[Talks from Big Names] Web 3.0 and the Digital Economy
![[Talks from Big Names] Web 3.0 and the Digital Economy](https://images.bitpush.news/2022/08/special_cn-20220803-165953889835568381.jpeg:4JWTUBSWVZABDHJ22GSZOSK4EU.jpeg)
Recently, Han Feng, author of “Blockchain Wealth of Nations”, a visiting scholar at Columbia University, and a visiting researcher at Tsinghua University, visited Alibaba Research Institute to discuss topics such as blockchain, the digital economy, and the value of data information with Gao Hongbing, vice president of Alibaba Group and director of Alibaba Research Institute. During the conversation, two industry leaders pointed out that in the face of next-generation Internet changes characterized by Web 3.0, digital information authorization can drive the iterative development of the digital economy. This trend has already attracted great attention from both China and the US.
01 “What is a digital account? What does it have to do with the digital economy?”
Han Feng: Author of “Blockchain Wealth of Nations”, visiting scholar at Columbia University, visiting researcher at Tsinghua University
In 2016, Director Gao Hongbing once said something that left a deep impression on me: “A bank credit building marked by reinforced concrete is being replaced by a blockchain credit that uses data as the soil.”
Zhou Ziheng's book “Accounts — A New Economy and a New Financial Path” mentions that before the Internet, the economy revolved around corporate accounts, banks served enterprises, and there were not many personal businesses; today, the online economy revolves around personal accounts, and credit generation also revolves around personal accounts. According to the data, the transaction volume of online accounts in 2021 exceeded 100 trillion dollars. As a result, the economy and society underwent fundamental changes, moving from the small data world to the big data world.
As Dean Gao said in his words,From the traditional economy to the online economy, the core is the shift in credit generation models. From atomized buildings and large enterprises to bit-enabled data and individuals, computational credit continues to emerge, highlighting the importance of data and digital accounts.
Gao Hongbing: Vice President of Alibaba Group and Director of Alibaba Research Institute
In 2000, Microsoft proposed an internal online identity card program (Passport), which refers to a digital account. As a digital account, Passport is a portal for users to join the digital world. This is a huge business plan. Users can register to log in to this lifetime account through any Microsoft software to access all Microsoft application scenarios. Zhou Ziheng's “account” idea on internet finance echoes Microsoft's technology and commercial digital accounts to some extent. Dr. Zhou tried to use Internet accounts in the digital economy to describe the future of the internetization of traditional bank accounts. He discovered that consumer internet finance driven by mobile payments is on the rise, and its core is precisely this Internet-based financial consumer digital account.
Going back to the phrase “a bank credit building marked by reinforced concrete is being replaced by a blockchain credit facility that uses data as the soil”, why should big banks choose the most expensive and best location for their offices is because banks want to let depositors see the strength of the bank and increase credit. Entering the digital economy era, the line between original TOB public accounts and TOC private accounts in banks is gradually blurring. Personal accounts have also begun to accumulate and credit wealth, and the concept of a personal balance sheet has emerged. An individual's balance sheet is digitally recorded and has the potential to anchor a person's long-term credit. This digital balance sheet did not exist in the past. In the IT era, it was also difficult to do because manual entry was too expensive; now, with the popularity of websites and apps, people use personal digital accounts to log in to networks and applications, and server systems will automatically record and deposit these digital footprints. Through some scoring models, this personal balance sheet will be formed.
Today, digital accounts are the starting point of the metaverse. It's also an entry point for people to join the metaverse. Arguably, without this digital account, there would be no metaverse.
Han Feng: Author of “Blockchain Wealth of Nations”, visiting scholar at Columbia University, visiting researcher at Tsinghua University
The credit brought about by blockchain technology is of great significance to the digital economy.
As can be seen from Satoshi Nakamoto's paper published in 2013, the core of blockchain technology is the issue of asset authorization in the digital age. Why does content exist in digital form belong to you? Before blockchain, this couldn't be done. The internet is full of information, but until now it has always been a “borderless world.” With the advent of blockchain, asymmetric encryption and private key signatures were used to solve the problem of information ownership. Bitcoin is an example. The reason why some people question Bitcoin is precisely because they can't understand why the string representing Bitcoin is so valuable. Bitcoins must be signed with a private key to be exchanged and show ownership. Bitcoin fits the most basic definition of an asset precisely because it has solved the issue of affirmation of rights.
With the development of the digital economy, digital information is authorized and becomes an asset. This should be one of the directions for future technological evolution.In this process, blockchain solves bookkeeping authorization, that is, issuing certificates for “who are you, who do you belong to” questions, and recording transactions across the network to avoid confusion.
From the perspective of an operating system, digital information requires point-to-point communication; it cannot go through a third party or operator; it also requires decentralized storage, that is, the information cannot be stored on a centralized server.Additionally, a “trusted computing capsule” is required, which means that the data processing procedure itself requires affirmative protection. In the future, it is the trusted computing capsule that can actually protect digital information, which is exactly the hardest.
From a practical perspective, in 2019, Facebook also proposed discussions on the ownership of digital information. Nick Grossman, one of the main participants in the Facebook virtual currency Libra, once proposed that Libra is needed as a transaction currency because future data can be traded as personal assets. On December 8 of last year, the US Congress organized a hearing on Web 3.0. Cryptocurrency veteran Brian Brooks attended and testified. He expressed his opinion at the hearing that Web 3.0 is about enabling individuals to own their own data.
Blockchain is about asset prices, not the underlying logic of the internet and metaverse.
The underlying logic of digital transformation is still the TCP/IP protocol, which is the cornerstone of the digital world, and distributed computing and packet switching are the two core components of this protocol set. Thanks to the Internet Protocol (IP protocol), more hosts and terminals are connected, making computing extremely valuable. 5G has upgraded the effectiveness of this network protocol. Cloud computing, big data, IOT, blockchain, metaverse, etc. are content and applications running on the TCP/IP protocol.
As far as the realization of data and data value is concerned, it is necessary to understand the “DIK value law of data”, that is, the generation of data value must go from D (data) to I (information) to K (knowledge). D (data) is only a raw material; D (data) must go through informatization I (information) and knowledge K (knowledge) to generate value. In fact, it is through blockchain that data is converted into asset value through computation. Blockchain and computing are tools and means for data to complete informatization I (information) and knowledge transformation K (knowledge).
The D (data), I (information), and K (knowledge) process of realizing data value is like realizing the value of coffee. D (data) is equivalent to obtaining coffee raw materials through cultivation, and coffee is further roasted and processed into coffee beans and coffee powder, which completes the industrialization of coffee. Finally, when entering Starbucks coffee, coffee becomes a product in the service industry, which corresponds to the K (knowledge) of data.
The Internet Protocol's success was due to the fact that the inventors of TCP/IP did not claim intellectual property rights, which made it widely and rapidly popularized. Today, in the field of data development and use, data validation is expensive due to the existence of various stakeholders. Microsoft is trying to unify standards by using its own software and portal; Apple has built a set of privatized systems and accounts to solve this problem, but no matter who it is, it is still extremely difficult to achieve the value of data today.
03“How to realize the value of digital information and promote the iterative upgrading of the digital economy?”
Han Feng: Author of “Blockchain Wealth of Nations”, visiting scholar at Columbia University, visiting researcher at Tsinghua University
We're migrating from Web 2.0 to Web 3.0. As a decentralized world, the user experience of Web 3.0 may even be worse than Web 2.0, because the central server will solve the problem more smoothly, but in a decentralized world, where payment with a Bitcoin wallet requires six confirmations, the transaction processing capacity (TPS) per second (TPS) is more than one level worse than Web 2.0.
However, Web 3.0 helps to affirm information assets. History has proven time and again that affirmation of power helps large-scale transactions and wealth movements. The development of China's real estate industry is a good example. As property rights become clear, real estate can be traded legally and normally, and banks issue loans to individuals, driving housing prices to rise year by year. This shows that asset authorization can form large-scale transactions, which will generate huge wealth benefits. However, although real estate has a strong ability to make money, it stifles industrial innovation. In the US, real estate accounts for a relatively high share of the asset structure of only lower-level people; people with a higher level of education have a stronger ability to innovate. In particular, various financial innovations bring more wealth opportunities. Relatively speaking, the Chinese concept is still stuck at the stage where commodities are wealth. They think mass production means wealth, but that is no longer the case.
With the advent of blockchain and Web 3.0, if authorization based on digital information actually appears in the future, the digital economy will definitely bring about a new wave of wealth movements. But how to do it?
In May 2022, Ethereum founder Vitalik Buterin co-wrote an article with Microsoft Research researchers. The article suggests that the current cryptographic digital industry is monotonous, excessive speculation, and excessive finance, with almost nothing but hype and speculation. There is no hope in continuing this way, and in the event of an external shock, it will collapse. According to the article's analysis, the reason for this phenomenon is because there are no credit entities in Web 3.0. In real life, all economic contracts and the operation of economic entities will be implemented as “legal representatives”. Long-term, global collaboration is possible only with creditors and responsible entities. Currently, there is no concept of a credit subject on Web 3.0, and “blockchain credit on data soil” has yet to be formed.Therefore, the future of Web 3.0 must develop the concept of a “trusted soul”. This “trusted soul” is first and foremost an account or private key. Through transaction data related to this private key, a credit score is given through the clear and immutable characteristics of blockchain technology, and the initial content of this “soul” is given through on-chain credit.
If you want to establish blockchain credit in Web 3.0, you must first use the root of credit, that is, an account, and then combine on-chain credit ratings to create a credit NFT, which is the “trusted soul” mentioned in the article. Users establish credit subjects on this “soul”, become owners of digital information and credit, and achieve true decentralization.
This concept, if implemented, will indeed help solve many of the problems in the Web 2.0 world:
First, it broke down the “data silos” problem in Web 2.0. Currently, users' different account information cannot be accessed. Once all the information on these isolated islands is bound to a “soul,” users have a certain degree of autonomy over the information. Also, in Web 3.0, in order to attract users and traffic, new projects will “airdrop” tokens. If a “trusted soul” appears, the project can search for a truly valuable “soul” through credit evaluation, which will encourage users with high credit value to prosper in the metaverse.
Second, “Trustworthy Soul” is expected to open up Web 2.0 and Web 3.0, and promote the formation of a true global credit market. In the future, the platform should start from the perspective of protecting users' ownership of information, provide a convenient support interface, allow users to have a “trusted soul” in the metaverse, promote innovation in new services and business models, and create huge wealth opportunities.
When information is authorized to people, forming a decentralized “trusted soul,” and credit is transferred to accounts in the metaverse, new business models will emerge in the future. I think,The real economic climax of the future is brought about by Web 3.0 or metaverse, which can be called Digital Economy 2.0.In the digital economy 2.0, everyone has their own digital information, and the market economy energy derived from this is huge. Now, Web 3.0 is just around the corner. The US government has said that it is necessary to ensure that the Web 3.0 revolution takes place in the US. In this context, China also attaches great importance to this field.
Gao Hongbing: Vice President of Alibaba Group and Director of Alibaba Research Institute
China recently issued a policy document on building a data infrastructure system. The goal is to build a digital economy with data as a key element. One of the tasks in the document relates to the registration of data property rights. The point is, how do you do this work?
In China, domain registration now earns hundreds of millions of yuan a year. In 1996, I participated in the startup of the China Internet Network Information Center (CNNIC). Initially, the Chinese Academy of Sciences gave 10 projects to prepare a departmental unit from the network center to be responsible for the registration of “.cn domain names” on behalf of the State Council information. The start-up capital for that year was less than 400,000. At the time, the agency negotiated with an international organization in the name of the Private Internet Association and regained the right to register and operate “.cn” country domain names. At the time, the “.com” and “.net” domain names were completed through agents and agents.
This can be seen as the earliest digital asset, that is, registered based on an IP address, which is equivalent to a house number. This is the ISP stage (internet access) of the development of the Internet. Later, the Internet entered the ICP stage (Internet content). Portals digitized and internetized content from traditional media, retweeted it, and made money by attracting attention and posting advertisements. This is also known as the era of portal networks. At this stage, no digital assets were formed; instead, free-to-use content attracted traffic. The cost was huge, and many portals made it through a very difficult time. Later, in the era of large-scale Internet applications and e-commerce, so-called new finance or internet finance formed by a token system appeared. Tokens use digital means to lock in credit. The so-called digital assets or digital credit are just one field of the digital economy, not all; they are usage data in the field of assets or credit.
The crux of the problem is to re-understand data and data applications. This issue still needs to be discussed on the basis of digital accounts. If the government establishes an agency to register data assets, what will it register? What kind of registration do you use? These operational-level issues are important.
The point is that building a market for horizontal data circulation and trading must be based on deep vertical data development (DIK). Public policies must encourage the public sector and private sector to invest in resources and costs, and vigorously develop data value (DIK). The focus is on using computation, blockchain, algorithms, and various computational models to further informatize and knowledgeize (information, knowledge) data (information, knowledge), etc., to form data products on this basis, so that large-scale circulation transactions can be generated.
