In emerging industries, thought and timing are more important factors than capital and superiority.
Original title: “In the process of digital financial ecological construction, thinking and timing are more important than capital and dominant position”
Written by: Gu Yanxi, founder of the American Liyan Consulting Company, a researcher and practitioner in the blockchain and encrypted digital asset industry
In the competition of any industry, capital and the dominant position in the industry are the key factors that determine the outcome. However, in emerging industries, other factors besides capital and dominant position are more important. The two most critical of these factors are thought and timing. Funds and dominant position can only exert the greatest effect after the industry rules are determined. Before the industry competition rules are determined, thought and timing will determine whether the competition can succeed.
The success of Bitcoin is the best illustration in this regard. The design of Bitcoin products is completely different from the various product designs already in the market at that time. It is a unique product, and at the same time an automatic system, without any financial or institutional support. But after 10 years of operation, Bitcoin has developed into a product with a market value of 200 billion US dollars. The success of Bitcoin illustrates the importance of thought and timing. The same is true for the success of Ethereum. Ethereum is an improvement of Bitcoin products. It inherits some of the characteristics of Bitcoin product design, and at the same time has undergone essential changes in the computing environment and consensus mechanism. When its mainnet went live in September 2015, Ethereum was also a unique product. Ethereum has developed to this day and has become the default blockchain public chain option worldwide. Its status in this regard is still not replaced by any other underlying blockchain technology. In these two cases, capital and industry dominance did not help. Product design ideas and the time it takes for the product to market determine the success of the product in the market.
Today, the construction of the digital financial ecosystem is still in the early stages, and the timing and business ideas still determine whether the blockchain project can be successful. If the business idea is wrong or the start is too late, no matter how much financial support thereafter, and no matter how many other advantages the initiator has, it will not be possible to occupy a place in the future digital financial ecology. In fact, sometimes sufficient funds and abundant resources in other areas are negative factors for success, rather than positive factors.
In terms of timing, it is still the early stage of the development of the digital financial ecosystem. The market competition is not fierce. In fact, since now is the early stage of the development of digital finance, the market can be said to be in a completely undeveloped state. Most of the current participants are still in the exploratory stage. Only a few of them have adopted the correct product design, business model and business strategy. So in terms of timing, it is still a good opportunity. At this stage, exploring the right business model is more important than investing a lot of resources.
In terms of business ideas, the business ideas of different participants are very different, and this can lead to different results. In my ten lectures on blockchain applications, I have a dedicated lecture on the methodology of blockchain applications. It mentioned two main wrong ideas in blockchain applications. This is the idea of ​​blockchain fundamentalists and traditional exclusive management. Blockchain primitives are mainly on the provider of blockchain technology, and the exclusive management idea is mainly on the application side of blockchain technology. The idea of ​​exclusive management is to continue the business ideas so far, that is, to develop and promote the application of blockchain entirely on its own. Therefore, the blockchain solution developed by it is often the blockchain solution of a certain company. But this kind of exclusive management idea is no longer applicable in the era of digital finance. Blockchain technology supports multi-party cooperation on an equal basis. Only when the application of blockchain technology is matched with the correct social organization form can it exert its greatest value. If it is a company operating alone to develop blockchain technology applications, it is difficult to obtain
Support from other business partners. Therefore, it is impossible to establish a cooperative ecosystem within the industry. If such a company has always insisted on promoting its own blockchain technology applications, then it is the institutions and individuals that are currently totally dependent on such companies. And for participants who are evenly matched and who also play a very important role in the ecology, it is impossible to participate in such an ecology. The application of such a blockchain therefore cannot obtain maximum value.
No matter how much capital a company has, and what its current dominant position in the industry, the ecosystem based on blockchain technology it can build will be very limited. What should be studied in this regard is Facebook’s strategy in this regard. Facebook originally planned to develop a stablecoin by itself. If you follow the traditional business ideas, based on Facebook’s financial strength and the dominant position of its social network in similar products, it can develop its own digital stable currency, and then attract potential partners to join. But Facebook did not take such measures, but adopted the method of establishing an association to promote the development of this stable currency. The members of the Libra Association, including Facebook itself, are working together to build the Libra ecosystem on an equal basis. Therefore, Libra can obtain the support of key parties in the industry, such as the initial support of Visa and MasterCard, as well as the support of various application developers. Therefore, such a digital financial ecosystem will be quickly established and will have a very solid foundation. The digital financial ecology established in this way is a global operating ecology, not limited to one industry or a certain region.
