The popularity of Runes is a step backwards in the development of encryption technology, but it is also the best embodiment of the core value of Web3

Original author: @Web3 Mario

**Introduction:**Yesterday, I accidentally learned from fren that it has obtained a large return on investment in the field of BTC inscription, which deeply aroused the author’s Miss Out mentality, and I was anxious for two consecutive days, which is really ashamed. Recalling that earlier after the release of the technical architecture of Ordinals, the author studied the relevant documentation, but as a developer, I was quite unimpressed by this technical path, and the judgment at the time was simply a reversal of encryption technology, because its design concept seems to be similar to that of a distant alt project Color Coin, that is, how to use the technical architecture of BTC to issue some independent tokens, but unlike Ordinals Instead of redeveloping a chain, it chose to reuse the BTC network, which currently enjoys broad consensus. Compared to the proposal of on-chain Virtual Machine (e.g., EVM or other WASM), this architecture has proven to be somewhat rudimentary and not scalable, and due to the fact that BTC does not have a Turing Complete execution environment, the development of related Application Layer is relatively difficult, and it is also expensive! It doesn’t seem so rudimentary, and these are not mentioned in on-chain Virtual Machine solution, because designing an ERC-20 is something that a beginner Web3 developer can do… However, these judgments are simply pale and ridiculous in the face of the real wealth effect, and after calming down, some relevant feelings will be shared with you.

The tangible fact at the root of all our thought-distinctions, however subtle, is that there is no one of them so fine as to consist in anything but a possible difference of practice. To attain perfect clearness in our thoughts of an object, then, we need only consider what conceivable effects of a practical kind the object may involve—what sensations we are to expect from it, and what reactions we must prepare.

----William James

Anarchist post-Snowden

I’m long fren amazed at the emergence of Bitcoin, just like the Golden Age of Ancient Greece, which seems to be an unconventional and inexplicable product of genius, but I don’t agree with this view, I think that the invention of Bitcoin was not a coincidence at all, it was an inevitable consequence of the online environment of the time.

In the previous introduction, we have reviewed the history of the development of the Web, in the classical liberal Internet era, the Internet protocol design principles of openness, inclusiveness, globalization and neutrality gradually formed, but with the emergence of a large number of Web applications, the composition of Internet users has changed dramatically, from the previous subcultural group of users, that is, coder, to a universal mainstream cultural group covering all kinds of people, and pragmatism with high efficiency and low cost as the priority prevails.

But this does not mean that the principle of openness protocol disappears completely, unlike political revolutions, the evolution of technology is non-violent, so the corresponding ideological evolution is a process of moderate integration. In fact, some developers, what we can call the remnants of classical liberalism, have been adhering to the principle of open protocol in technology research and development and related concept promotion work, and we can easily find them, such as the Free Software Foundation, the Electronic Frontier Foundation, the Wikimedia Foundation, and other organizations, who have funded and promoted long interesting technical solutions, such as Tor, VPN, SSH, etc., and they are also the first users of Bitcoin to use Bitcoin Therefore, it is reasonable to believe that Bitcoin must have been designed from this group of people, with the initial purpose of developing an unregulated, payment-oriented, anonymous electronic cash system for organizations.

As Bitcoin’s huge success has piqued the interest of some of these computer experts, I believe that both Vitalik and Gavin Wood belong to this group of people, and it is possible to completely change the classic C/S web development paradigm by building a decentralization, anonymous computer system with Bitcoin’s most important original technology: the POW Consensus Algorithm.

With the explosion of the sensational “prism incident”, the credibility of technical and political authorities has been greatly dropped, which provides an excellent opportunity for the promotion of new concepts, so we can see the emergence of Web3 with the latest semantics, that is, Web3 proposed by Gavin Wood, here I think it is necessary to quote this classic description again:

Web 3.0, or as might be termed the “post-Snowden” web, is a re-imagination of the sorts of things we already use the web for, but with a fundamentally different model for the interactions between parties. Information that we assume to be public, we publish. Information we assume to be agreed upon, we place on a consensus ledger. Information that we assume to be private, we keep secret and never reveal. Communication always takes place over encrypted channels and only with pseudonymous identities as endpoints; never with anything traceable (such as IP addresses).

The core vision of this version of Web3 is to build an online world that is de-authoritative, censorship-free, and fully protects personal privacy, which can be seen as a classic interpretation of anarchism in the online world, so I would like to call it anarchist Web3. It is worth noting that the significance of making such a clear distinction is that we need to figure out what principles should be used to guide our application design in order to achieve the ultimate vision, so as to complete the construction of the network, which is best in line with our needs.

Under the guidance of such an ideology, the extreme pursuit of Decentralization and privacy has given rise to a series of interesting Web3 projects, such projects are usually based on the underlying infrastructure, recall those superb Cryptography and Consensus Algorithm, I will not give specific examples, because you can find very long well-known projects, but when it comes to Application Layer and protocol layer, it is not very long, perhaps ENS is an exception.

Hyper-financialized liberal capitalism

Since 2013, MasterCoin designed the way of ICO Crowdfunding, the Crowdfunding financing model with Crypto Assets as the subject matter has gradually become popular, and with the improvement of protocol layer such as ERC 20, the issuance and participation threshold have been greatly drop, and in 2017, the development of ICO reached its peak.

Let’s look back at that period of history, as the subject matter of Coin (that is, Token), has also evolved into different types, the most representative of which are utility certificates and ownership certificates. In fact, in the early days of ICO development, most long of the issuance tokens of the project belong to this type, including Mastercoin, NextCoin, and even Ethereum (in the early Ethereum design, POS planning was not included).

The emergence and rapid development of certificate of ownership, I think it is inseparable from two opportunities, the first is that a geek named Sunny King proposed the Proof of Stake (POS) in 2012, and developed Peercoin, I think the biggest contribution of this concept is that for the first time, a paradigm design that uses Token to carry ownership of a dedicated network (although here, Token In 2018, the Dividend long EOS ICO ushered in the peak of development, but the excessive development bubble and the explosion of applications that could not be realized made the development come to a standstill.

And the second opportunity for the development of ownership certificates, I think, can be traced back to Compound’s issuance of Comp, which also completely opened the era of hyper-financialized liberal capitalist Web3. For a long time before this, the focus of the development of ownership certificates was focused on the distribution of ownership of the underlying network, and the application layer did not seem to respond, in fact, the birth of some well-known Dapp projects was very early, when “administrator governance” + “paid system” was basically the mainstream model, until the emergence of Comp, through the ownership of the Token bearing application to achieve “community co-governance” + Dapp around the key use of this Dapp “Mining Incentive”. The development model has gradually gained widespread acceptance and is growing rapidly. Due to the characteristics of rich financial returns, smooth exit mechanism and free market environment, investors of all sizes carry a large amount of money into Web3, similar to the changes of the classical liberal network, the industry has once again ushered in changes with the change of the composition of major users, and the meaning of Web3 has also undergone a great change, let’s recall the definition of Chris Dixon:

Web3 is the internet owned by the builders and users, orchestrated with tokens. In web3, ownership and control is decentralized. Users and builders can own pieces of internet services by owning tokens, both non-fungible (NFTs) and fungible.

So far, the difference has been very obvious, Web3 from the original pursuit of authority and personal privacy, gradually changed to carry network ownership through digital assets, so as to achieve the redistribution of network resources. Under such a vision, the private ownership of digital assets and an absolutely free market are the ultimate ends, and the de-authoritarianism and personal privacy degenerate into a means to guarantee both goals, which is an important change, which is basically completely equivalent to the political pursuit of liberal capitalism (in fact, in political philosophy, liberal capitalism is basically equivalent to a specific, specific anarchism).

Under such ideological guidance, innovation in the value categories and ownership distribution methods carried by digital assets has become the main evolutionary direction, and basically, the main innovation in the Web3 industry has been concentrated here before the recent wave of fierce deleveraging. We need to be very clear about the difference between the two, because this will lead to two completely different evaluation criteria, some Web3 projects are very good in the eyes of anarchist Web3 proponents, but they are not useful in the eyes of liberal capitalist Web3 proponents, and of course there are completely opposite things, in the final analysis, because of ideological differences.

Innovation around digital assets will continue

With the distinction between these two claims clear, I hope to explore what the core drivers of the next wave of Web3 growth may be. Personally, I agree with some of the views of pragmatism, in my opinion, the significance of judging an idea or concept of things lies in what effect the idea has on people’s behavior and what kind of value it produces, and the top-down way of thinking based on metaphysics is usually not conducive to the development of society, and from this point of view, I also agree with socialism.

Under the guidance of such a concept, I think that the development of the online world will most likely develop along a compromise, low-friction path, remember the network ideology graph we mentioned in the previous article, in general, we can classify the classical liberal network, anarchist Web3 and liberal capitalist Web3 into the same area, which is a part of the opposite of the network of technological authoritarianism, and the future network world ideology will burst out with greater energy in the blue shaded part. The core driving this development is whether there will be new, more universal value propositions being explored, and from some of the existing results, I think digital assets basically have such capabilities, or innovation around digital assets will continue to be the core driving force of Web3.

First of all, I need to state that I do not recognize the value of work related to Decentralization and privacy protection, on the contrary, I think that the relevant results are usually enlightening, but in terms of the current actual situation, these two goals are usually based on the evolution of cryptography technology, subject to the development of related technologies, some products supported by this concept are mostly unsatisfactory in performance, or compared with some mature computer network technology, these products still have a lot of shorts for improvement, and because cryptography as a basic discipline, has the characteristics of large investment and long output cycleThe current status quo of Web3 companies is not compatible, and I don’t think this situation will change anytime soon.

However long wick candle discussion of digital asset, the situation will be different. So far, I still feel the ingenuity of the design of digital asset ownership (or encryption assets) in the Web3 world, the most direct impact of which includes three aspects:

• A method of determining ownership that relies solely on technical security;

• A method of implementing a digital asset that physically ensures the exclusive ownership of the digital asset by the owner;
• A web-based method for transferring digital assets;

It is no exaggeration to say that any technical solutions and specific products before this are not as perfect as the implementation of digital assets in Web3, which also brings more practical value to digital assets in Web3, that is, high liquidity and low-cost trust guidance, injecting new vitality into the development of the online world. Therefore, I believe that the core driver of the next wave of rapid development of Web3 will continue to be innovation around digital assets, and in short, innovation may be carried out from the following aspects:

Paradigm innovation: Similar to FT and NFT, the proposal of each new paradigm of digital assets has injected unprecedented development momentum into Web3, because the proposal of the new paradigm gives people the specific boundary of innovation and has guiding significance. On the surface, Fungible and Non-Fungible, this pair of opposite categories is enough to cover all types, but what I’m trying to say is that it’s not right, imagine gender, we took gender binary for granted for a long time, and look at what we’ve achieved now. In fact, I think it’s interesting to propose some token paradigms with different characteristics under certain conditions, and Fungible is only one of the dimensions, there will be more long dimensions to be discovered, of course, the premise of innovation is to propose specific application scenarios of the corresponding paradigm to be valuable. Just recently, I think the introduction of new digital asset carriers such as Runes is a very good start;

* Value Innovation: Through a certain economic model or a certain application design, combined with the existing FT and NFT paradigms, carrying a new type of value is also a very meaningful innovation direction. Taking FT as an example, I believe that the value carried by the current FT can be roughly abstracted into the following types, utility value, growth value, dividend right value and governance value, and in the next article, I will analyze the differences between these four value types in detail. Combined with the current development of the industry, I think credit value is likely to complement this as a fifth dimension.

* Business Innovation Here I think there will be two potential innovation paths, the first is the transformation of traditional Internet business, using some characteristics of digital assets to partially optimize or transform existing business models to form new competitiveness, and the second is the optimization and transformation of the existing use mode of combining digital assets, or it can also be called the innovation of the token model, this kind of innovation can usually play a role as a catalyst for the development of the industry, similar to Yield Farming, X-To-Earn, etc., all fall into this category;

Protocol, I think that although protocols such as Runes may seem like a step backwards from a technical point of view, their value as a new digital asset carrier still deserves recognition. Let’s wait and see what Web3 will look like in the future.