Waist Internet why no news

原文作者： Henri Hyvärinen，就职于加密项目财务指标公司 Token Terminal

原文编译： 0x33，律动 BlockBeats

Preface: Open source services provide a level playing field for developers

Today, all digital services are supported by private databases. The advent of Crypto provides a new way to build and maintain databases. In the encryption world, digital services are built on a decentralized database protocol, operated by a community of network participants. In just a few decades, the Internet has gone from a highly fragmented architecture to one controlled by a few powerful gatekeepers. This creates a monopoly that limits the access of developers and ultimately slows innovation.

Encryption protocols are designed to break this highly centralized architecture and level the playing field for developers. Applications can again be built separately on open and unlicensed protocols with additional valuable features.

Today's tech giants use decentralized Internet protocols to grow their businesses. Similarly, modern technology companies can now use encryption protocols as building blocks for new applications without relying on third party access. It is increasingly clear that these building blocks continue to attract engineering talent from around the world.

This article is divided into six main parts:

1. Innovation Cycle of information Technology & NBSP;

The history of the Internet & NBSP;

API economy & NBSP;

4. Fundamentals of encryption technology

5. The potential of encryption

Appendix: Relevant reference indicators

It innovation cycle

Source: Chris Dixon, The Next Step in Computing (2016)

New computing platforms offer unique capabilities that allow developers and entrepreneurs to reimagine entire industries and create new ones. We have seen many examples of this in the field of information technology. In the 1980s, personal computers created personal tools such as word processors, spreadsheets, and other desktop applications. The Internet connects these computers by providing a global information distribution network, turning previous tools into collaborative services such as search engines, social networks and E-mail. Smartphones, in turn, have made these services ubiquitous, adding cameras and GPS capabilities.

Encryption technology is a new Internet financial computing platform that makes financial transactions as efficient as E-mail. As a native technology to the Internet, encryption has been at a high starting point for global distribution since day one.

The next "big thing" always looks like a toy first

Source: Carlota Perez, Technological Revolution and Financial Capital (2003)

Every new technology goes through an investment phase before it reaches the mainstream. Speculation drives innovation and attracts talent and capital to emerging markets. A new computing platform is always good at one thing, but terrible at most other things. In the beginning, the new technology did not meet the needs of the users, which resulted in the products of these technologies being regarded as a worthless toy by the public. And there is a general tendency to underestimate the pace of innovation on new computing platforms. Smartphones were originally thought of as small, slow computers, but today they are used to do most things, and people have even developed a dependency syndrome.

We're still at the stage where encryption is still considered a toy. What is new about encryption is that it supports collective maintenance of both open and global databases, eliminating the need for trusted third parties. While the transactional capabilities of these networks are still limited, we should not lose sight of the fact that encryption has attracted the same developer interest as the early Internet.

Open source software synthesis innovation

The open source software movement was started in the 1980s by a group of marginal researchers. Today, 97% of businesses are actually using open source software. Android is built on Linux, the most popular open source operating system. In 2018, IBM bought Red Hat for $33.4 billion and Microsoft bought Github for $7.5 billion.

Open source software benefits the entire technology industry. The ability of anyone around the world to contribute and improve existing software spurs rapid innovation. Developers can integrate existing software into their products and services.

The emergence of encryption technology makes open source development of a global nature possible. Without relying on corporate coordination and financial incentives, encryption allows software to be monetized directly from the protocol, and embedding financial incentives accelerates open source development.

The History of the Internet

The Internet was originally a research project to create an open and decentralized communications network. The project is funded by government and academia. The goal is to create a communication network without any single point of failure. The commercial Internet is built on this network structure.

Then the Internet became ubiquitous because its underlying network was open and decentralized. Open communications standards provide a Shared infrastructure for global information transmission. Anyone can join, communicate with, or deploy applications to a global network without permission. Encryption is an open Internet financial communication network. Encryption keeps the global financial infrastructure from a single point of failure. Anyone can use and deploy financial applications on a Shared infrastructure. An open financial infrastructure enables permission-free innovation.

The early Internet protocols were just channels of communication

Protocols define the standards for communication between computers on the Internet. These protocols are used for all Internet communications to ensure fast and reliable information transmission. Different types of information require different protocols: Web requests (HTTP), E-mail (SMTP), voice (VoIP), and so on.

Internet protocols are limited in their capabilities because they cannot store state. Internet protocols can transmit information, but they cannot store it. This means that communication can never be based on previously sent messages. Communication through these protocols lacks context.

Before encryption, any meaningful activity on the Internet required the participation of third parties. The ability to record information (state) is a prerequisite for building Internet applications. So far, private companies have maintained databases that communicate over Internet protocols.

Internet protocols need private third-party databases to realize their full potential

All Internet services rely on the ability to store previously active data. For example, it is not possible to maintain a user's social network record without accessing previously established contacts. Entrepreneurs see great potential in aggregating data. Privately owned databases hold records of activities on the Internet. This data is filtered and sorted and can be used to create user-friendly applications. The better the user experience, the more users will be attracted to the service, resulting in more data being collected. This has created a virtuous cycle in which a handful of technology companies have become data monopolies.

Encryption protocols store data in collectively owned databases. The encryption protocol can be used as an open database for applications. Instead of companies aggregating data, it is aggregated at the protocol level and becomes a Shared infrastructure. Applications and users can leverage and benefit from the same data store.

Data monopolies became the gatekeepers to the Internet

Source: NFX, Network Effects Manual: 13 Different Network Effects (2018)

The Internet began as a decentralized network, but has since slowly morphed into one controlled by a handful of large technology companies. Google and Facebook now directly affect more than 70% of Internet traffic. As a result, startups have to spend almost 40% of their venture capital money on Google, Facebook and amazon, relying on their services to generate traffic and attract customers.

Users find that the greatest value in plugging into an existing service is due to previous network effects. Large technology companies (GAFA) provide their users with access to billions of relevant counterparties (users, suppliers, customers, service providers, and so on). In addition, they can provide an unparalleled user experience because they have accumulated user data.

Lack of competition stifles innovation on the Internet. Gatekeepers used to try to compete, which kept the Internet market diverse. Today, most of these companies dominate their respective Internet domains. The result is that consumers lose their diversity of choice.

The lack of a local payment layer limits the possibilities for business models over the Internet

The lack of a local payment layer limits possible business models on the Internet. These days, companies tend to focus either on the attention economy or the wallet economy. The former is typically a data market that emphasizes participation and AD monetization (Facebook, Twitter, Snapchat), while the latter is typically a content and product market that makes money through transactions (Amazon) and/or subscriptions (Spotify, Netflix). The main source of revenue for Internet companies has become so concentrated.

However, the existing payment infrastructure does not support frictionless payment. At present, physical payment methods that have migrated to the Internet make it difficult to make small and continuous payments. But seamless payments provide product developers with more accurate user value data. In addition, the security of traditional payment methods is not ideal.

Traditional payment methods are hurting users' experience on the Internet. More and more advertising makes many applications and services difficult to use. Extreme targeting in ads can compromise privacy, and software is often malicious (coercive or user-unfriendly). Subscription-based revenue models bundle users into a wide range of services. Users are forced to sign up for monthly or annual subscription plans -- many users no longer use these products or services, but they often forget to cancel their subscriptions and continue to pay for services they don't get.

API economy

Source: Scott Kupor, Entrepreneurship, Platforms and Innovation (2019)

Leading technology companies are platforms. They are two-sided markets that connect users and services. Platforms thrive on network effects and user-generated content. For service providers, the platform can gain customers at a low cost. For users, the platform is a way to plan and provide access to high-quality service providers.

Platforms have business models that make capital efficient. Uber is the most valuable taxi company, but it doesn't have a car. Airbnb is the world's largest hospitality company, but it doesn't own any real estate. Spotify is a music market where all content is created by artists. Youtube is the largest video streaming service, but it doesn't have any exclusive content.

The platform relies on network effects and user-generated content without rewarding users. The typical life cycle of a platform is to raise venture capital, gain users, and improve network effects. In turn, the users of the platform make the service more attractive to new service providers and users. Once the platform reaches critical mass, the company can permanently extract rents from the platform's activities.

The relationship between the platform and third parties changes over time

Source: & have spent Chris  Dixon, Why Decentralization Matters (2018)

The relationship between the platform and the third party is complementary to the change in time. Successful platforms tend to follow a similar pattern. As platforms move along an S-shaped curve, their influence on users and third parties grows steadily. As they reach the top of the S-curve, their relationship with network participants shifts from cooperation to competition. Centralized platforms start with recruiters and eventually become value extractors. Initially, the platform needs to recruit users and complement third-party resources, such as developers, enterprises and media organizations, to make the service more valuable to users. Once the platform reaches critical mass, the natural path for business growth is to compete for market share with third parties that complement it.

Platforms naturally stifle innovation. Complementing third-party offerings, the shift from cooperation to competition makes it difficult to build sustainable businesses and makes entrepreneurs tired of building on centralized platforms. A recent high-profile case about the risks of such platforms is Spotify vs. Apple, which is accused of unfairly promoting its music service in the app store.

The core functionality of the application depends on API access from multiple other service providers

Source: Martin Casado, The World Through the API (2018)

Applications do not do isolation. Instead, they typically connect to a database of multiple external service providers & NBSP; API.

Modularity is mutually beneficial for technology companies. It is often impractical to build many functions from scratch, which is why companies tend to rely on other service providers to provide many core functions.

Encryption protocols replace the traditional NBSP; by providing a cheaper and more reliable service; API. API access is expensive to maintain. For example, Uber paid $58 million for the right to use Google maps from 2016 to 2018. The right of an API provider to unilaterally change data access rights creates inherent platform risks for third-party application developers. When built on top of encryption protocols, developers don't have to worry about sudden changes in data access rights. Open infrastructure eliminates platform risk for third-party developers.

Fundamentals of encryption

Source: Emre Tekisalp, Understanding the Web 3 -- A User-controlled Internet (2018)

Encryption protocol is a new Internet infrastructure. Encryption protocols add an open data layer to the current Internet protocol suite. Business logic previously performed by companies can now be programmed directly into protocols. Encryption protocols are owned, maintained, and operated by an online participant network rather than a centralized company.

Encryption Protocol a platform on which developers can build applications without permission. Developers now have access to a cake that is not controlled by a centralized company; API  Build the application on the Shared data layer. Applications and users have equal access to the Shared data store.

Encryption protocols provide developers with complex building blocks. A Shared programmable data layer enables faster and more cost-effective application development. In addition, it eliminates the platform risks inherent in centralized platforms.

In the space of a decade, encryption has grown from a humble forum post to an institutional asset class

Nathaniel Popper, Digital Gold: Bitcoin and the Inside Story of Misfit and Millionaires Trying to Reinvent Money (2016)

The bitcoin protocol specification was first published in 2008. The first major venture capital investment in encryption followed in 2013. The 2015 launch of Ethereum attracted a lot of attention from developers and opened up a design space for encryption applications.

The Internet was supposed to have a local payment layer. Similar to the Web error page display & NBSP; "404 Not Found", also in the Internet error code specification "402 Payment Required" & NBSP; Error. The Internet's founders had hoped to integrate the digital payments layer in the 1990s, but they could not solve the technical challenge of maintaining a global database without a trusted third party.

Encryption converts payments into Internet packets. Similar to the Internet's support for the transfer of unlicensed information, Bitcoin supports the transfer of unlicensed value. Any connected device is free to participate in the Bitcoin network.

The Bitcoin agreement provides an economic incentive for its participants to maintain a globally open database

Source: Satoshi Nakamoto, Bitcoin: A Peer-to-peer Electronic Cash System (2008)

Participants in the bitcoin network compete for the right to verify transactions. Participants were rewarded with Bitcoins for honestly updating and maintaining the database.

The Bitcoin protocol is a solution that bypasses intermediaries. The absence of trusted third parties makes assets on the Internet safe and cross-border transactions effortless. As a single, Shared, open database of transactions, Bitcoin offers an alternative to the friction inherent in traditional financial infrastructure, where all Banks have their own internal transaction databases. Money can now be sent and sent globally as efficiently as E-mail.

Encryption potential

Source: Ethereum, Next Generation Intelligent Contract and Decentralized Application Platform (2014)

Ethereum enabled the creation of intelligent contracts. Smart contracts are common products embedded in the Ethereum blockchain. Anyone can pay to interact with them. The developers realized the potential of programmable currencies. While Bitcoin can be thought of as a calculator capable of performing simple functions, Ethereum is more like a computer capable of performing arbitrarily complex transaction logic.

Smart contracts expand the design space for cryptographic applications. Smart contracts are building blocks of applications that can be deployed on a globally open data layer. Because software simply encodes human thoughts into a machine-readable format, any ideas that a developer can form under these constraints can be applied to the application.

Ethereum's programmability has led to an explosion in intelligent contract development

Open-ended financial instruments (used for lending, derivatives, trading, etc.) are financial processes that can interact without the need to trust a third party. The open market core Internet infrastructure (storage, computing, video conversion coding, content delivery, etc.) enables any user to provide and consume computing resources directly from other network participants, while NFT represents the only globally transferable digital information, such as game items or online identities.

The encrypted space offers unparalleled opportunities for developers and technology entrepreneurs. Developers have been given the tools to rebuild financial and Internet infrastructure from scratch. The sheer size of the potential impact of applications, coupled with the new ability of open source software to make money, has led to an increasing number of developers entering the field.

The next generation of Internet applications will be based on encryption protocols. Encryption protocols provide unique capabilities that enable a new type of Internet application to be created. Similar to entrepreneurs building new businesses over open Internet protocols, encryption allows developers to reimagine existing industries and build entirely new ones.

Decentralized applications use encryption protocols as their core feature

Credit: Introduction to The Veil (2019)

Just as traditional Internet companies rely on third-party API access, applications built on encryption protocols access similar functionality without the associated platform risk. Don't rely on a third party NBSP; API, developers can minimize infrastructure risks. Unlike the current application development environment, encryption protocols create economic incentives to prevent data silos (islands of information and data, no state of integration). Instead, developers have an economic incentive to create protocols that can easily integrate with other protocols and applications -- in order to increase traffic and usage of their own protocols.

The modularity and composability of encryption protocols have led to rapid innovation. Because developers are able to deploy applications on top of existing back-end infrastructure, creating compelling user experiences becomes a major difference between applications. For example, decentralized banking services can be efficiently built by creating user interfaces that connect to encryption protocols that provide relevant financial primitives such as exchanges, loans, and/or derivatives.

Augur: The agreement to forecast the market

Source: Augur, a decentralized Forecasting machine and forecasting market Platform (2018)

The Augur protocol allows anyone to create, trade, and verify the results of the forecast market. Forecasting markets can be used to bet on events, predict the probability of future events, and hedge risks. Augur provided cheap and global access to any financial market. The Augur market can be created by anyone with an Internet connection. The agreement contains built-in economic incentives to encourage online participants to operate the market at the lowest cost.

Decentralized applications build on the Augur features and provide a user interface for consumers. Decentralized applications plan and filter interesting markets for their users. Since both transaction execution and settlement occur directly in the agreement, users do not have to rely on trusted third parties to host their assets in order to participate in the Augur market. Instead of relying on a single company for security, users benefit from the underlying protocols for global network security.

Value creation and value acquisition will be transferred from company shares to agreed tokens

Source: Joel Monegro, Fat Accord (2016)

Encryption protocols can perform many of the value-added functions previously performed by centralized companies. Encryption protocols aggregate values by charging for the functionality they provide. Because encryption protocols can create better services (cheaper, faster, more secure) for consumers, they are likely to capture much of the financial activity that takes place on the Internet.

The emergence of encryption represents the biggest revolution in information technology since the Internet.Encryption protocols, which all major Internet applications rely on today, may become as ubiquitous as TCP/IP or SMTP. However, compared to TCP/IP or SMTP, it is possible to have a share of the encryption protocols and to benefit economically from all the communications that they will facilitate in the future.

Appendix: Relevant reference indicators

Global penetration of the Internet, smartphones and e-commerce changes

Appendix to Institutional Participation in the Encryption Market

& have spent Note: This article was published by the original author on July 11, 2019. Some of the data are subject to change as of today.

Link to original article:https://medium.com/@henrihyvarinen/

This article is translated and published by Rhythm BlockBeats with the authorization of the original author. If you want to reprint this article, please attach the hyperlink:https://www.theblockbeats.com/news/16865

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia