Point From Dr. Xiao Feng: Ultimate Hypothesis on Blockchain Application Models
This is the closing speech Dr. Xiao Feng made for the Day 1 session of the Sixth Global Blockchain Summit on Oct.27 where he pointed out that as the blockchain technology ameliorates, a great number of applications will be created and blockchain will ultimately be made into an infrastructure by converging all features. When it becomes an infrastructure, blockchain will encourage more developers to build more applications by making it easier to start business in this industry.
Today, I would like to share with you my hypothesis on the application models of blockchain. As projects like Dfinity to be launched by the end of this year, the technology framework of public blockchains will be fully established. Admittedly, there remains much to be done to improve the model and framework of blockchain, but we can say for sure that a great number of applications will be created while we improve the technology framework of blockchains.
I scratched a framework to think about the application models of blockchain. From top to bottom, this framework consists of distributed network, distributed database, distributed computing and distributed ledger. Distributed ledger is the thing we have been using since the age of Internet, but the distributed storage and computing we talk about in the age of blockchain have become much more decentralized than what they were in the age of Internet. The distributed ledger can be taken as a watershed between the age of Internet and the age of blockchain. As this technology is widely adopted, we are going further into the age of blockchain.
Blockchain technologies play an important role in distributed governance, including building the economic model and the consensus algorithm. A sophisticated distributed governance will nourish distributed applications, the essential components of the distributed business world.
The applications of information technology went through three phases of development. Applications in the 1970s-90s were solely built with information technologies and the software systems of these applications were composed of hundreds of thousands lines of codes. With the emerging of Internet platforms, the complicated software became infrastructure. Now we are entering the third phase, the age of blockchain, where Internet platforms are becoming infrastructure. Looking back into the development of IT and digital applications over the past decades, we can see that we are constantly transforming applications into infrastructure, which in turn innovates the applications.
Take the finance industry for example, applications in this industry are also becoming infrastructure. A case in point is the third-party payment tools. They have become an infrastructure for Internet companies like social network, e-commerce, food delivery, sharing bike, etc.
The software systems of the applications were complicated at the beginning. For example, Windows was hard to use because we had to use applications in it with command lines that few people mastered. But the birth of browsers made the applications easy to use and became popular.
Coming into the age of Internet platforms, complicated software systems were replaced by apps that were easy to use. Though Apps like WeChat are supported by hundreds of thousands lines of codes, they are so easy to use that even seniors can learn to use them quickly.
Smart contracts in blockchain are just like applets. It may take tens of thousands lines of code to make an app but it just takes hundreds or thousands lines of code to make a smart contract.
Apart from the simplification of apps, another important change that will happen in the age of blockchain is that the business will shift from being consumer-driven in the age of Internet to developer-driven, as developers play a major role in the building of blockchains. The best blockchains so far have been established by developer communities and blockchains without developer communities can hardly be sustainable.
You may wonder why blockchain is not driven by consumers or there are no killer applications? That’s because, I would like to quote from Vitalik Buterin “Blockchain is a killer network.” It is a network driven by developers where the supply side pushes the network forward and brings the benefits to consumers.
I would like to illustrate my hypothesis on the application models of blockchain with two examples. The first one is Uniswap that has been frequently mentioned recently. By taking place of a centralized system supported by tens or hundreds of thousands lines of codes with just 500 lines of codes, this visionary project reveals the features of the ideal blockchain applications.
Blockchain applications must be built with smart contracts that are composed of thousands lines of codes. The reason why Uniswap can replace a centralized system made of tens of hundreds lines of codes is that blockchain is integrating different technologies and making features like distributed network, distributed database, distributed storage, distributed computing, distributed ledger and distributed governance into infrastructure. Public blockchains like this are permissionless and easy to develop, which cuts the cost for starting new business in this industry. But in the age of Internet, if you would like to run your application on the systems developed by Internet tycoons, you would need to go through a lot of procedures.
The other example is Dfinity that built a decentralized TikTok with 100 lines of codes. I am looking forward to the launch of Dfinity’s main net, because its success would be a persuasive verification of my hypothesis: The ideal applications on blockchain are smart contracts made of hundreds or thousands lines of codes.
Uniswap and Dfinity have indicated the trends of blockchain applications. Put it simply, blockchain will become the infrastructure for more and more applications by integrating features like storage, computing, ledger, address, account, etc. and the blockchain infrastructure will have the following characteristics:
First, open source. This is an essential prerequisite for blockchain to become a trustable infrastructure.
Second, permissionless. That is to say, start-up can build whatever applications they are interested about on the blockchain without permission.
Third, the community is governed by all and the benefits are shared by all. Blockchain will shift the focus from shareholders to stakeholders. Stakeholder capitalism breaks the centralized mechanism and makes sure that all benefits are shared by all. Besides, stakeholder capitalism should be distributed, decentralized and autonomous.
I hope that after establishing the overall framework this year, blockchain will be further optimized as an infrastructure and become ready for killer applications. When that day comes, as long as you are code literate, you will be able to develop your application on blockchain at a very low cost. These applications will be trustable, reliable and decentralized. This is something we have never seen in the age of Internet.
In the age of Internet, only 200 thousand Chinese were equipped with capital, human, operation and other resources to start up their business. But in the age of blockchain, as blockchain becomes a free infrastructure, it will be much easier for people to start business in this ecosystem. The number of entrepreneurs will hopefully jump from 200 thousand to 10 million, increasing the possibility for great applications to be created.
To sum up, I believe as the blockchain technology ameliorates, a great number of applications will be created and blockchain will ultimately be made into an infrastructure by converging all features. More importantly, compared with the consumer-driven applications in the age of Internet, blockchain applications will be driven by developers and create a favorable environment for starting new business, which will contribute to socio-economic development.