From Xiao Feng’s blockchain origin to the fourth industrial revolution and token economy engine

"We wanted transoceanic planes, but we invented Zoom."

Time has come to 2025. For insiders, this crypto market has gone through a long period of development (more than ten years), through several bull and bear ups and downs, and is magnificent. We can all remember every code ticker that has survived to this day, and they all have a sense of history.

However, in fact, the scale of crypto assets is only 3 trillion US dollars, which is less than 1% of the traditional financial market of 400 trillion to 600 trillion US dollars. Although the Bitcoin ETF, which was promoted by Grayscale last year and disruptively entered Wall Street, it still seems difficult to carry the banner of digital gold, resonate with Nasdaq, and deviate from REAL gold.

In such a crypto market that we are so eager to enter, is it survivor bias? Or is it a test field for the new financial revolution?

As Dr. Xiao Feng said, to answer this question, we must start from the origin of blockchain, from the first principles, and from the basics to examine the hotly debated digital currency/crypto assets, the crypto market, and the blockchain technology behind it.

1. Blockchain: New Financial Infrastructure

If we look at crypto assets from a single dimension, such as the US SEC, we may only distinguish these assets as commodities and securities; if we look at the crypto market from a macro perspective, it may be a sub-sector in the development of the digital economy; but if we look at blockchain from a deeper level and combine it with the previous industrial revolutionsechnological revolutions, then blockchain as a new financial infrastructure will surely present a picture of the Age of Discovery, setting sail and riding the wind and waves.

All of this is based on blockchain technology. Therefore, we must return to our original intention and explore what blockchain is.

1.1 The first principles of blockchain

The first principles of blockchain are not a single technology, but a systematic combination of decentralization, cryptography, consensus mechanism, transparency, incentive mechanism and other elements. These systematic combinations are reflected in a paper by Satoshi Nakamoto in 2008:

The Bitcoin white paper, by combining a variety of innovative technologies and the design of changes in social production relations, hopes to change the centralized financial system with traditional banks as the core, solve the centralized trust problem in the current financial system, and provide users with a safer, more convenient and low-cost payment method (a peer-to-peer version of electronic cash (system) would allow online payments to be sent directly from one party to another without going through a financial institution).

From the perspective of Bitcoin, the endowment of blockchain is financial infrastructure, and its initial construction is used to solve the final consistency problem of payment and settlement. Digital currency built on blockchain can bring us great advantages brought by digital currency and blockchain technology, which are reflected in near-instant settlement, 24/7 availability, low transaction costs, and the infinite possibilities brought by the programmability, interoperability, and DeFi composability of digital currency tokens themselves. These are what the traditional financial payment system desires and is difficult to achieve.

Investor Will Wang gave a good summary of this: In Trustless We Trust. If you have to add a time limit, I think it is: 10,000 years.

1.2 The essence of finance

What is the essence of finance? It is the mismatch of value across time and space. This essence has not changed for thousands of years. But the service mode is changing: from no bank to bank, from no central bank to central bank.

New finance based on blockchain can greatly improve the efficiency of finance:

A. Cross-time

On the one hand, it is reflected in the time value of money (Time Value of Money), which means that if I use tomorrow's money today, I will pay a time interest for tomorrow's loan. This interest rate model will be run through DeFi, which will unlock the limit of traditional bank capital turnover (12 times a year), and the efficiency of funds will be greatly improved. On the other hand, it is the instant settlement of value. Remittances from Hong Kong to the United States can be realized in seconds through Web3 payment, with nearly zero handling fees and no need for five institutions to reconcile accounts. This is the best choice.

B. Cross-space

The most intuitive case is that in 2023, Warren Buffett, the stock god, invested heavily in high-return Japanese trading companies by issuing yen bonds with a rate close to "0". However, banks, central banks and other institutions in financial services will be the bottleneck and obstacles to the global flow of value. This is exactly the point where new finance can break through: global and cross-space value configuration. There is no such thing as going overseas in the blockchain and Web3 industries, because we are Day One Global, we are different.

C. Value

Stablecoin, synthetic dollar or special currency is essentially a token pegged to the US dollar. Through digital currency and blockchain technology, the essential attributes of currency are further highlighted, its core functions are strengthened, the efficiency of currency operation is improved, and the operating costs are reduced. In addition, the tokens circulating on the blockchain can carry other assets, such as Tokenized MMF, so the transmission of this value token can also be completed instantly. Visa has always referred to it as Money Transfer. With the blockchain, it should be changed to Value Transfer.

Tokenization and unified ledger - blueprint for building a future monetary system

Just like the essential attributes (value scale) and core functions (exchange medium) of currency are unchanged, despite the carriers or manifestations of currency such as shells, chips, cash, deposits, electronic currency, stablecoins, etc. The essence of new finance is also unchanged. What needs to be changed is the service methods of banks, exchanges, etc. What needs to be considered is how to provide better financial services in a distributed, digital, and space-time scenario.

1.3 New Financial Revolution

Compared with traditional finance, the biggest innovation of new finance is the change in accounting methods - blockchain, an open and transparent global public ledger. Changes in human accounting methods have only occurred three times in thousands of years, each of which has profoundly shaped the economic form and social structure, and each breakthrough reflects the co-evolution of technology and civilization.

Single-entry accounting in the Sumerian period (3500 BC) enabled humans to break through the limitations of oral communication for the first time, promoting the formation of early trade and the state because of the need to record taxes and trade. Commercial dispute clauses appeared in the Code of Hammurabi in ancient Babylon.

Double-entry accounting promoted the commercial revolution in the Renaissance (14th-15th centuries). The prosperity of trade in Mediterranean city-states, investment in the Genoese fleet, and the Medici family's multinational bank all required complex financial instruments, which promoted the emergence of banks and multinational companies and the establishment of commercial credit.

What followed was the familiar distributed accounting driven by Bitcoin in 2009, which led to changes in decentralized finance, trust mechanisms, and the rise of digital currencies.

This new finance based on the transformation of distributed accounting methods is inevitably inseparable from blockchain, smart contracts, digital wallets, and programmable currencies. As the ledger settlement layer of financial infrastructure, blockchain itself was originally designed to solve the problem of final consistency in payment and settlement. The combination of digital currency and smart contracts built on distributed ledgers can bring unlimited possibilities to new finance: near-instant settlement, 24/7 availability, low transaction costs, and the programmability, interoperability, and composability of digital currency tokens with DeFi.

As a result, new finance mainly presents three major changes:

First, the accounting method has changed from centralized double-entry accounting to decentralized distributed accounting;

Second, the account has changed from a bank account to a digital wallet;

Third, the accounting unit has changed from legal tender to digital currency.

The most important distributed accounting is born out of the cross-time, cross-space, and cross-organizational characteristics of digitalization, and is the financial foundation of the Fourth Industrial Revolution.

2. The First Three Industrial Revolutions

Dr. Xiao Feng quoted the research results of a Nobel Prize winner in economics: "The Industrial Revolution has to wait for a financial revolution." The Nobel Prize winner believes that all industrial revolutions rely on the support of new financial service methods to support the development, development and growth of new industrial revolutions. Conversely, without the blessing of the financial revolution, the industrial revolution of human society may not succeed. Similarly, another economist further pointed out that each industrial revolution is the superposition of energy revolution, industrial revolution and financial revolution, among which the financial revolution is often the premise.

His research results cover the first three industrial revolutions, and now we have entered the fourth industrial revolution - the era of intelligence and digitalization. Let's review the first three industrial revolutions:

The first industrial revolution (1760s to 1840s) was marked by steam engines and took place in Britain. The British national debt system and joint-stock banks provided financing channels for railways and factories, which greatly improved productivity.

Douglass North pointed out in The Rise of the Western World (1973) that before the Industrial Revolution, Britain provided capital accumulation and risk sharing mechanisms for technological breakthroughs (such as steam engines and textile machinery) through institutional innovations such as financial system reform (such as national debt system and improvement of banking system), property rights protection, and reduction of transaction costs. He believes that "the industrial revolution had to wait for the financial revolution" is a summary of this stage.

The second industrial revolution (late 19th century to early 20th century) was represented by electricity and wireless communications and took place in the United States. The development of capital aggregation in the US financial system (such as investment banks and stock markets) is a prerequisite for technological innovation, which provides channels for large-scale financing of enterprises. For example, railway construction requires a lot of long-term investment. The United States attracts domestic and foreign capital by issuing railway bonds and stocks. Investment banks (such as J.P. Morgan) play a key role in integrating scattered capital.

The third industrial revolution (late 20th century to early 21st century) is marked by computers, codes and the Internet, and it also emerged in the United States. At that time, the Silicon Valley venture capital model (such as Sequoia Capital and KPCB) became the core financing mechanism of the third industrial revolution. VC provides early funds for high-risk, high-return start-up technology companies (such as Apple, Microsoft, and Google) through equity investment. For example, between 1970 and 2000, the amount of VC investment in the United States increased from hundreds of millions of dollars per year to hundreds of billions of dollars, which directly promoted the commercialization of semiconductors, software and Internet technologies.

On this basis, the Nasdaq stock market, established in 1971, has become the main channel for technology companies to go public and raise funds with low barriers, high liquidity and inclusiveness for technology companies. For example, Microsoft (listed in 1986) and Amazon (listed in 1997) obtained expansion capital through IPOs. At the same time, tools such as stock options and employee stock ownership plans (ESOPs) attract talents to join innovative enterprises, binding human capital with financial capital.

3. The Fourth Industrial Revolution

If the fourth financial revolution based on blockchain has the basic prerequisites, then according to the argument that "the industrial revolution has to wait for a financial revolution", it is actually looking for where the fourth industrial revolution will be born.

The "Fourth Industrial Revolution" was first formally proposed by the Germans in 2013. Its core idea is to use information technology in the manufacturing field, thereby changing the traditional standardized and large-scale production and establishing a highly flexible and intelligent industrial production model. However, limiting intelligent information technology to the industrial field alone obviously does not really recognize the profound impact of the scientific and technological revolution represented by AI and blockchain on human civilization.

3.1 The technological revolution in the eyes of Cathie Wood

Cathie Wood, known as the queen of technology investment, released ARK Invest's "Big Ideas 2025" research report at the beginning of the year, saying that although the International Monetary Fund (IMF) predicts that the global economic growth rate will be 3.1% by 2030, she believes that the annual economic growth rate should exceed 10%!

ARK Invest believes that the growth changes of the macro economy conform to historical laws and show a phenomenon of step-by-step jumps, and each jump is brought about by major technological changes.

Since the beginning of human history, the economy has stagnated for 100,000 years, and innovation (especially writing) has enabled empires to connect continents together, thereby doubling the actual growth rate in 1000 AD. Since then, agricultural innovation has increased population density and specialized labor, resulting in a doubling of the growth rate in 1500 to 0.3% per year.

Since then, the first industrial revolution has swept the world, bringing the average economic growth rate of mankind to 0.6% per year. The second industrial revolution, marked by electrification, cars and telephones, ushered in modernization and allowed humans to increase economic growth fivefold to an average of 3% over the past 125 years.

If there is no new technological revolution, the IMF's forecast is likely to be correct, but Cathie Wood believes that technological breakthroughs in fields such as AI, blockchain, and smart robots may increase productivity again, which will be a major technological revolution and push economic growth to a higher level in the next 5 to 10 years.

3.2 AI reconstructs the spatial dimension of human economic activities

I agree with the two logics that Cathie Wood said:

1) Every technological revolution will take the economic growth rate to a higher level;

2) AI is a major technological revolution.

This point should not be controversial in 2025, so what I want to express is:

Each technological revolution or industrial revolution is essentially to reconstruct the spatial dimension of human economic activities through technological breakthroughs, break through the original physical or institutional boundaries, and create a new value exchange field. This "economic space expansion" is not simply an expansion of the geographical scope, but through the transformation of the technology-economic paradigm, it achieves dimensionality upgrades in three levels: the combination of production factors, the boundary of value creation, and the system of trading rules.

For example, in the first industrial revolution, the use of steam engines shifted production from home workshops to factories, and railways and ships expanded the scope of trade, allowing raw materials and commodities to be transported across regions. This is indeed an expansion of geographical space, and its essence is to incorporate surface resources and colonies into a single capitalist production network. In the second industrial revolution, electricity and internal combustion engines brought about urbanization and the rise of multinational corporations. Economic activities were no longer limited to local areas, but to national and even global scopes. The information technology of the third industrial revolution, especially the Internet, has created a network virtual economic space, e-commerce, digital services, etc., which completely broke the geographical restrictions. The fourth industrial revolution may involve AI, blockchain, and the Internet of Things, further integrating the boundaries of physical and digital space, and even covering the economic activities of the AI Agent silicon-based world.

The greatest value of AI lies in embodied intelligence and spatial intelligence, which requires a large number of physical robots and virtual AI Agents. Investor Wang Chao has talked about it before. If the future is a society composed of tens of millions of AI Agents, then Cryoto is a more feasible solution for interaction with people, machine-to-machine interaction, and various interactions.

Cathie Wood said: AI Agent will change the logic of people's search and shopping, and will be carried by digital wallets; digital wallets can further integrate the functions of savings, lending, insurance, investment, consumption, etc. in traditional bank financial services. Through the AI Agent innovation paradigm, the value chain of global e-commerce and digital consumption of downstream platforms can be moved upstream.

I also believe that programmable currency based on blockchain smart contracts can be competent for the value flow of AI silicon-based civilization and carried by Web3 digital wallets. This means that the Fourth Industrial Revolution will inevitably need new finance based on blockchain, otherwise it will become an old concept of traditional finance to reduce costs and increase efficiency.

4. Token Economic Engine

The UK supported the first industrial revolution with credit and bond markets, the United States supported the second industrial revolution with investment banks and capital markets, and the third industrial revolution was supported by venture capital (VC) in Silicon Valley and the Nasdaq emerging stock market. So doesn't the Fourth Industrial Revolution need a new financial model?

As Dr. Xiao Feng said:

Many people are ashamed to admit that blockchain is the infrastructure supporting the Fourth Industrial Revolution, so we often mention that we want to make "alliance chains" or "coinless blockchains." But the practice of the past decade has proved that most of these attempts do not work. We must bravely admit that blockchain, as a tool for adjusting production relations, has finance as its core entry point. If there is no financial demand, we don't need blockchain at all. This means that when humans enter the Fourth Industrial Revolution and carry out digital and intelligent production relations innovation, a new financial revolution is indispensable. Otherwise, all this may not happen or fail.

Obviously, the new financial model based on blockchain is in place, and the token economic engine on it has begun to roar.

Although there are many types of tokens, from the original three-token model of Dr. Xiao Feng, to the five types of tokens today, and to the seven token types framework recently given by a16z, although Online is New Onchain, all assets will be tokenized on the chain, but I think that the utility token combined with the project network usage rights is the key to leading the crypto market. If other token types are upgraded and transformed, then the utility token can be an innovation.

In 2023, Dr. Xiao Feng delivered a closing speech on "The Three-Token Model of Web3 Applications" at the Hong Kong Web3 Carnival. I also wrote an article in July 2023 on "Value Capture and Compliance, Exploration of the Application of the Three-Token Model in China". As for the discussion of utility tokens, it seems that it is still very applicable now.

Dr. Xiao Feng's closing speech at the 2023 Hong Kong Web3 Carnival

Web3, based on the blockchain network, is an economic model based on the value network (stakeholder capitalism), emphasizing data credibility, data sovereignty and value interconnection. Under the premise that all values can be tokenized, value not only includes ownership, but the more important value is the right to use.

The right to use is non-exclusive and has multiple sharing properties. It can be authorized and licensed multiple times, and even open source and CC0 can be infinitely recycled, which is conducive to ordinary users to participate and share value. The core of the right to use system is stakeholder capitalism. The original organizational form may not be suitable. The decentralized autonomous organization (DAO) based on open source organizations and non-profit organizations naturally fits stakeholder capitalism and has become the main organizational form of the new economic model of Web3.

Under the right to use system, all participants in the decentralized organization collaborate on a large scale as stakeholders, make their own contributions, and share organizational value. In this context, the shareholder ownership represented by the shareholders of centralized projects is no longer meaningful. What is truly valuable is the right to use the project.

The right to use cannot be decentralized, but it can be tokenized. Combined with blockchain distributed ledger technology, the right to use can be standardized and shared in the form of tokens, which is related to the interests of every participant in the project network. This token is called a utility token.

In this Web3 new economic model, tokens are essentially carriers of value. Only after a deep understanding of the value of tokens can we design the best economic model for Web3 applications, realize multi-layer growth flywheels, and motivate all participants.

Web3 New Economy and Tokenization

Let's take a look at a vivid token economic engine case - Web3 decentralized telecom operator Roam. This project can actually solve the difficult-to-solve pain points in Web2 scenarios through Web3. It can be said to be a model of Web3's transformation from virtual to real.

Roam is committed to building a global open wireless network to ensure that humans and smart devices can achieve free, seamless and secure network connections whether they are stationary or mobile. Compared with the geographical limitations and homogeneity of traditional telecom operators, Roam, based on the inherent global advantages of blockchain, has built a decentralized communication network based on the OpenRoaming™ Wi-Fi framework and accessed the eSIM service to build a global open and free wireless network.

After just over two years of construction, Roam currently has 1,729,536 nodes and 2,349,778 application users in 190 countries around the world, and conducts 500,000 network verification activities every day, making it the world's largest decentralized wireless network. In addition, Roam users can also obtain free eSIM data when building and verifying Wi-Fi nodes, making Roam a telecom service provider that can operate in an Internet mode.

Globally, although traditional Wi-Fi still carries more than 70% of data traffic, its old infrastructure and privacy data security issues limit the exploration of its potential. To address these challenges, Roam worked with the Wi-Fi Alliance and the Wireless Broadband Alliance (WBA) to build a decentralized communication network by combining traditional OpenRoaming™ technology with Web3's DID+VC technology. This not only reduces the high upfront cost of global network construction, but also enables seamless login and end-to-end encryption similar to cellular networks.

Roam encourages users to participate in network co-construction through the Roam App, share Wi-Fi nodes, or upgrade to the more secure and convenient OpenRoaming™ Wi-Fi. Users can not only enjoy seamless connections between four million OpenRoaming™ hotspots around the world, but also find Roam's self-built network nodes in inaccessible areas such as Siberia and northern Canada, thereby greatly expanding network coverage and improving user experience.

Roam has promoted the rapid development of decentralized networks through free global access to Wi-Fi+eSIM and a diverse project network incentive mechanism. The ideal country of Network State needs to be built on a communication network, and Web3 decentralized telecom operators like Roam may become the digital foundation of the ideal country.

Combined with the narrative of the Fourth Industrial Revolution, a project network like Roam can obviously become the communication base of AI silicon-based civilization, and can also bring the same speed of the Internet to the global transmission of value. This new economic model of Web3, which has sprung up in 2 years, can be said to be a subversion of the traditional economic model of Web2, and the token economic engine is crucial.

5. Written at the end

Teacher Yang Peifang said: "Looking back at human history, the Chinese nation once dominated the agricultural civilization era with agriculture, mulberry, silk and fuzzy holistic philosophy; Europe and the United States dominated the industrial civilization era with mechanical electricity and fine reductionist philosophy."

So in this Fourth Industrial Revolution, although the wave of anti-globalization has been caused by geopolitical factors, we will still be pulled together by the unified ledger of the blockchain, and you will find that the world is really flat. As a book says: "We wanted transoceanic planes, but we invented Zoom."

In this parallel global market, we can ignite global power through the token economy engine, achieve instant global value transmission through the blockchain settlement network, and realize global financial inclusion and financial equality through new financial infrastructure. Of course, there is still a lot that can be done and a lot that needs to be done.