Blockchain is the foundation, digital currency is the end

The concept of blockchain has become one of the hottest investment targets in the world.

However, blockchain is not equal to digital currency. Blockchain is an application tool, and digital currency based on blockchain technology is essentially just a kind of reward points. The former is the essence, and the latter is the end. There is a significant difference in the investment value of the two. At present, many blockchain concept projects are mixed with a large number of digital currency issuance scams, which hide huge investment risks.

Various digital currencies, including Bitcoin and Ethereum, are rewards pre-arranged by the system for participants (computers) during the formation of the blockchain. That is, when any participating computer first obtains a valid calculation result according to the established rules, the system provides points rewards to this computer (user). The earliest blockchain operating system reward points in the world launched by Satoshi Nakamoto is called Bitcoin, and later there were blockchain reward points with various names such as Ethereum.

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This kind of reward points only have individual subjective value, but because they have no actual value and cannot form a universal value consensus, they cannot become natural currency. Moreover, because they cannot accurately describe the value of goods in the market, they cannot become circulating currency at all, let alone replace legal tender. It is just a "currency" in name only.

Digital currency based on blockchain technology certainly has a certain value, but this value is based on the real subject matter it refers to. Only when the value of digital currency and the real subject matter it refers to is unified can it be integrated into real economic life. However, even the world's top technical experts and economists cannot predict its initial development stage in the future. Investment in such reward points is very likely to produce harmful financial bubbles such as rat trading and pyramid schemes. Most of the blockchain projects currently flooding the market for the purpose of issuing digital currency have such harmful characteristics.

Economics is based on the assumption of rational economic man. We should neither underestimate nor overestimate human nature. The highest principle of the market is freedom, and we should try our best not to set limits on it. However, in certain crazy stages, under the guidance of herd mentality and the temptation of huge profits, the harm caused by certain free behaviors is unbearable for society and must be regulated, such as rat trading and pyramid schemes. Just like the attitude of the US government towards pyramid schemes, it is certainly not a ban, but a strict supervision of pyramid schemes by setting an upper limit on the amount of inventory required for consumers and an unconditional return clause. Violators are immediately charged with criminal charges, which minimizes the harm of pyramid schemes to the US social economy.

In fact, with the continuous influx of capital, the US government is currently introducing relevant laws for digital currency issuance projects based on blockchain technology, bringing them under supervision like pyramid schemes to maintain normal financial order. This is undoubtedly a strong signal worthy of attention for Chinese investors and the Chinese government.

This means that the investment prospects of digital currency are limited, and governments around the world are working hard to introduce capital market investment into blockchain R&D and real-world applications. Due to the extraordinary value of blockchain technology itself, real-world applications of blockchain have broad investment prospects.

Throughout history, all scientific discoveries that can promote economic growth are related to the supply that brings convenience to human life and market transactions. For example, currency brings convenience to barter, the rule of law reduces transaction costs, and steam engines improve productivity. These inventions and discoveries have brought more commodities to human society and increased the wealth of human society. The characteristics of blockchain such as "decentralization", "openness", and "information cannot be tampered with" bring a new social relationship that does not require third-party endorsement and is absolutely credible. It will greatly reduce production and service costs, as well as market transaction costs, and will inevitably bring a new round of economic prosperity and wealth growth. This is also an important reason why governments around the world are paying close attention to the development trend of blockchain technology.

At the same time, under the protection of features such as "information cannot be tampered with", blockchain transmits the "truth of information" without any defects - we know that "truth" is "goodness", and the application of blockchain technology will inevitably bring about a new kind of human interaction related to "goodness" through the value transfer formed by this machine trust. It will be easier for people to form positive incentives, and human civilization is bound to take another step towards harmony and goodness.

Making full use of blockchain can greatly reduce market transaction costs and build new social interpersonal relationship characteristics, which will inevitably give birth to many great business ideas and become a new round of economic growth. However, the biggest difficulty facing the world's smartest minds is to implement blockchain in real-world application scenarios.

In any case, the widespread application of blockchain in real-world scenarios is an inevitable trend.