On Dec.28th, InnoKOL has a fascinating conversation with Dr. Dazhi Guo, the Chief Researcher of the Research Center of Digital Economy at Draper Dragon, and Author of “Internet Revolution_Web3.0”, talking about his unique work experience and profound insights on the opportunities& challenges facing the development of Web3.0.
Jokia: How would you describe yourself in three words? What’s your motto?
Dazhi: Rationality, openness, and optimism. My major is economics, so I believe that everything in the world has its own rules to support it. I also believe that the world is infinitely vast, and everyone should constantly spit out the old and bring new ideas to grow. Of course, on the whole, I am an optimist, and I believe that everyone's efforts will be rewarded.
Jokia: Can you please share more about your educational and professional background? And we’d love to hear what brought you to blockchain.
Dazhi: I'm an economics Ph.D., graduated from the Central University of Finance and Economics, had been a visiting scholar at Georgia Institute of Technology U.S.A, serve as the chief researcher of the Research Center of Digital Economy in Draper Dragon Capital, and the former chief researcher fellow in Huobi Academy of Blockchain Application. I'm the author of "Blockchain: Reshaping The Economy And The World" (CITIC Publishing House), "The application of blockchain in the insurance industry” included in the "Chinese Fintech Development Report 2017" (Social Scientific Publishing House), and "Internet Revolution—Web3.0"(CITIC Publishing House); participate in the establishment and optimization of SMARTChain blockchain assets assessment model, has rich experience in technology trend, blockchain application, and investment areas.
My working experience is mainly focused on industry research in the FinTech area， and some people ask me what is the Bitcoin？ I can't answer their question immediately and went to check some material to find the answer. After I read some papers related the Bitcoin, I said to myself that Bitcoin has a reasonable scheme and is cool, I think when an innovative thing has rooted its foot in both a solid technical basement and a reasonable economic theory, then It will be a great thing that can change our life. It's the right thing that we have seen in Blockchain in the past and future years.
Jokia: From your perspective, what’s unique and game-changing about blockchain technology?
Dazhi: Blockchain can endow data with some kind of scarcity. As we know, the main feature of data is that the marginal cost of replication and transmission is almost zero, so data can only represent information, and cannot directly correspond to atoms in the real world one by one. Because the basic rule of the atomic world is scarcity, while the basic rule of the bit world is unlimited replication at zero cost; That is to say, data can only reflect some features of the real world, but not all of the real world; If you have to use data to reflect the real world, you must have an institution or individual to play a role. For example, if you make transfers online, you must have an intermediary to determine the number of each person's deposits. Only the figures approved by the intermediary can correspond to the wealth of each person. But if the intermediary strikes, the entire financial system will collapse. However, the blockchain endows data scarcity through computational redundancy, which can correspond to the rights and interests of the real world. Moreover, this scarcity does not depend on a certain individual or institution, and no part of the institution can change the public ledger. In this way, the bit world has the same scarcity as the atomic world, and the bit world and the atomic world may be more closely integrated.
Jokia: How web3 is shaping the future of finance?
Dazhi: One of the main features of web3.0 is the decentralized framework such as blockchain. And blockchain can promote the major upgrading of financial infrastructure by creating a new mechanism related to the rights confirmation, pricing, and trading of digital assets. Based on the blockchain, financial services are more efficient, open, and inclusive, and their anti-attack and robustness are also significantly improved. The specific impact of blockchain as a financial infrastructure is mainly reflected in the following three aspects.
First, Self-service account opening makes the threshold of financial services lower. As we know, accounts are the most basic unit of financial services and the key area of financial supervision. In the traditional financial system, accounts and individuals are strongly bound. If you want to open an individual account, you can only go to the bank site. Even today, financial technology is so developed, this is still the bottom line that financial institutions adhere to.
However, the blockchain uses asymmetric encryption technology to define an account. As long as anyone has the private key, he or she can control the account assets. The whole service process does not require the participation of any institution. Of course, self-service account opening can also be realized. However, accounts and people based on the blockchain are both bound and can be split. Therefore, the self-service account opening is a double-edged sword, which can lower the threshold for users to use, bring us convenience, but also provide convenience for some illegal and financial criminal activities. Therefore, we need to be cautious.
Second, The characteristic of clearing is settlement makes the transaction more efficient. Clearing and settlement are two basic steps in the asset transaction process in the financial system. Among them, Clearing refer to a summary of all accounts' transfer in and transfer out transactions within a certain period; Settlement refers to asset delivery according to the summary of the clearing.
In the traditional financial system, CSD (Central Securities Depository), CCP (Central Counter Party), SSS (Securities Settlement System), and PS (Payment System) are required to play the functions of securities registration, market making, and settlement respectively in the process of asset trading.
For example, when we buy and sell stocks at the stock exchange, we often need to follow the T+1 or T+2 rules. That is, after you buy a stock, you must sell it one or two days later, which is the time for clearing and settlement. Compared with each transaction being delivered one by one, clearing and settlement is an efficient processing method, but the process design of clearing and settlement also sets an upper limit for further improvement of transaction efficiency.
The blockchain ledger itself is a CSD and SSS, which can play the role of securities registration and settlement. Every time a new block is wrapped, the clearing and settlement of all transactions are completed. If the block is wrapped fast enough, the clearing and settlement will almost be completed synchronously with the completion of the transaction. In this way, we can greatly improve the liquidity of assets by conducting asset transactions based on the blockchain.
Thirdly, Smart contracts enable finance to have AI-like capabilities. The blockchain supports smart contracts, which are based on the distributed computing network. Once the contract is deployed, specific transactions will be automatically executed according to the conditions set in the contract, and will not be terminated by any party. This feature of smart contracts is more suitable for complex transactions involving multiple parties. Once the payment terms of smart contracts are triggered, the transactions will be executed unconditionally, and the transactions will no longer face credit risk. For example, in the insurance business, compensation terms can be set through smart contracts. Once the compensation conditions are triggered, compensation funds can be automatically transferred to the insured user.
Asset securitization refers to the financier building an asset pool based on the assets or equity that can generate stable cash flow, enhances credit through structural design, and converts it into securities that can be sold and circulated in the financial market. The essence of asset securitization is the transformation from non-standard assets to standardized assets. Therefore, the core link of asset securitization business is the confirmation of basic asset cash flow, and the construction of complex structured products through the participation of various intermediaries to achieve the goal of risk isolation and credit enhancement.
The application of blockchain to asset securitization business can greatly improve the efficiency of information processing. Smart contracts can realize credit enhancement, financial asset settlement and clearing, physical asset confirmation, and other functions included in the asset securitization business process; Using smart contracts to automate the key business processes of asset securitization, such as cash flow recovery and basic asset allocation, will reduce the possibility of human error, effectively manage the entire business process of asset securitization, and reduce the possibility of fraud in each link.
Jokia: How will web3 change the future of social media?
Dazhi: In traditional social platforms, two value chains are both independent and cross each other. One of them is the advertising value chain, which mainly refers to the advertising business carried out between advertisers and social platforms. In this chain, advertisers pay for the clicks and attention they get, while platforms charge for user aggregation and the feature tags they create for users. Users are just a tool for social platforms to get charged in this process.
The other is the creative value chain. Here, users are further divided into content creators and consumers, and consumers pay creators for the content they are interested in. Generally, the platform will share a portion of the revenue from creators, similar to tax in nature, but sometimes the platform will provide some subsidies to some creators who have obvious traffic advantages to expand the scale of platform users, and thereby enhance the stickiness of the platform to users.
Although public opinion has made a lot of judgments on user data leakage caused by social platforms and subjective information release rules, for ordinary users, privacy protection is not the first requirement for selecting social network platforms, but the content is. If you can make profits while consuming content, it will be icing on the cake. At a time when Web 2.0 products have precipitated almost all outstanding creators and content, it is difficult for Web 3.0 products to shake the entire market pattern by relying solely on data-independent narration. The arrival of the consensus singularity requires considerable accumulation. A more realistic approach is to strive for outstanding creators through subsidies. This direction has also become the main direction and opportunity for web 3.0 social innovation.
For the web3.0 social platform, it is not only necessary to break the data monopoly at the data infrastructure level, so that users' social relations can become their own portable and profitable data assets, but also to establish algorithms with a sufficient matching degree under the premise of users' authorization of data access to help advertisers obtain sufficient good delivery results. These two factors are necessary conditions to ensure the implementation of the advertising value chain in the decentralized platform. The technical difficulty in this aspect is mainly reflected in cross-platform and cross-application user data collection and analysis, which includes not only cross-chain data collection but also the collection of on-chain and off-chain data. For example, if you can display the total forwarding times obtained on Twitter and Mirror on the same interface, it will be very beneficial for users to migrate from the Web 2.0 platform to the Web 3.0 platform.
But the establishment of an advertising value chain can only be regarded as a defensive strategy for web 3.0 social platforms, because in this field, centralized social platforms have accumulated very rich data and experience, and web 3.0 social platforms need to gradually catch up with data accumulation. As a new entrant to the market, the weapon of the web 3.0 social platform to launch an attack is the creative value chain. The web 3.0 social platform needs to help the creator group obtain reasonable income through new infrastructure and economic models, and help consumers obtain sufficient utility, such as providing infrastructure for creators to release high-quality works, receive advertisements, sell goods live, and reward; The other side of these functions is that while consumers enjoy the functions for free, they can easily carry out activities such as giving rewards, shopping directly in the creator's shop, being diverted by advertisements to consume outside the platform, and becoming paid fans to purchase content.
In this mode, SocialFi can solve the pain points of creators and consumers through a token, and redistribute business interests among creators, consumers, and platforms. For example, in the traditional social networking platform, in the recommendation system where traffic distribution naturally tends to head, the profit threshold for creators is very high. Many high-quality creators give up because it is difficult to obtain sufficient benefits during the promotion. Through the influence token model, middle-class creators will be likely to start making profits early, and consumers can even get incentives through Read/Match to earn.
Jokia: What are the opportunities and challenges facing NFT in the future?
Dazhi: At present, the direct applications of NFT are digital art, PFP, and membership cards, but the use of NFT is far more than that. NFT can be the representative of digital goods in the virtual world because of its one-to-one correspondence and indivisibility, and it reflects more business models in combination with various scenarios. For example, in the social platform, we mentioned below, everyone's social data and social relations can be capitalized in the way of NFT to turn into personal wealth, It can also be used in the financial field, bringing a large number of non-standard assets into the DeFi system.
Jokia: How do you think the Metaverse will shake up the games industry?
Dazhi: In my opinion, the Metaverse is a combination of the new human-computer interaction and decentralized Internet. New human-computer interaction technologies include VR, AR, MR, brain-computer interface, etc. Supported by these new human-computer interaction technologies, the granularity of the virtual world is more refined, and the integration of the virtual world and physical world is higher; The decentralized Internet not only means to break the data monopoly of existing Internet giants but also means more opportunities to participate in Internet construction, that is, to start businesses and share technological dividends. In this context, the impact of the Metaverse on office, production, and life is far greater than that of games. If we have to discuss the impact of the Metaverse on games, we can generally say that better immersion, more relevant game content to real life, and updated game development models.
ABOUT THE SPEAKER:
Dr. Dazhi Guo is the Economics Ph.D, graduated from Central University of Finance and Economics. He serves as the Chief Researcher of the Research Center of Digital Economy in Draper Dragon Capital and the Former Chief Researcher fellow in Huobi Academy of Blockchain Application. Dr.Guo is the Author of "Blockchain: reshaping the economy and the world" (CITIC Publishing House) , "the application of blockchain in the insurance industry” included in the "Chinese Fintech Development Report 2017" (Social Scientific Publishing House) and "Internet Revolution—Web3.0"(CITIC Publishing House). with rich experience in technology trend, blockchain application and investment areas, he also participates in the establishment and optimization of SMARTChain blockchain assets assessment model.
ABOUT THE HOST:
Ms. Jokia Yin is the Founder of Innoverview and InnoKOL, the Vice Chairman of HK International Blockchain Finance Association as well as the Head of Media at United States of America-China Chamber of Commerce. Jokia has over 10 years of marketing and management experience, much of which has been in the Asia Pacific Region within events and PR industry. She has held key leadership roles executing market research and entry, developing sales channels and revenue generation, building marketing, finance and Operations related infrastructure for a more than 20 events related to retail, tourism, energy storage, blockchain, cosmetics domains.
Chinese
Japanese
Korean
