Blockchain "Token has five values, the core value is to establish a set of incentive mechanism, the second is to build a set of governance mechanism, the third is to help the market start up, the fourth is to be used as a financing tool, and the fifth is the investment value .” What blockchain? Refer to "Blockchain Technology - Blockchain Overview"
Xiao Feng, vice chairman of China Wanxiang Holdings, said in a speech titled "Token and Digital Assets" in Shanghai in 2018 that the blockchain has brought a new account system. Based on this, a new financial model will be born on the blockchain , In the future, there will be innovative models in the financial field that are still completely unpredictable.
And Token is the securitization of the right to use. Token is a security, but Token is not a stock. In the future, the market for this right to use will not be smaller than the stock and bond markets, and it will be a market worth tens of billions of dollars. It is precisely because Token is a security, it will be subject to the securities law, and any behavior that wants to break away from the centralized supervision mechanism in order to bypass the supervision department must be a crime.
In Xiao Feng’s view, Token has five values. The core value is to establish an incentive mechanism, the second is to build a governance mechanism, the third is to help the market start up, the fourth is to be used as a financing tool, and the fifth is to investment value. The reason why it has investment value lies in the infinite scalability of the blockchain system. Token design is the key to the success of blockchain projects. He believes that the key to investing in blockchain projects (public chains) is to see whether the economic incentive model is designed well, which is a very important factor in judging whether to invest in blockchain projects. The best Token design is to design decentralized business as an infinite loop game, and all participants can continue to play in an infinite loop.
The following is the content of Xiao Feng's speech:
1. The new account system brings financial model innovation
The encrypted digital currency has fallen sharply in the past two days, and I almost have to change my beliefs. I am here to recharge my beliefs today.
We currently have three types of account systems. One is the bank account system, and the other is the Internet account system, such as WeChat wallet and Alipay, which have been separated from the central bank's account system and bank cards. Finally, based on the asymmetric encryption algorithm, we can open a new blockchain account system that does not need to be managed by a centralized organization.
World-class financial technology innovations all come from new account systems. It is impossible for mobile payment and Yu'e Bao to appear in the traditional bank account system. They can only appear in the new account system. Without account innovation, there will be no subversive financial innovation. Without account innovation, we can only make marginal changes in the original model.
We can foresee that in the account system of blockchain, new financial innovations, new financial transactions, and even new financial systems will have innovative models that you cannot predict now, because it is a new account system , it will have a new financial model.
The asymmetric encryption algorithm is actually the property right confirmation system in the digital world. Only based on distributed accounting methods and blockchain accounts, can we record and operate digital assets, and asymmetric encryption algorithms are the source.
2. Evolution of Token: From Computer to Blockchain
Token actually has an evolution process.
In the computer Internet world, Token refers to tokens, which are licenses, passes, passwords, and passwords. It is separate from ownership, and you can use it without permission, but it doesn't mean you own it.
In the children's playground, you can also go to the counter to buy a Token, and then use this Token to play all the games. You can spin the horse for five minutes by throwing two Tokens. The horse is not yours, you just have the right to use it for five minutes. At this time, the Token of the children's playground has a settlement function, which is not available in the Token of the computer world. The Token of this children's playground is the same as casino chips. Assuming that you use cash to play each game, the settlement is very complicated. After changing to casino chips, the settlement is very simple.
In online games, there are tokens naturally. In addition to the use function and settlement function of online game tokens, you can actually obtain the gold coins issued to you by the system through labor. At this time, this token has economic incentives. This is a new function of Token, economic incentives, which motivates you to continue playing this game.
In fact, you can regard the public blockchain as a game. In the blockchain, in addition to the functions of use, settlement, and economic incentives, Token also has functions such as payment, financing tools, and diversion. Take the diversion function as an example, it can help the project to start hot. For example, Fcoin, relying on the design of transaction mining, it became the exchange with the largest transaction volume in the world within a few days. But if the mechanics are poorly designed, the game becomes unsustainable.
3. Token is the right to use market
We divide the market into three categories, namely the ownership, usufruct and usufruct markets.
The ownership market has the stock market, and buying and selling stocks is actually trading ownership. The usufruct market is the bond market. You can get a certain percentage of interest by holding bonds, but you don't own the company. The blockchain is a marketplace of usage rights. why? You think, we say that Bitcoin is an open source foundation. In fact, any blockchain system has no balance sheet, shareholders and registered addresses, but you can use this system with Token. The blockchain separates the right to use Token and establishes a market where everyone trades Bitcoin and ETH, which is useful.
The meanings of ownership, usufruct, and usufruct are very different. We call it equity in the ownership market, and usufruct is a right. Someone tells you that Token can pay dividends, then it is no different from stocks. There is a big difference.
4. Token is a security, not a stock
Stocks securitize ownership, bonds securitize income rights, and tokens securitize use rights.
We think that Token is a security, but Token is not a stock. If it is a stock, then we don’t need to get a Token out, just buy the stock directly, and use the stock to trade. Token is a brand new thing, and it is very valuable. The reason why everyone is happy to discuss it is because it means another market, which is a market for usage rights.
The stock market is very large, estimated to have millions of participants, and it is a trillion-dollar market. The bond market is also very large. We have reason to believe that the token based on the securitization of the right to use is the right to use market. This market will not be smaller than the previous two markets, and it will also be a market worth tens of billions of dollars in the future. Maybe 20 years, maybe 30 years. For example, Uber is a market for usage rights. It is a market where ownership is downplayed and usage rights are valued. Any permission to use the right can be Token, and it is valuable, and it may be very, very valuable in the future. Access is not free.
And because it is a security, it will be bound by the securities law. Any behavior that wants to break away from the centralized regulatory mechanism and bypass the regulatory agency must be a crime. After the ICO, the discussion of STO is very heated. This kind of discussion is to rely on stocks, and to bypass supervision. Don't need supervision to wait to go to jail.
But the securitization of Token, that is, the securitization of the right to use, is technically very different. The securitization of stocks is to turn shares into shares of shares. According to the Chinese Securities Law, the face value of stocks is one yuan. The securitization of the right to use is not a denomination, but an atomization, which is split to the smallest detail. This is the biggest difference between the two securitizations, and behind it is the biggest difference between the two currencies. Some people say that the fixed circulation of 21 million bitcoins will cause economic deflation. He looks at digital currency from the perspective of legal currency. Digital currency has no denomination and can be subdivided into many decimal places. ETH has 18 decimal places, and it can still be inflated, but inflation is not about issuing currency, but increasing prices.
5. The core value of Token: establish an incentive mechanism for the blockchain
We have a big misunderstanding about the valuation of Token. We regard it as a stock or a bond. In fact, we cannot follow the past valuation model. Because it is the right to use, we have to use the value in use to value it, which is the biggest difference between it and stocks and bonds. It is not a financing tool. Financing is just an incidental value. The real value of Token is that only based on Token can you build an economic incentive model on the blockchain.
We believe that technical maturity such as interoperability does not mean that business on the blockchain will be successful, and technology is the foundation. Moreover, technology cannot be solved by a developer alone. It needs the entire community and computer experts to help it solve it. Token is the key to the commercial success of blockchain projects. Token must be used to establish an incentive mechanism, and then analyze whether this incentive mechanism and the corresponding governance mechanism are sustainable.
Therefore, we classify the value of Token into the following categories.
First of all, building an incentive mechanism is the core value of Token; second, Token helps the community operate and establish a governance mechanism on a decentralized system; third, Token helps to achieve a hot start of the market; fourth, Token is a financing tool ; Fifth, Token has investment value.
But we think its investment value lies in the infinite scalability of the system. why? We believe that everything on the blockchain is free, and transaction costs are almost zero, so it has unlimited scalability for business. If well designed, a blockchain system can serve 2 billion, or even 5 billion people. At this time, when your Token supply is fixed, its price will have a huge increase. However, you are not analyzing the value of Token based on cash flow, nor dividends and interest. This set is completely invalid in the Token field. You analyze it based on its business scalability and the value of Token in business.
When you invest in a blockchain project, or a public chain project, you have to see whether its economic incentive model is well designed, otherwise it has no investment value. This is a very important factor in judging whether to invest in a blockchain project .
The best token should be an "infinite loop game"
What Token design actually does is to design a decentralized business as a game that can be infinitely looped on the blockchain. All participants can continue to play the game in an infinite loop.
Bitcoin is a game that can be infinitely looped, because it is simple, has clear boundaries, has only one clear purpose, and it is a locked system. Ethereum is in trouble, it is open, in addition to the underlying public chain, it supports secondary development, even application development, it is too complicated, no one can perfectly design its incentive mechanism at the beginning of the design, so its The incentive mechanism and governance mechanism can only be continuously optimized. Recently, Ethereum is changing the incentives for full nodes because the previous incentives were not enough.
We think who you motivate and who you distribute Token to will ultimately determine who is participating in your blockchain. Taking Ethereum and EOS as examples, the incentives of EOS have been given to investors, and EOS has become a community dominated by investors, and people around EOS are all speculators. The incentives of Ethereum are mainly inclined to technical developers, so its community is mainly thousands of technical developers. From this perspective, Ethereum is more promising than EOS. After all, there are so many technology developers involved in it, and it will gradually improve.
**This article only represents the views of the original author and does not constitute any investment opinion or recommendation.
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