By Kang Shuiyue, founder of Fox Tech and Way Network and chairman of Danyang Investment
Preface: Spring silkworm do not see autumn silk, summer cicadas do not see winter snow. Whether you see it or not, Web3 is right in front of you.
Three million years ago, at the beginning of the Paleolithic Age, Homo sapiens made the earliest stone implements, and then used these stone tools to kill animals and cut meat for burning. 20,000 years ago, from the beginning of the Mesolithic Age, in addition to the more diversified stone tools made by humans for catching prey, stone carvings and decorations began to appear to meet the spiritual needs of users. 14,000 years ago, from the Neolithic Age, represented by grinding stone tools, humans learned to sow plant fruits and keep wild animals in captivity, resulting in agriculture and animal husbandry, which is known as the “first agricultural revolution”. 10,000 years ago, humans learned how to make bronze hoes and other bronze ware, so they began to settle down and hoe farming, which is known as the “second agricultural revolution”. 5,000 years ago, humans learned to make iron plows and use captive cattle as power to plow, while using irrigation technology to increase yields, known as the “third Agricultural Revolution.” These three “agricultural revolutions” over a long period of time now seem commonplace.
The timeline goes back nine centuries, to the 12th century. At that time, Europe began the “enclosure movement,” a barbaric but productive “man-eating” movement that lasted until the 19th century. As humans began to enter the business of navigation and explore new space on land, the East India Company with the highest MarketCap in human history was born. The three industries, Marine industry, textile industry and sheep industry, became the background of the “enclosure movement” at that time: aristocrats drove out the farmers who had rented their land, tore down their houses, and used the land to make more money for sheep farming. With the concentration of land, larger and more intensive farms and pastures were formed. Large numbers of displaced peasants moved into the cities, providing cheap labor for the first Industrial Revolution, which took place between 1830 and 1840.
Indeed, the first financial revolution took place in Europe on the eve of the first industrial revolution. The so-called “financial revolution” is now largely ignored, but its impact may be greater than that of the industrial revolution itself. The Amsterdam Stock Exchange was founded in 1602, the Bank of England, the first central bank, in 1694, the London Stock Exchange in 1773 and the New York Stock Exchange in 1792. Since then, stocks, bonds, foreign exchange, commodities and other financial products have been flat. The first financial revolution provided the capital fuel for the three industrial revolutions that took place over the next 500 years, enabling technological research and development and large-scale industrial production. Finance breeds technology and promotes it to further transform economic society. Now human society has once again come to the FinTech highlight moment where technology and finance blend.
It took humanity 3 million years to move from the Stone Age to the agricultural Age, and 14,000 years to move from the agricultural age to the industrial Age, but it took humanity only 500 years to move from the industrial age to the digital age. In the past 500 years, although the play of stocks, bonds, exchange, and business is constantly renovated, it is a new bottle of old wine, until 2009 with Bitcoin as the representative of Crypto came out, stocks, debt, exchange, and businesses four major financial assets since then there is an unprecedented asset category: programmable assets, that is, people commonly known as “currency”. The Blockchain is like a golden-horned beast that fell to Earth from outer space, and Crypto is like the golden horn on the head of the beast, spooking traditional financial markets in what will come to be known as the “second financial revolution”.
The economic value generated by 14,000 years of agriculture is far greater than that generated by 3 million years of the Stone Age, and 500 years of the Industrial Age is far greater than that generated by 14,000 years of agriculture. The economic value generated by the digital age in the last 60 years is also much higher than that generated by the industrial age in the last 300 years. Humanity is in the very early stages of a technological explosion, and the continuous emergence of programmable tools on a global scale is a central feature of this technological explosion. The transition from stone tools to hoes to hoes to programmable tools took a staggering 3 million years. The starting point of all digital processes originates from the birth of “the computer”.
The appearance of integrated circuit computers in 1964 marked the entry of humans into the digital age, and large-scale programming has a physical basis. The first feature of the digital age is tool programmability. With such programmable tools, human beings have transformed the physical world far ahead of human beings, ancient people, and apes, and profoundly changed the industrial structure in various fields.
Platform architecture in the digital age is divided into the front end and back end. The back end includes two parts: the back-end device and the network. The front end includes two parts: front-end device and user interaction. Back-end devices include chips, operating systems, servers, data centers, and communication networks. From the single machine, LAN period of Web0, then to Web1, Web2 and now Web3, this is the development of the network. Front-end equipment includes the computer, mobile phone, watch, glasses, headset, car, and smart furniture; User interaction includes graphics, voice, video, figurative space, and brain-computer interface.
The main difference between Web3 and Web2 from a front-end perspective is that Web3 users have more data sovereignty. Why is it possible for Web3 to make ownership decisions while the Web2 can’t? An important technique is to have verifiability at the time the data is generated. From a back-end perspective, the important feature of Web2 is the emergence of the cloud, and Web3 is the emergence of blockchain. Cloud represents centralized capacity output, blockchain represents decentralized capacity supply.
Web2 user data is typically stored on a central server, and although there may be several backups, these servers are all managed by a single provider. Although the vendor can also prove ownership, the data ownership belongs entirely to these centralized entities because of blockchain, which allows these assets and data to be owned. At entry, the blockchain generates a verifiable time series to establish ownership at the consensus level.
However, the development of new things is never smooth, because there are always people who will use the new things to do evil or do illegal things. As the core product of the second financial revolution, programmable financial products were reduced to the common name of “currency” and “virtual currency” under the heavy oppression of governments and traditional departments in the past, and “currency” has become a word to be avoided. Blockchain is the core of the Web3 backend, its development road is also stumbling. Some people are forced the to shut down their projects, others choose to cross the ocean and become digital nomads.
Faced with unprecedented things, man is a thinking reed. The new things of the industrial age of the last 500 years, the steam train, the automobile, the airplane, etc., caused a great deal of panic when they first appeared, only to be dispelled when ordinary people began to use them. Blockchain and digital currencies are also bound to go through this phase. After all, even great thinkers like Pythagoras, Plato, Aristotle, and Ptolemy, were under the illusion that the earth was the center of the universe, and even worse, that it was common people.
Web3 is not purely driven by technology, and the second financial revolution accompanies its development. Therefore, Web3’s promotion of the economy and society is not single, but plays a role by superimposing the programmable financial product Crypto, a cryptocurrency. Programmable financial products are not monsters, not even stablecoins. Programmable financial products have never appeared in the industrial era in the past 500 years, but they are bound to appear at certain stages in the development of digital finance. Governments are obviously not adapting to this new thing. They are still in the stage of surprise, confusion, learning, understanding, pondering, and testing.
But there were always those who grasped the technological and financial changes early and jumped on them. Typical cases are Aptos and Sui created by Meta(Facebook); Qualcomm came out and started Solana; Investment institutions represented by Sequoia Capital and a16z have invested $57.3 billion in Web3 since 2021; Graduates from the world’s top universities have also joined the “land enclosure movement”. According to the Web3 project database created by alumni of Harvard University, Stanford University, University of California, Berkeley, MIT, Tsinghua University, Peking University, and Zhejiang University collected by Rootdata, I made the following statistics according to each main subdivided track:
Of all the projects that have received financing, 386, or 35.12 percent, are in the United States. China has 109, accounting for 9.92%; There are 105 in Singapore, accounting for 9.55%; India has 68, accounting for 6.19%; The UK has 62, accounting for 5.64%; Korea has 35, accounting for 3.19%; Canada has 34, accounting for 3.09%; France has 34, accounting for 3.09%; Vietnam has 26, accounting for 2.37 percent. It is much more difficult for Chinese projects to get investment than American projects, and the discourse power of Chinese Web3 capital is much lower than that of American Web3 capital.
When it comes to Web3 policy, the posture of China and the US is the most critical. The current policy trend of the United States is loosening in the first place and tightening in the latter; China is looser in the front and looser in the back. On February 20, 2023, the Securities and Futures Commission of Hong Kong issued an Advisory Document on cryptocurrency trading, marking the Hong Kong government’s liberalization of the cryptocurrency trading field with the acquiescence of the central government. Does this mean that China is likely to regain the dominance of Web3 in the next decade?
Conclusion: In any case, Web3 has 250 million users worldwide, and its penetration has extended from the financial field to gaming, social networking, content creation, communication, travel, medical care, education, shopping, supply chain, manufacturing, finance, marketing, corporate governance, and other fields. At the current rate of land grabs, it may take less than five years for Web3 to reach 1 billion users worldwide, and 60 percent of the world’s population in as soon as 10 years. In other words, it will take just over a decade for Web3 to eat the world. Are you ready for the steepest climb in output since the Stone Age, when the world will look different in a generation?