Unleashing Blockchain Innovation: Exploring Disruption and Decentralization
Author:Xiaxiaozhi
The innovation capability of blockchain originates from where? Under what circumstances can it flourish? Today, I will explore this question from the perspective of intellectual history and unearth the fundamental source of blockchain innovation.
Firstly, let me provide an example. If you ask me how to provide a simple and secure savings solution for people with low usage of the banking system, although I may not know the answer, I know how to obtain it because this question has a clear path. While the answer may not necessarily be correct, the question itself is clear.
However, if you ask me whether blockchain technology can replace governments or if fiat currencies will disappear, then I may not be able to answer because such questions lack a defined direction, let alone standardized answers. These questions face an unknown future, which we simply cannot predict. We categorize the first type of question as technical issues and the second type as theoretical issues.
Technical issues are actually not difficult because they have a clear path, based on existing theories for experimentation. For example, deriving decentralized finance (DeFi) from traditional finance, relying on smart contracts to provide a more transparent and efficient financial system; or utilizing Non-Fungible Tokens (NFTs) to tokenize ownership of images and artworks for trading on the blockchain. The former is based on traditional finance, while the latter utilizes a digital ledger to provide ownership proof for buyers.
Since there are clear theories and methods behind technology, as long as there are large development teams and sufficient funds, technological innovation can be achieved. For example, the Ethereum team is highly skilled in technical innovation, pushing many technologies to new heights.
However, theoretical issues are entirely different. For example, whether blockchain technology can replace governments or if fiat currencies will disappear. These questions lack a clear path.
To address these questions, what we need to solve is not whether the answers are correct, but how to find the answers. Therefore, the second type of question is essentially an attempt.
We need to find the path to reach the answers, much like rolling dice, which is filled with uncertainty. We cannot plan to roll a specific number. Faced with the unknown, even with large development teams, significant funding, or continuous efforts, they may be in vain.
Funds may be directed towards the wrong direction, large development teams may be engaged in futile efforts, and continuous efforts may be wasted, much like a stubborn donkey going in circles. In fact, all cutting-edge theoretical innovations do not require technological accumulation or the inheritance of experience and gradual learning. They often occur as mutations, accidents, and cannot be planned, relying solely on the genius and inspiration of individuals.Blockchain innovation can be categorized into two types. The first type involves the blockchainization of traditional financial models. For example, in the innovative Automated Market Maker (AMM) trading model, any user can become a liquidity provider for cryptocurrencies and earn transaction fees. Uniswap has reinterpreted the AMM technology implemented by centralized exchanges on the blockchain, making decentralized exchanges have a more liquid and immediate trading environment compared to centralized exchanges. The second type is disruptive innovation. For instance, in 2009, Satoshi Nakamoto invented Bitcoin, a decentralized ledger technology. This groundbreaking change can address the deficiencies of the financial system through security, immutability, and transparency. At a time when public confidence in centralized authorities and financial systems is waning, it offers people a brand-new choice, helping them reclaim their rights.
Disruptive innovation depends on the sudden insights of individuals. Knowledge is hidden within each individual, and it cannot be achieved through planning and design. A unified manager or planner cannot possess this insight. It relies on countless individuals making independent decisions in complex markets. It belongs to the absolute talent of individuals. Disruptive innovation is even less likely to thrive in a standardized blockchain project produced under a scaled production mode.
This is a community with flat management, reducing the communication costs between you and the central planners and managers during the planning process. Instead, it delegates decision-making power to the grassroots.
Due to the lack of strong central control, this community is wild and untamed. It is not a stable social structure but a typical binary opposition structure, with the struggle between religious and secular power, private rights and public rights, in a state of absolute dynamic change. This dynamic binary structure is extremely dangerous but also full of tension. It reserves a fertile soil for innovation, allowing numerous theories to sprout and grow.
To maintain innovation, it is necessary to defend the imagination and freedom of thought of geniuses. However, because creativity stems from the overturning and breaking of traditional ideas, the imagination of geniuses often tends to be destructive. They are dangerous to traditional society, just as Copernicus's heliocentric theory was dangerous to Christianity and Darwin's theory of evolution was dangerous to the theory of divine creation.
But a dangerous theory, a theory without ultimate answers, always heralds a burst of new thinking. This burst may destroy traditional values and ethics, potentially leading to the collapse of existing social systems and the disintegration of ideological systems.