Popular Science: What is Crypto Economy?

Original title: "Cryptoeconomic Essentials"

At 17:00 on May 20th, Mr. Changyong, the founder of Zhimi University and founder of Freecash, was invited to participate in a flash mob event in the PlatON Chinese Telegram group, and shared knowledge about the crypto economy with community members. The full text is as follows:

Today I still talk about the crypto economy that has been practiced and practiced in the past few years. This logic is very clear.

The encryption economy refers to the economic form in which asymmetric encryption technology is used in various fields of the economy. It is the third economic form of the information economy after the digital economy brought about by computer technology and the Internet economy brought about by network technology.

Digital Economy——>Internet Economy——> Password Economy

In general, in the past century, human society has been shifting from a material economy to an information economy, that is, the core of people's lives has shifted from material products to information products.

The starting point of the information economy is that computer technology standardizes various information into binary numbers composed of 01, which opened the era of "digital economy". From the invention of the computer in 1940 to the peak of the computer industry in 2000.

The State Council: Promoting the deep integration of science popularization and blockchain technology: In order to implement the important deployment of the Party Central Committee and the State Council on science popularization and scientific quality construction, it is formulated in accordance with the "Law of the People's Republic of China on Science and Technology Progress" and "Law of the People's Republic of China on Popularization of Science and Technology" "Outline of Action Plan for National Science Literacy (2021-2035)", which requires the implementation of smart science popularization construction projects. Promote the deep integration of science popularization and blockchain technologies, strengthen the concept of demand perception, user stratification, and scenario application, promote innovation and upgrading of communication methods, organizational mobilization, and operational services, strengthen the construction of "science popularization in China", strengthen the application of popular science information, and Deep integration of smart education, smart city, and smart community. (Xinhua News Agency) [2021/7/10 0:40:52]

Network technology further connects digitized information on a global scale, bringing about the "Internet economy". Network technology started in 1960 and reached its peak roughly by 2020. The Internet economy is currently facing two bottlenecks, one is information security, and the other is information monopoly. Almost all negative news about the Internet economy can be attributed to these two problems.

You can pay attention to these negative news.

Okey Cloud Chain Group officially launched the block chain science popularization action "Star Program": On April 26, O Key Cloud Chain Group officially announced the launch of the blockchain science popularization action - "Star Program". Launch a series of salons across the country, increase efforts to promote blockchain science popularization into institutions, state-owned enterprises, and campuses, etc., and cooperate with government departments and industry associations to build a more complete and effective blockchain science education ecology. At the same time, Directly hit the existing pain points of blockchain science popularization, and launched a simple and easy-to-understand short public welfare short video course of "Understanding Blockchain in Seconds".

The plan aims to promote the society to establish a clearer understanding of the industry in all dimensions, and together with the "Kunpeng Plan" to help the healthy development of the digital economy and the blockchain industry itself, lay a solid foundation for "talent" and "industry cognition". [2021/4/26 20:59:37]

The encryption economy is a new economic form based on asymmetric encryption technology, which fundamentally solves the problems of Internet information security and information monopoly.

So the crypto economy is the evolution of the Internet economy.

The basic solution to the problem of information security lies in the popularization of asymmetric cryptography. When everyone can use their private keys to control their own information security, the information security problem of the whole society can be solved.

Huobi launched a series of popular science videos "Understanding DeFi in One Minute": According to official news, on August 24, Huobi launched a series of popular science videos "Understanding DeFi in One Minute", and cooperated with Weibo Finance to title-zce and broadcast DeFi Cognition, Helping the Industry Development "Understanding DeFi in One Minute" is the industry's first series of popular science animations that systematically and comprehensively explain DeFi created by Huobi Growth Academy. The "Understanding DeFi in One Minute" series of animations systematically sorts out the development of DeFi, which is suitable for people who want to understand DeFi in the blockchain from the shallower to the deeper and comprehensively and systematically. The video has been released by the official Weibo of Huobi.com. [2020/8/24]

To solve the problem of information monopoly, on the basis of asymmetric cryptography to achieve information security, further important social and economic data and rules, with the help of peer-to-peer network technology, form a distributed consensus system that is not monopolized by any center.

After solving the problems of information security and information monopoly with asymmetric cryptography and distributed consensus, the Internet economy has fully transformed into a cryptographic economy.

Since the civilian use of asymmetric cryptography in the 1980s, the cryptographic economy has begun to sprout, and it is expected to be fully realized by around 2040.

Dynamics | Binance Popular Science MimbleWimble Algorithm: Binance official Twitter today released a popular science post about the privacy algorithm Mimblewimble. In the message area below, a large number of netizens left messages guessing whether Grin or Beam, a privacy coin based on the Mimblewimble algorithm, is about to land on Binance Exchange. Grin's voice was louder. [2019/9/2]

In this process, there will continue to be phased innovation breakthroughs, bringing about multiple bull markets.

Understanding the logic of the crypto economy can better grasp the rhythm and seize opportunities in the bull market.

Asymmetric cryptography has two main functions, one is encryption and decryption of information, and the other is signature verification of information.

Encryption and decryption are mainly used to prevent information leakage.

The basic method is that the sender encrypts with the recipient's public key, and then transmits the ciphertext to the recipient, and only the recipient can decrypt it with the corresponding private key. During the transmission process, it does not matter if the ciphertext is leaked, because only the recipient has the corresponding decryption private key.

Signature verification is mainly used to prevent information forgery.

Voice | Chinese Academy of Sciences Yao Jianquan: To speed up the popularization of science training on the integration of blockchain and the Internet of Things: According to Xinhua News, recently, at the Blockchain and Internet of Things Integration Development Summit, Yao Jianquan, an academician of the Chinese Academy of Sciences, said that attention should be paid to blockchain technology. Big data, combined with blockchain technology for measurement and detection, can better improve laser cleaning technology. Yao Jianquan suggested that in the future, Wuxi should speed up the popularization and training of the integration of blockchain and the Internet of Things, and correctly guide the general public to understand the technology; at the same time, establish a professional, authoritative, but universal and complete set of theoretical systems and standards, This cuts into the practical application of blockchain. [2018/9/18]

The basic method is that the information publisher signs the information with his own private key, and then publishes the information, signature and his own public key. The recipient of the message can use the publisher's public key to verify that the message is signed by the publisher's private key. Anyone who falsifies the information content-zce will not pass the verification.

Since asymmetric cryptography was originally invented to encrypt information for the military, it was translated into asymmetric encryption technology when "Asymmetric cryptography" (asymmetric cryptography) was introduced in Chinese.

This led to the later cryptocurrency and crypto-economy also being called "encrypted currency" and "encrypted economy". Actually this is wrong.

Encryption, decryption, signature, and verification are just application methods of asymmetric cryptography.

I also made this mistake at the beginning. It was Sun Lilin from PlatON who reminded me that this happened in 2018.

A correct understanding of this can reduce detours in the process of building a crypto economy.

Asymmetric cryptography was invented in 1970, and it was promoted to civilian use by cypherpunks in the 1980s. It has roughly gone through two stages so far.

1) Network Security Phase

From the 1980s to 2009, asymmetric cryptography was mainly used by commercial enterprises in the digital economy and the Internet economy to improve the security of equipment and network transmission.

With the support of asymmetric cryptography, online payment, e-commerce, https, etc. have been popularized, which has contributed to the prosperity of the Internet economy.

At this stage, asymmetric cryptography is hidden behind the scenes, used by enterprises and platforms, and not grasped by ordinary people.

2) Password consensus stage

Since Satoshi Nakamoto launched the Bitcoin system in 2009, the combination of asymmetric cryptographic technology and distributed consensus mechanism has begun to build an independent decentralized economic system, which is what people often call the blockchain, which I call "cryptography". consensus".

In the cryptographic consensus system, ordinary users hold their own private keys, thus gaining stronger economic freedom. The resulting decentralized economic system can reconstruct various global economic infrastructures and become a new engine for global economic growth.

In the first stage, asymmetric cryptography mainly uses encryption and decryption functions to ensure the security of information transmission.

In the second stage, the signature verification function is mainly used to establish a verifiable trust relationship between people on the network.

Many people don't know that all data in the Bitcoin system is completely open, and no data is encrypted.

Distributed consensus is a natural solution to information monopoly and has existed since ancient times.

Information monopoly refers to the fact that all important data and institutional rules of an economic organization are controlled by a center, that is, data monopoly and rule monopoly.

Distributed consensus means that each member of the economic organization can master important data and rules, namely data consensus and rule consensus.

The most typical scenario of distributed consensus is playing mahjong: everyone records important data, everyone understands, abides by and supervises others to abide by the rules, and there is no need or can be decided by one person.

Distributed consensus systems have been feasible since ancient times, but restricted by the development level of information technology, they can only be used in small economic activities.

As the scale of economic organization increases, the efficiency drops sharply.

Therefore, since ancient times, all large-scale economic activities have been centralized.

Now the situation has changed.

Computer technology and Internet technology have greatly improved the storage, analysis and dissemination capabilities of information, and asymmetric cryptography technology provides remote identity verification functions. Therefore, distributed consensus can be realized in a wide range.

Satoshi Nakamoto combined the distributed ledger, peer-to-peer network, blockchain and proof-of-work mechanism gradually discovered by the predecessors, and realized the first distributed consensus system that operates effectively on a global scale—Bitcoin. Push the crypto economy to a climax.

There are two fundamental features of cryptographic consensus, one is that the individual holds the private key, and the other is decentralization.

Personal mastery of private keys is not only the premise of realizing information and asset security, but also the fundamental guarantee of personal basic rights and interests, and is the foundation of the encryption economy.

The blockchain in which individuals cannot master the private key is not fundamentally different from the traditional Internet.

Decentralization is the source of efficiency for the encryption economy to surpass the Internet economy. It can eliminate huge central operating costs, prevent the central self-interest from harming the ecology, and promote high-speed knowledge sharing and free collaboration on a global scale.

Cryptographic consensus is suitable for building the most important infrastructure of the global economy, such as currency, network, storage, etc. The infrastructure reconstructed based on cryptographic consensus cannot be stopped and divided by any individual, organization or country, and can realize true global economic integration.

In the crypto economy, various centralized commercial activities can share the decentralized infrastructure, the operating cost will be greatly reduced, the market space will be greatly expanded, and the efficiency will be rapidly improved. Compared with traditional Internet businesses, it will form a dimensionality reduction blow.

From now to 2025, it is a critical period to build a global cryptographic consensus infrastructure. Both PlatON and Freecash are working in this direction.

If this stage goes well, before 2040, the global encryption economy will be basically realized.

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