Blockchain: The power to change business models

特邀专栏作者

2023-08-29 11:48 (UTC+8)

This article is about 3361 words, reading the full article takes about 5 minutes

By analyzing the characteristics of the blockchain and the impact of the Internet, we can better understand the relationship between the two and the future development trend from another perspective, apart from conventional perspectives such as decentralization and security.

AI Summary

In 2017, when my friend told me about Bitcoin, the gears of fate began to turn. I have been in this industry from 2017 until today, and the blockchain industry has seen various attempts and developments. However, many projects quickly faded from view. How many people are still paying attention to EOS after its initial hype? The same thing is happening today. I want to express some of my thoughts through these events, hoping to provide a clearer understanding of the industry's development for entrepreneurs and investors in this field.

For a long time, people couldn't truly find the value and meaning of blockchain networks. Recently, I had discussions with some friends who work in the internet industry. Most of them are currently struggling with the inwardness of the internet era, and they still find it difficult to understand what is happening in the blockchain world. Of course, this is normal because most projects are still approaching the future with an internet mindset. So, in the current cycle, is the strategy of blockchain projects capable of generating value in the same way as internet projects? This is something to consider. However, one thing needs to be understood: electric cars and fuel cars are products of different eras.

Internet

Since the birth of the internet, it has brought about a whole set of new business models. I believe that these business models represent the core of how internet companies generate profits.

The internet changes traditional business models by creating value. This is the focal point that we should pay attention to because it creates new business models that were previously impossible to achieve. Before the internet, algorithms did not exist, or if they did, they didn't have much practical effect due to insufficient data. In the past, when you bought something, the factory would produce goods and wholesale them to the general agent, who would then wholesale them to the provincial agent, and so on, until the goods were eventually sold to you through retail. In this model, algorithms did not come into play, only supply and demand relationships. But in the era of the internet, things are different.

For example, the content on TikTok is provided to users through the Internet as streaming media content. This algorithm will recommend content to you based on your interests and preferences. On the one hand, it speeds up efficiency and saves you time by not wasting it on things you're not interested in. On the other hand, it removes intermediate layers and reduces costs. Today, this model has become very common. For example, TikTok short videos, food delivery promotions on Meituan, Pinduoduo, JD, etc. However, when you start thinking about the essence of the Internet, a word comes to mind: data.

What is the basic business model of the Internet?

"The essence of the Internet is the distribution of asymmetric information."

Most of the large Internet companies we see today, whether they are the original BAT or later companies such as ByteDance, Pinduoduo, JD, Meituan, etc., their basic business model is to obtain user behavioral data (information) through users' free use of products, and then generate commissions, advertising fees, information distribution fees, ranking fees, etc. by pushing advertisements (information).

For example, the ranking of various e-commerce platforms' stores, homepage displays, etc. Let's take Meituan as an example here. Meituan's business model is a typical traffic + data + advertising. In Meituan's business model, the interaction between merchants and users is done through the app. Meituan collects and organizes information about users and merchants, and then distributes this information to merchants and users in different regions, allowing merchants to showcase their products and services on the platform through various marketing methods, and allowing users to see different merchants based on different criteria. Meituan provides an aggregated service to merchants and does not directly transact with consumers, but can provide consumers with more convenient, fast, and high-quality services. And these services appear to be provided for free to consumers. At the same time, by leveraging massive user data, they can naturally collect commissions from merchants, provide rankings and information distribution and advertising display services for merchants, and naturally make huge profits. This is the famous theory of "sheep, pigs, and dogs" - the wool comes from the dog, but it's the pig that pays the bill.

The core of the Internet is data, so that's why there are some monopoly companies. The giants you see in various industries today are all making money from data. Since data can make money, do you think they will share their data? It's like you wouldn't tell someone else your wallet private key. Tim Berners-Lee, the founder of the internet protocol, once said, "I created the internet to make it more connected, but now the current internet has deviated from my goal." It's like one isolated island after another.

The giants we see today are formed based on data monopolies. Instead of a diverse landscape, we are now bowing down to the internet effect - one winner takes all. In the current internet model, competition will never end and ultimately only super-giants will exist. No wonder Wang Xing, the founder of Meituan, said many years ago, "The internet is a never-ending war, the war will continue."

But in blockchain, the rules will be completely different.

Blockchain

In the traditional Internet model, it is a thin protocol network. What does this mean? For example, TCP, IP, HTTP, these things are the foundation of the network and have great value, but not many people know that they are the core of the network.

In fact, the value of these protocols is captured by application software, namely apps. Let's take the various apps we use now, such as TikTok, WeChat, Meituan, and other well-known companies that capture everyone's data, thus forming isolated data islands.

Blockchain, on the other hand, is a different world. It is completely open source and replaces the advertising costs on the original Internet with tokens. Its circulation brings great value, which is the basis of the entire blockchain based on protocols. Tokens connect these agreements together, ultimately forming circulation. Users who control their own data will link their value behavior to the blockchain through tokens and become nodes. This is what people often talk about regarding distributed networks. Successful blockchain projects can profit from these protocols.

The Essence of Blockchain

When many friends in traditional industries talk about blockchain, their first impression is about finance, assets, and cryptocurrency. In fact, the essence of blockchain is not finance. It's just that finance is the most easily understood form. Therefore, Defi appeared without surprise and became the earliest blockchain application recognized by the public. In fact, you can understand blockchain as the next generation of the internet. Simply put, what does it mean? It means that we currently belong to the internet of information. What about the next generation? It is the internet of value, which means that it will gradually evolve from information transmission to value autonomy. Of course, blockchain is not omnipotent, just like the internet. Both of them are making value connections, but the pattern has changed. Blockchain distributes the circulation of value through various protocols.

The future of blockchain is the "fat protocol", and single chain projects or DApps will become less important. This is because in the essence of value distribution in blockchain, the protocol itself is the most core, not finance or other applications. Therefore, the future of blockchain will be driven by protocol-based distributed networks, not centralized institutions or applications. This distributed network is algorithm-driven, not based on trust in individuals. These protocols should be very valuable as they are the foundation of the blockchain network, ensuring its security and reliability. At the same time, I believe that the final blockchain will emerge in a completely different way from the internet. Products that bring about huge changes and value in any era will not come from the same devices or ideas as the previous era. Just like when Blackberry and Nokia encountered Apple? So why is today's internet competing for the existing market? It's because there is no more traffic. When a technology has encompassed all aspects of the market, it loses the incremental market. That's why blockchain emerged.

Blockchain brings new thinking

The aspect where blockchain goes further than the internet is actually open protocol, token circulation, value-oriented. It is precisely because of this that in the future world of blockchain, you don't need to trust centralized institutions, you just need to trust the algorithm-driven distributed network. To put it more simply: You don't need to trust people, just trust the network consensus formed by protocols.

Blockchain and the internet have fundamentally different commercial logics and values. To do well in blockchain, you need to break out of the framework of the internet and explore the unique characteristics and possibilities of blockchain. Of course, it is not easy to understand now because most people do not have the mindset of looking at the present from the future. It's similar to when we were in the era of 2G and 3G networks, most people's understanding of 4G was that the internet speed would be faster, making it more convenient to upload and download things. They never imagined that the improvement in internet speed would lead to the rise of live streaming, the popularity of e-sports, and the explosion of the short video era. Most people's thinking is limited; some people have never seen the vast sea, so they think rivers are the most magnificent. But some people, through a falling leaf, can see the whole autumn. The transformation of the entire business model by blockchain will not be gradual, but will explode at a point that may not be easy for everyone to consider. Here's a guess: perhaps the arrival of 5G will promote the explosion of blockchain.

The core value of the internet is solving problems that traditional business models cannot solve. Similarly, I believe that the core value of blockchain changing the internet should also be to solve what the internet cannot solve.

Nowadays, I have noticed that many projects are following the Internet's approach of chasing after traffic, but I have a vague feeling that something is not right. The airdrops in various projects now seem to be similar to the money-burning subsidies of Internet companies in the early days of their development. However, many projects only shine during the airdrop phase and are gradually forgotten afterwards. For most projects, perhaps this is the only way to generate some attention and traffic, which is certainly better than having no activity at all. It is also something that users would enjoy seeing. While the Internet model can burn money to create market size and user habits, this is not the case in the world of blockchain. Perhaps in the end, blockchain is not about traffic, as traffic has no loyalty and can leave at any time.