Author: Beichen

There are more and more discussions about PayTech, Solana, Binance, Coinbase As crypto industry giants focus on Web3 payments, traditional finance companies such as Visa, Sequoia Capital, and Temasek are also frequently investing in crypto payments, giving people a sense of familiarity as what happened to DePIN in early 2023 - they are all influential in the new and old worlds. Big capital is deployed, and the narratives are focused on attracting real-world resources. In the third world such as Southeast Asia and South America, USDT has even become a better choice than the domestic legal currency.

A variety of information from different levels and channels all point in the same direction, that is, Web3 payment (PayFi/encrypted payment) is on the rise. After all, if the global payment market is compared to a dream wedding cake, then as long as one crumb falls off the cake, it will become a billionaire giant, and this gold rush has just begun.

However, because the concept of Web3 payment includes too many irrelevant things, we must first clearly define whether it evolved from the traditional financial system to USDT FinTech (financial technology), such as stablecoins as its core, is still a payment system based on distributed ledger technology (DLT) that evolved from Bitcoin.

Web3 payment implemented with financial technology only adds USDT and other stable coins to the originally provided legal currency, and still uses the traditional layer-by-layer nested clearing system. Settlement system. The only value of this type of product lies in its stablecoins such as USDT as shadow US dollars. Otherwise, it is no different from supporting Q coins and Happy Bean.

Web3 payment based on distributed ledger technology is now very convenient for transfers, but high-frequency payments have not yet been realized. This type of Web3 payment is actually an economic idea that has been brewing for hundreds of years and has been verified in the encryption test field over the past ten years. If you go in this direction, you will find that a magnificent journey is starting at dawn. !

1. Web3 payment under the traditional financial technology system

Most Web3 payment products are so-called Web3 actually refers to stablecoins such as USDT. The product level is still no different from other Web2 payments. They are all developed an application based on the API of a certain link in the traditional payment system, but they support USDT and the like.currency type. And because it is additionally grafted with alternative currencies, the channel cost is actually higher than legal currency.

Let's first jump out of the complicated jargon in the technology and financial fields to clarify the true face of the traditional financial technology payment system. What is the quality of Web3 payment? It's much clearer.

1.1. The evolution of traditional payment systems and PayTech

First, let’s start with the problems in daily life Take the payment scenario as an example to analyze the traditional payment processing process. When we check out at a convenience store, we just scan the code with our mobile phone and confirm the payment. However, behind this action of less than one second, there are six or seven participants who have gone through more than a dozen procedures to complete it.

First, the customer will choose a payment method (such as a credit card, debit card or digital wallet such as Alipay). After confirmation, the payment gateway will encrypt the transaction information and pass it to the payment processor/processor. After checking Once there are no abnormalities, the card will be released and transferred to the card organization (such as Visa, MasterCard). The organization then transfers it to the issuing bank where the bank card is located. After verifying whether the amount is sufficient, the funds are deducted from the customer's account (but note that the funds are not transferred directly, but are held in custody first), and then the information is returned along the original route, in sequence. It is sent to the merchant via the card organization, payment processor/processor, and payment gateway, and the merchant displays the payment as successful. However, it will take at least one working day for the account to actually arrive, and the settlement process is also very complicated, so I won’t go into details here.

Such a complex process in the modern financial system was gradually established in the era of postal carriages. Fintech companies have not changed this system, but have cut in from a certain link in the process and are responsible for accelerating the processing of information. This is the entire value of FinTech. After all, with the accumulation of countless transactions, every link means a huge amount of wealth.

Although banks have been electronic since the 1970s, FinTech The idea has always been to move the business online to speed up processing. The internal structure and processes of the bank have not changed. At most, the construction of the middle office has been promoted for the sake of intensification in order to compete with third-party payment companies.

As a cross-bank clearing network, the card organization’s core business is to solve the issuance, settlement and reconciliation of cross-bank transactions. It also started electronically in the 1970s. , but the business logic is no different from the era of paper bills, FinTech just speeds up the processingspeed.

However, card organizations represented by Visa launched payment terminals-POS machines on this basis, which not only quickly occupied the mainstream payment in the retail industry The market, and hence the payments ecosystem, revolved around payment terminals. For example, a group of hardware manufacturers represented by VeriFone have been established, and the role of payment service providers (PSPs) has been differentiated, and the tasks of payment service providers have been abstracted away from payment processors/processors. servers and payment gateways.

If card organizations allow merchants to receive transfers from more banks by forming a bank network, then PSP (payment service provider) goes a step further Allowing merchants to accept transfers from more card organizations and other payment channels (such as later Paypal). As for the payment handler/processor and payment gateway, they are responsible for transmitting the information and checking the information at different stages.

FinTech in the above links is all about speeding up the efficiency of information processing. The entire process is still complicated and lengthy, and of course the cost is also high. For example, the humble payment processor alone is expected to have a market size of over US$190 billion by 2030.

The truly revolutionary FinTech was Paypal in 1998. Users registered accounts/digital wallets with their email addresses, and after recharging, they could bypass traditional finance. System, transfer money losslessly within the platform, and fees will only be incurred when you have to deal with the bank when withdrawing cash. Although Paypal's processing method is no different from that of the gaming company's Happy Bean, this simple and crude method tore a hole in the traditional financial system, forcing traditional finance to stagger into the era of Internet payment. , and the price is that financial technology companies represented by Paypal continue to face prosecution and suppression.

Although the payment field after Paypal is booming in business, for example, the rising star Alipay has gradually built a financial service platform that can completely replace banks, and even established A credit system that transcends the banking system, but the progress in FinTech is only micro-innovations such as QR codes, and there is no revolution in the mechanism.

1.2. Web3 payment based on financial technology

Now whether it is a cryptocurrency giant or a traditional The Web3 payment projects launched by payment companies are all based on traditional payment systems, but they can still be more specific.Let’s introduce the differences.

1.2.1. Traditional payment companies: treat USDT as happy beans

Traditional payment The company is actively entering Web3. Although it also considers acquiring new users, it is still largely an offensive defense and is afraid of missing out on the cryptocurrency trend. Just like candidates competing in the U.S. election to express support for cryptocurrency, they only spent minimal energy to gain resources from non-core strategic territories.

In fact, traditional payment companies have not changed the traditional financial system in the past, and they will not change when they enter Web3. They just use their existing market share advantages to provide Cryptocurrency has just been added as an asset class to many of its services, and the technical difficulty is equivalent to adding Happy Beans.

From banks (such as ZA Bank) to card organizations (such as Visa) to payment service providers (such as PayPal), they claim to embrace crypto, and they do There are pretty in-depth studies out there, but it doesn’t matter what they say, it’s what they actually do. All businesses can be summed up as allowing consumers to use bank cards to purchase cryptocurrencies and make transfers and payments. This is to serve as an "exchange channel between legal currency and cryptocurrencies" to earn exchange fees. This is completely OTC. market. As for technologies such as "allowing end consumers to have a seamless experience", it is nothing new, because Happy Bean is the same.

The traditional payment company that can really go a step further in Web3 payments is PayPal. They issued the US dollar stable currency PYUSD (PayPal USD) on Ethereum and Solana. ). PayPal claims to be "leveraging distributed ledger technology (DLT), programmability, smart contracts and tokenization to enable instant settlement and is compatible with the most widely used exchanges, wallets and dApps...", because not only can this Earning the exchange fee between legal currency and PYUSD can also extend the precipitation time of funds, which is the same as Binance’s original intention of launching BUSD.

PayPal's longer-term goal is to replace bank cards as the main payment channel. Of course, at present, it neither has the basic base of an e-commerce platform, nor does it occupy the market of offline merchants. Moreover, major platforms are also launching their own payment tools (such as Apple Pay), so they are trying to return to their peak through PYUSD. The chances seem slim.

Compared to the lack of payment scenariosPayPal and Square, the payment platform established in 2009, have established a large offline merchant payment network and promoted their own payment tool CashApp through rate discounts and other methods. They seem to have a tendency to replace bank cards as the main payment channel. It is worth mentioning that Jack Dorsey, the founder of Square, is also the co-founder and former CTO of Twitter.

Square officially entered Web3 by developing Bitcoin mining machines, but its former employees came out to found Bridge, a Web3 payment company, in 2023 and received a lot of attention. Institutions such as Shan Capital, Ribbit, and Index invested US$58 million, and in October it was sold to payment processor Stripe for US$1.1 billion. What Bridge does is actually let customers deposit US dollars and euros, create stablecoins, and then use the stablecoins to transfer funds. If you think of stablecoins as happy beans, you will suddenly become enlightened. Of course, I am not criticizing Bridge. In fact, Bridge has quietly realized the grand narrative promised by Ripple back then.

Similar products include Huiwang, which is said to be from a Chengdu team, but the main reason why it can make successful products in Southeast Asia is because of the people there. The space is relatively large, and the payment collection tools produced by Heihui are undoubtedly very needed.

The product that is more fundamental than payment tools is the currency itself. Now, in addition to USDT and USDC, there are also many stable coins emerging in specific scenarios, such as in Belle OUSG and USDY launched by Ondo Finance with the support of Germany are used to invest in short-term US Treasury bonds and bank demand deposits.

In short, the Web3 payment of traditional payment companies is equivalent to the technical difficulty of Happy Bean. The threshold lies in whether it can find its own payment scenario.

1.2.2. Cryptocurrency giants: keen to issue co-branded bank cards

If we talk about traditional Finance earns OTC handling fees by supporting Happy Bean, while cryptocurrency giants earn OTC handling fees by supporting bank cards. In short, they are working in both directions to open up the connection between bank cards and Happy Bean. channel.

The reason why exchanges such as Coinbase and Binance choose to cooperate with established payment giants such as Visa and Mastercard to issue co-branded crypto bank cards is to take advantage of traditional finance. Infrastructure to attract more crypto assets, there is another hidden reason, which is to build a brand. After all, as long as you issue a card, you can claim to support "exchanging and spending cryptocurrency at more than 60 million online and offline merchants around the world." In fact, you only need to cooperate with a member bank in the Visa international organization, or even outsource it directly. Just give it to a third-party card issuer.

There are countless such cases. It is somewhat like the year around 2015 when mobile payment first flourished. Many mobile payment startups emerged, and the technology and even licenses were It is a shell, but it does not prevent the capital market from favoring this new trend.

The operating costs of the cryptocurrency giant's co-branded cards are actually quite high. For example, the OneKey Card launched by the hardware wallet OneKey was offline after more than a year of operation. According to the announcement, "There are many challenges here. It is very difficult to balance these factors while simultaneously achieving low-cost operation of a small team, low handling fees, stable operation of card segments, anti-black and gray production, and compliance..."

Later, PayFi emerged, a new financial concept on the chain built around sending/receiving settlement, trying to redefine payment, claiming to "get rid of traditional banks. The system enables users to send cryptocurrencies globally at low fees, with the option to easily withdraw crypto assets to personal custody." But judging from the current solutions, they all use the framework of the traditional payment system to seize the market of OTC merchants, and their compliance is destined to be no different from the traditional banking system and Happy Bean in the end.

The Web3 payment solution that can truly bring about a mechanism revolution in PayTech must be a solution based on distributed ledger technology.

2. Blockchain payment: Blockchain payment inside and outside supervision are two species

Whether it is a central bank CBDC, a private institution or a public chain, Distributed Ledger Technology (DLT) cannot be avoided when discussing Web3 payments. Even if many of them treat USDT as Happy Bean, at least the Happy Bean here is based on Issued by DLT.

DLT is essentially a database maintained by multiple nodes, with each node sharing and synchronizing the same copy. Blockchain is a kind of DLT, but DLT is not necessarily a blockchain. With the impact of blockchain and cryptocurrency caused by the birth of Bitcoin, DLT is increasingly being used as a new infrastructure to replace traditional centralized entities to transfer funds. Of course, most of them are alternatives and are still in the experimental stage.

The biggest advantage of DLT is that it is a peer-to-peer (P2P) network, so both parties to the transaction no longer need complex intermediaries and can verify financial transactions directly through the public ledger. This enables clearing and settlement, and DLT operates 24/7. Another advantage of making payments based on DLT is that currency is programmable - not only can different currency rules be defined through smart contracts, but more complex functions can also be implemented when interacting with other smart contracts.

The above are the common advantages of payment based on DLT, but the problem is that the difference between DLT and DLT is so big that there is even reproductive isolation, such as public chain and alliance chain . And even if they are all public chains, only the type of consensus algorithm (such as PoW and PoS), the confirmation speed and cost structure may vary greatly, not to mention the payment applications built based on different types of DLT.

The industry seems to ignore these differences and only cares about whether TPS is fast or slow and compliant. However, the market is different from academia that relies on peer review (maybe it becomes authoritative after publishing too many papers). The development of DLT must ultimately be verified by the market.

2.1. The alliance chain and CBDC are products of adultery

The alliance chain is largely It is a product of cooperation with a centralized system - based on DLT technology and strictly controls access rights. This seemingly decentralized centralized solution can meet regulatory compliance, but in essence it is still a closed system. This is destined to only play a role in reducing costs and increasing efficiency in a certain link within the traditional financial system, and will not change the system itself.

In the most mainstream narrative, central bank digital currency (CBDC) seems to be the end of Web3 payments. Although CBDC itself is a false proposition, not only from a technical perspective, but also from a monetary perspective. Some CBDC solutions are not as good as alliance chains, because they are basically a centralized database. They can only be said to have borrowed some technical features of DLT, such as multi-node and consensus mechanisms. But what is even more ridiculous is that some technologies with centralized databases have pieced together a relational database with a version number, without blocks or chains, but they are touting it as a blockchain innovation, such as Sui.

So payment applications and CBDC based on the alliance chain are only partial tool iterations for the clearing and settlement system within the organization, rather than involving the entire financial system. Paradigm revolution. Moreover, these tools can be directly used iteratively in theoryA centralized database will work better.

This phenomenon of using new technologies to repeat old businesses is just a special product of the transitional stage. Hong Kong has already accumulated many cases in building financial products based on DLT, but so far it has not brought about a qualitative leap in business. So let’s focus on those Web3 payments that are actually built on the public chain.

2.2. The public chain is imitating the alliance chain

Real Web3 payment should be built on the public chain On-chain, this is also the original vision of Bitcoin and blockchain. This idea has been continuously expanded over the years. In July this year, Lily Liu, chairman of the Solana Foundation, officially proposed the PayFi concept.

She defined PayFi as "a new financial primitive built around the time value of money", which is a financial innovation above the settlement layer. DeFi solves transaction problems, while PayFi involves a wider range of economic activities - sending and receiving, such as supply chain finance, salary loans, credit cards, corporate credit, inter-bank repurchase and other scenarios, so the market is also larger.

Lily Liu believes that the success of PayFi must meet three conditions: fast and low-cost, widely used currency, and developers. The final conclusion is that only Solana can be perfect. satisfy. There is nothing to criticize in the previous discussion, but this conclusion will definitely attract opposition from many competitors, such as Ripple.

Ripple officially launched PayFi in 2012 (the term did not exist at that time), positioning it as a block that allows XRP to be used for transfers between global financial institutions. Chain, which had high hopes of breaking SWIFT's monopoly, was also selected as one of Forbes' 50 most innovative financial technology companies in 2019.

Ripple's Layer1 is XRP Ledger, which is a blockchain based on federated learning. Strictly speaking, it is a consortium chain, although it claims to be a public chain (only It can be said that it is open source). The initial business was to copy Bitcoin, only faster - allowing everyone to directly use its native asset XRP to transfer money.

The Ripple team holds a large amount of XRP and continues to sell it for profit. It has also repeatedly released buyback news and cooperated with market makers to increase transaction volume. Pull orders in the secondary market. They intentionally blurred XRP and R when selling XRPThe relationship between ipple's equity interests has been targeted by the SEC and has been mired in disputes for four years. It should be settled in the near future, but this does not hinder the basic fact that XRP is of no use. Ripple later realized that no one would use XRP, an air currency with price fluctuations, to pay (even Bitcoin is not suitable for retail payments due to its volatility), so it tried to launch a stable currency RLUSD, build a CBDC, and provide asset tokens for everyone. Asset Tokenization and hosting services.

If you just judge based on Ripple's promotional materials, you will feel that Ripple has covered more than 80 payment markets around the world by virtue of its ability to complete payments within seconds. , processing more than $50 billion in transaction volume. But in fact, Ripple's xCurrent for banks only records cross-bank transfer information on Ripple's blockchain. The core automatic reconciliation engine technology is actually no different from traditional clearing institutions. Ripple acquired Metaco, a digital asset custody technology provider, in 2023. The value of this business is mainly reflected in licenses and channels. As for using XRP, an air currency with fluctuating prices, for consumer payments, it is even more false.

In a word, Ripple has played the role of a top marketer in the PayFi market. Just like the encryption company mentioned just now, as long as it cooperates with a member bank of the Visa International Organization, it can claim that its products can "exchange and consume cryptocurrency at more than 60 million online and offline merchants around the world."

In short, when almost all public chains talk about PayFi, they emphasize how fast it is, how cheap it is, and how compliant it is, but based on public The PayFi products (such as Huma Finance) made by the chain still use the blockchain as an accounting tool within the traditional payment system. Except that there is no KYC, what is the difference between it and the consortium chain?

2.3. Bitcoin Lightning Network and Limitations

So it still depends on how it is built in the public On-chain encryption is a native solution, but it is often limited by the block size and confirmation time of the public chain, so it can only be used as a remittance transfer and cannot support high-frequency small payments in daily life. Bitcoin Lightning Network is a good solution.

To put it simply, a payment channel (channel) is established under the chain. This channel is equivalent to a multi-signature wallet jointly created by account A and account B. They Everyone deserves the moneyRecharge the wallet, and then you can transfer it an unlimited number of times (each transfer essentially updates the wallet balance distribution status to form a new UTXO, which is the unspent transaction output), until the last transfer is when the channel is closed. It will be verified by the Bitcoin network. Therefore, the Lightning Network can achieve high-frequency payments without changing the underlying mechanism of Bitcoin.

You may have a question here, that is, the balance changes in the payment channel are not uploaded to the chain, so how to ensure security? The security of the traditional financial system depends on the credit guarantee of the institution, but the Lightning Network ensures the security of the payment channel through cryptography technologies such as LN-Penalty and HTLC (Hash Time Lock Contract), which will not be described in detail.

It should be noted that the security channel just discussed is one-to-one, but in actual transfers, it is impossible to build a separate multi-signature with everyone wallet, so a one-to-many solution emerged, which is multi-hop routing technology. Generally speaking, there is a payment channel between A and B, and there is a payment channel between B and C. Then A directly transfers money to B, and B transfers money to C. Account B acts as a relay node, and A and B There is no need to build a separate payment channel. According to the six degrees of separation theory, you can get to know anyone in the world through six people.

This one-to-many solution requires relay users to be online regularly and have sufficient funds, otherwise the transaction may fail. The Lightning Network uses multi-path routing and node redundancy. technologies are sufficient to overcome these challenges. But in actual use, this design is too idealistic-assuming that users are willing to lock a large amount of funds in advance, assuming that users are willing to tolerate various technical limitations, these are contrary to the capital efficiency problem that PayFi was originally intended to solve.

The Lightning Network solution was later expanded from Bitcoin to other public chains. For example, Fiber Network built on Nervos CKB has Turing-complete smart contract capabilities and is more flexible in asset management, but it still does not escape the dilemma caused by payment channel design.

This raises a very profound question: Finance is a complex system, and it may be difficult to reshape the entire payment system only with innovations at the technical level. So what kind of design can bring about a systematic paradigm revolution?

3. The end of money is no money

Finance has always been a complex It exists as a system and is only technical.It is difficult to bring about substantial changes through words, so we need to re-examine this system.

Finance is a system of tools developed to serve real-life transactions, in which currency plays the role of a unit of value accounting, resulting in extremely complex transactions. system, clearing system and credit system, etc. Precisely because we cannot circumvent currency, to be precise, we cannot circumvent fiat currency, and more precisely, we cannot circumvent the US dollar, so the current Web3 payment track and even the entire crypto market, the highest pursuit is to be included in the shadow represented by USDT dollar economic system.

"The great luck of a man is that whether he is an adult or a child, he must embark on an extremely difficult road, but this is the most reliable road. The misfortune of a woman is that she is surrounded by almost irresistible temptations; she is not required to work hard, but is only encouraged to slide down to reach bliss. When she realizes that she has been fooled by a mirage, it is already too late, and her strength is failing. has been exhausted in the adventure."

This passage comes from "The Second Sex" written by Beauvoir in 1949. I think the "woman" in it can be replaced by "crypto", at least the Web3 payment track is developing Running wildly and selflessly on this road of falling to bliss. What I want to point out is that it is entirely possible to go down another extremely difficult path. This path is derived from hundreds of years of economic thinking and has been initially developed in the encryption test field over the past ten years. verify!

3.1. The evolution logic of currency

If we sort out the history of currency development from shells to digital currency, we will get an interesting The conclusion - money as an intermediary may disappear.

Before currency was born is bartering, but This method is too inefficient. Not only does it need to accurately match the needs of both parties to the transaction, but it is also difficult to give a fair exchange ratio during exchange. In addition, the goods are also rec> is difficult to divide evenly.

So it is natural to adopt some commonly needed and easy-to-store commodities as general equivalents and enter commodity currency. stage. For example, animal skins, livestock (the word "money" in many languages ​​has an etymological relationship with livestock), grains, cloth, salt, and decorations such as shells.

Later, as the scale of trade expanded, the requirements for portability, durability, divisibility and other characteristics became higher and higher, and currencies began to be concentrated in metals. Entered the metal currency stage.

However, with the development of the scale of trade, even precious metal currencies are inconvenient for merchants to store and carry in large quantities. They choose to store precious metals in vaults with guards. goldsmiths, and then trade directly on the market with storage notes similar to warehouse receipts. This kind of note was gradually recognized by law as a quasi-currency.

Since generally no one frequently accesses their stored precious metals, goldsmiths often overissue bills. At this time, the value of the bills is based on the gold. Based on the credit of the craftsman. Later, more professional banks evolved from goldsmiths (most bankers in London in the 18th century were still members of the Goldsmiths Guild). From then on, based on institutional credit, they directly entered the paper currency stage. Of course, a relatively standardized system was also established. Currency issuance and redemption rules.

As the earliest banknote, Jiaozi was issued under a similar background during the Southern Song Dynasty, and its subsequent development path was also similar. It was first issued by private commercial institutions. And compete freely, and then be monopolized, backed by credit, concentrating the issuance power in the central bank, and forcing the circulation of printed legal tender (this is extremely bad!).

After entering the credit currency stage, currency issuance rights have become part of sovereignty, and the currency itself has not undergone any major changes (at most, the Bretton Woods system After the disintegration, liberation from the shackles of the gold standard, and further release), the next development is about technology.

As the scale of trade expands, paper money (essentially bills) can no longer meet demand. But if both parties open accounts at the same bank, then they don't actually need to use banknotes. The transaction can be completed through pure accounting records such as bank transfers. It only requires the bank to perform complex liquidation behind the scenes. This kind of clearing can naturally also serve transfers between different banks, so a banking network and a bank credit system have gradually formed, including The credit cards and electronic payments we are familiar with are also within this system. This is why today's financial system is so bloated. It is the cumulative result of historical evolution and has very strong path dependence.

Looking back at this, we can find that currency is generated from service trade to efficiently match supply and demand, from commodity currency to credit currency, even credit Currency is no exception.

However, credit currency relies on the regulation of the central bank, and regardless of whether the central bank's regulation is correct or not, the starting point of each central bank's interests is inconsistent, so these will eventually disrupt the original The price structure leads resources to be invested in the wrong direction, and mistakes continue to accumulate until they are finally liquidated. Therefore, Hayek advocated currency demonetization, which required a free currency movement like the free trade movement in the 19th century, and then the formation of a new banking system.

Since currency has evolved from a physical medium of exchange to an abstract unit of account with the evolution of exchange mechanisms (especially clearing systems), can it be changed? Further direct exchange of goods and services? After all, money was created simply to overcome the limitations of barter. This is by no means a throwback to primitive society. The reason why barter was replaced by currency was because the market at that time was too small and lacked enough coincidence to match demand.

But with the expansion of market size and the evolution of exchange mechanisms, these can be overcome. In fact, in Argentina in the 1990s, some communities had tried to use internal credit certificates as alternative currencies to help disadvantaged groups participate in economic activities through barter, and achieved initial success (the peak number was 6 million people). , but later due to the proliferation of issuers, it was as unfinished as the junk bonds issued by local governments today. However, the crypto world directly and technically eliminated the possibility of such unfinished business.

However, I would like to add one point here. The author does not extremely believe that currency should be completely eliminated. He just believes that currency will no longer be needed as an intermediary for transactions in the future, but it will still be needed. A common reference standard of value. After all, the ratios between a large number of commodities are almost endless. The ideal unit of measurement should not be fiat currency with unlimited inflation, but it should not be assets such as gold and Bitcoin with limited supply, because this means that the cost of latecomers must be higher than that of early holders, that is, This will inevitably lead to holders tending to hoard, ultimately causing unnecessary deflation.

3.2. The experiment of cryptopunks represented by Bitcoin rec>

This technology that touches deeper financial systems is the blockchain started by Bitcoin. As a trustless peer-to-peer value exchange system, it can directly skip the multi-level clearing system in traditional finance (what they have done is nothing more than calculating the amount)

And in the blockchain world, each token (token) means some kind of value, ownership and even access rights, which means that they are naturally a kind of goods or services native to the chain. The time can be exchanged through DEX (decentralized exchange), skipping the currency intermediary and directly calculating the exchange ratio, so not only is there no need for physical currency, but there is no need for currency at all.

This scheme seems to be a fantasy that Satoshi Nakamoto jumped out of the cracks in the stone, but in fact, as early as 1875, the British economist and logician William Stanley Jevons wrote "Money and Its Exchanges" He deduced the development path of currency in "Money and the Mechanism of Exchange" and believed that it would enter the stage of barter in the future. At that time, he prophetically predicted that the US dollar was unswervingly becoming an international currency. p>

And the cryptography practice in the past few decades has also verified this conjecture.If we trace back to the starting point, it is actually much earlier than mid-2008 rec>The Bitcoin white paper published by Ben Satoshi, even in 1982 before the Internet was open, passwords J.David Chaum proposed the idea of ​​ anonymous electronic currency, which is roughly a system of preservation through public records of member consistency. It can be said to be the prototype of the blockchain, and it was implemented the following year, which was Ecash. The digital currency CyberBucks mentioned here is actually the electronic representation of legal currency

Ecash has cooperated with some banks.Most web3 payments of the day are similar. Bill Gates also had contact with the Ecash team at that time rec>Want to integrate it into Windows 95 system to realize global payment, but it ended without any problem. Let’s talk about this ideaFollow More than thirty years later, Zuckerberg wanted to issue a basket of currencies called Libra and integrate it into FaceBook, but the latter was more radical and issued currencies directly.

The real money creation was in 19 rec>In 1998, it was created by college student Wei B-mo< proposed by Dai /rec>n ey, that is a passionate declaration, It begins with a clear statement, "I have nothing to do with Tim May's encryption. isms are of great interest Unlike the communities traditionally associated with the term "anism," in crypto-anism, it's not about being temporarily destroyed. , but is permanently banned and permanently unwanted. It is a community in which the threat of violence is impossible because its participants cannot be linked to their real names or physical locations.”

Ten years The basic idea of ​​Bitcoin that came out later was born out of this article< /rec> rec> (especially linking currency to computational costs) < rec>, It can be said that < rec>Crypto has been there since birthdeep rec>< /rec>Carved additionThe color of cryptopunkism, destiny is Using cryptography as a rebel in pursuit of free will and decentralization, and eventually expanded from cyberspace to The real world, to reshape finance, communications and governance, sadlyToday's Web3 has started a pilgrimage in the opposite direction .

at B - In the same year that money was proposed, cryptographers Nick Szabo also independently proposed Bit Gold's idea (But no one has ever written the code for him), it can be said that Bitcoin has direct inheritance at the technical level, such as PoW mechanism, Timestamps and chain structures, etc. In addition, said that he had already studied smart contracts earlier in 1996.

After many conjectures and experiments with ideas and technologies, Satoshi Nakamoto finally published "Bitcoin: A Peer-to-Peer Electronic Currency System" in 2008. Based on the work of his predecessors, he combined the consensus algorithm with public key cryptography, truly realizing a decentralized currency and ushering in the era of blockchain.

However, he stubbornly believes that Bitcoin does not need a scripting system, which gives opportunities to latecomers. For example, in 2012 Yoni Assia proposed Colored Coins< rec>(Colored Coins) rec> ’s conception, This is a protocol layer built on Bitcoin to issue assets between FT and NFT. Each attribute is a color. Finally, many parameters form a colored coin, so it can map multi-dimensional coins in the real world. Assets such as stocks, taxis, shopping vouchers, subscriptions and even original paintings.

Colored Coins allow Bitcoin to represent various digital assets. However, due to the functional limitations of Bitcoin, it can only be issued and traded, and it still cannot support Turing completeness. script. So Vitalik Bute, a core member of the teamRin started from scratch and released the Ethereum white paper "Next Generation Smart Contracts and Decentralized Application Platform". Since then, the blockchain with built-in Turing complete programming language has been officially launched, allowing anyone to write smart contracts and decentralized applications.

So far, From the theoretical preparation of economics to the technical foundation of cryptography, we should welcome the real The paradigm revolution.

Conclusion

A true paradigm revolution, absolutely not as a convert of the old order Let's go on a pilgrimage to find our way back, but as a rebel to explore new worlds outside of experience. .

In the garden of forked paths in Web3 Payment, the tricks of Happy Beans are being performed lively on the path of converts, attracting countless audiences. The path of the rebels is full of thorns, and they are destined to "embark on an extremely difficult road, but it is the most reliable road."

From Jevons to Hayek, liberal economists have foreseen that money will eventually return to a more essential form of exchange. From cyberpunk to crypto-alessism, creators and cryptographers have given us a glimpse of this possibility in the crypto world’s proving grounds.

We have discovered a reliable new paradigm. In the next article, we will show how based on A deep understanding of the characteristics of blockchain builds completely different technology fragments Payment paradigm, and in the future, with trends such as embedded finance and open banking, try Become a new financialworld.

On this difficult but reliable road, we look forward to more like-minded partners joining us , work together to contribute in technology stack and business scenarios, and pioneer our own paradigm revolution. Welcome to follow and discuss~