Is the current blockchain the Internet in its infancy

Founder Zuckerberg has just shared in the New Year’s wish to delve into the cryptocurrency, and in the blink of an eye has closed all the Bitcoin, including cryptocurrency ads on the platform – even companies with formal registration and legal operations cannot be on the platform. An advertisement for cryptocurrency, secondary options and ICO (initial coin offerings for the first time).

Eitafang founder Vitalik Buterin, like Zuckerberg, believes that “overheated markets” will curb the development of blockchain applications. The skyrocketing cryptocurrency has given early supporters a lot of wealth, but rising transaction costs are curbing innovation. Dissatisfied with the community culture, Vitalik even threatened to leave the Ethereum community. He called on entrepreneurs to focus on development, not on price spikes.

The blockchain originated from Sakamoto's bitcoin. As the underlying technology of Bitcoin, it is essentially a decentralized database. Some people think that blockchain is the most disruptive technological innovation since the invention of the Internet. It relies on cryptographic and mathematical distributed algorithms. On the Internet where trust can't be established, participants can reach consensus without the intervention of third-party centers. The problem of reliable delivery of trust and value is solved at a very low cost.

What really pushes the blockchain is the token system and ICO that come with the blockchain.

Even if many people say that 99% of ICO projects will not return in the end, they will still be unable to stop the wind and give everyone a dream of making a fortune. At the same time as the bubble and the myth of making wealth, many people are also anxious: is the blockchain the next Internet, will you miss the next opportunity? Now the blockchain bubble is not the Internet bubble of 2000?

How hot is the blockchain in Silicon Valley?

Whether it's VR/AR or artificial intelligence, Silicon Valley is the first to feel the origin and trend of technology. If you are in Silicon Valley, you can feel the madness of this blockchain more than anywhere else in the world:

Recently, Silicon Valley has become popular with a new way of saying hello: Have you bought a few bitcoins? Starting with the ICO boom, in the heart of Silicon Valley, the small town of Palo Alto, next to Stanford, most of the time I wrote in the coffee shop, I could hear the ICO at the next table. During this period, domestic investors and entrepreneurs flew to Silicon Valley to set up a company. I participated in the TechCrunch conference in the second half of last year. This is the largest entrepreneur conference in Silicon Valley every year. A special phenomenon is that at least one-third of startups are blockchain projects. After the meeting, the mailbox received a batch of blockchain startups seeking coverage.

The blockchain activity here is also full of the venue. If it is late, even if it is registered, it may not be able to enter the venue. The organizers often have to strictly control the number of visitors, and even attract fire trucks; investment bankers are targeting the ICO market. Full venues to find projects that need to be listed for distribution, provide investment banking services; private equity funds from Africa come here to find projects; Bay Area landlords announced that they accept bitcoin payments when they sell.

The background of entrepreneurs who are involved in the blockchain is becoming more and more “higher”: engineers from the top five giants of Silicon Valley Technology, investment managers from Goldman Sachs and Morgan Stanley, and Stanford alumni even formed the “Stanford Blockchain Alliance”.

Silicon Valley giants have begun to lay out this business in the last bitcoin economic cycle. The most alternative investment, Peter Thiel, exaggerated Bitcoin into a flower called "Digital Gold"; the founder of Linkedin, known as Silicon Valley's Rein Hoffman, invested in bitcoin cryptography company Blockstream; Airbnb and The cryptocurrency is inextricably linked, and co-founder Nathan Blecharczyk has repeatedly shown bitcoin, saying that he is willing to pay in bitcoin, bought the Bitcoin application company when the bubble burst, and now the founder of the largest bitcoin exchange, Coinbase. People are early Airbnb employees.

Recently, Stanford lecture professor, physicist, and founder of Danhua Capital, Zhang Shouyi, publicly issued a blockchain technology platform. Hong Kong's richest man, Li Ka-shing, believes Bitcoin is risky, but only "conservatively" invested 100 million Hong Kong dollars in bitcoin, which was in 2014, when the currency price hovered between 200 and 300 US dollars.

The fiery and irrationality of the blockchain market has reached its peak. Today, many entrepreneurial teams that do not have a single line of code have a valuation of over 100 million. Even if they are pragmatic and sincerely do the "quality team" of the blockchain project, several engineers are valued at US$10 million. If this is not a bubble, what is a bubble. As more and more high-value projects are exposed, more and more scams are being exposed.

Whether it's an ideal entrepreneur or a speculator, look at the distress of the leaders in the blockchain industry – those star projects in Silicon Valley, where investors are looking for money to open up some investment quotas, no money yet. The entrepreneurs are worried that the price of the listed project will rise too fast, affecting the entrepreneurial and employee mentality. A coin entrepreneur told me that the most important thing in this industry is money.

In a word, this industry is too rich. This influx of wealth can be called a "bubble." The wealth that comes too fast is often difficult to retain.

This week, the US SEC publicly called AriseBank's $600 million ICO issue, saying the fraudulent project financing amount, which is the first time the SEC has shot the ICO project. The SEC said that token issuance should normally be equated with a regulated bond or stock issue, and the financier should disclose the company's business and financial history. All cryptocurrencies fell. As national regulatory measures become more frequent, blockchain bubbles are being squeezed out.

When is the bubble broken? Secrets hidden in the economic cycle

To understand in depth the comparison between the blockchain industry and the previous Internet industry, we first look at the two maps.

10 years before and after the Internet bubble Nasdaq index, Source: Wall Street Journal

85 bitcoin price 8 years change chart, source: Coindesk

Let's start with the second picture. Recently, the price of bitcoin exceeded $17,000 to cover up the previous round of skyrocketing. At the time of 2013, bitcoin prices rose from $13 to $1,000. Nearly a hundred times the return was similar to the situation at the end of December 2017. Almost all newspapers, websites, and Twitter are talking about bitcoin prices. The surge in 2013 attracted a lot of attention, and Li Ka-shing was also the one who entered the round. Early batches of "coin circle" and "chain" companies were born, including Ripple, Ethereum, Bittland, and the still hot Litecoin and major exchanges.

Many people only saw the glory of today's companies in a new round of soaring, but ignored how many companies went bankrupt, closed down, and broke their homes when Bitcoin fell from the highest point of $1,000 in 2014. Since then, in the long trough, how many companies have survived the hard times.

At that time, the companies that survived really enjoyed the dividend of this round of economic cycles and became the leader of this round of blockchain.

Although within Bitcoin, divided into "coin circle" and "chain circle", the early blockchain entry players are almost all participants in the bitcoin, they put the earned money into this "decentralization" Going in the technology. You can see that the skyrocketing dividend of bitcoin prices has completed the original accumulation of capital for the blockchain sector.

The economic cycle of bitcoin and blockchain is faster than the Internet cycle. The Internet around 2000, in the biggest bubble of the round, rose from 1000 points to 5000 points from the Nasdaq index, 5 times in 5 years; Bitcoin can rise 10 times in a year; the Internet is the most From the time of madness from December 9, 1999 to March 10, 2000, the Nasdaq index more than doubled, setting the fastest record; and Bitcoin from more than 2,000 US dollars in the second half of 2017 to 17,000 US dollars In just three months, the price has increased by 7 times.

What happened after the Internet bubble burst? I have met a Berkeley computer major. He is a 2000 graduate. In that year, more than 90% of their profession did not find computer-related work. He worked as a hotel waiter for a long time and then went to Indonesia to start a real estate business.

If you have experienced the financial crisis and the economic cycle, those companies that have stood up in the crisis have finally become "big companies." Companies that have experienced three rounds of economic cycles can become a "hundred-year-old shop." Only in the blockchain industry, the cycle is faster and more violent as the price of the currency rises and falls, and the industry cycle is shorter.

Unlike the Internet, the blockchain industry has a faster cycle and more volatile prices. This technology, known as “decentralization”, is not welcomed by the government. However, because of the “globalization” feature, the blockchain and cryptocurrency system have become unsuccessful and forced to take some regulatory measures. Without supervision, it means that investors do not receive any protection.

Bubbles bring people and money to help an industry grow. If we look at the price cycle of Bitcoin, we are in the early stages of a bubble burst. 99% of those who have not left the market will face a difficult time when they squeeze out the bubble in the blockchain. Every time the bubble bursts, the true believers and entrepreneurs will be washed out. Those who can survive will grow into the next Google, the next Facebook, like the tempered pearls.

What can the blockchain do?

Many people question why the blockchain technology has been born with the release of the Bitcoin white paper for nearly 10 years. There is no super application yet. What can the blockchain do?

Let's take a look at the Internet. The Internet was born in 1969. It started with two computers connecting to each other. But what really made the Internet start to get hot was the emergence of the World Wide Web in 1989. The turning point of the World Wide Web was the 1993 Mosaic web browser. Appearance.

From 1995 to 2000, Internet companies were born in large numbers, and the most representative Internet company was Yahoo. From 1995 to 2000, the Nasdaq index continued to rise from 1000 points to 5048.62 points. At that time, the enthusiasm for Internet speculation was exactly the same as today's enthusiasm for the blockchain: global capital flooded into the Internet, just as today's rich people flew from all over the world to San Francisco, hoping to enter the blockchain.

If the traditional economy is difficult to catch up with the development speed and market value of the Internet, then the development speed of the blockchain has already left the world behind.

How to understand the blockchain technology is actually very simple - the blockchain solves the two major mechanisms of consensus and non-tampering.

What is special about this technology? This is a perspective of a technical staff who has been doing Internet finance for ten years. He has learned about this technology very early. After careful analysis, he believes that blockchain technology has nothing special. The efficiency of the blockchain is very low. Is it really necessary to have a single point encryption, irrevocable decentralized system.

A distributed system programmer said that this decentralized system is less efficient than a centralized system, and the cost of completing the same task is higher.

Even if they will claim that a large number of ICO projects are not reliable, the blockchain bubble will soon be shattered. Why do the big guys embrace the blockchain in action? There is a good summary of the blockchain - blockchain is not just technology, but also a philosophy, it is economics + philosophy + cryptography + math + computer. The old man of the coin circle summed up the blockchain: the core of the blockchain is a self-motivated economic model with its own hematopoietic mechanism.

How to understand this sentence? In fact, the blockchain project has its own financing function. It can quickly raise funds for startup companies, form their own community culture, and complete the closed-loop of culture, technology and capital needed for entrepreneurship. These early entrepreneurs are enjoying the wealth dividend in the soaring currency.

This technology does not solve all the problems, nor is it a substitute for the Internet, but a specific application for a particular scenario. At present, most of the projects are still solving the problem of virtual life. Whether it can solve real life problems has been debated, but its hematopoietic system has realized the redistribution of benefits.

If Bitcoin is the first generation of the cryptocurrency system, Ethereum is the second generation of the cryptocurrency system. The super-platform "smart contract" system has changed the way the blockchain is financed and has become the APP Store in the blockchain industry. Vitalik Buterin is a talented programmer who started programming at the age of 4, and his contribution to Bitcoin 2.0, which squeezed Zuckerberg in 2014 and won the World Technology Award, but he found the limitations of Bitcoin's innate design, dropping out of school. Silicon Valley created Ethereum.

Ethereum realized the issuance and circulation of tokens through blockchain, changed the financing method of blockchain projects, saved a lot of intermediate links, and was hitting traditional financial markets.

The most popular application area for blockchains is finance. Ripple is a company that solves the bank clearing system based on the idea of blockchain. Many people don't like Ripple and think it is becoming more and more "centralized." Once the company had the right to cooperate with the supervision, whether it had the right to freeze personal assets, how to deal with the tokens, etc., the two core founders had a big dispute in 2014, causing a founder to leave and sell 10 billion Rippo . In the end, Ripple gave up a more radical personal business, specializing in the gateway for cross-border remittances of banks, and moving towards a bank-cooperative route rather than the opposite of regulation.

With the price of Ripple issued by Ripple soaring, the small startup company calculated at the highest price of Ripple, and once became a company with a market value of more than 300 billion US dollars. After several adjustments, the role of Ripco in the actual business is Not obvious, but unexpectedly propped up the company's market value. Founder Chris Larsen holds 5.19 billion Ripple and a 17% stake in Ripple. If the currency is calculated at an unstable price, when the currency rises to $3.84, Oracle founder Larry Ellison, who squeezes out Silicon Valley, becomes the world's fifth richest man. Fortune surpasses Facebook founder Zuckerberg, Google founder Lin and Page.

These are the blockchain enterprises that survived the last round of the economic cycle from 2013 to 2016. More applications on the Ethereum platform began to appear in this round. The most lethal blockchain application may still be in the breeding. A while ago, the Silicon Valley popular blockchain project “Yunyang Cat” won the $70 million Series A financing led by Soros Quantum Fund, and Google, ConsenSys and DoubleRock funds followed.

Zuckerberg has felt the pressure from the blockchain and began to study blockchain technology. Where does this anxiety come from? If you live in Silicon Valley, you will be deeply touched by Facebook's dilemma. Almost every crisis is closely related to fake news, data privacy and over-commercialization. Facebook has invested heavily in manpower and eliminated Negative, still can not replace the social network again and again