Token has five values, and 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, the fourth is as a financing tool, and the fifth is the investment value.
The following is the content of Xiao Feng’s speech:
01. New account system brings financial model innovation
In the past two days, the encrypted digital currency has fallen so badly that I almost changed the “belief”, but today I am coming to “recharge the faith.”
We currently have three types of account systems, one is the bank account system, and the other is the Internet account system. Like WeChat wallet and Alipay, we have left the central bank’s account system and got rid of the bank card. Finally, based on the asymmetric encryption algorithm, we can open a new account system that does not require centralized management of the blockchain.
World-class financial technology innovation comes from the new account system. Traditional bank account systems are unlikely to have mobile payments, and there is no possibility of a balance, they can only appear on the new account system. Without the innovation of the account, there will be no subversive financial innovation; without the innovation of the account, we only have to change the marginal benefit in the original model.
We can foresee that in the blockchain account system, new financial innovations, new financial transactions, and even new financial systems, it will have an innovative model that you can’t predict now, just because it is a new account system. It will have a new financial model.
The asymmetric encryption algorithm is actually the property rights confirmation system of the digital world. Only based on distributed accounting methods and blockchain accounts, we can record and run digital assets, and asymmetric encryption algorithms are the source.
02.Evolution of Token: From Computer to Blockchain
Token actually has an evolutionary process.
In the computer Internet world, Token is a command card, which is a license, a pass, a password, and a password. It is separate from ownership and allows you to use it, but does not mean that you own it.
At 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. Throw two Token Trojans for five minutes. The Trojan is not your home. You only have five minutes of use.
At this time, the Token of the Children’s Playground has a settlement function, which is not available in Token of the computer world. The Token of this children’s playground is the same as the casino chips. Assuming that you play in cash for each game, the settlement is very complicated. It is very simple to settle after switching to casino chips.
In the online game, there is a natural Token. In addition to the function and settlement function of the online game Token, you can actually get the gold coins issued to you by the labor. At this time, this Token is economically motivating. This is Token’s new feature, economic incentives, which inspire you to continue playing this game.
In fact, the public blockchain can be seen as a game.
In the blockchain, in addition to the use, settlement, and economic incentives, Token also has functions such as payment, financing tools, and diversion. In terms of the diversion function, it can help the project to start hot. For example, a trading platform relies on the design of trading mining to make it the most trading platform in the world in a few days. But if the mechanism is not well designed, the game becomes unsustainable.
03. The token is the market of the right of use
We divide the market into three categories, namely the ownership, income, and use rights markets.
The ownership market has a stock market, buying and selling stocks, and actually, trading is ownership. The income right market is the bond market, and you can get a certain percentage of interest when you hold bonds, but you don’t own the company.
The blockchain is the market for usage rights. why? You think, we say Bitcoin is an open source foundation. In fact, any blockchain system, it has no balance sheet, no shareholders and registered addresses, but you can use this system with Token.
The blockchain has separated the use of Token to create a market where everyone trades Bitcoin, ETH, which is useful.
Ownership, income rights, and use rights have different meanings. In the ownership market, we call it equity, and the income right is rights. Someone told you that Token can pay dividends, then it is no different from stocks. There is a big difference between the two.
04. The token is a security, not a stock
Stocks are securitized, bonds are securitized, and Token is securitized.
We believe that Token is a security, but the Token is not a stock. If it is a stock, then we don’t have to get a Token out, buy stocks directly, and trade with stocks. The token is a brand new thing and it is very valuable. The reason why everyone is willing to discuss is that it means another market, which is a market for usage rights.
The stock market is very large and it is estimated that there are millions of participants, and it is a multi-billion dollar market. The market for bonds is also very large. We have reason to believe that Token, which is based on the use of securitization, is a market for usage rights. This market will not be smaller than the previous two markets and will be a market of tens of billions of dollars in the future. Maybe 20 years, maybe 30 years. For example, Uber is a market for use rights, which is a market in which ownership is diluted.
Any license to use can be Token, and it is valuable, and it may be very valuable in the future. The right to use is not free.
Because it is a security, it will be bound by the securities law. Any attempt to circumvent the supervision of the centralization of the regulatory mechanism is definitely a crime. The discussion of STO after ISI was very enthusiastic. This kind of discussion was to rely on stocks for the first time, and the second was to bypass regulation. Waiting for supervision is waiting for jail.
But the securitization of Token, the securitization of the right to use, is technically very different.
The securitization of stocks is the share of stocks into one share. The Chinese securities law stipulates that the stock denomination is one dollar. The securitization of the right to use is not denomination, atomization, and splitting to the finest. This is the biggest difference between the two securitizations. The biggest difference between the two currencies is behind.
Some people say that Bitcoin’s fixed circulation of 21 million will cause economic deflation. He is looking at the digital currency from the perspective of legal currency. The digital currency has no denomination, and it can be subdivided into many places after the decimal point. ETH is 18 after the decimal point, it can still be inflation, but inflation is not a currency, but a price increase.
05.Token core value: building incentives for blockchain
We have a lot of misunderstandings about Token’s valuation. We look at it as a stock or bond. In fact, we can’t follow the previous valuation model. Because it is the right to use, we have to use value to value, which is the biggest difference between it and stocks and bonds. It’s not a financing tool, financing is just an added value. The real value of Token is that you can build an economic incentive model on the blockchain only based on Token.
We believe that technological maturity does not mean that business in the blockchain can be successful, and technology is the foundation.
Technology is not something that a developer can solve on its own. It requires the entire community and requires computer experts to help it. The token is the key to the commercial success of blockchain projects. Tokens must be built with Token and then analyzed whether such incentives and corresponding governance mechanisms are sustainable.
Therefore, we classify the value of Token as follows:
First, building an incentive mechanism is the core value of Token; second, Token helps community operations to establish a governance mechanism on a decentralized system; third, Token helps achieve a hot start of the market; and fourth, Token is a financing tool. Fifth, Token has investment value.
But we believe that its investment value lies in the infinite scalability of the system. why?
We believe that everything in the blockchain is free and the transaction cost is almost zero, so it has the infinite scalability of business.
If designed well, 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 the Token based on cash flow, nor is it dividends or interest. This set is not valid in the Token field, you are based on the analysis of its business’s scalable new and Token value in the business.
When you invest in a blockchain project, or a public chain project, you have to look at it: its economic incentive model is well designed, and it doesn’t have investment value. This is very important to judge the investment in the blockchain project. factor.
- The best Token should be an “infinite loop game”
Token design, in fact, is done on the blockchain, designing the decentralized business into a game that can be infinitely looped. All participants can continue to play this game and loop indefinitely.
Bitcoin is a game that can loop indefinitely because it is simple, has a clear border, has only one purpose, and it is a locked system. Ethereum is in trouble. It is open. It supports secondary development and even application development in addition to the underlying public chain. It is too complicated. No one can perfectly design its incentive mechanism at the beginning of design, so its Incentives and governance mechanisms can only be continuously optimized. Recently, Ethereum is changing the incentives for the whole node because the previous incentives are not enough.
We believe that who motivates, who to distribute the token, will ultimately decide who is involved in the blockchain.