Photo by Ali Pazani from Pexels
Let’s call that a true “World Computer”. It has the potential to radically disrupt the way people live and work, so much so that it will be more promising than the Internet back more than a decade ago.Juju
Bitcoin is an encrypted peer-to-peer payment system based on distributed ledger technology. Created by Satoshi Nakamoto in 2009, it characterizes decentralized book-keeping, transparent and tamper-proof transactions, inflation protection, and anonymity. Its free and open spirit has posed a huge challenge to the existing financial system, but also as a result, gathered many firm believers.
Why is bitcoin a bubble?
The reason it is difficult to regulate cryptocurrencies is that most of them are both securities and currencies, subject to price fluctuations while used as media of exchange. They are essentially novel securities. However, even in the crypto world, currencies that serve as a means of payment should act as stablecoins. It is not difficult to understand why: these coins are not backed by any real commercial activities that justify their price fluctuations the way securities are. So the only reason for their price movements is speculation, which is, under no circumstance justified.
The price of bitcoin is too high, mainly for two reasons: first, miners and speculators collude to drive it up, while true believers willingly support its price. On the other hand, it doesn’t have any alternative commercially, or in terms of scale. However, when Satoshi designed bitcoin in the first place, he intended it as a type of stablecoin. In other words, Bitcoin was never expected to experience any major fluctuations. What’s more, it is not scarce in any sense. It’s very easy to issue a similar cryptocurrency. The only thing special about Bitcoin is that it is many people’s first contact with the world of crypto.
Second, mainstream investors do not have a sufficient understanding of blockchain. Once they do, they will no longer flock into Bitcoin. In my opinion, Bitcoin is nothing more than another type of collectible and there should be a cap on its price. When its price becomes too high, a market crash easily ensues.
Of course one can talk about nostalgia. Collectibles such as the world’s first car or computer were also sold for a high price at auctions. The same may be true with Bitcoin. The difference is that be it “the world’s first car” or “the first computer”, there are unique and exist in physical form. Yet the current consensus on Bitcoin’s price derives mainly from the consensus of the miners. It remains a question what the public consensus will be for a digital asset that can be created by code and whose consensus is achieved via distributed collaboration. Personally, I don’t think such digital assets have enough scarcity and uniqueness to justify their inflated prices.
The future of blockchain—RChain
After bitcoin was born, there have been several similar cryptocurrencies, most of whom do not have any practical value, until Ethereum expanded the blockchain technology from payment to the architecture layer. Ethereum has been a success, yet its technology route is flawed, which explains why it still hasn’t solved the “impossible triangle” problem or achieved large-scale commercial application. More and more people start to understand and recognize the huge promise of blockchain technology. Yet its inability to support large-scale commercial use is still hindering its mainstream adoption. Until RChain.
Blockchain 1.0 Bitcoin Payment system, transfer of coins, the simplest application
Blockchain 2.0 Ethereum Smart contracts that expand the scope of cryptocurrencies
Blockchian3.0 RChain Safe and expandable on-chain collaboration based on data
As I understand, blockchain is a decentralized collaboration technology that promises to facilitate safe and trustless cooperation and communication among people around the globe. In that sense, public chains represent the future of blockchain. From a technology’s perspective, blockchain is essentially the combination of a distributed architecture and decentralized computing. So we need to first understand that this system must be highly concurrent. In the real world, most of the transactions are isolated and most people’s financial situations independent. For example, when you go grab a cup of coffee, someone on the other side of the Earth might be heading out for shopping. Your transactions are unrelated. That is very important in the blockchain world. If we serialized these transactions, we would be heading nowhere. All transactions must pass through a virtual machine. If the virtual machine is sequential, then all the transactions have to be ordered sequentially, which is why our current blockchain systems are so slow (including bitcoin and Ethereum, etc.)
Until now, I’ve only discussed transactions, which in the context of this article, refer to the transfer of coins. Payment is the easiest application of blockchain technology. Yet a correct blockchain architecture should be designed around data. We are heading towards a big data era, with huge amounts of data generated every day. Yet our control of personal data is increasingly weakened. Every day, centralized giants infringe on our privacy. We talked about payment, but coins are nothing more than one form of data and transactions nothing more than the transfer or exchange of coins. At a broader scale, data exchange can include such activities as listening to music or watching a video, etc. But they require a much more complicated architecture than the one that supports mere payment. Let’s call that a true “World Computer”. It has the potential to radically disrupt the way people live and work, so much so that it will be more promising than the Internet back more than a decade ago.
My research shows that the optimal solution to this “World Computer” (the combination of a decentralized architecture and distributed computing) is a novel discipline that has only existed for dozens of years- Process Calculus and RChain is on top of that.