The future Internet of value is mainly based on NFT

The future Internet of value is mainly based on NFT

On July 25, the “2021 World Blockchain Conference Hangzhou” was held at the Academic Exchange Center of Hangzhou Future Science and Technology City.

I had the honor to deliver a speech “NFT-The Future of the Internet of Value” at the conference. I believe that the future Internet of Value is mainly based on non-homogeneous token NFT. NFT is a better digital value carrier than FT, and it is also an inevitable trend of the Internet of Value. The Internet of Value based on NFT still requires a lot of infrastructure innovation.

What exactly is NFT?

Recently, the digital asset market as a whole is in a bear market state, which still shows some bright spots, such as Metaverse, GameFi (gamification finance) and NFT sectors. In fact, both Metaverse and gamification finance are closely related to NFT, so the entire industry needs to understand NFT more and more. Nowadays, when you talk about NFT, you think of artwork. We think it is very narrow. What exactly is NFT? We combine our own research to do some theoretical discussions for everyone.

In 2017, my teacher Yuan Dao and I translated the English word Token into a pass, which was recognized and accepted in the industry. Looking back at 2017, we had a lot of visions for the Internet of Value, blockchain, and open finance in the future. For example, at the time we felt that the future Internet of Value would have a protocol layer dedicated to expressing value; using certificates and digital currencies to express value, we thought that the certificate economy could mobilize the enthusiasm of millions of users and create new growth models. We judge Finance, Internet applications and games will all be reconstructed on the blockchain. Today it seems that these judgments are correct.

But I must admit that one thing we didn’t see is NFT. At that time, the Internet of Value we envisioned was mainly based on homogeneous tokens. When we wrote that article (“Tokens are the key to the next-generation Internet digital economy-One of Yuandao Blockchain Dialogues”), it was at the time when the crypto cat became popular. Encryption cat tells us that in addition to homogeneous tokens, there are also non-homogeneous tokens. We think it is very good. NFT is a supplement to FT, an embellishment, but it is by no means mainstream. However, four years later, I have a completely different view on this issue.

The future Internet of value is mainly based on NFT

I think that in the future value Internet, most of the tokens are non-homogeneous, and homogeneous tokens are only a small part. In other words, the future Internet of Value is mainly based on non-homogeneous tokens-NFT.

Review the development history of network communication

Before starting the discussion, let’s talk about a piece of past. Regarding the development of network communication, in fact, the first electronic communication network of mankind was the telephone network, not the Internet.

The telephone network is mainly a circuit switched network. What is a circuit switched network? For example, Zhang San wants to call Li Si. He sends the request to the operator. The operator takes out a cord with plugs at both ends and connects the phone lines of Zhang San and Li Si, and the two can talk. The voice signal can be like water, from Zhang Sanliu to Li Si, very simple, clear, low-latency, and high-quality. But there is a problem. Once the channel between these two people is established, this line can only be monopolized between Zhang San and Li Si at this time, and other people are not allowed to plug in. This kind of exclusive line situation has contributed a vocabulary to our Chinese, which is the so-called “busy line”.

The future Internet of value is mainly based on NFT

Because of the busy problem, if the circuit-switched network of the past has been used, the number of users will be busy everywhere. The entire network cannot be enlarged, and it is absolutely impossible for us to listen to music, watch the news, and play games like today. , Because as long as one application is busy, other applications cannot be used. In a professional way, this kind of network is not scalable.

How to make network communication scalable? In 1962, the MIT research group proposed a new network switching protocol, namely the Packet-switched Network (Packet-switched Network) applicable to the Internet today. One of the most important advances in packet-switched networks is to cut the data that used to be like flowing water into pieces and put them in one data packet after another.

What does a data packet look like? It first has a fixed format, which must contain several specific fields, and contains a series of self-descriptive information, such as indicating what protocol it complies with, how big the packet is, the address of the sender and receiver, its own serial number, etc. Wait. Then, there must be a content field in this packet, and the actual transmitted data is placed in this field. Data packets often do not make special provisions for this content field, allowing you to put anything in it.

To make a visual analogy, the data package solution is equivalent to packing water in many bottles. Each bottle has a package. Write clearly who sent it to whom, the quality and composition of the water, and which bottle is it. Water and so on, this is called self-descriptive information. Data has changed from stream to packet, and the entire network communication form has undergone a fundamental change. The core point is to transform the past simple stream-based communication form into a self-describing data packet, through buffering, storage, copying, routing, Forwarding and a series of means to build a highly flexible and scalable network.

NFT is the value data package of the Internet of Value

After understanding this past, let’s take a closer look at NFT? The current NFTs are basically based on the ERC721 standard. Let’s take a magnifying glass and take a closer look at ERC721. It stipulates that NFT must have two necessary fields, one is the issuance contract of this NFT, the other is TokenID, and then there is a huge “content” field below, this field is a blank piece of paper, allowing us to do anything inside. “A piece of white paper is good for drawing the most beautiful pattern”, you can do whatever you want on it. The artists first came out and said, let me paint on it, so we see that nowadays a large number of NFTs are all art Taste. The game developer came out and said, let’s draw the land certificate and game equipment on it, so now there are NFT virtual land and game equipment. However, everyone should be aware that you can put anything in this content field, even a doll, and then put another bottle.

The future Internet of value is mainly based on NFT

Don’t you think that ERC721 NFT is very similar to data packets in a packet-switched network?

So we see an interesting historical rhyme. Among the communication protocols, we move from circuit switching to packet switching, and the key is to turn data into self-describing data packets. However, the development of the Internet of Value is still in an era dominated by ERC20 homogeneous data. This technology has many advantages: good liquidity, good calculation, simple agreement, but only acquaintances can be socialized between smart contracts, and it can only complete a few simplest and most basic actions. If this form continues, no matter at the application level, the network communication level, or the intercommunication level of the value Internet, the network will not grow.

We believe that NFT is the value data package in the Internet of Value. It is a bottle of water. After labeling, the user decides what to put inside. In this case, it can have huge scalability advantages and can easily cross-chain. The smart contract does not need to know which smart contract issued the NFT to be processed. This is a very important ideological change.

Important direction of NFT development

So we wondered whether we can upgrade the Internet of Value and construct the Internet of Value with NFT (Non-Homogeneous Token). In the process of upgrading, it may be necessary to make basic requirements for the NFT protocol. In addition to the ID of the contract and Token, there must also be a chain identity of the blockchain (Ethereum, Polkadot, BSC, etc.), with a chain identity After that, we can carry out cross-chain transfer. The content placed in the NFT must be linked to business and application logic. From this we will get an important ability: the mutual combination and calculation of cross-chain NFT.

This ability is just sprouting in the field of blockchain today, and I believe it will become an important direction for the development of NFT in the future. This has several outstanding advantages:

First, the cross-chain trade of assets is using NFT as the carrier, and the cross-chain trade of assets can be much easier than it is today.

Second, NFT can be used as game equipment . NFT can embed a large amount of business logic, and the business logic of equipment upgrade can be directly written in the content layer of NFT. For example, a bronze equipment, plus some diamonds and gold coins, can be upgraded to gold equipment, etc. Such logic can be directly implemented at the NFT level.

Third, a better, more direct, and easier-to-think application is to use NFT to make computable tickets , such as commercial papers, certificates of deposit, bonds, standard contracts, bills of lading, pledge certificates, financial derivatives (options, futures) And so on, can be expressed as NFT.

Fourth, regulatory traceability . Due to the strong self-description ability of NFT, supervision can conduct a series of data analysis and supervision based on this self-description information, and apply a series of specifications and requirements, constraints and restrictions to its application, which can bring endless possibilities to future open financial applications. imagination.

If the future Internet of Value is based on NFT, it will become a major upgrade of the entire Internet of Value.

Solv uses NFT to express computable tickets

What the Solv agreement does is the third point mentioned above, the ticket. We use the content part of the NFT to create a standard specification that expresses a computable ticket, which is a new type of NFT called vNFT internally. The essence of a computable ticket is a table, so we constructed a set of standards to implement table calculations. For example, you can use a form to represent the bill of lading information, put this form in the content field of vNFT, and this vNFT becomes the bill of lading. This is easy to think of.

But the Solv agreement took a step forward. Let’s recall that data packets in network communications can be buffered and combined. In a sense, data packets can be calculated, that is, they can be split and combined. We believe that this ability is also very important for NFTs that represent value. Therefore, the vNFT protocol can realize the combined calculation of these two forms, which is equivalent to integrating two bills. One bill can be used to pick up one hundred books, and the other bill can be used to pick up two hundred books. It’s just a bill for three hundred books. A bond of the same specification, a bond of 1,000 yuan and a bond of 2,000 yuan can be combined into a bond of 3,000 yuan. This basic calculation logic has been implemented in our protocol, which can not only achieve merging, but also split, and the main linear calculations can be expressed.

The future Internet of value is mainly based on NFT

The ideal is full, but everything is difficult at the beginning, and it needs successful application cases to prove it at the beginning. We first choose to use vNFT to express Vesting Token, which is the well-known investor lock-up share (not only investors, but also all tokens currently locked and released in the future). For example, we can lock one hundred bitcoins in a bill, and then set the release time and release mode (in accordance with the linear release of each block or periodic release, write the release rules in advance), stipulate Good movement rules, the bill may be moved, it may be restricted to not be moved, and it may be restricted to be moved only once, etc. We can even transfer Token to a specific bill, that is, holding a bill, no matter who the bill is transferred to, a payment will be directly transferred to this bill in the next three months, realizing a mobile account . NFT makes digital assets more versatile, so we have chosen this direction. So far, this idea has been recognized by professional investment institutions around the world.

To sum up, we believe that NFT is a better digital value carrier than FT, and it is also an inevitable trend of the Internet of Value. The advantages and transcendence mainly come from the self-description ability of NFT, and this self-description ability can be customized. In this view, the ERC721 we are most familiar with is just the most common and common NFT. Everyone puts pictures, collectibles, and works of art in ERC721. If we open our minds and put other things in it, in fact, its applications are infinite and vast, which will cause a large-scale wave of innovation in our industry, including meta-universe, art, financial tickets, games and other fields. The NFT-based Internet of Value still requires a lot of infrastructure innovation. We also hope that Solv as a Chinese team can play an important role in this great process. Thanks!


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