At 21:00 on February 3, the 47th BlockMania AMA live broadcast will continue. BlockMania is committed to bringing the deepest cognition and thinking of the blockchain industry to the industry and the public. We welcome other communities to cooperate with us to create a connection of ideas amps and amplifiers.

The following is the full review of this AMA

The following is the full review of this AMA

This evening, there's a new mechanic we want to dig into.

My name is Hu Yuqing. I graduated from the Department of Economics of Duke University. I used to work for the World Bank, an international charity organization for poverty alleviation.

Recently joined RadicalxChange.org and learned about blockchain for translating Radical Markets by Glen Weyl and Eric Posner. In the past few days, the outbreak of atypical coronavirus pneumonia in Wuhan, seeing everyone donating money, reminded me of the work done by my previous organization. So tonight, I want to use this event to discuss the relationship between the radical market and charity, and how the secondary financing method Quadratic Funding (QF) that I recently learned and applied to the blockchain can effectively improve the current public utilities .

First of all, let’s talk about the big picture. Is business the biggest charity? I know this is a point of view that many people currently agree with, but in today's new environment of new technologies, it is necessary for us to take a deeper look at this. The famous economist Xue Zhaofeng also wrote an article in his early years"Business is the greatest charity"。

The argument of this article has its advantages and disadvantages. Teacher Xue talked about the low efficiency of our World Bank's poverty alleviation, which really made me reflect on its low efficiency. In contrast, Mr. Xue mentioned the high-efficiency event that "Harry Potter" sold 9 million copies in just one day after it was launched in the UK and the United States. This is somewhat similar to our Tmall sales of 270 billion on Double 11.

So does such a high efficiency and such a huge number mean that we have really achieved the greatest charity? I can only say that business benefits both the buyer and the seller of the transaction, and its positive results also create a greater potential space for charity. From this perspective, the saying "business is the greatest charity" is true. of.

But business is not the same as charity, because the nature is different. Business has great social value, but in today's situation, this does not mean that we do not need governments, World Banks and other charitable organizations and institutions.

The reason is simple. You only need to carefully examine the different groups corresponding to the two cases in Mr. Xue’s article to draw conclusions. First of all, in the first case, the groups helped by the World Bank were African children and women who were unable to work, were struggling against malaria, and were dying. They were unable to engage in commercial activities. This is like those low-income patients who were infected with SARS in Wuhan these days and could not afford high medical expenses.

As for the 270 billion yuan traded on the day of Double 11, who will get the profits in the end? The money initially went to the operators of Taobao stores, many of whom were deeply impoverished before, and it was precisely because of the rise and development of the e-commerce platform that they were lifted out of poverty. Part of this money will also flow to those who are unable to make commercial contributions and need help through people's family affection and kindness, the government and public institutions, such as full-time students, such as the elderly, the weak, the sick and the disabled.

If there is only business and no other forms of transfer payments, those who cannot participate in business but need to survive will not get enough help. The reasons for this I will discuss in detail in the second part.

But business and philanthropy have different natures. The essence of commerce is exchange and cooperation, which occurs between individuals or groups with matching values, and all participants are voluntary and capable of doing so. Due to the heterogeneity of social groups, there will inevitably be some people who cannot participate in commercial activities, and the groups that cannot be reached by the market are the ones we need to help.

So, what is the greatest charity? My definition is that if there is a mechanism or market design that can stimulate the goodness of human nature rather than the evil of human nature as much as possible, and benefit as many people as possible, it is considered the greatest charity. This design can be a company's business model, a regional market plan, or a country's public policy; it can be a two-party transaction with currency flow or a unilateral subsidy, or it can be a game or Operations.

Now I'm going to move on to our second, more important part, do you have any questions right now?

OK, now we come to the second point. As I just said, the reason why the government and the World Bank and other institutions exist is to make up for the lack of pure market functions. One of their functions is to do charity. So since the current market has shortcomings, can we have a better design?

"Radical Market" gives us a potential answer.

This is the address of the English version of the book:

http://radicalmarkets.com/

This public account of the RadicalxChange Chinese community introduces the content of the book: (insert Xipi Chengchang)

First of all, the starting point for writing this book is a series of new challenges in today's world-despite the global economic growth in recent decades, the gap between countries has narrowed, the inequality within countries has increased, and social Disagreements and divisions with politics are also becoming more and more serious-the liberal market economy that once made the Western world, especially the United States, is facing an unprecedented crisis. Change is imminent, but no better alternative to a centrally planned economy is yet to emerge. However, fortunately, today's technological progress, especially the rapid development of machine learning and artificial intelligence technology in the context of big data, is quietly redefining social relations and production relations.

To a certain extent, this makes the new system design feasible, including philanthropy, which can also break through the system barriers and have better solutions with the help of new technologies such as artificial intelligence and blockchain.

Very related to philanthropy is the quadratic voting method (Quadratic Voting, referred to as QV) mentioned in Chapter 2 of the book. Kojima also shared this in the last sharing session of "Radical Market".

QV allows voters to convert the square root of votes into voting points, thereby more effectively influencing the issues that are most important to them, which overcomes the problems of "tyranny of the majority" under the "one person, one vote" system. Under QV, if a person is particularly concerned about one thing, he can consider spending more voice points on it, but he will have to pay a quadratic price.

Since the cost of voting can vary widely by one vote, one benefit of QV is that it prevents vote bribery. Another benefit is encouraging minority votes.

(An example of a blockchain is Ethereum's smart contract public chain platform EOS, which also follows the democratic election system of one person, one vote, but the turnout rate is very low.)

For a series of papers on QV, you can go to the Glen Weyl homepage to see:

http://glenweyl.com/research/

A derivative of QV is Quadratic Funding (QF), which is also the market design related to charity that we will focus on today. The word comes from a newer paper by Vitalik Buterin, Zoe Hitzig, and Glen Weyl:

https://pubsonline.informs.org/

Brief introduction of the author: Vitalik is the well-known founder of Ethereum, Zoe is a doctoral candidate in the Economics Department of Harvard University, Glen is the author of "Radical Market", the chief economist of Microsoft, and the founder of RadicalxChange.

Charity is essentially an act of providing public goods or quasi-public goods in a society. For example, during the SARS epidemic in Wuhan, many people donated masks to Wuhan, and people distributed them according to their needs during this special period. This is a process of providing public goods.

However, due to the non-competitive and non-exclusive characteristics of public goods, there will be a free-rider phenomenon and the problem that the needs of the minority cannot be fully expressed, which eventually leads to its insufficient supply. Take the example of the outbreak in Wuhan. The Wuhan incident has caused a sensation all over the world these days, but in other corners of the world, some minority people may also need the same help at this moment, such as remote villages that also lack funds and health infrastructure, but because they are a minority group, Therefore, their voices of needs are drowned out, and they cannot get help and attention from the society; an even more desperate situation is that they know that even if they say their needs, because people speak lightly and rely on their own strength, the needs will hardly be met. Being seen and satisfied, they simply chose to remain silent.

Due to these characteristics of public goods, if there is a pool of funds such as charitable foundations that can deliver materials point-to-point to people or projects in need, the efficiency will be greatly improved.

But there is another problem, how to allocate these funds to different projects?

The QF method proposed by the author aims at maximizing the total welfare brought by public goods to society (utility brought by public goods minus the cost of fund investment), rather than allowing resources to be distributed fairly among residents. This is also called "liberal radicalism" (LR) by the author.

Corresponding to it are "liberal individualism" and "liberal democracy". In liberal individualism, everyone has something to contribute and make a direct contribution to society, and everyone hopes to maximize their return (personal income minus personal investment). In this case, social welfare cannot be optimal due to the non-excludability and non-rivalry of public goods. "Liberal democracy" is the other extreme, where public decisions are made by means of democratic voting that work for all.

Liberal radicalism based on QF is to find a compromise between liberal individualism and liberal democracy. In fact, this is somewhat similar to the development trend of our society. Now everyone is running a community. Liberal individualism is dominated by individual will, liberal democracy is dominated by collective or national will, and liberal radicalism is somewhat similar to group will and division.

Talking about the Wuhan epidemic a few days ago, different groups automatically formed groups to raise donations. For example, we saw that blockchain practitioners organized a blockchain donation group, artificial intelligence practitioners had an artificial intelligence donation group, and stars also had Celebrities' donation groups, etc. By purchasing cryptocurrencies issued by the blockchain platform or using other cryptocurrencies to donate, donating through the blockchain can not only remove the hidden danger of misappropriation of charitable funds, remove suspicion of charities, but also expand donation channels and contribute to charity The development is a big help.

Blockchain technology has four advantages: decentralization, openness and transparency, information traceability, and automatic execution through smart contracts. Information related to charitable public welfare projects can be distributed on each node of the blockchain network, and we can query and trace every transaction on the chain. Ideally, we can know who the corresponding recipient of each donation is, how it is used, how many times it has been distributed, how effective the relief is, and so on. This prevents an organization or individual from manipulating a charitable project for their own benefit.

One of the biggest benefits of this is that the blockchain handles non-competitive resources in the same way as competitive resources. People can get rid of the dependence on trusted third parties and freely exchange digital currency, intellectual property rights, equity and even in the digital world. Real estate ownership.

Now let's briefly talk about the third part, how to combine the pursuit of profit maximization with public undertakings such as charity? In fact, the business we are talking about is still in the traditional financial world; the philanthropic innovation we are talking about is in the blockchain world. So I think the essence of this problem is how to integrate traditional finance with blockchain, and how to coordinate centralization and decentralization.

In the book "Blockchain: From Digital Currency to Credit Society", it is said that information asymmetry, search costs, matching efficiency, transaction costs, economies of scale, risk control and other issues in traditional financial transactions determine the necessity of intermediaries . At present, in the foreseeable future, finance will not be completely decentralized, but multi-centered (small center) and weak center (big center).

Therefore, the arrival of the blockchain does not mean that traditional finance is completely revolutionized and subverted, but that it has transformed from a monopolistic, resource-advantaged center and strong intermediary into an open platform, becoming a service-oriented multi-center differentiation, So that the traditional intermediary center and the new intermediary center can achieve a win-win situation.

What the blockchain realizes is a transfer of trust, so that people's trust objects in the process of transactions and cooperation are transferred from people and institutions to the consensus machine of the blockchain.

Blockchain is an idea, a collection of many open source projects, and the "ledger" of countless brainstorms. Technology will be eliminated, inventions will become obsolete, and companies will go bankrupt, but distributed ideas will not.