Why invest in blockchain

Why invest in blockchain

– BitGulu

It has been a long time since I last wrote an article after the blockchain industry returned to normal. I just finished a three-week backpacking trip and felt it necessary to record my thoughts during this period.

Bitcoin

I have been in contact with Bitcoin for nearly 5 years. I have witnessed the whole process of the industry's growth, prosperity, madness and restoration of calm along the way. As the first flower in the blockchain garden, Bitcoin has really amazed the world. For the first time in human history, the development process of an emerging field has been intuitively recorded in the form of public trading prices. I first came into contact with Bitcoin in October 2010, when the price of Bitcoin was about a few cents. After that, it experienced three crazy increases, with high points of $30, $266 and $1,243 respectively, during which many incredible wealth myths were created. Its price today is $245.

There is no love without reason, nor is there hatred without reason. Years of price increases show that people have a special liking for Bitcoin, so how can this love be explained? An example of my own may explain some problems. At that time, I was still in the United States. After introducing Bitcoin to a good friend in China, I wanted to give him a Bitcoin. After I sent the Bitcoin to his address, he said he received it on QQ a few seconds later. It felt really good at the time. So where is the love?

Blockchain

The blockchain technology behind Bitcoin has realized the global, fast, and frictionless flow of value for the first time on Earth. This is the reason for love. Bitcoin is not the first to practice any of the three "global", "fast", and "frictionless", but their combination has produced a magical chemical reaction. If the Internet is the highway of information, then the blockchain is the highway of money, where people can send money to every corner of the world like sending an email.

So, what is blockchain? Blockchain is a globally unified, public database. It has a feature that once data is stored, it cannot be deleted or tampered with, so it is very suitable for accounting. Blockchain can be regarded as an account book, and each block is a page of the account book. As time goes by, the account book is turned down page by page, and the content recorded on the turned pages is recorded in history forever, which can neither be deleted nor modified. The appearance of blockchain is shown in the figure.

Programmable money

As mentioned before, blockchain is the highway of money. In addition to the fast and free flow of wealth on it, there is another feature: these assets are "programmable". In other words, blockchain has realized the "programmable money" for the first time. This is a very important thing, and it has the potential to greatly change the way the world works.

Before discussing its power, let's first look at what programmable money is. For ordinary money, once it leaves the hands of its owner, it is no longer subject to constraints and control, because it has a new owner; but this is not the case with programmable money. For example, when parents give their children pocket money, they are always worried that their children will spend it recklessly. Now with blockchain and programmable money, parents can add rules to the money, such as the upper limit of daily spending, etc. From this point of view, the biggest difference of programmable money is that conditions and rules can be added.

As the first asset on the blockchain, Bitcoin is naturally programmable. However, the Bitcoin system did not consider the convenience of programming too much at the beginning of its development, making the programming of Bitcoin more cumbersome. Therefore, the use of Bitcoin is currently more focused on transfer applications. With the continuous maturity of blockchain technology, a new blockchain product, Ethereum, was launched on July 30, 2015. Ethereum is committed to achieving the convenience of programming, and the programming object is the assets (tokens) on the blockchain. If Bitcoin is compared to a calculator (because it has a single function and is used for transfers), then Ethereum is the iPhone, which provides countless possibilities. The applications on it are as diverse as the App Store, with many categories, including games, financial applications, basic services, etc. If users need to use a certain function, they can directly go to the App Store to search, without having to write an App from scratch.

application

Just as Apple's App Store provides excellent business opportunities for many companies and individuals, I personally believe that platforms like Ethereum will definitely see successful examples like "Angry Birds". For IT-oriented startups and individuals, this is a blue ocean. Here are a few examples to give you a glimpse of the projects that are being nurtured in the blue ocean.

1. Augur (www.augur.net), decentralized prediction economy, application is under construction.

Augur means "prophet" in English. Users can bet on various events on this application, such as whether Hillary will win the 2016 US election; whether China's GDP growth will exceed 7% in 2015; whether the Shanghai Composite Index will exceed 10,000 points before 2020, etc. For participants, if the prediction is correct, they will receive financial rewards; and for the society as a whole, Augur has become a collector of collective wisdom. The betting information on it reflects people's best assessment of the possibility of a certain event in the future. When you open the search engine and enter "Will xxx win the 2020 US election?", you may find the following result: "Augur: The probability of this event happening is 46.6%."

2. Maker (www.makerdao.com) is a financial decentralized autonomous organization, and its application is under construction.

Maker is a decentralized autonomous organization (DAO) that maintains a series of contract software (i.e. smart contracts) for financial services, one of which is the Dai Credit System, whose white paper has been translated into Chinese: http://ethfans.org/posts/DAI-bond-whitepaper. The Dai Credit System is an application for lending through collateral, because when users have many assets on the blockchain, an obvious demand is to obtain funds through collateralized borrowing without selling assets, similar to a mortgage loan.

3. WeiFund (http://weifund.io), a decentralized crowdfunding platform, is under construction.

The advantage of this crowdfunding platform is that the funds do not need to be managed by a third party, but by the program, so the funds can be guaranteed to be 100% safe. If the funding of the crowdfunding project exceeds the predetermined target within a limited time, the program will send the funds to the entrepreneur; if the target is not reached, the funds will be returned to the crowdfunding participants.

4. Boardroom (www.boardroom.to), DAO management platform, application is under construction.

Decentralized Autonomous Organizations (DAOs), like traditional companies, can also have the concept of shares, usually DAO tokens, which can have voting rights. Combined with WeiFund in the previous example, interesting things can happen: if the crowdfunding fundraising goal is reached, WeiFund can send the funds to Boardroom and form a DAO with the participants of the crowdfunding project. In this way, these participants can control the specific use of funds through voting, rather than simply distributing the funds to entrepreneurs at one time, which greatly avoids the moral hazard from entrepreneurs.

5. Ujo Music (www.ujomusic.com), music copyright management platform, beta version.

As a music copyright management platform, Ujo Music can directly establish a direct connection between song creators and consumers, thus eliminating the middleman's commission (such as the 30% commission charged by iTunes). Furthermore, singers can even list themselves on WeiFund through IPO, so that investors who hold singers' shares (tokens) will share the future sales revenue of the songs. They are the natural hardcore fans of musicians. Helping singers promote music is not only for economic motivation, but also for emotional support. Imagine holding Adele's tokens when she was unknown. How glorious it would be! At the same time, tokens are also a medium for interaction between singers and fan groups. For example, singers can allow fans holding tokens to purchase concert tickets first, so that the fan economy becomes prosperous.

This website lists the projects currently being developed on Ethereum, with a total of 109 projects as of the time of writing. (http://dapps.ethercasts.com/)

In addition to innovative projects on the Ethereum platform, there are also independent blockchain projects such as "Antshares" (www.antshares.com/), which is committed to connecting real assets so that these assets can circulate on the blockchain, such as company shares.

Conclusion

Xiao Feng, the author of Investment Revolution, believes that human society is experiencing the fourth great migration: the first was when humans left Africa and went to the world; the second was from Europe to the New World; the third was from rural areas to cities; and the fourth great migration that is now underway is from offline to online, and our lives are increasingly moving to the Internet. Each migration is accompanied by changes in productivity and the creation of incremental wealth. Blockchain is the vanguard of this migration. This field has gathered a large number of smart entrepreneurs, and subversive innovation is being awakened, and the world will be amazed again.

This is why investing in blockchain is important.