Fire Yuan Yuan Mingming: The essence, meaning and commercial system design of blockchain | Tsinghua x-lab open class

Shortcomings of the shareholding system

Hello everyone! I am very happy to have the opportunity to return to my alma mater to communicate with everyone. I was admitted to Tsinghua in 2003. I studied in the mechanical department for a year and then transferred to the automation department. Later, my undergraduate and master's degrees were completed in the Department of Automation. After graduating, I went to Guotai Junan and then went to Industrial Securities to do TMT industry research. So at that time, including cloud computing, big data, internet of things, artificial intelligence, my research scope, until the end of this year, I chose the direction of the blockchain. , joined the fire coin, mainly to study the blockchain.

Today my topic is "How to use blockchain to transform production relations." Today, the content is divided into several parts. The first is that the shareholding system has great shortcomings. Why are there shortcomings and disadvantages? The second is why the blockchain can transform the production relationship. What are the reasons for the transformation and what is the fundamental driving force? Third, what is the manifestation of the blockchain's ability to transform the production relationship; finally, based on the design of the supply blockchain business system, how to design a blockchain business system.

First, let's explore a very basic question. What is the nature of the blockchain?

Is it a distributed ledger? Is it a point-to-point transmission? Still asymmetric encryption? There may be many people who feel that they are decentralized.

But I don't think so. These are just means, not an end, not a essence.

I think that the essence of the blockchain is a win-win situation, we are on the same boat.

Internet thinking, if summarized in two words, may be the user, may be a closed loop, see wisdom and see. Blockchain thinking, if summarized in two words, is a win-win situation.

Collaboration and win-win is the most fundamental reason why human beings can rise in nature. As the French philosopher Pascal said: Man is just a reed, the most vulnerable thing in nature. The reason why we humans can defeat all kinds of beasts that are much stronger than ours, and finally rise to dominate the earth in the natural world, is largely based on the formation of a collective and a win-win situation.

At first, human collaboration relied on language and writing. After that, papermaking and printing were more efficient. Then, the shareholding system and the Internet were helping humans achieve win-win cooperation. Now it's time to blockchain.

For a long time, the shareholding system was a very advanced mechanism that united everyone on the same ship to achieve win-win cooperation.

How did the shareholding system emerge? It was in the era of great voyages. The Spaniards, the Portuguese, and the British all had to take the boat out to take risks. However, there was not so much money for a single person. They had to make a piece of money together and set up a joint stock company. Every time they went back to the sea to explore, they would follow the shares. To distribute profits.

So the shareholding system was a very advanced mechanism.

But now the society has been moving forward for another five hundred years, and many changes have taken place. Still going to apply the shareholding system of the Great Navigation era, in fact, it is already a sword.

Tell everyone three paragraphs:

The first one: the Internet is the wool out of the pig, the dog to pay the bill

The second one: the market value of all military enterprises in the A-shares is not as good as three bottles of wine.

The third one: A-share listed company's profit for one year, can't afford a house of 10 square meters in Shanghai, Beijing can't afford it, but as long as you sell 1% of the shares, you can buy the whole set of villas. Excuse me, which property market and the stock market, which bubble is bigger?

The reason why these three paragraphs become a paragraph is widely circulated because these three sentences are ridiculous. But what is even more frightening is that these three sentences are not magic realism, they are realities, and they all exist.

We can blame the people for not knowing what to do, accusing the investment institutions of being tempted, and knowing that stocks are speculating on stocks, accusing Internet entrepreneurs of lacking social responsibility. But have we ever thought about it, there are so many ridiculous things, there must be a reason. What is the reason behind it?

I think the most essential reason lies in the shareholding system.

In the era of great navigation, people started to go out in the same year, and they had nothing to ask for in order to make a profit. But nowadays, why do you only use profit as the sole yardstick?

Military enterprises have made great contributions to the country and the people, but under the rule of profit, there is no way to compare with liquor companies, so the market value is not as high as three bottles of wine.

Many Internet companies have actually reduced the cost of information dissemination for the society and greatly improved the efficiency of the society. In fact, it is very valuable, but the shareholders are not satisfied, and they have not created profits. They have to find ways to let the wool out to the pigs and let the dogs Pay the bill.

Including why many A-share companies have less profit per year, can't afford to buy a house, can buy a villa after selling a little bit of stock? Of course, there are definitely some stocks that are junk stocks, which are speculated to a relatively high market value, but there are still many stocks, there are many breakthroughs in technology, and the industry has a high status, that is, no profit.

Fund managers are willing to give these stocks a valuation premium and are willing to value the company with a relatively high market value, so their market value is still high. However, fund managers are also very uncomfortable in the investment process. Although they have simple ideas that these companies are worthy of investment, the price-to-earnings ratio is too high and always feels inconsistent with their own ideas.

All these problems, in the final analysis, are only the pursuit of profits under the shareholding system. Enterprises are only responsible for the profits earned by shareholders. The market regards profits as the sole yardstick for evaluating companies, which is caused by malformations.

Modern enterprises are a huge system and very complicated. A good mechanism should be able to mobilize all aspects of power. But now only a few major shareholders are anxious, and they are anxious about how to make profits.

Others, such as customers, take the company's products, the products are easy to use, and the company's shares have nothing to do; for example, the supplier, the company's payment, and the company's shares do not matter; such as promotion channels, they only take the rebate, It doesn't matter to the company's shares; even if it is an employee, the main source of income for most employees is wages, not shares, so the company's shares have nothing to do with them.

This is not a win-win relationship, not a good mechanism.

Let's take a look at what the world of blockchain is like.

For example, we all know 51% of attacks. If the calculation of a single mine is more than 51%, you can do whatever you want. But why haven’t this happened for Bitcoin for so many years? In fact, there have been many times, including BTCGuild, ghash, which have been close to or even more than 51% of computing power. Nakamoto has disappeared, why didn't they choose to control Bitcoin? Because once the calculation capacity of the mining pool is close to or even exceeds 51%, the masses will begin to worry that the price of the coins will fall, and the miners will withdraw from the mining pool. Finally, the mining pool will actively limit the growth of its own power.

Why do you have such cohesiveness because the miners and mine pools have lofty feelings and a love for Bitcoin? There may be some, but most miners are ordinary people, the most important thing is because Bitcoin is designed to be a win-win mechanism. Everyone is on a boat.

Everyone pays attention to the fact that when I interpret the win-win mechanism, I don't use "the same world, the same dream." For the unity of miners, it is more important to let them understand that we are on a boat, if you fight yourself. Small abacus, the ship will sink.

For another example, the founder of Ethereum, Vitalik. When he founded Ethereum, he was only 20 years old and didn't know how to start a company. What should he do? He sent a message and responded to the top 10 of his email as co-founder. In the system of the traditional joint-stock company, it is very unreliable, but the heart of the company has been successful. Now Vitalik is worth tens of billions of dollars, the highest value of the code farmers in history.

Let's imagine that if Vitalik was not so naive, and set up a joint-stock company to do Ethereum, what is the consequence now.

The first is to completely open the code. That is to contribute to society, and what benefits are not available. Now the entire IT world is running, the World Wide Web is needed every day, Java is needed, and relational databases are needed, but some people remember who invented them? Those people's contribution to the IT industry, I think it is bigger than Bill Gates, than Zuckerberg, but they are not reflected in wealth at all.

The second is to survive through equity through donations and tenaciously. Just like China's AcFun, it is station A. I don't know how many of you are second-degree enthusiasts, although I am not, but I know that Station A is the source of China's second-yuan culture and is a holy place for many fans. Station A has always abide by "I will close down, and will not receive a penny from the user."

But the festival did not bring profits, and the station A was sold and sold for six or seven times. You are a treasure in the heart of the fans, and you can only sell them if you can’t bring profits. In the previous quarter of February, once the A station was closed, the official micro-transmission of a particularly tragic Weibo "I want to live another five hundred years."

Countless fans leave a message below, retention, encouragement, and wishes. However, this is not a win-win mechanism. There are more fans. They are not shareholders or management. They cannot change the status quo. I am very pleased to see that the recent A station has been difficult to resurrect, but I feel that the future of the A station is still difficult, and it is unlikely to be as beautiful as the Ethereum.

The third type is to rely on advertising, relying on local tolls, and wool out on pigs. There are too many such companies, and I will not give examples. Those apps, once everyone liked it, but in the end, in order to make money, they began to change their tastes, and they were also embarrassed by many users. After all, they became what they hated at first, but what is the solution?

Therefore, the commercial structure of the blockchain is a qualitative improvement compared to the traditional shareholding system.

How to transform the production relationship of blockchain

Here are two questions. One is why the blockchain can transform the production relationship. We have sorted out the four most fundamental driving forces. One is how the blockchain transforms the production relationship. The five major forms of expression objectively and rationally analyze the blockchain compared to the traditional What kind of change has come.

Let me talk about the four driving forces:

1. The code of the encryption algorithm replaces the traditional contract

Contracts have short-term long-term, formal informal, or broader concepts called contracts. In fact, these two words are the same word "contract" in English. In a narrow sense, all goods or services transactions are a contractual relationship. Broadly speaking, the rules and conventions of all business systems, whether explicit or implicit, are contractual.

Traditional contracts, in order to guarantee authenticity, need to be signed, stamped, and rewritten in a few copies. Now, based on the encryption algorithm code, you can use digital signatures to prove identity, use hash pointers to ensure that the content has not been tampered with, and use smart contracts to ensure that the program can be executed automatically.

This is a very fundamental driving force, because the most important thing in the business system, the contract has changed, will lead to a series of huge changes in the business system.

2. Realize asset generalization

Everyone has seen the balance sheet and knows which categories a company's assets include, currency cash, inventory, receivables, advance receipts, fixed assets, intangible assets, goodwill, and so on. According to the traditional theory of financial statement analysis, assets and corresponding return on assets determine the company's profits.

But since IT and the Internet, we have found that many past theories are not established. There are a lot of companies like Amazon that are not profitable all the year round, but the valuation is very high. Many people want to use the theory of traditional financial analysis to come to the conclusion, such as not looking at PE, PB, such as changing cash flow, seeing EBITDA, etc. But there are still many Internet companies that have not only had no profit at first, but even no income. The financial statements are completely unreadable, but the valuation is always high. At this time you are very weak and don't know how to explain this high valuation.

Give everyone an example. Everyone used to learn dark matter when they were studying physics. In fact, dark matter cannot be directly detected. However, human beings found in astronomical observations that there are a large number of phenomena that violate Newton's gravitational force and cannot be explained. Until someone suggests it, there may be a large amount of dark matter in the universe, and it will be explained suddenly.

There is a lot of dark matter in the world of IT and the Internet.

For example, you have a lot of users, or you have a lot of data, or you have a very good technical staff and product manager, or you have a lot of good ideas and ideas. These are huge values for the company, but they are not reflected in the traditional financial statements.

But with the blockchain, it will be different, and everything can be cured with the pass. As a user, a token can be obtained, an employee can obtain a token, a contribution data can obtain a token, and a contribution creative can also obtain a token. In the value of Token, these hidden assets are finally expressed for the first time. Only by expressing it explicitly can we be more conducive to the value of this asset, the assessment of value, and the possible exchange of value.

3. Realize the unification of owners, producers and users

According to the traditional rules, for example, if you are a restaurant customer, you are just a customer. Even if you go to the restaurant every day, you will become a VIP customer at most. The restaurant is not yours. Of course, you have the ability to get the restaurant owner to say another. And what do you think of the restaurant's dishes, how the flowers in the restaurant should be placed, and you can't take you, you are not a restaurant employee.

Entrepreneurs in the traditional world have the words, the first user, the second employee, and the third shareholder. I sincerely admire such entrepreneurs, knowing to put users and employees on top of shareholders. In fact, the entrepreneurs who can persist in this are very limited. The responsibility of the management of the company is to be responsible to the shareholders. It is possible to distribute 10% of the shares to early-stage users at the time of financing, and there are only a handful of companies like Reddit.

In the world of blockchain, you don't need to do this sorting. Your users are also your employees and your owners. Everyone is on a boat. This is a win-win mechanism.

4. Refine the granularity of the division of powers and responsibilities

The famous economist Coase has an assertion that the clearer the definition of power and responsibility, the easier it is for the economy to reach Pareto optimality. As a non-economics professional, I did not understand this at first. This is not easy, the contract is written in detail, and the various terms are written as clearly as possible.

Our team's associate professor of economics told me that it can't be done in the traditional world. There is a concept called the lemon market effect. In American sayings, the lemon market is the defective market.

But in fact, unless it is selling a very standardized product, the seller of the product will always have more information than the buyer. For example, in the used car market, the seller can say how good his car is. After opening for a while, you may find that there are various problems, so the seller said that the buyer does not believe, that is, the price is low, then the seller can only sell inferior goods under such low price. The car finally formed a vicious circle, and bad money drove out good money. This is called asymmetric informatics and won the Nobel Prize in Economics in 2001.

But in the future, we have a blockchain that can solve the problem of information asymmetry to a large extent. The contract for selling used cars is no longer an ordinary contract, but a smart contract. After buying a car, the buyer can agree on which aspects of the car are found, which are the seller’s responsibility and which are the buyer’s responsibility. Corresponding to how much the seller should pay, and then automatically executed, of course, this process needs to combine artificial intelligence and the Internet of Things, and finally eliminate the information asymmetry between the two sides, and achieve the optimization of resource allocation, which is the effect of granularity of power and responsibility division.