Wu Jihan: Why has Bitcoin been able to rise from nothing to something in 10 years?

Text | Wu Jihan

Produced by | Mars Finance APP (ID: hxcj24h)

This article is recommended by Wang Feng, the founder of Mars Finance and Consensus Lab.

This content is derived from the latest lecture notes given by Jihan Wu, co-founder of Bitmain, at the Macau station of the "Mars University Global Blockchain Course Summer Class" at the end of August 2019. In the course, Jihan Wu systematically analyzed the rise of Bitcoin and the PoW consensus mechanism, explained the reasons for the high volatility of Bitcoin prices from an economic perspective, and comprehensively reviewed the history of Bitcoin expansion, responding to the expansion dispute for the first time. At the same time, he also analyzed the essence of the venture capital boom in the encrypted digital currency market from the perspectives of the development history of Baked Cat, the rise of Ethereum, and the fall of ICO.

The following is the essence of the lecture notes:

Why has Bitcoin risen so rapidly in 10 years?

Before discussing blockchain and encrypted digital currency, I will first talk about the origin and dynamic process of the formation of decentralized financial and monetary systems. Understanding based on principles and logic is not only very helpful for us to understand the formation of Bitcoin, but also allows everyone to have a more forward-looking grasp of trends when facing industry changes in the future.

How did currency come into being before Bitcoin?

I personally agree most with the Austrian School of Economics’ theory of the birth of the monetary system based on “barter.” Each commodity has its own “marketability.” Goods with strong marketability will gradually evolve into currency, while goods with weak marketability will gradually withdraw from the role of currency.

In addition to marketability, what other basic properties of humans and the material world play a key role in the birth of money? There are two basic points that must be grasped.

First, individuals have extremely limited ability to process and exchange information. In a barter market, it is difficult for individuals to know the full picture of the market in a timely manner. Not only is the cost of information search high, but the process of processing information is also time-consuming. Information is usually hidden in different market individuals. In economics, this type of information is called "signal."

Secondly, individual preferences are changeable and unpredictable. This is an important reason for the failure of planned economy. The former Soviet Union once had a planned economic committee, and its method of directing the economy was very simple. For example, if a region produces wheat and grapes, it only needs to meet the production targets of wheat and grapes, without considering the characteristics of the region's long history, prosperous culture and art, and suitable for the development of tourism. Culture, art, and tourism are options that meet the unique preferences of consumers. It is difficult for organizations such as the planned economic committee to discover this special preference and make corresponding adjustments to economic development plans.

In summary, when information is opaque and everyone's preferences are inconsistent, the pressure of barter will be very high. At this time, a highly marketable commodity will eventually become "currency", which can meet people's needs for convenience and improve transaction efficiency. In turn, the emergence of "currency" also promotes the better operation of the entire economic activity. If someone in the market does not accept this "currency", then the efficiency of his economic activities will be greatly reduced.

Next, let’s try to analyze: Why is the currency that ultimately wins extremely marketable? What are the aspects of marketability?

Carl Menger, the founder of the Austrian School of Economics, is the inventor of the theory of "marketability". He divides marketability into three factors: market, space and time. I will combine these three factors to explain why Bitcoin has been able to rise from nothing in 10 years.

First, market factors.

There are several conditions that a product must meet to satisfy market factors:

First, there must be a lot of people who like this product;

Second, people who like this product must have strong purchasing power;

Third, the product is scarce;

Fourth, the goods are easy to divide;

Fifth, there are very liquid markets, including markets constructed for speculative trading.

Bitcoin meets all the above five conditions.

The Internet has expanded the scale of people who know about Bitcoin; the love of Bitcoin by higher-income "code farmers" has further amplified its influence; the limited supply of 21 million defines the scarcity of Bitcoin; the smallest unit of Bitcoin is in the eighth decimal place (that is, 1 Bitcoin can be divided into a maximum of 1 million parts), which provides extremely strong divisibility and eliminates obstacles to trading activities; Bitcoin transactions, from initially concentrated in Japan's Mt.Gox exchange (Editor's note: currently bankrupt), to now spread across exchanges around the world, the market liquidity is very strong.

This series of economic and social factors determine that Bitcoin has a very high market acceptance, which makes it easy to use for exchange and its rights and interests can be protected.

Second, the spatial factor.

The spatial factor refers to the fact that within the range where a commodity can be traded, people are willing to accept and consume it; at the same time, the transportation cost should be low, that is, the loss of the commodity in the process of transferring from one area to another should be low. Bitcoin just meets this condition.

However, Bitcoin still lacks a more prosperous and convenient trading market. In international trade, more than 70% of contracts are settled in US dollars and more than 50% of payments are completed in US dollars, while the main trading objects of Bitcoin are other types of encrypted assets.

So, is Bitcoin useful in international trade? From practical experience, the answer is yes. For example, Bitcoin can reduce the restrictions of capital controls and be better used for cross-border wage payments.

Third, the time factor.

The time factor is related to whether this commodity has lasting value in people's psychological expectations. "A diamond is forever, and a diamond will last forever" means this. But why is it difficult for diamonds to become currency? Anyone who knows a little bit about the industry knows that De Beers' monopoly on the diamond industry has artificially created the scarcity of diamonds. Once this monopoly is difficult to maintain, the value of diamonds will be difficult to maintain.

Another dimension to understanding the time factor is whether the cost of keeping the commodity is low enough, whether it can generate interest, and whether the market demand for this commodity is too cyclical. If the cyclicality is too strong, it will be difficult for it to become a currency. In addition, from a social and political perspective, will this commodity face periodic prohibitions? For example, if the government prohibits private ownership of gold and prohibits private use of gold for trade settlement, gold will not be able to maintain its currency status. Even if the prohibition does not actually occur, as long as the expectation is strong and it is possible to happen in the future, the currency status of gold will be challenged.

In human history, at many times and in many regions, gold and silver eventually became the winners in the currency competition; but in some times and regions, such as the paper currency "Jiaozi" in the Song Dynasty of China, credit currency was also born and widely used. Credit currency generally uses the government's coercive power to solve the problem of currency marketability.

In general, the dominant currency is formed in dynamic competition. In the short term, its position is very solid, and even the monetary authorities will use its superior position to maintain its dominance; in the short term, even if hyperinflation occurs, it is difficult to bypass the dominant currency; but in the long term, its position will be challenged, and the currencies with irresponsible monetary policies will eventually disappear.

Bitcoin is a brand new species born under new technological conditions and new economic conditions. It has emerged in the long-term dynamic competition process and has strong marketability. As the number of people accepting Bitcoin continues to expand, its currency nature will become stronger and stronger. In addition, the total amount of Bitcoin is scarce, so it will definitely have huge room for appreciation.

Why is the PoW consensus mechanism so important?

The birth of Bitcoin can be traced back to the early cypherpunk movement, which was an inevitable product of the development of cryptography during World War II. Since cryptography played a key role in World War II, after the war, this technology was strictly regulated by the US government, but spontaneous resistance from the public has always existed.

In order to fight against government surveillance, many people began to conduct spontaneous research activities regardless of government bans, and eventually they found a potential solution to evade surveillance and control in the cryptographic system. After that, spontaneous cryptographic research by the public was combined with the subsequent open source software movement, and gradually formed the cypherpunk movement. Today, the common HTTPS (encrypted hypertext transfer protocol) and PGP (an open source encrypted communication protocol) are all due to the cypherpunk movement.

Around the 1980s, after solving the communication encryption problem, the cypherpunks turned their attention to cash and currency systems. Unfortunately, the experiment has not been successful. The main problem is that if a decentralized solution is adopted, how to solve the "double spending" problem? When a sum of money can be spent twice, fraud is easy to occur. If a centralized solution is adopted, although the "double spending" problem is solved, how to solve the money laundering problem under the atmosphere of liberalism?

It was not until 2008 that Satoshi Nakamoto published the paper "Bitcoin: A Peer-to-Peer Electronic Cash System" in the Cypherpunk mailing group, proposing some key inventions, such as the PoW consensus mechanism, which effectively solved problems that previous generations could not solve.

Although PoW is not a new concept, its application in Bitcoin is very clever. If Bitcoin is regarded as a ledger, PoW stipulates that the miner who finds the answer first can obtain the right to record the account, and ensures that the ledger is connected in series.

It is easy to understand this principle by thinking of the "saddle stamp" on the documents in reality. If a person wants to check whether the document is complete, he can check whether the saddle stamp is complete. If someone takes away a page in the document, the saddle stamp will be incomplete. The blockchain is roughly equivalent to the principle of the saddle stamp. Its technical characteristics ensure that you can easily find out whether the account book is complete and whether it has been tampered with by others without checking the account. At the same time, as time passes, the PoW mechanism ensures that the bookkeeping is completed through competition, and there is an independent timestamp server that does not need to be monitored by a third party, which makes it difficult for anyone to tamper with the account book without making great efforts - this means that the double payment problem can be effectively solved under decentralized conditions.

However, the cost of PoW is very high. In the early days of mining, the CPU of an ordinary computer could support it. However, as the difficulty of mining increases, not only the CPU is difficult to support, but even GPU (graphics processing unit) and FPGA (field programmable gate array) chips are gradually outdated, and ASIC (application-specific integrated circuit) chips have become mainstream. This means that you have to constantly update your mining equipment, and after updating the equipment, you still have to face high electricity costs. At the same time, the delay problem of PoW has not been solved - if you want to make payments in seconds, it is definitely unrealistic for Bitcoin to take 10 minutes to confirm a block.

Although the cost of PoW is very high, it has created a sense of "fairness" for a long time. I believe that many business leaders and bosses will find that fairness is particularly difficult to achieve in the process of managing employees. Everyone thinks that they are the most important and have contributed the most.

How does PoW create a sense of fairness? Take mining for example. As long as you buy equipment and connect it to electricity, you can participate in the Bitcoin mining system. Then, when you make money from mining, you will feel fair. The effort of mining is related to the shortcomings of PoW mentioned above. To mine Bitcoin, you have to pay a lot, which creates a psychological value anchor. What is value anchor?

It is essentially a kind of psychological aversion to loss. If something costs you a lot, you are unwilling to sell it at a price lower than the cost. This is "reluctant to sell".

Another meaning of fairness comes from "openness". You can freely buy and sell mining machines to participate in mining, and even participate in the manufacturing of mining equipment and code programming. These thresholds are relatively low and do not require government approval. Therefore, the entire Bitcoin mining is an open system.

Without such an open system, many problems will arise. For example, XRP (Ripple), because it does not use the PoW mechanism, attracted users through airdrops in the early days, and let users grab airdrops, which resulted in a large number of wool parties, rather than real users. The wool party will not cherish XRP. After they get XRP, the first thing they think of may be to sell it. For example, for some currencies with PoS mechanism, who are the beneficiaries? Those who joined first and those who run the master node. This is just like the high-caste Brahmins in the Indian caste system. The beneficiaries can always get free interest and gain income at almost no cost.

These encrypted digital currencies are fundamentally different from Bitcoin. Bitcoin miners spend a lot of money to buy machines, pay electricity bills, and work hard to mine, so they will build a concept of cost and be reluctant to sell.

Bitmain once occupied a leading share of computing power in Bitcoin mining, but computing power changes dynamically, and we are always worried and work day and night on research and development, because Bitcoin is an open and challenging system. This is the beauty of PoW.

Another implicit advantage of PoW is that it creates an independent system that can exist independently based on its own logic. It does not need to connect to the time servers of Microsoft, Apple or Google to know the order in which transactions occurred.

Finally, from a technical point of view, PoW is also the safest mechanism, although it also has the controversy of 51% attack.

Why is Bitcoin price volatility so high?

Security, scalability, and decentralization constitute the "impossible triangle" of blockchain, but there is also a very famous impossible triangle theory in international trade and foreign exchange markets - the "Mundell Impossible Triangle", which means that the three goals of free flow of capital, independence of monetary policy, and stability of exchange rates cannot be achieved at the same time. To achieve two of the three goals, another goal must be abandoned.

Hong Kong adopts a currency board system, and the Hong Kong dollar is strictly pegged to the US dollar, so it has given up the independence of monetary policy, but has achieved the free flow of capital and the stability of the exchange rate. There are capital controls on the RMB. If you are an enterprise and want to remit RMB, you need to provide proof of use to the State Administration of Foreign Exchange through a commercial bank; if you are a natural person, they will review whether your quota has been used up and whether the use of the quota is reasonable?

Therefore, my country's central bank has adopted some restrictions on the free flow of capital to ensure the independence of monetary policy and the stability of the RMB exchange rate. It is also because of this that we were able to achieve the first economic recovery through the implementation of large-scale monetary policy stimulus during the 2008 financial crisis, which in turn influenced and promoted the recovery of Europe and the United States.

It can be said that foreign exchange control is a very important monetary policy tool in my country. So let's see what the options are for Bitcoin?

Obviously, Bitcoin has an independent monetary policy system, with a total supply of 21 million, and the output is halved every four years. Bitcoin prices have experienced several sharp declines in history. During the sharp declines, some people asked, can the supply be reduced? The answer is no, Bitcoin will not change the output setting as the price fluctuates. The high volatility of prices, from the perspective of Mundell's impossible triangle, means that Bitcoin has given up the goal of exchange rate stability.

The story of Bitcoin hard fork

First of all, let me give a conclusion: Bitcoin hard fork is a natural phenomenon and is not subject to personal subjective will.

I personally stand at the forefront of the trend. I seem to be the leader of the times, but in fact it is just an idolized understanding of collective action when a change, a revolution, or a process comes. Some people call BCH, which is a hard fork of Bitcoin, "Jihan Coin". I am embarrassed and don't know how to explain it. But I will take the opportunity of Mars University to talk about it in detail. In fact, it is related to the governance structure of the blockchain world.

The so-called governance structure is a group's rules on how to move forward, what to do or not to do, how to do it when it is done, and who decides. How is Bitcoin's governance structure formed?

We know that the purchasing behavior of Bitcoin users supports the value of Bitcoin, but for it to become a currency, it is determined by its "marketability". There are about 20 to 40 million people buying and selling Bitcoin in more than 100 countries around the world, with different languages ​​and cultures, and most of them lack professional knowledge. Therefore, it is very difficult to get this huge group to take effective action. Moreover, when the crowd is large enough, the mass behavior patterns can be easily influenced by propaganda, and the phenomenon of following orthodoxy can also occur.

Related to following orthodoxy is "imagined reality". Yuval Noah Harari mentioned Peugeot in "Sapiens: A Brief History of Humankind". He asked, does a large multinational company like Peugeot really exist? Perhaps you would say that such a large company with so many people certainly "exists". But if Peugeot goes bankrupt one day and is forced to dissolve, although the company's factories, production lines, employees and cars still exist, Peugeot disappears out of thin air - in fact, Peugeot itself has no substantial connection with the real world.

According to this statement, the Peugeot car is a fantasy and does not really exist. Yuval went on to say that the Peugeot car is a kind of "imagined reality", which means that everyone believes in something, and as long as this common belief exists, it has enough power to influence the world.

Similarly, in the world of open source software, there is also the pursuit of orthodoxy (including Bitcoin, almost all blockchain projects are open source software). Early open source software developers had almost no income, so what was the main motivation for them to persist in writing code? I summarize it as "self-realization". Realizing oneself through creation, whether it is a sense of accomplishment, self-esteem, glory, or external respect, is a very good personal feeling. Generally speaking, the founder of open source software is a person who has a strong authority among many developers and often has the final say. For example, the founder of Bitcoin is Satoshi Nakamoto, and the founder of Ethereum is Vitalik. If the founder disappears or abdicates, suddenly loses contact, or voluntarily gives up, the next person will take over, or a committee will be formed to take over, but in either case, the authority is decreasing. In this case, it is easy to split - splits are everywhere in open source software. Some are very successful, and some are relatively unsuccessful.

Let's talk about Bitcoin. Bitcoin was almost worthless in the early days. If someone abused transactions, he could paralyze the entire Bitcoin blockchain network without spending money. How did Satoshi Nakamoto solve this problem? He quietly added a block size limit to Bitcoin, setting the upper limit to 1M. When this code was added, Bitcoin was almost maintained by Satoshi Nakamoto alone. It was not until October 3, 2010 that Jeff Garzik, a core developer of Bitcoin, discovered this problem. He believed that 1M was a limited capacity and suggested raising this upper limit. This triggered a long discussion at the time, but Satoshi Nakamoto's point of view was that there was no need to rush to modify it now, and it would be modified when the Bitcoin network needed it in the future. As the founder of Bitcoin, Satoshi Nakamoto's authority is very strong, and it makes sense to put the problem aside first.

But then some changes happened in the Bitcoin community. At the end of 2010, Satoshi Nakamoto gradually faded out of development activities. Before that, he handed over the Github authority to Gavin Andresen, the chief developer at the time, and handed over the management authority of some important Bitcoin website forums such as Bitcointalk.org to Theymos. In 2014, Gavin Andresen also gave up his identity and authority as the chief developer and handed it over to Wladimir van der Laan, a Dutchman. Wladimir is equivalent to the third generation of Bitcoin, which we call "Core". At this time, Bitcoin also transformed into a committee governance structure.

Some important things happened later. In August 2014, core developer Gregory Maxwell, entrepreneur and investor Austin Hill, core developers Pieter Wuille and Matt Corallo co-founded the Bitcoin technology company Blockstream. The company focuses on sidechain technology. When Bitcoin's expansion capacity is limited, some transactions can be moved to the sidechain to keep the main chain simple and secure without taking a big upgrade risk. At the same time, sidechain innovation also helps the diversified development of market protocols. Unfortunately, sidechains have not been realized today, and there is no well-developed sidechain ecosystem. Leaving aside the technical difficulties, the more important reason is that Bitcoin's on-chain expansion cannot support the entire commercial application on the chain.

This may bring a motivation. In order to make the problem solved more effective and valuable, we first create a problem, such as creating a reality that cannot be expanded. Liu Changyong, a professor at Chongqing Technology and Business University, wrote a very systematic article introducing the brief history of Bitcoin expansion, restoring the situation at that time. As a participant in Bitcoin expansion, I feel interesting about this process, not angry or upset. Generally speaking, the entire expansion process is divided into two modes and two stages.

The first model is that the community is afraid of division and consensus is difficult to reach.

Any group will feel fear when facing potential split pressure, and most people want to reach a consensus. This fear of "not being able to split" will lead to a result that consensus must be reached for any changes. In the process of Bitcoin expansion, there has been an endless debate on the definition of consensus. At the same time, there will be hardliners who are unwilling to make any changes. They constitute a group that refuses to expand and upgrade. Although this group may be small in number, they have a disproportionate veto power and can control more people through operations, making the process lengthy, complicated and controversial.

The second model is derived from the first model. The party that supports capacity expansion will make compromises step by step . First, will 20M be okay? If not, will 8M be okay? Will 2M be okay? Still no. Why is there a situation of compromise in capacity expansion? Because we need to seek consensus. This model is inevitable. Anyone who wants to make changes proactively will definitely be in a passive position in the negotiation.

The entire expansion process can be divided into two stages, the starting point can be traced back to 2013. The first stage was from 2013 to 2016, and the second stage began at the end of 2016.

The first stage was a free discussion among developers, full of technical language, and mainly internal debates among developers, so it was not followed or reported by the mass media. The second stage was a negotiation between developers and miners, which gradually evolved into a confrontation. The miners, led by me and Bitmain, advocated for capacity expansion, but the developer "Core" opposed it.

The first stage ended with the failure of the expansionists. The second generation of Bitcoin core developers left and fell one after another, and some up-and-coming developers did not have long-term and in-depth thinking and experience with Bitcoin's complex code and protocol. This led to the decline of the reputation and actual development capabilities of the expansionists, which I can describe as "getting worse day by day". At the same time, the developers in the "Core" camp had been doing development from 2010 to 2016, and invested a lot of time in the development and maintenance of the Bitcoin protocol. After the establishment of Blockstream, they devoted themselves to it and accumulated more than two years of experience, so they thought very deeply and had very strong experience. Under such circumstances, the expansionists must have failed one-sidedly.

In the second stage, since the developers of the expansion faction failed in the struggle, the expansion faction turned to the Chinese miners for help. Chinese miners, including me and Bitmain, stood up very enthusiastically, and gradually became the popular choice - I became the person who wanted to control Bitcoin in everyone's mouth. However, there were several flaws in the negotiation process between the miners and "Core":

First, miners do not have the objective ability and credibility to continuously maintain and upgrade the Bitcoin protocol and software. The earliest Bitcoin developers and miners were one and the same, and Satoshi Nakamoto himself was also a miner. Later, the rise of professional miners such as Baked Cat and Bitmain led to the separation of the roles of miners and developers.

Second, miners do not hold the title of justice. The title of justice needs to be shaped by the media. However, the key discussion venues and communities of Bitcoin are controlled by "Core". But what happened in 2016, when the bull market just started? A large number of new users poured in, but the "Core" camp blocked speech, so the information that new users were exposed to was all against expansion. At the same time, the expansionists made many mistakes in technology and publicity. Before 2016, the statistics of the forum showed that 80% of the community participants supported expansion. By 2017, the vast majority of people believed that it was just to keep the block size small enough.

Third, at that time, almost all mining equipment was in China, and 60 to 70 percent of the computing power was also concentrated in China. However, China has a cultural and psychological stereotype that is not trusted much around the world, and the identity of "Chinese" is under attack in the community.

The two modes and two stages of expansion mean that the Bitcoin community was already split before BCH was born. The party that controls the media platform banned speech, which led to the disappearance of a unified discussion platform. A large number of banned speeches began to enter alternative discussion venues, and a scene of two factions saying different things emerged. The division of the community is the root cause of the final Bitcoin fork.

From "bigger baked cats" to "better Ethereum", the essence of the crypto venture capital boom

In the history of Bitcoin development, mining is the earliest market activity. It has brought prosperity to hardware, investment, and mining pools. The roar of mining machines also allows investors to experience that Bitcoin is not so virtual, but a real existence.

In this historical process, we cannot fail to mention "Baomao". "Baomao" graduated from the junior class of USTC. In 2012, he and his classmates issued stocks to raise 600,000 yuan. At that time, the company's valuation was about 1 million yuan. They used this money to invest in SMIC's 130-nanometer chips. Facts have proved that this investment is very worthwhile. By July 2013, "Baomao" stock rose to 5 bitcoins per share. Compared with the crowdfunding price of 0.1 bitcoin, in less than a year, the company's stock price rose more than 50 times. Since the price of Bitcoin also rose more than 10 times during the same period, the stock return of "Baomao" company reached an astonishing 500 times. Those who participated in the "Baomao" investment received lucrative returns.

I am also one of the investors of "Baomao". One conclusion I drew from this incident is that all investment activities involve risks. What is important? The market does not care how many investors you make lose all their money, but how many investors you make a lot of money.

The same is true for NASDAQ. After the Internet bubble burst in 2000, only a few companies survived, but NASDAQ is still great today. Why? It gave birth to truly great companies. In contrast, why did the Hong Kong Growth Enterprise Market fail? It is because it has produced almost no good companies. The blockchain financial market is in its infancy, and failure is not a big deal, but entrepreneurs must think systematically. How can you ensure that there will be successful people in the market and ecosystem you operate?

You are not obliged to ensure that everyone succeeds and makes money, but you must ensure that someone succeeds and makes money. This is very important because the successful ones will bring a wave of market enthusiasm and give birth to "bigger baked cats". Because of the "baked cat" myth from 2012 to 2013, a wave of mining company stock issuance events arose in the market, at least 60 or 70. Everyone wanted to become a "bigger baked cat", but most of them failed. This also directly led to the depression of the entire Bitcoin community in 2014.

When a business model achieves great success, it will attract a group of followers and imitators. For example, in the early days of the group buying model, after the rise of Groupon in the United States, a number of group buying websites emerged in China, creating a situation of "a thousand group wars", and Meituan eventually won. Weibo, taxi-hailing, shared bicycles... Such stories have been repeated again and again.

The important inspiration from these stories is that the capital market is likely to increase investment after a successful example emerges. Although the "Bigger Baked Cat" wave burst in 2014, the "Baked Cat" story has not ended. Where does the new story come from? Ethereum.

When the Bitcoin community was facing the "Innovator's Dilemma" (I also recommend you to read the book of the same name), Ethereum founder Vitalik Buterlin proposed the idea of ​​smart contracts, which attracted investors with keen sense of smell. He gave a speech full of codes in Silicon Valley. The PPT presentation process was all codes. After the speech, investors were very excited. This is the future! Then Ethereum completed a fundraising of 20 million US dollars through ICO, creating a miracle of fund raising.

Why did Ethereum ICO succeed? It should be said that it is a replica of the "Baked Cat" story. With the technical logic and complete story, investors are willing to take a risk. Wanxiang Xiaofeng supported Vitalik Buterlin in his most difficult time, which led to the Ethereum of today. In this sense, Xiaofeng made a crucial contribution to the success of Ethereum, and of course, he also received huge rewards from the success of Ethereum.

The subsequent ICO boom in 2016 and 2017 was the result of the pursuit of a “better Ethereum” (Grin’s story is different, it pursues a “better Bitcoin”). High TPS, sharding, layering, cross-chain… concepts that are very familiar in the industry today all serve the theme of “a better Ethereum”.

Looking back at history, you will find that it is precisely because of the PoW mechanism that the Bitcoin community had a relatively healthy capital market in the early days, which was able to give birth to successful cases such as Baked Cat; this successful case inspired larger-scale investment and speculation activities later, which in turn supported the birth of Ethereum; the success of Ethereum brought about a huge explosion of blockchain protocol development and financing activities.

Even if capital is attracted by the news, how many public chains can become "better Ethereum"? How many "better Ethereum" does the world need? This question may need another 3 to 5 years to get a better answer.