In addition to the legend of getting rich quickly, what else is possible with blockchain?

The prevalence of various speculations has made blockchain a "street word" comparable to AI. Discussions about this word can be heard on bus broadcasts, office buildings, and even in vegetable markets. However, apart from getting rich overnight, what else is worth paying attention to behind this mysterious technology? How is it different from credit card payments on the Internet? What are the real challenges that blockchain is currently facing? From information technology to the Internet to mobile Internet and now to the blockchain economy, which most important sector have people missed...

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Recently, the New York Times published a long article "Beyond the Bitcoin Bubble", in which the author Steven Johnson tells us the answers to many questions about blockchain. After reading this article, I believe everyone will have a more rational understanding of blockchain, Bitcoin, Ethereum, Transit, ICO, etc.

As we all know, the order of the words is meaningless: a random array put together by an algorithm, like in an English dictionary. To make them valuable, they can be specially generated by a software tool called "MetaMask". In cryptographic terms, they are called "my seed phrase". Although they may sound upside down and meaningless, after conversion, they can become a key to unlock a digital bank account or even an online identity.

The whole process only requires the following simple steps.

On the screen, I followed instructions to keep "my seed phrase" safe: write it down or save it somewhere safe on my computer. I wrote the 12 words in a notepad, clicked a button, and "my seed phrase" was transformed into a string of 64 seemingly random characters, like this:

 1b0be2162cedb2744d016943bb14e71de6af95a63af3790d6b41b1e719dc5c66

In cryptography, this is called a "private key": a way to prove your identity, and this limited way will be your key to open the "front door" and participate in the real world and prove your identity. "My seed phrase" will generate an exact sequence of characters every time, but there is currently no known way to reverse the original phrase, so it is very important to store the "seed phrase" in a safe place.

This "private key" number is then run through two additional transformations to create a new string:

 0x6c2ecd6388c550e8d99ada34a1cd55bedd052ad9

This string is my address on the Ethereum blockchain.

“The Bitcoin bubble may eventually become a real watershed moment for blockchain”

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Image: Ethereum

Ethereum is in the same family as the cryptocurrency Bitcoin, which has increased in value more than 10 times over the past year. Ethereum not only has its own currency, most notably the ether exchange rate, but its platform is also much wider. You can think of my Ethereum address as a bank account, an email address, and a social security number. But now it only exists on my computer, as a meaningless, even garbled string of characters, and if I try to make any kind of transaction with it later - for example, to participate in a crowdfunding campaign or an online referendum - this address will be broadcasted to an impromptu global network of computers to tell the network that it is trying to verify the transaction. The verification result will then be broadcasted to the wider network, where more machines will compete to perform complex mathematical calculations, the winner of which can be recorded in a single specification of Ethereum's historical transaction list. Because these transactions are recorded in a series of "blocks" of data, it is called a blockchain.

The entire transaction took only a few minutes to complete. From my perspective, the experience was pretty much like any other online experience. But from a technical perspective, something magical was happening—something that would have been unimaginable to us all a decade ago. As you can see, I was able to complete a secure transaction without relying on any traditional trusted institutions—no middleman, no social media capturing data from my transaction for advertising purposes. And no credit bureau was tracking this activity.

But can the platform make all this possible? The truth is, nobody can own it. As far as I know, there are no Ethereum companies, so there are no venture capitalists backing them. As a form of organization, Ethereum is closer to democracy than a private company. It has no power center, and users can join the community to do this work, thereby gaining the privilege of helping to guide the Ethereum flagship. Like Bitcoin and other blockchain platforms, Ethereum is more like a group than a formal entity. Its boundaries are porous and its hierarchy is flat.

Some members of Ethereum have amassed billions from this work, as the value of one ether has risen from $8 on January 1, 2017 to $843 today (just over a year ago). Of course, you might be inclined to dismiss these shifts. After all, the runaway valuations of Bitcoin and Ethereum look more like a case study in irrational exuberance. But why should we care about this mysterious technological breakthrough? How is it different from credit card payments on the Internet today?

If we’ve learned anything from the recent history of the internet, it’s that seemingly esoteric software architectural decisions can unleash profound global forces once the technology enters wider circulation. If email standards adopted in the 1970s had included public-private key cryptography as a default, we might have avoided the email catastrophes that have exposed everyone from Sony to John Podesta — millions of consumers would have been spared routine identity theft. If Tim Berners-Lee, the inventor of the World Wide Web, had mapped our social identities to a primitive canonical protocol from the beginning, there might not be a Facebook.

The true believers behind blockchain platforms like Ethereum see distributed trust networks as an advancement in software architecture that will be historic in the long run. This promise has driven a huge jump in cryptocurrency valuations. But in a sense, the Bitcoin bubble may end up being the real watershed for blockchain technology. Many evangelists believe that the real hope of these new technologies is not to replace currency, but to replace the Internet we follow now, while returning the online world to a more decentralized and equal system. If you believe in evangelism, blockchain is the future, but it is also a way to return to the roots of the Internet.

The Internet Becomes a Scapegoat

Over the past year, the Internet has seemed to become a scapegoat: almost all of the "social diseases" we face are caused by it: Russian trolls are willing to destroy democratic systems with fake news on Facebook; hate speech thrives on Twitter and Reddit; the huge wealth of geek elites further widens income inequality... For most people who have participated in the early days of the Internet, the past few years have even felt like entering a post-colonial era. The Internet has created a new egalitarian media composed of various small magazines, blogs, and self-organizing encyclopedias. The information giants that dominated 20th century popular culture will be replaced by a more decentralized system defined by cooperative networks rather than hierarchies and channels such as broadcasting. The broader culture reflects the peer-to-peer structure of the Internet itself.

Last year was the final sign of this narrative breaking down. The existence of internet skeptics has never been anything new, but the difference now is that the criticism is coming more from former enthusiasts:

• “We have to fix the internet,” Jobs biographer Walter Isaacson wrote in an essay published after Trump’s election. “After 40 years, it and we will begin to corrode.”
• James Williams, a former Google strategist, also said in an interview with The Guardian that "the dynamics of the attention economy are structural and will destroy human will."
• Brad Burnham, a partner at Union Square Ventures, a top New York venture capital firm, lamented the collateral damage of quasi-monopolists in the digital age in a blog post: "In Facebook's 'sea of ​​news,' publishers find themselves becoming suppliers of undifferentiated commodity content."
• Google’s search algorithm also changed slightly in response to the general trend. When Amazon made the decision to source products directly in China and shift demand to its own products, manufacturers could do nothing about the decline in sales.
• Even Berners-Lee, the inventor of the website, wrote a blog post expressing her concerns about the proliferation of "misinformation" and "fake news" caused by the advertising model of social media and search engines, which are "channeling human biases and spreading like wildfire."

For most editorialists, the most effective way to address these huge institutional problems is to shut down smartphones, keep kids off social media, or establish strong regulatory and antitrust measures—subjecting tech giants to the same scrutiny as other industries vital to the public interest. For example, tech giants like Google and Facebook should face the same regulatory scrutiny as TV networks. However, these interventions seem very sensible, but in detail, they are not very effective in solving the core problems of the online world. Because in the 1990s, Microsoft's dominance was not only challenged by the Justice Department's antitrust, but also by new software and hardware companies, such as the Internet, open source software, and Apple products.

The evangelists behind Ethereum believe that a series of advanced technologies in software, cryptography, and distributed systems will be able to solve the problems facing today's digital age, such as brainwashing incentives in online advertising; the quasi-monopoly of Facebook, Google, and Amazon, etc. If successful, their creation will be more likely to challenge the dominance of technology giants than any antitrust regulations. They even call it an alternative to "the winner-takes-all model of capitalism" and will not exacerbate wealth inequality.

So far, the only blockchain project that has made it past mainstream acceptance is Bitcoin, which is now in the midst of a speculative bubble that bears some resemblance to the dot-com IPO frenzy of the 1990s. Herein lies the cognitive dissonance for anyone trying to comprehend blockchain: the potential power of this coming revolution is being undercut by the crowd it is attracting. Technologists who pursue the vision of an open and decentralized web find themselves once again surrounded by speculators who want to get rich overnight. The question, however, is whether blockchain can truly deliver on its promise after the bubble bursts.

For some students of modern technological history, the decline of the internet is an irreversible process. Blockchain advocates, however, do not accept the inevitability of cycles. They argue that the roots of the internet are actually more radical and decentralized than previous information technologies, and we are supposed to remain faithful to those roots.

Facebook spans the economic gap between InternetOne and InternetTwo

To understand this, we need to think of the Internet as consisting of two fundamentally different systems stacked on top of each other, like layers in an archaeological dig. One layer is made up of software protocols developed in the 1970s and 1980s that reached critical mass in the 1990s (protocols can be thought of as software versions of a universal language, the way multiple computers communicate with each other). On top of them, the second layer is the web-based services like Facebook, Google, Amazon, and Twitter that will collectively explode in popularity over the next decade.

The first layer is called InternetOne, which is built on open protocols, which are defined and maintained by academic researchers and international standards organizations, which are owned by everyone. In fact, the original openness still remains in our daily lives. For example, current email is still based on open protocols POP, SMTP and IMAP; websites still use open protocols HTPP for services; bits are still circulated through the original open protocol TCP/IP of the Internet. The characteristic of this protocol is that anyone can use them for free.

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Photo/BY DELCAN & COMPANY

However, the benefits of these protocols, while powerful, are not visible to the naked eye. At the same time, some key standards have not yet been developed. For example, GPS, an open standard for defining geographic location. It was originally developed by the US military and opened to civilian use during the Reagan administration. About a decade later, it began to be used on a large scale in the aviation industry, until individual consumers used it in car navigation systems. And now, we can receive signals from GPS satellites through our smartphones.

But what if the military had kept GPS out of the public domain? Presumably, a market signal would have been sent to innovators in Silicon Valley and other tech hubs in the 1990s about consumer interest in establishing exact geographic coordinates and projecting those locations onto digital maps. There were several years of intense battles among rival companies, each putting their own proprietary satellites in orbit and advancing their own unique protocols, but eventually the market settled on a dominant model. While the open, decentralized web worked very well on the InternetOne layer, we have rarely adopted new open standard protocols since the World Wide Web began in the mid-90s. The biggest problems that technologists solved after 1995, many of which had to do with identity, community, and payment mechanisms, were left to the private sector to solve. Based on this, a powerful new layer of Internet services was formed in the 21st century, which we can call InternetTwo.

Although the inventors of the protocol that developed it shaped the future of the Internet, they failed in some key elements that would prove crucial to the future of online culture. For example, they failed to create a secure open standard for human online identity. Units of information could be defined as pages, links, and messages, but people had no protocol for themselves: no way to define and share your real name, location, interests, or relationships with other people online.

This turned out to be a major oversight, because identity is a universally accepted solution that benefits everyone. As Ethereum founder Vitalik Buterin describes it, “base layer” infrastructure, like language, roads, and postal services, is a platform that facilitates commerce and competition through a public sphere foundation. Offline, we don’t have an open market for physical passports or social security accounts; of course, we have a few reputable authorities, most of them backed by the state, through whom we can prove to others who we are. But once online, the private sector swooped in to fill the gap, and because identity is universal, the market has fiercely resolved common standards for “defining yourself” and “who you know.”

Economists call this self-reinforcing feedback loop "increasing returns" or "network effects." After dealing with and experimenting with social media startups like Myspace and Friendster, we found that the market already had a proprietary standard for who you are and who you know. That standard was Facebook. In the late 1990s, the company had more than 2 billion users. Fourteen years after its founding, Facebook had become the sixth most valuable company in the world based on user growth.

Facebook is arguably the ultimate manifestation of the economic divide between InternetOne and InternetTwo. No private company owns the protocols that define email, GPS, or the open web. Yet this single company owns the data that defines social identity for two billion users today, and Zuckerberg holds a majority of the voting power in the company. If the rise of the centralized web is an inevitable cyclical turn, then there is no reason to worry that we will abandon the vision of InternetOne. In any case, it makes no sense to try to restore the architecture of InternetOne. Our only hope is to curb these corporate giants through regulation and antitrust action, and by using the power of the state.

An advocate of the revival of open network protocols

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Picture/Juan Benet in the middle (Via Courtesy of Token Summit)

One of the most eloquent advocates of the open protocols renaissance is Juan Benet, a Mexican-born programmer who now lives in a three-bedroom suburban street in Palo Alto, California, with his girlfriend, a programmer, and several roommates, some of whom work at Benet's Protocol Labs. On a September day, Benet greeted me at the door of the lab wearing a black Protocol Labs hoodie. Once inside, the interior of the lab is reminiscent of HBO's "Silicon Valley Incubator," with a row of black computer monitors in the living room. In the entrance hallway, the words "Welcome to Rivendell" are scrawled on a whiteboard. "We call this house Rivendell," Benet said sheepishly. "It's not a very good Rivendell. There are not enough books, waterfalls and elves."

Benet, 29, sees himself as a child of the information revolution of the late 1990s and early 2000s, driven in large part by networks like BitTorrent. BitTorrent is a content distribution protocol that uses an efficient software distribution system and peer-to-peer technology to share large files, and allows each user to provide upload services like a network redistribution node. This service takes the decentralized Internet to a new level, helping users create distributed media libraries (mostly pirated). Services like Skype, which helps people make calls over the Internet, are actually very similar in nature to BitTorrent.

Sitting in Rivendell's office, Benet told me that he believes peer-to-peer technology reached its peak in the early 2000s with the rise of Skype and BitTorrent. "But then, humans began to gravitate toward centralized architectures, and the walls of peer-to-peer (technology) broke down," Benet said, "partly because the business model of peer-to-peer was driven by piracy."

A Stanford computer science graduate, Benet speaks in a way that's a bit like Elon Musk. When he speaks, his eyes flick slightly overhead, as if he's reading an invisible teleprompter. He's enthusiastic about the technology Protocol Labs is building, but also keen to put it in a broader context.

For Benet, the shift away from distributed systems to more centralized networks is a change that only a few could have predicted. "The rules of the game, the rules that govern these technologies, are very important," he said. "The structures we build now will paint a completely different picture for the next five to 10 years." Benet added, "It was clear to me then that peer-to-peer was something extraordinary. I didn't understand what the risks were or why we had to pick up the baton. Now it's our turn to protect it."

Protocol Labs is the baton that Benet is trying to take over. Its first project is to completely reform the Internet file system, including the basic solution for solving the location of web pages. Benet calls it IPFS (the full name is InterPlanetary File System: Star File System, which is a global, peer-to-peer distributed hypermedia distribution protocol, including Git, self-certifying file system SFS, BitTorrent and DHT, and is considered to be the new generation of Internet protocol most likely to replace HTTP). According to Leifeng.com, the current HTTP protocol can only download web pages from one location at a time, and there is no built-in online page archiving mechanism. IPFS allows users to download a page from multiple locations at the same time (programmers call it "historical versioning") so that previous iterations do not disappear from historical records. To support this protocol, Benet also created a system called Filecoin, which allows users to effectively rent unused hard disk space.

"There are a lot of hard drives sitting around the world with almost nothing on them, and their owners are losing money," Benet said. "So we can bring that supply online and reduce the cost of storage." As the name of the lab suggests, Protocol Lab's mission is also to support more new open source protocols in the coming years.

Why did the Internet take the path from open to closed? One explanation lies in the “evil of omission”: As a new generation of coders began to solve problems that InternetOne had not solved, there was an almost unlimited source of money to invest in that work, as long as the coders kept their systems closed. The secret to the success of InternetOne’s open protocols was that they were developed in an era when most people didn’t care about online networks, so they were able to reach critical mass without being noticed, and without having to contend with large conglomerates and venture capitalists. But by the mid-2000s, promising new startups like Facebook could attract millions of dollars in financing even before they became household names. Private sector money was used to ensure that the company’s critical software remained closed in order to extract as much value as possible for shareholders.

However, as venture capitalist Chris Dixon points out, there's another factor to consider here—one that's more technical than financial. "Let's say you're trying to build an open Twitter," Dixon says in a conference room at Andreessen Horowitz's New York office. "Let's say I'm @cdixon at Twitter. Where do I store [this information]? [In this case] I need a database." A closed architecture, like Facebook or Twitter, maps all of a user's information, including likes, photos, and connections to other people on the network, into a private database at the company. Every time you swipe to Facebook's newsfeed, you're granted access to a small portion of that database, and you see only the information that's relevant to you.

Running Facebook’s databases is an incredibly complex operation. They rely on hundreds of thousands of servers scattered around the world, overseen by some of the world’s most brilliant engineers. From Facebook’s perspective, they are providing a valuable service to humanity: creating a common social network for nearly every person on the planet. The inevitable cost of using that network is that Facebook has to sell ads to maintain the service, and the scale of their network gives them incredible influence over two billion people in the world. Maybe a decade ago, this made sense. Building a database capable of handling the interactions of hundreds of millions of people could only be done by a single company. But, as Benet and his fellow blockchain evangelists are eager to prove, that may no longer be tenable.

Bitcoin, Ethereum, ICO

So, in an age when big tech companies have attracted billions of users and are sitting on hundreds of billions of dollars in cash, how can base-level protocols be effectively applied? If the internet is currently causing significant and growing harm to society, how do you get people to adopt new open source technology standards? This seemingly esoteric question will have serious consequences. The only hope is that governments intervene to limit the power of Facebook or Google, or that consumers revolt and encourage the market to shift to neglected, fairer online services. Neither approach threatens InternetTwo's stability.

The challenge to the era of closed protocols came in 2008, shortly after Facebook’s corporate headquarters went live. A mysterious programmer (or team) named Satoshi Nakamoto sent a paper to a cryptographic mailing list. The paper was called “Bitcoin: A Peer-to-Peer Electronic Cash System.” In it, Nakamoto introduced an ingenious digital currency system that didn’t require a centralized trust to verify transactions. At the time, Facebook and Bitcoin seemed unrelated—one was a thriving, investor-favored social media startup where you could share birthday wishes and connect with old friends, and the other was a peer-to-peer cryptocurrency initiative that came out of nowhere. But 10 years later, the idea that Nakamoto published in a paper posed the biggest challenge yet to the dominance of InternetTwo like Facebook.

The paradox of Bitcoin is that it could be a truly revolutionary breakthrough, but as a currency, it could be a massive failure. As I mentioned, Bitcoin has increased in value nearly 10 million times over the past five years, making early investors a fortune. At the same time, it has also made it an extremely volatile payment method. The process of generating new Bitcoins also consumes a staggering amount of energy.

It seems to be a historical rule that new technologies always have very different uses from their initial applications. Similarly, all the current discussion about Bitcoin as a payment system may just be a smoke screen. Satoshi Nakamoto called Bitcoin a "peer-to-peer electronic cash system" in his paper, but the innovative theory he proposed has more general characteristics at its core, with two key features:

First, Bitcoin proved that you can create a secure database — a blockchain — distributed across hundreds or thousands of computers, with no single authority controlling and verifying the authenticity of the data.

Second, Satoshi designed Bitcoin so that the work of maintaining the distributed ledger is rewarded with small, increasingly scarce Bitcoins. If you spend half of your computer’s processing cycles helping the Bitcoin network perform calculations correctly, thus warding off hackers and fraud, you’ll receive a small fraction of a Bitcoin. Satoshi designed the system so that Bitcoin becomes increasingly difficult to obtain over time, thus ensuring a certain amount of scarcity in the system. If you help Bitcoin keep its database secure in its early days, you’ll receive more Bitcoins than those who come later. This process is called “mining.”

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For us, we don’t need to pay attention to the craze about Bitcoin, just remember these two characteristics: Satoshi introduced a mechanism for all nodes to reach a consensus on the content of the database without anyone controlling the database, and a mechanism to compensate people who contributed to the development of the database without the need for group profit distribution. These two characteristics together solved the distributed database problem and the funding problem. So, an open protocol that did not even appear in the early days of Facebook suddenly appeared.

These two features have now been copied by dozens of new systems inspired by Bitcoin. One of these systems is Ethereum, which was proposed by Vitalik Buterin in a white paper when he was 19 years old. Although Ethereum has its own currency, the core of Ethereum is not to facilitate electronic payments, but to enable people to run applications on the Ethereum blockchain. There are currently hundreds of Ethereum applications in development, ranging from prediction markets to social networks to crowdfunding services. Almost all of them are in the testing phase and cannot be put into real use. Despite the embryonic state of these applications, Ethereum has seen a miniature version of the Bitcoin bubble, which is likely to make Buterin a huge fortune.

These currencies can be used in clever ways. Juan Benet’s Filecoin system will rely on Ethereum technology and reward users and developers who adopt the IPFS protocol, or those who help maintain the shared database required by the protocol. Protocol Labs is issuing its own cryptocurrency, also mentioned above, Filecoin, and plans to sell these coins on the open market in the coming months. (In the summer of 2017, Filecoin raised $135 million in the first 60 minutes of its presale phase, which Benet called a “presale” of tokens to authorized investors.) Many cryptocurrencies are open to public trading through a process called an initial coin offering, or ICO.

The acronym ICO can be said to be a response to the first Internet IPO bubble in the 1990s. But there is an important difference between the two. Speculators can buy during the ICO, but they are not buying shares in private companies or proprietary software as in traditional IPOs. After the ICO, the system will continue to issue currency in exchange for labor, in the case of Filecoin, that labor is anyone who helps maintain the network. Developers who help improve the software can earn electronic currency. Ordinary users who give up hard drive space to expand the network's capacity can also receive electronic currency. Filecoin establishes a system that can reflect that someone somewhere has contributed to its network.

To emphasize that the technology is not meant to replace existing monetary systems, advocates like Chris Dixon have begun referring to the compensation awarded by the system as “tokens” rather than “currency.” He said:

I like this metaphor because it shows that electronic money is like game coins. You only use these game coins when you go to the arcade. Electronic money is not intended to be real money, it only acts as a pseudo-currency in the virtual world.

Dan Finlay, founder of MetaMask, holds a similar view to Dixon. He said: "What's really interesting to me is that we can design new value systems. These systems are not based on money."

Pseudo-currency or not, the advent of ICOs has led to a number of dubious offerings, some by celebrities who wouldn’t seem like blockchain fans, such as DJ Khaled, Paris Hilton and boxer Floyd Mayweather. “I hate it,” Fred Wilson, founder of Union Square Ventures and an early proponent of the blockchain revolution, wrote in an October 2017 blog post, adding that most ICOs are scams. “And the celebrities who hype them up on social media in hopes of getting more money are behaving badly and are probably violating securities laws.” Arguably, the most surprising thing about the ICO frenzy is that some platforms that have yet to have any effect on ordinary users are attracting so much financial investment. At least during the dot-com bubble of the late 1990s, when people could buy books on Amazon or read newspapers online, they were sure that the Internet would become a mainstream platform. Today, the hype is so rampant that a lot of money is pouring into a technology that laymen barely understand and have never used.

For the sake of argument, let’s assume that the hype is warranted and that blockchain platforms like Ethereum become the foundation of our digital infrastructure. How will distributed ledgers and token economies challenge the current tech giants? Brad Burnham, a partner at Fred Wilson, Union Square Ventures, gives an example of a company that has attracted the attention of regulators and public discussion: Uber. “Uber is essentially just a coordination platform between drivers and passengers,” Burnham says. “Uber was really innovative, and at the beginning, Uber had a lot of problems, like getting people to trust that drivers would participate, and mapping issues. There were a lot of things that we were very positive about.” But when a new service like Uber becomes popular, there is a strong incentive to consolidate its leadership. Uber’s growth in users attracts more drivers, and more drivers attract more passengers. People link their credit cards to their Uber accounts, install the app, and there are a large number of Uber drivers on the road. As a result, the cost of trying to switch to Uber’s other competing services becomes very high. “In a way, the innovation around coordination becomes less innovative,” Burnham says.

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If Uber and Lyft already dominate the shared mobility market, how can Transit gain position in this industry? That needs to be said about tokens. Early users of Transit will receive tokens rewarded by Transit, which people can use to buy Transit’s services or convert them into traditional currencies. As in the Bitcoin model, with the popularity of Transit, fewer tokens will be rewarded throughout the system. In the early days, developers may see unexpected gains from tokens using Transit’s iPhone app; Uber drivers who started using Transit as the second choice to find passengers can collect tokens as rewards for embracing the system; adventure consumers will receive rewards when using Transit early, with fewer drivers available than existing proprietary networks like Uber or Lyft.

But when Transit starts to become popular, it attracts speculators, who price these tokens and make them more popular by boasting about the value of the system, which will attract more developers, drivers and users. If the entire system can finally run like its supporters say, the result will be more competitive and make the market fairer. The economic value generated through this system will not be concentrated in shareholders or large groups, but a wider population: early developers of Transit, producers of the App, drivers and passengers who were the first to use the system, and the first wave of speculators. The token economy brings elements that are not available in the traditional economic model: it does not create value by owning something, but by improving the underlying protocol. The boundaries between founders, investors, and users are becoming increasingly blurred; it appears to no longer win-winners take all. At the same time, this economic model also requires speculation from people outside the community.

The real challenge of cryptocurrency

Even decentralized cryptocurrencies have their key nodes. For Ethereum, one of them is at the Brooklyn headquarters of the ConsenSys organization. ConsenSys was founded by pioneer Ethereum pioneer Joseph Lubin. Last November, Amanda Gutterman, 26, of ConsenSys, took me to visit here.

Picture/startupexpo

ConsenSys is headquartered in Bushwick. It’s not like the headquarters of a company at all, with its front doors covered with graffiti and stickers. The most recent renovation of their staircase was in the 1920s. ConsenSys, which just started three years ago, now has more than 550 employees in 28 countries around the world, and this operation has never been solved through financing. As an organization, ConsenSys looks very special: technically, it’s a company, but it also has characteristics similar to nonprofits and workers’ collectives. The shared goal of ConsenSys members is to strengthen and expand the Ethereum blockchain. They support developers to create new applications and tools for the platform, and MetaMask that generates Ethereum addresses is one of them. They also provide consulting services for businesses, nonprofits or governments, hoping to integrate Ethereum smart contracts into their systems.

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Blockchain communicators believe that the current way of information storage is lagging behind. People should maintain their own digital identities—including date of birth, circle of friends, shopping history, etc. When seeing the right service, users can freely provide some of the information to the service provider. Since identities are not included in the original Internet protocol, and because it was difficult to manage distributed databases before Bitcoin, this form of "autonomous" identity was actually impossible before. Now it's different, and this is an achievement goal. Some blockchain-based services are trying to solve this problem, including a new identity system called uPort, which has been separated from ConsenSys, and the other is Blockstack, based on the Bitcoin platform. (Tim Berners-Lee is leading the development of a similar system called Solid, which will also enable users to control their data.) These competing protocols have slightly different frameworks, but they have the same view on how user identities should be truly used in a decentralized network.

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Gutterman believes that the same system can be applied to more important identity information, such as healthcare data. People store genome sequence information in personal data archives, rather than on servers of private companies. "I don't want many businesses to see this information, but maybe I might donate it to medical research institutions. I'm using a blockchain-based autonomous ID card to allow what teams to use it. Or I can sell it," she said.

This token-based architecture enables a complete set of blockchain-based identity identification standards and is embedded in code architectures like Facebook’s own internal code architecture. As many critics have seen, average users on social media platforms create almost everything without any compensation. Companies get all the economic value from these content through advertising sales. A token-based social network will at least give early users some rewards, making the new platform more attractive. "It would be quite convincing if someone could actually find a platform that allows users to own a portion of the network and get paid," Dickson said.

Will this information be safer in distributed blockchains than well-designed firewalls for big companies like Google or Facebook? In this regard, the Bitcoin story is actually very illuminating: it may never be stable enough to operate as a currency, but it does provide a compelling evidence of the security of a distributed ledger. "Look at Bitcoin ($80 billion) or Ethereum's market capitalization ($25 billion)," Dixon said. "That means if you successfully attack that system, you can leave with $1 billion. Do you know what the 'bug bounty' is? Some say, it's 'If you hack my system, I'll give you a million'. Bitcoin is now a multi-billion-dollar bug bounty, and no one hacks into it. It's like a good proof."

The decentralized nature of these new identity protocols brings additional security. In the identity protocol proposed by Blockstack, actual information about your identity—your social relationships, your purchase records—can be stored anywhere on the web. Blockchain simply provides encrypted security keys to unlock this information and share it with other trusted providers. A system with a centralized repository of hundreds of millions of user data—which security experts call "honey pots"—is more attractive to hackers. Here are two options, which one would you choose if you were a hacker?

1. By hacking into 100 million independent personal computers, stealing 100 million credit records, and then analyzing until you find the correct data on each machine.
2. In Equifax blacked into a honey pot and then left with the same amount of data within a few hours.

As Gutterman said, "this is the difference between robbing a house and robbing an entire village."

Once more audiences are discovered, the architecture of blockchain is likely to be abused. This prophecy shapes many blockchain architectures. It is also part of its charm and power. Blockchain distributes speculators’ funds through the sharing of tokens among the platform’s true supporters, thus preventing any individual or group from gaining control of the entire database. Its cryptography is designed to prevent surveillance or identity theft. In this regard, blockchain shows family similarities to the political constitution: its rules can be seen at a glance how it is used.

Liberal blockchain worldview

Currently, anarchic liberalism in Bitcoin and other non-floating currencies has made great progress. This community is filled with some vocabulary and jargon that sounds like the slogan of a militia organization in Montana. However, because of their potential to break high-centralized powers, the blockchain philosophy will provide a possibility for those who want wealth to be more equal and break monopolies in the digital age.

The blockchain worldview sounds very liberal because it provides a solution to the monopoly of information among capitalists. However, supporting blockchain is not necessarily against regulation, as long as the purpose of this regulation is to complement the blockchain. For example, Brad Burnham believes that regulators should insist that "everyone has a private data storage location" where all aspects of information will be maintained. The government does not need to design these identity protocols, they will be developed on the blockchain and are open source. Ideologically, private data storage will be a real team-based project: they will be knowledge-shared, funded by token speculators, and backed by regulators.

The Internet was initially defined by open protocols and knowledge sharing, but the second phase was gradually ruled by closed source architectures and proprietary databases. The experience we draw from this history is enough to support the assumption that openness is better than closed at least in the field of infrastructure. But returning to the age of open source protocols is not easy, and the next generation of protocols that save the Internet is unlikely to be born in the research of the Ministry of Defense, just like the first generation of the Internet in the past half-century.

Blockchains now look like a speculation and are hard to understand. But the beauty of open source protocols is that they will be guided in surprising new directions by those who discovered and supported them in the early stages. At present, the only hope for the spirit of open source protocols to be revived is blockchain. Whether it can ultimately achieve egalitarian goals depends largely on those who use the platform, they need to inherit the spirit of open source from the early Internet pioneers. If you feel that the Internet has lost its early spirit, you can’t expect to change through imagination and government regulation, what you need is new code.