption At the end of 2008, Satoshi Nakamoto published an article about Bitcoin. In early 2009, Bitcoin, based on blockchain technology, was born. At that time, almost no one foresaw that the "spark" of blockchain, digital currency, and the digital economy would, in just ten years, form a "raging inferno." This is mainly manifested in the following five major transformations:

First, the transformation from niche recognition to mass participation has been completed. Bitcoin originated in a very niche cryptopunk circle; the first and only article about Bitcoin written by the Bitcoin team was published on a highly specialized cryptography website. As for Bitcoin's initial value, it was not recognized by the public or by financial elites.

Participants in blockchain, digital currency, and digital assets have shifted from a minority to a majority, including not only professionals and elites but also grassroots individuals. Worldwide, there are hundreds of thousands to millions of such people. While this number is small compared to the total human population, its growth rate is strong. The group that is completely unaware of what Bitcoin is continues to shrink.

This is a field where "heroes do not ask about their origins." Among the participants, young people are the main body. However, there are still differences between China and Western countries: in the United States, the average age of children involved in the cryptocurrency space is around 20, mainly from the middle class and elite strata. In China, the age group is slightly older, and besides major cities like Beijing, Shanghai, and Shenzhen, a considerable number of young people come from second- and third-tier cities, presenting a very grassroots state. Regardless of whether abroad or domestically, urban youth share some common traits: they are idealistic, have strong learning abilities, dare to try new things, and even possess a spirit of adventure.

Second, the transformation from a small number of enterprises participating to an increasing number of enterprises getting involved, stimulating the emergence of new types of enterprises based on blockchain technology, has been completed. In the past decade, on one hand, industries centered on blockchain technology have emerged, or new industries have formed by combining blockchain with sectors like big data; on the other hand, blockchain has entered traditional industries, and traditional capital has continuously increased its investment in the blockchain and digital currency fields, thus forming cross-industries. In summary, under the impetus of blockchain and digital currency, a new industrial cluster is forming.

Third, the transformation of most national governments from adopting "laissez-faire" to implementing strict institutional rules and regulatory measures has been completed. Around 2010, the vast majority of governments worldwide did not pay attention to blockchain, especially digital currency, and basically allowed it to grow freely. However, as Bitcoin prices continued to rise and a series of incidents occurred on Bitcoin trading platforms, some countries began to pay attention, establish regulations, and implement oversight. The "ICO" craze swept the globe in 2017, leading to so-called "scams" that harmed public interests, prompting governments to take it seriously. Regardless, from developed market economies to emerging market economies, more and more governments have abandoned the "non-intervention" approach to digital currency and adopted a proactive attitude.

Fourth, the transformation of the impact on the world economy from negligible to increasingly significant has been completed. From the start of Bitcoin mining in 2009 to the successful ICO of Ethereum in 2014, blockchain and digital currency did not have a substantial impact on the macroeconomy of any country or the world economy. However, in the past three to four years, the situation has changed. With the rapid development and increasing influence of blockchain, digital currency, and digital assets, they have begun to change existing economic operating models, industrial structures, division of labor patterns, and employment trends, even affecting business cycle mechanisms.

Fifth, the transformation from attention only from financial and technical professionals to interest from other social fields has been completed. It is said that the number of people who now know and pay attention to blockchain and Bitcoin has spread from financial and technical professionals to almost every social field, becoming a social hotspot. At the same time, a large number of white papers published by blockchain media, related funds, and enterprises, along with numerous conferences, have created an information shock, especially the "wealth myth" of Bitcoin has accelerated the aforementioned process. Notably, blockchain and digital currency have disrupted many traditional thoughts and concepts, driving a new, quiet social movement.

In summary: Blockchain and digital currency have evolved from a spark to a raging inferno. Taking digital currency as an example, almost every day new digital currencies are born. Statistics show that by the end of 2017, the number of global digital currencies had increased to 1,334, an increase of 980 from 2016. The five most mainstream ones are Bitcoin, Bitcoin Cash (BCH), Ethereum, Ripple, and Litecoin. Blockchain and digital currency have formed an irreversible pattern. In this pattern, a large-scale and comprehensive combination of science and technology, capital, and power has emerged that has never been seen in history. In previous human history, there has never been a time when government power, various capital resources, and scientific technology all focused on one issue. In this pattern, the traditional wealth system is undergoing changes and transformations.

The development of blockchain can be roughly divided into two stages: Blockchain 1.0, characterized by decentralized digital currency; and Blockchain 2.0, characterized by smart contracts.

Currently, there is no consensus on the form of Blockchain 3.0. In general, the "chain circle" believes that blockchain has the characteristics of being real, traceable, trustworthy, and fair, and can establish credit relationships through consensus mechanism algorithms, ensuring that contracts and agreements are executed automatically, thus reducing social transaction costs.

Second, the "coin circle." The main body of the "coin circle" includes so-called "Bitcoin fundamentalists" who regard Bitcoin as a belief, believing that global currency will eventually achieve non-statehood; groups that obtained Bitcoin through "mining" in the early days; investors from traditional capital entering the digital currency space; and some related media. In the "coin circle," there are indeed many individuals and institutions that have made considerable wealth through ICOs or digital currency trading. The "coin circle" also includes the general public, who, due to the high learning costs and entry barriers of digital currency and blockchain technology, understand "trading coins" through their experiences in "stock trading" or "trading treasury bonds." After September 2017, many players in the "coin circle" have cashed out and exited.

Third, the "mining circle." The "mining circle" includes mining machine manufacturers, such as Bitmain and Canaan Creative; "mining pools" located in areas with very low electricity costs; and miners. Mining is a resource-intensive activity, and storage is closely related to mining. However, Bitcoin mining should not be categorized as a general economic activity's energy consumption; it is considered energy waste. This is because Bitcoin is a high-value wealth form that relies on proof of work.

The ecosystem formed by the above three "circles" has the following characteristics:

(1) The degree of interdependence is continuously increasing;
(2) Regional divisions of labor have formed globally;
(3) There is strong internal innovation motivation;
(4) The scale of capital entry is continuously expanding;
(5) It promotes the upgrading of the digital economy. Supporting this ecosystem are both profit factors and the commitment to achieving decentralization and maintaining distributed ledger principles. Regarding governments of various countries, there are no differentiated policies for the three "circles"; the main difference lies in the understanding of the relationship between "chain" and "coin," with some believing they are inseparable and others believing they can be separated, leading to different policies.

Blockchain is a comprehensive technology based on mathematics and physics, and it has profound connections and interactions with Internet+, big data, cloud computing, and artificial intelligence. In the era of the IT revolution, most technological resources, human resources, and financial resources supporting technological research and development were concentrated in Silicon Valley, USA. However, this revolution is global, with a wide geographical distribution of technological, human, and financial resources.

Second, this revolution touches the core of human economic interaction, namely digital currency. The greatest significance of Bitcoin lies not in creating a payment tool or a new vehicle for wealth but in opening the "Pandora's box" of monetary system reform. Since then, not only has there been a "Great Leap Forward" development of non-governmental and private digital currencies, but it has also promoted the development of legal digital currencies or central bank digital currencies. Thus, the original monetary system has begun to deconstruct. Furthermore, if digital currencies gain traction, they will ultimately affect the base currencies of countries worldwide, impacting the structure and quantity of M0 and M2.

Third, this revolution has led to the emergence of the "token economy." In network technology, Token originally referred to a "token" representing a proof of rights or interests, translated into Chinese as "通证." Tokens can represent all proofs of rights, or in other words, all proofs of rights can be represented by tokens. Of course, this is an ideal state. The so-called token economy does not have a standardized definition; it refers to an economic ecosystem based on tokens. It includes three elements: proof of rights, encryption, and circulation. As for the token economy model, it is quite diverse, with the most representative being: currency model, points model, asset model, and data model. In the long run, the token economy shares significant commonality with the sharing economy.

Fourth, this revolution is changing the organizational forms of traditional enterprises. Blockchain technology has brought about the feasibility of new economic combinations and new value combinations. Based on blockchain, "all employees co-govern enterprises" or "distributed autonomous operating enterprises" have begun to emerge. For example, ConsenSys operates on the Ethereum platform. The core feature of such new enterprises is decentralization, where ownership, structure, operation, rewards, and governance are integrated into a distributed management model, forming a new mechanism that encourages innovation, employee motivation, and collective action, creating a more inclusive and sustainable economic entity. This new type of economic organization based on blockchain changes the traditional hierarchical structure—where power and wealth are highly concentrated, and most activities occur within the company.

Fifth, this revolution provides governments with new governance tools.

The essence of governance is the systematic development and management of government data. The consensus mechanisms, encryption algorithms, smart contracts, immutability, traceability, and security features inherent in blockchain technology help in the exploration, storage, analysis, and confirmation of government data resources, effectively avoiding data distortion caused by excessive hierarchy, ensuring that government systems can quickly and efficiently collect real and complete big data, providing quality data support for government decision-making, and facilitating the construction of a "digital" goal.
Regarding trends: This revolution, represented by blockchain, digital currency, and the digital economy, is global, merging technology, industry, and finance, and has formed an irreversible trend. This revolution has also triggered changes in global geopolitics. Such a large economy does not need to be far off; in the next year or two, or even a little longer, blockchain and encrypted digital currencies will reach new historical peaks in development.

"Digitalization" of traditional assets. These two types of "assets" are interpenetrating and mutually influencing. Because there are digital assets, logically, there are digital asset investments, digital capital, and digital wealth. There exists a connecting mechanism between these concepts, forming market characteristics different from traditional assets. For example, the digital asset exchange that NASDAQ aims to establish is an important experiment regarding educational digital assets. It is particularly important to emphasize that digital assets are based on blockchain and are highly technological, thus differing from traditional assets such as real estate, minerals, and machinery. Blockchain involves many scientific disciplines. Therefore, research institutes have begun to discuss cooperation with the Mathematics Institute of the Academy of Sciences and some universities regarding measuring digital asset indices. One idea is to select more than five cryptocurrencies to establish a composite index system. The volatility of cryptocurrencies is quite complex, including endogenous and exogenous factors. Just like earthquakes and tsunamis, earthquakes are determined by changes in internal geological structures, but earthquakes can also lead to tsunamis, which in turn affect earthquakes.

In the research and practice of digital assets, CIDA possesses four resource advantages:

(1) Intellectual resource advantage. The research institute has intellectual resources that understand both traditional economics and have a foundational understanding of digital economics. Currently, those who only understand traditional economics but not digital economics, or only understand digital economics without recognizing traditional economics and its operations, are insufficient to face the new economic and technological mixed era.

(2) Strategic partnership resources. The background, positioning, and philosophy of the research institute's establishment, particularly the original domestic and international relationships of the founding members, help the research institute form a global strategic partnership network.

(3) Interdisciplinary research resources. Blockchain is a comprehensive technology still in its early stages, and its development requires the introduction and development of basic and applied sciences. For example, it requires the participation of mathematicians and computer scientists, while its application in economics and finance requires economists, monetary theorists, and even financiers and bankers. Additionally, the foundational technology of blockchain may change due to advancements in quantum computing and quantum computers.

The research institute has the resources and capabilities to organize interdisciplinary research, for which it has designed and established a "Technology and Academic Committee."

(4) Blockchain implementation resources. The future development of blockchain largely depends on its application, industrialization, and commercialization.

This includes information systems covering academic and technological frontiers, talent, distribution of economic entities, and local government planning; (2) proposing a one-year plan and a three-year plan;
(3) Internal organizational structure design.
Mainly based on three concepts. The first is Node. Each team member is a node, performing their functions on the node. The second is Matrix. Blockchain is a matrix, so the team industry needs to adapt to a multidimensional working style. The third is Cluster. CIDA adopts a collective model for external cooperation.

One is the traditional physical and material world. In this world, traditional agricultural production, farmers, and rural areas have not completely disappeared; they continue to exist around us. At the same time, industrial society continues to expand, with industrial products ubiquitous, from machinery and machines to cars and household appliances. The Chinese people have experienced a process from almost no cars on the streets to cars being everywhere. Additionally, rural areas are gradually disappearing, while cities are experiencing explosive growth. Even globally, the era of material scarcity and poverty is fading away. Therefore, people have to discuss issues such as whether production is excessive and whether capacity is excessive.

The other is the information society, a new world established based on the Internet, mobile Internet, and so on. In this world, the production factors are entirely different. The production factors in the traditional world are labor, capital, land, etc., while in the information world, the main production factors are data, information, and knowledge. The entire society is ultimately transitioning to a digital economy and digital currency, with the most important sign being "digitalization." In the digital currency or digital world, it is necessary to understand digital science, computer science, or the basic principles of algorithms. Now, a digital society based on the digital economy and digital currency has arrived and is beginning to permeate people's daily lives, changing their lifestyles.

However, for the vast majority of people, there is no way to understand the essence of the digital economy era that has begun to dominate us, just as they understand and experience the material world. The arrival of the digital economy or digital society does not depend on whether we understand and comprehend the digital economy and digital society. This situation is not the first time in history. When the industrial revolution occurred, the vast majority of people also did not understand or comprehend industrial society.

Blockchain is infrastructure. Blockchain is a new type of economy. Just as our traditional economy needs roads, railways, aviation, and ports, these are all infrastructures; only blockchain infrastructure has not been presented to people in a physical state. Blockchain is an economic form. This is easy to understand. Blockchain itself is rapidly growing, giving rise to a new economic form, such as various cryptocurrencies. Currently, the economy connected to blockchain is limited in absolute quantity, only a few trillion dollars, but its development potential is enormous. It is an economic form and economic entity; blockchain is an experiment. Chain reform is a type of experiment. Blockchain will also produce various emerging economic models, giving rise to countless new scientific and social uses. Blockchain is a value system, including people's expectations and understanding of decentralization or non-centralization.

Blockchain is first and foremost science. It is widely recognized that blockchain requires at least six layers; if blockchain supports smart contracts, even more layers are needed. The bottom layer consists of some general foundational modules, such as basic encryption algorithms, network communication libraries, stream processing, thread encapsulation, message encapsulation and decoding, system time, etc.; the middle layer is the core module of blockchain, generally including the main logic of blockchain, such as P2P network protocols, consensus modules, transaction processing modules, transaction pool modules, simple contracts or smart contract modules, embedded database processing modules, wallet modules, etc.; the top layer is often based on JSON-RPC interaction modules, which can also create better UI interfaces or be a web service. Supporting smart contracts requires adding more layers, such as adding a BaaS layer to provide autonomous services for smart contracts on the blockchain.

According to the above technical description of blockchain, the foundation supporting blockchain is cryptography. The true perfection and success of cryptography occurred after the 1970s. This is merely mathematics and cryptography; if we delve into computer science and algorithmic languages, it traces back to scientific issues. Cryptography is also linked to the prime number theorem, which describes the relationship between prime numbers (which can only be divided by 1 and themselves) and all natural numbers. From when Gauss proposed this theorem to its eventual proof, each step has propelled the development of cryptography. Without these developments, blockchain would not be possible.

The "blockchain social movement" has gathered a wide range of social classes and institutions. The extraordinary thoughts and technologies supporting blockchain have attracted technological elites, knowledge elites, business elites, media elites, and a considerable number of ordinary people, gradually drawing attention and participation from enterprises to governments. Notably, blockchain is a "cross-generational" movement primarily driven by young people. Because of the "cross-border" structure of blockchain, it not only changes the traditional connotations and forms of currency, finance, investment, property rights, and wealth but also alters traditional models of enterprises, organizations, and non-organizations, quickly entering the realm of "governance."

The "blockchain social movement" is a typical global movement. The technology and principles of blockchain, as well as the Internet that serves as the foundational structure of blockchain, are not constrained by sovereignty, ideology, culture, or language. Therefore, it is easy to form a global "consensus" on blockchain. This is a "consensus" that originates from entirely new thoughts, based on rationality, science, and technology, far exceeding the so-called "Washington Consensus" or other types of "consensus" in history. Keynes once said, "I believe that the power of vested interests is vastly exaggerated compared to the ability of ideas to erode them." The expanding influence and application scenarios of blockchain worldwide prove that Keynes's statement is correct. Furthermore, due to the correlation between blockchain and globalization, it will inevitably lead to adjustments and changes in the international division of labor system and ecology, providing a solid foundation for global sustainable development.

Blockchain applications or landing scenarios require consideration of several relationships:

(1) The relationship between short-term and long-term. Currently, blockchain faces challenges in application or landing scenarios and is still in its early stages. This is because blockchain technology is not mature enough, and the level of knowledge dissemination is insufficient. However, in the medium to long term, opportunities are continuously increasing.

(2) The relationship between traditional industries and non-traditional industries. Blockchain requires digitalization as a prerequisite. Industries with inherent digitalization genes, mainly those that have grown and developed on the Internet, are more likely to be blockchainized; while traditional primary and secondary industries face greater difficulties in blockchainization.

(3) The relationship between rigid demand and elastic demand. The current application or landing scenarios of blockchain require a rigid demand as a prerequisite. At this stage, the industries and sectors with rigid demand for blockchain are limited.

(4) The relationship between macro effects and micro effects. The macro effects of blockchain technology are easier to prove and manifest compared to micro effects; however, the macro requires a combination of micro. Therefore, it is best for blockchain applications or landing scenarios to have overlapping macro and micro benefits.

The conceptual changes triggered by blockchain involve several aspects:

(1) Believing in and pursuing a balance of fairness and efficiency based on blockchain technology.

(2) Maintaining the inherent data rights of individuals through blockchain, including various privacy rights. Opposing the uncompensated deprivation of public big data.

(3) Supporting and participating in community-based, socially-oriented enterprises and other self-organizations based on blockchain, establishing cross-temporal and spatial combinations based on blockchain.

(4) Upholding the values of blockchain, where the new rules for distributing new wealth need to meet the moral standards of the new era.

(5) Establishing a trust system based on blockchain infrastructure and through blockchain business relationships.

The seven major future trends of blockchain:

(1) Industrial blockchain becomes the main battlefield for the development of the blockchain industry, with consortium chains and private chains becoming mainstream directions.
(2) Blockchain promotes changes in economic and social governance.
(3) An increasing number of large traditional enterprises introduce blockchain.
(4) The integration of blockchain with the digital economy and society becomes increasingly close, with "cloud chain usage" becoming a new indicator for measuring digital economic development.
(5) The formation of multinational blockchain industry alliances promotes blockchain applications in vertical fields.
(6) Blockchain combines with multi-party computing, secure computing, and federated learning to solve data privacy protection and sharing issues.
(7) Distributed commerce will continue to experiment and explore scalable business models.

Correctly understanding Bitcoin ICO is the abbreviation for Initial Coin Offering. The "coin" in ICO refers to Bitcoin. However, ICO financing includes not only Bitcoin but also Ether. Both Bitcoin and Ether essentially belong to the category of encrypted digital currencies. Therefore, reflecting on ICO needs to start with a correct understanding of Bitcoin.

First, the necessary conditions for Bitcoin's birth. At the end of 2008, the Bitcoin paper was published, and in early 2009, Bitcoin was born. This was not a coincidence; it required three necessary conditions: (1) the combination of cryptography and other branches of mathematics. Bitcoin is a man-made currency; the idea of blockchain came first, leading to Bitcoin, not the other way around. Therefore, Bitcoin is a product of the full utilization of cryptography by cryptopunks, along with other relevant applied mathematical achievements. (2) Infrastructure represented by the Internet.

Second, the basic characteristics of Bitcoin. Bitcoin is a new species of currency that should not be measured by the "ruler" of traditional currency.

The basic characteristics of Bitcoin are: (1) The existence form of Bitcoin is a source code without any traditional material as a carrier.
(2) Bitcoin has no central issuing unit. Each Bitcoin has no parents; it is independently generated through "mining."
(3) The entire transaction process of Bitcoin is recorded on a super ledger and is traceable.
(4) The total issuance of Bitcoin has a final cap, which is 21 million coins. In fact, if Bitcoin can last until 2141, the Bitcoin stock at that time will be less than 21 million coins because many Bitcoins will be lost over a hundred years. (5) The core design concept of Bitcoin is to cut off the mechanism that leads to devaluation due to unlimited issuance. Thus, it fundamentally solves the mechanism problem of inflation caused by so-called fiat currencies. As for whether Bitcoin can be defined as "deflationary currency," further discussion is needed.
The community ecology of Bitcoin. The emergence of Bitcoin has stimulated the formation of the so-called "coin circle," "chain circle," "mining circle," and "media circle."
Within each circle, different factions have emerged. For example, the reasonable split caused by Bitcoin forks. Meanwhile, due to the entry of traditional capital and the establishment and operation of numerous exchanges, an industrial chain and value chain have formed around Bitcoin, thereby creating a community ecology. In this digital currency community without traditional geographical boundaries, there are natives, pioneers, new immigrants of capital, and the proletariat. It is particularly noteworthy that within this ecology, there is a group of "coders" who have undergone professional training and at least understand one to two algorithmic languages such as C++, Java, or Go.
Sixth, the ideology of Bitcoin. We do not know who Satoshi Nakamoto is, nor is it necessary to know. History has proven that the team that created Bitcoin published their plans anonymously and disappeared after completing the early experimental phase of Bitcoin, which was the right decision. It is important to affirm that although the only paper on Bitcoin hardly mentions its ideology, the team had specific ideals when designing Bitcoin, driven by a sense of social responsibility, likely containing elements of idealism critical of capitalism. Therefore, the basic principles upheld by Bitcoin "fundamentalists" are commendable. In practical economic life, Bitcoin has been helpful for Mexican immigrants in the United States: they used to transfer money home through Western Union, which charged a 6% fee and took three days; now, through Bitcoin, it only takes seven minutes at a very low cost.
Sixth, the limitations of Bitcoin. Bitcoin has a short history and many limitations. The recent so-called Bitcoin forks occurred to address specific limitations of Bitcoin. In addition, there are rising costs of labor, electricity, and machinery for Bitcoin mining; speculative issues arising from Bitcoin price volatility; and problems related to tax evasion due to Bitcoin's anonymity.

Blockchain provides "confirmation of rights" technology. Currently, the widely recognized blockchain is divided into public chains, private chains, and consortium chains. Regardless of the type of blockchain, the micro-foundation is the "confirmation of rights" of data and information. Blockchain technology has a natural means of "confirmation of rights," storing user data and information in the form of hash values, and through blockchain's decentralization and distributed ledger, effectively ensuring that stored electronic data is not tampered with, thereby guaranteeing the authenticity and originality of the data, forming the premise of "confirmation of rights." In particular, blockchain will inevitably achieve a system integration, and "code is law" will eventually transition from a concept to reality, thus obtaining legal protection through blockchain's "confirmation of rights."

Fifth, blockchain has enormous potential for industrialization. Currently, blockchain industrialization includes two directions: (1) directly creating new industries based on blockchain, such as finance and conceptual industries; (2) implementing chain reform or blockchainization in traditional industries, such as the arts and culture industry, food industry, and transportation industry. As it stands, blockchain industrialization is just beginning, and truly successful cases are still very limited. The biggest bottleneck is the mismatch and shortage of talent. Entrepreneurs who understand the industry do not have enough knowledge of blockchain, while technical talents who are relatively familiar with blockchain lack industry experience. Therefore, blockchain training is an urgent task. Unfortunately, most so-called blockchain training courses currently being offered are still at the conceptual level, linking blockchain with speculation.

Sixth, blockchain helps change existing economic organizational forms. Blockchain provides a technological foundation for achieving "self-organization," which will sooner or later change the organizational forms of traditional enterprises, mainly the structure of companies. People will base their cooperation on blockchain through "nodes." Moreover, blockchain facilitates the development of the "token economy."

FinTech. FinTech can be defined as the combination of traditional financial institutions, including traditional banks and non-bank financial institutions, with science and technology. The following is a list of some banks and financial institutions worldwide using blockchain technology.

The social, market, and consumer dynamics are becoming the most important driving forces for the technological transformation of the banking industry and the promotion of the integration of finance and technology. The key transformation areas of the traditional financial system focus on the technological renovation of payment systems. The payment system is the most direct functional embodiment from banks to users, including institutional users and individual users.

Blockchain and smart contracts have brought significant innovations to the double-entry bookkeeping system, which has been the core support of traditional financial activities for hundreds of years.

The market value of physical products depends on the balance of "recognition" of the product's value by both supply and demand sides. The market value of conceptual products, however, is more influenced by the scale of consumer "recognition." The "recognition" of the supply side can only be transformed into actual market prices if it receives "recognition" from consumers. For example, the commercial value of artists like Faye Wong and Madonna comes from the "recognition" of their audiences. Even if some singers sing better than them, if they are not recognized by the public or sufficiently recognized, their products will have no price or insufficiently high prices.

"Recognition" is a subjective phenomenon. People's "recognition" of the value of conceptual products is multi-faceted, diverse, and multi-attribute, influenced by different times, environments, systems, countries, cultures, moods, and ages, leading to different value recognitions. "Recognition" includes both active and passive recognition. For example, people's recognition of colors is often active; while recognition triggered by advertisements is passive recognition.

In practical economic life, the "recognition" of the value of conceptual products is mainly realized through two pathways: "attention" and "experience." The so-called "attention" is the interest and attention that consumers develop for specific products under psychological, learning, and informational stimuli. The so-called "experience" is the process through which consumers consume specific products through certain parts of their bodies. "Attention" and "experience" interact and are prerequisites for each other.

The theory of "increasing marginal utility" vs. "decreasing marginal utility": According to traditional marginal value theory, the marginal utility of consumption decreases, thus constructing the supply and demand curve. The marginal utility theory is based on human physiological experiences of physical products. However, human psychological experiences of conceptual products do not decrease in utility but rather increase. "Fans" are groups formed by repeated consumption. Each consumption by "fans" has a higher utility than the initial consumption utility. The principle of "fans" formation lies in the fact that people's consumption of a conceptual product requires a process of cultivation, learning, and development, which includes deepening understanding, resonance, reinforcement, and recognition. Therefore, the process presented is not "decreasing marginal utility," but rather a repeated use and consumption process of "increasing marginal utility."

The theory of "marginal cost approaching zero" vs. "increasing marginal cost": The theory of "increasing marginal cost" is an important cornerstone of traditional economics, especially microeconomics. However, in the conceptual economy, the marginal cost of producing conceptual products can theoretically be zero. This is because conceptual products do not diminish in use; rather, they can be reused, and one use does not damage the value of the next use. In many cases, the more times a conceptual product is used, the higher its value becomes. For example, QQ and WeChat. The production and consumption of conceptual products prove the limitations of the "increasing marginal cost" theory and the necessity to reform and replace traditional manufacturer theories based on material production.

The theory of "interval strategy pricing" vs. "unique equilibrium pricing": Equilibrium theory is the core theory of traditional economics. The intersection of the supply curve and demand curve is the "perfect" equilibrium price, considered unique and capable of maximizing the interests of producers and consumers. The supply and demand curves present a typical equilibrium state of physical products. In other words, according to traditional economics, one product has one price; price comes first, followed by production. Any product entering the market has a predetermined price as a reference; supply is a function of price, and as prices rise, supply increases. Traditional physical products exhibit price convergence. For conceptual economic products, there is no unique equilibrium price. The price of typical conceptual products is not a unique equilibrium price. Conceptual products can be supplied infinitely at zero cost, so the supply quantity cannot depend on price. The price of conceptual products is a function of the recognition of the concept and the surplus of the recognized population. In other words, the higher the recognition of the concept, the higher the price of the conceptual product, and the more surplus of the recognized population, the higher the likelihood of that conceptual product's price.

Barbaric Growth Period#

Why did The DAO incident directly promote the subsequent barbaric development of blockchain? Let me explain slowly. All software systems will have bugs. Generally, we modify the source code based on the previous software version; the new version differs from the old version only in part of the logic, and the basic rules of the program do not change much. The two versions of the program can simply adapt to each other, and we can say they are seamlessly compatible. We call this situation iteration. However, at other times, due to architectural adjustments and rule changes, the two versions of the program can no longer be compatible. In this case, we cannot call it iteration; instead, we refer to this change as reconstruction. Typically, the result of multiple iterations is reconstruction, which can be understood as a qualitative change caused by quantitative changes. In blockchain, the network is composed of multiple interconnected nodes, and nodes must be able to communicate with each other. Several small versions of software iterations do not affect the operation of the blockchain network; some nodes upgrade while others continue to use the original version, which will not cause a split in the blockchain network. This situation is known as a soft fork, which is essentially a compatible program version update.

Once the community decides to reconstruct the blockchain protocol, it must coordinate all network nodes to upgrade. You can imagine that if half of the nodes continue to use the old version while the other part upgrades to the new version, in this case, a blockchain network would be split into two. Although their data belongs to a common ancestor, at a certain moment, they independently derive different data paths. This is the logic of a hard fork, which is essentially an incompatible program version update.

This explains why every upgrade of the blockchain network is a significant event that requires the community to coordinate from which block to enable the new version and discard the old version. Returning to The DAO incident itself, Ethereum split into ETH and ETC through a hard fork, with both networks operating independently. Logically, there is no problem; it makes sense. But the issue lies in the fact that its certificates are valuable. Before the hard fork, I owned 1 ETH, and after the hard fork, I had 1 ETH and also 1 ETC. It is equivalent to having an additional valuable certificate out of thin air without any operation, although its value may be relatively lower than the original ETH.

"Pandora's box" has been opened. Some people's thoughts have been liberated. If I have reason to discuss the shortcomings of Bitcoin/Ethereum, propose solutions, write a white paper, and elaborate on my viewpoints and implementation paths, can I also create my own blockchain through a hard fork?

At the same time, if I can rally people to support me and get them to vote for me, will more people recognize my viewpoint? Through such operations, will there gradually be people willing to pay for my ideals, and once someone pays for me, I will have created a "wealth" bubble out of thin air? A grand chain creation movement has begun, with various side networks based on hard forks branching out. The happiest and most driving force behind this action is not the creator but the retail investors who held BTC/ETH before the hard fork; they received countless side certificates and, of course, hope their value increases. So they keep encouraging those around them to enter the market, thus continuously driving this false prosperity.

Indescribable Driving Force#

Besides hard forks, there are indescribable driving forces behind the barbarism, which for certain well-known reasons are not suitable for extensive discussion. Since this indescribable driving force emerged, it has been as natural as fish meeting water. The market has welcomed a new round of madness. Anyone with an idea related to blockchain can immediately write a white paper, gather a group of people to operate a community, promote their ideals, and entice investors to pay real money for their "ideals." It is undeniable that many teams initially did serious work relying on this financing method, but the market will not reward your seriousness proportionately; instead, those who boast excessively make a lot of money and disrupt the market. There is nothing they cannot do. The madness did not last long, and the bubble was ruthlessly pierced. Since then, the market has gradually cooled down. Time has come to a new stage in the development of blockchain, which is now; in the next lecture, I will detail the current state of blockchain technology.

Summary#

In this lecture, I articulated my understanding of the three historical stages of blockchain technology from its inception to its barbaric development. Bitcoin and Ethereum are phenomena, while blockchain technology is the essence behind them.

Blockchain technology originated from Bitcoin, was born in Ethereum, and has experienced a chaotic explosion. However, it is precisely because of those crazy years that countless people like you and me have come to know and understand blockchain technology.
History has no right or wrong, only results. I hope that through my explanation, you can understand the historical development process of blockchain technology and be filled with imagination and expectations for the future of blockchain technology.
You might try reading the Bitcoin white paper and the Ethereum white paper; they can be considered the bibles of the blockchain field. You can also take the opportunity to learn about Satoshi Nakamoto and Vitalik Buterin, both of whom are quite legendary figures.

Reflecting on the three stages of blockchain technology from its birth to its barbaric growth, after government intervention, the entire market has been sluggish due to the halving of Bitcoin prices, and speculators eager to make quick money have gradually exited, leaving behind a mess.

Against this backdrop, the development of blockchain has gradually shifted from price-driven to technology-driven. The exit of speculators means that those remaining are active individuals who have confidence in blockchain technology, pushing it forward and shaping blockchain technology into its current form. In this lecture, we will focus on the current state of blockchain technology.