Xiao Feng, Chairman and CEO of Wanxiang Blockchain: Blockchain will have trillion-dollar market value projects

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From December 18th to 20th, the 2020 NetEase Future Conference was held in Hangzhou. With the theme of “Insight into the Unseen”, the conference gathered the world’s most powerful brains, looking forward to transcending the unseen with foresight, to find the key to the future.

At the conference, the vice chairman and executive director of China Wanxiang Holdings and the chairman and CEO of Wanxiang said in a keynote speech on “Blockchain-a business perspective” that the perspective of the blockchain technology prototype is until 2020 At that time, the basic construction has been completed, or you can imagine it as the Internet era. In the early 1990s, the so-called technical prototype TCPIP was the end of the basic model and it was probably at this stage. In the next 5 years, there will be more commercial innovations of blockchain based on technical prototypes.

What is the business core of blockchain? Xiao Feng pointed out that because of the trust-free, trust-free, and ecological business model of the blockchain, it is used to solve large-scale collaboration. Anything that requires the participation of multiple parties and requires large-scale collaboration to complete will definitely use blockchain technology. To create new business innovations on this basis, and to create new business models with these commercial and technical characteristics of the blockchain, can new market capitalizations of trillions, trillions, and new business entities emerge.

Xiao Feng believes that in the blockchain world there will also be trillions of dollars in market value, or even a project with a market value of 2 trillion dollars. It may not be in the form of a company, but it will be in the form of a project, or in the form of an invisible digitalization. The ecological body form is presented.

The following is the speech record of Xiao Feng, Vice Chairman and Executive Director of China Wanxiang Holdings and Chairman and CEO of Wanxiang Blockchain:

I am very honored to be invited by NetEase to share it here.

At a summit two months ago, I said that the perspective of the technical prototype of the blockchain is that by 2020, it has basically been constructed, or you can imagine it as the Internet era, in the 1990s At the beginning, the so-called basic model of TCPIP, its technical prototype, ended, and it was probably at this stage. In the next 5 years, there will be more commercial innovations of blockchain based on technical prototypes.

Let me look ahead, in the future, I will look forward more to what will happen based on the commercial innovation of the blockchain. These are some personal opinions.

To compare the commercial innovation on the blockchain, in order to better understand it, so I took out the Internet. We look back over the past 20 years, how business innovation on the Internet has developed and evolved. In this comparison, we may have a better and more visual understanding of the business innovations on the blockchain in the next 5 years. My topic today is “Internet and Blockchain”. I will make a business perspective. Compare.

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First, look at it from a technical point of view. The Internet is part of ICT technology and part of information communication technology. I regard the Internet as the base of a series of information technology. Information technology includes computers, various software projects, operating systems, 2G, 3G, 4G, and 5G. These are all information technologies. But these information technologies, if only in terms of technology, each has its own function and value. But stringing them together creates a new business that cannot be separated from the Internet, so it has become the foundation of information technology.

Blockchain is the same, it is the base of a series of digital technologies. What is digital technology? Cloud computing, including blockchain, big data, these things I call digital technology. It is still different from information communication.

These information technologies and digital technologies also have great functions from the perspective of tools. But without stringing them together, it is difficult for us to create new business models that are native to new digital technologies. I think blockchain is its base. This is the first point I want to distinguish.

Second, the Internet as a whole solves the problem of freedom of information, frictionlessness, publication, communication, exchange, and interaction. Blockchain solves the problem of freedom of trust, frictionlessness, and the establishment of mutual trust relationships. Academician Chen Xiaohong talked about the issue of “no trust, no trust”. These two are actually very important.

All the Internet, from the initial BBS to Weibo, to the current various self-media, in fact, is basically inseparable from helping the free and frictionless flow of information. Freedom means a right, and frictionless means publishing information. The cost of communication, communication, and interaction are reduced to zero. We use all kinds of apps on the Internet, almost all of them are free, and you don’t need to obtain some kind of permission in advance to publish any information.

Blockchain is called a “free, frictionless system of trust”. The important one is the same. The cost of trust is very high. When the cost of trust is reduced to zero, the relationship between people, business, society, and the relationship between organizations will undergo tremendous changes.

If we want to promote a business, we must first establish a trust. Without such trust, business is not feasible, and society as a whole is the same. To make this society operate effectively and make good progress, we have various laws, third-party accounting firms, law firms, courts, and public security. Whoever breaks the faith may have to go to court, not only bear economic losses, civil losses, and even be punished criminally.

If you can reduce the cost of trust to zero, we can do much more than in the current situation, and the space is much larger. These two are also their huge differences.

Third, Internet business emphasizes the realization of traffic. All Internet platforms have a kind of “traffic anxiety”. I once read an article on the Internet. When it evaluated the difference in business models between e-commerce and social media, it gave me a great inspiration from the perspective of traffic: It is the entrance of traffic, and what social platforms seek is the exit of traffic.

There are already 900 million people and 1 billion people on social platforms. You just want to find the outlet of traffic and see how to realize it. So when e-commerce establishes its own platform economic model, it is different from when an Internet social media establishes its own traffic business model. One is to use ecological methods to give “half-life” to others; the other is to attract traffic like a black hole. No matter if you are looking for the entrance of traffic or the exit of traffic, you are doing things around traffic to reflect your value.

Blockchain does not obtain value from the perspective of traffic. Blockchain is more about the realization of data. As the previous guests said, blockchain-based data is credible data. On the basis of data credibility, if you can add some other digital technologies, such as privacy computing, to make data exchangeable. Reliable data exchange is the basis of artificial intelligence. So far, artificial intelligence has seen you need a lot of data to train these models, making it closer to reality and making it predictable.

But if these data are not credible, you will have to spend a lot of money to process those data. If these data are credible, the cost of training these algorithms with artificial intelligence will be much lower, and you can get a lot more data. The realization of data and the realization of traffic are themselves huge differences between the Internet and blockchain at the commercial level. So if you start a business in the field of blockchain, or if you invest in it, you should not examine its traffic. This is very different. Because many blockchain entrepreneurs say that I want to be a decentralized e-commerce, I want to be a decentralized social media, or I want to be a certain business on the decentralized Internet, I think this Neither is a proper way, or this may not be what blockchain should do.

What the Internet has done very well should not be done by blockchain. You can’t see that Internet e-commerce has produced a trillion-dollar market value company, so I use the blockchain to do another e-commerce. Can I also get a trillion-dollar market value company? Maybe you can’t think about it this way, because it is so great Technology, Internet technology, blockchain technology, it should solve different things. Blockchain technology was invented not to kill the Internet and then to do it again, not to do this.

Another, the Internet is a platform economy. During this period of time, platform economy has become a hot word. Blockchain is no longer a platform to engage in commercial innovation, it should be in an ecological way. The platform approach, we can use a term, Shareholder, shareholder capitalism. In an ecological way, we can also use an English vocabulary, Stakeholder, stakeholder capitalism. In the ecological model, more emphasis is placed on co-governance, sharing and co-construction by all parties involved. In the Internet’s platform-based business model, there will always be the last “controller” who takes most of the benefits on the platform, so it is a centralized business model, and the blockchain brings a distributed business mode. If you look at the public chain, there are no shareholders, no board of directors, no management, or even employees. Of course, it is to the extreme. But this “extreme” is technically realized. There is no legal structure for a business entity or an ecological business entity. There is no legal structure for a network like Bitcoin, there is no shareholder meeting, no board of directors, and no management. There is no employee, no office space, just a business floating in the Internet world, floating in the digital world. It has been running successfully for more than ten years. Such an extreme technical experience has actually brought a lot of new business innovation inspiration.

Another point is that for all Internet businesses, if we look at the core of their businesses, they actually do precise matching under precise portraits. Whether it’s e-commerce or social media, video, or search, the core of all Internet commerce so far is precise matching under precise portraits. Accurate matching naturally plays a very important role. It reduces transaction costs, including search costs and matching costs, to a very low level, which cannot be achieved by the industrial economy. The business core of the blockchain is not to replace the precise matching of the Internet. In terms of precise matching, Internet platforms and Internet commerce have done very, very well. It is difficult for you to say that my efficiency has increased by 10 times, or 5 times on this basis. , Or 3 times. Everyone knows that there is a principle of 10 times efficiency. If a new thing cannot be 10 times better than the original thing, then it is very likely that consumers will not accept you, or users will not accept such a replacement.

What is the commercial core of the blockchain? Because of its trust-free, trust-free, and its ecological business model, it is used to solve large-scale collaboration. Anything that requires the participation of multiple parties and requires large-scale collaboration to complete will definitely use blockchain technology. Therefore, to create new business innovations on this basis, and use the commercial and technical characteristics of the blockchain to create new business models, can new commercial entities with a market value of trillions and trillions emerge. For example, for a system like Bitcoin, so far, at least this week, the market value of the entire Bitcoin has exceeded US$400 billion. Internet companies, we know that in the Internet age, Internet companies have the highest market value of US$1,500 billion, and there are several companies. I believe that in the blockchain world there will also be trillions of dollars in market value, or even 2 trillion dollars in market value. It may not be in the form of a company, but it will be in the form of a project, or in the form of an invisible digital ecology Body forms appear, I firmly believe in this. If Bitcoin is “digital gold” and the total market value of gold is currently US$8 trillion, then why can’t Bitcoin be a US$8 trillion economy? Solving the problem of creating new businesses under large-scale collaboration, instead of solving the problem of precise matching, this Internet business has been solved very well.

Another judgment is that the original business of the Internet is not based on the local area network, so the blockchain will not be based on the alliance chain to generate new business innovations native to the blockchain. The alliance chain is good, but the alliance chain is just a tool, just like the Internet is good, but the local area network is just a tool, which will bring about the improvement of internal efficiency, the reduction of costs, and the more convenient communication. However, we have not found that the native Internet business model is based on the local area network, which can only be born based on the wide area network. As on the blockchain, some commercial innovations native to the blockchain can only be born based on the public chain, and it cannot be based on the consortium chain. Consortium chain has tool attributes, which can improve efficiency, reduce costs, and provide a better experience. It has a role. At this time, for us to start a business, or if we invest, we should look at it from such a perspective, is it worth your investment, or is it the next trillion in market value, a blockchain project that can bring a hundredfold return? One point is very important.

The last point, Internet business, its economic incentive model is external, blockchain business, its economic incentive model is built-in, it is self-contained, this is also the Internet and blockchain from business models, business innovation The above is a huge difference. Let’s look at e-commerce. A business activity such as e-commerce needs to complete the closed loop. It is not enough to rely on the e-commerce system alone. Therefore, payment and independent payment will come out. On the blockchain, distributed ledgers, and because of the distributed ledgers in the blockchain, the blockchain technology and the Internet technology are completely different. When you explained the blockchain before, many people said that the blockchain is nothing great. The blockchain is a distributed database. Isn’t the blockchain a P2P network? Is it a distributed network? Isn’t it a distributed database? Yes, the blockchain is based on distributed network and distributed database technology, and the blockchain is also based on distributed computing and distributed storage technology. However, the blockchain is also a distributed ledger, and the Internet is not a distributed ledger. When it is a distributed ledger, it gives a whole set of blockchain account system. Based on such an account system, the blockchain naturally has payment functions and light settlement functions, and it is naturally a light settlement network for payment networks and financial exchanges.

On the basis of such a network, coupled with the so-called consensus algorithm, or coupled with many mathematical rules of game theory, a distributed governance structure can be established. In this governance structure, if anyone calls a Stakeholder, the stakeholders are naturally in this system. You have done things for this system, and there is a place to keep accounts, and you can also get settlements in this system in time and get bitcoins. Obtain ETH, or any other form of Token issued by the network itself. This is also a huge difference between the business model of the Internet and the blockchain. I think that by grasping these seven points, we can better distinguish between Internet innovation and blockchain-based business innovation.

As the blockchain technology model is basically completed before the end of this year, the next five years will be a stage of technological optimization and iteration from the perspective of blockchain. At the same time, the optimization iteration stage is also the beginning stage of commercial innovation. Because when the prototype of this technology is basically built, if you want to optimize and iterate those technologies, you must combine it with application scenarios and commercial innovation. If you have no application, no commercial innovation on it, you don’t know how to optimize it, how to iterate it. You don’t know whether you are not satisfied with performance, or where else is not satisfied, or whether the economic model is not suitable for your business. Therefore, the stage of optimization iteration is also the stage of business innovation. We know that most of these business models of the Internet were established around 2000, that is, five years after the establishment of a technical model of Internet TCP/IP, most of the business innovations on the Internet have already occurred, and the next step is to spend more In 10 or 20 years, they have grown to such a stage that they have become spectacular. We can look forward to the next 5 years, similar to the period from 1995 to 2000 in the Internet era. I believe that in these 5 years, all innovations based on the blockchain, the general model and general direction of business innovation will occur. We need to see it with a pair of eyes, to find it, to find those commercial innovations that are based on blockchain innovation and have great prospects.

Okay, my speech ends here, thank you everyone!

The 2020 NetEase Future Conference is co-hosted by the Hangzhou Municipal People’s Government and NetEase, and hosted by Hangzhou Bureau of Commerce, Hangzhou Economic and Information Technology Bureau, Hangzhou Binjiang District People’s Government, Beijing NetEase Media Co., Ltd. and NetEase (Hangzhou) Network Co., Ltd. China Mobile’s general naming. The conference will have three days of brainstorming, covering forums such as foreseeing the future, new infrastructure, artificial intelligence, blockchain, trendy business, UP life, and culture.