Since the concept of Web3 became popular, we can hear some new terms every once in a while, such as consensus algorithm, zero-knowledge proof, NFT, DAO, DeFi, DID, etc. There are also some newly born and incomprehensible concepts, such as SBT, cross-border Chain bridges, etc., these various contents can be said to make us overwhelmed, especially because Web3 itself is an emerging industry, and many contents are difficult to understand.
In such an environment, the entire market environment seems confusing, and some financial scams, capital disks, and inefficient application scenarios have also occurred, which are not conducive to healthy development. Therefore, it is becoming more and more important to clarify the underlying logic in Web3, which will allow us to better control the frequent appearance of various concepts.
Institutional economics is a branch of economics, which mainly uses the method of economics to study the role of institutions in social economy. The so-called system, in simple terms, is a rule that people form a stable order in the process of mutual communication based on trust.
Tokenized Property Rights System in Web3
Since ancient times, property rights have been a core content of human social economy. In the ancient Roman codes, property rights were considered to be the right to objects and control. With the transformation of the social system and the improvement of legal rules, property rights also derived from the right of control to the right of possession, right of use, right of income, right of disposal, etc. A series of rights, among which the right of disposal is subdivided into transaction rights, inheritance rights, gift rights, etc. It is also based on the existence of property rights that promote enterprises and markets. The emergence of financial, legal, political and other systems has formed a complex and orderly social order.
Property rights in Web3 are still a content that cannot be ignored, but as a virtual digital space, how does it realize property rights confirmation like reality? The key to this lies in its tokenized digital assets.
Relying on the encryption mechanism and consensus mechanism in the blockchain, the Web3 pass becomes the content that users can control. Under the digital signature and ownership confirmation, the pass in Web3 realizes property right. Nowadays, many real-world content has realized digital property rights in Web3, such as points, gift cards, academic certificates, bills, etc.
Smart contracts and contracts in Web3
On the other hand, in institutional economics, contract is also a core content. Based on the contract, rules are used to establish a foundation of trust in people's transaction process, so as to plan the responsibilities, obligations, and benefits of all parties to the contract.
What is used to play a contract role in Web3 is to rely on codes to implement smart contracts that are automatically executed. Smart contracts can be pre-programmed into the relevant rules of the contract, and appear in a non-tamperable and transparent form, which can be viewed intuitively by all parties involved in the transaction. In addition, smart contracts can also be pre-programmed, and traders can write relevant contract content according to their actual situation, which greatly improves its flexibility.