Original author: Jingyi, founder of Yunqifangda, LD Capital Advisor (Twitter: @SulaXyz)
“Be brave and tell us what God means, no matter what you know.
I swear to Zeus beloved Apollo - you, Calchas,
The god to whom he prayed when he revealed his will to the Danai—
As long as I am still alive, as long as I can still see the sunshine shining on the earth,
No one dares to act wildly against you beside the ship in the vast sea.
No Danai dares to use force against you, even if you mean Agamemnon,
This man is now claiming to be the best hero among the Achaeans!
--Homeric
From the 14th to the 16th century, there were at least 166 large-scale wars in Europe that led to the annihilation of nations and genocide. The average war lasted more than 8 years. On average, more than two or three wars started at the same time every year, and the wars lasted more than 8 years. As many as 15 times. From the beginning of the Great Navigation in 1500 AD to the eve of the Industrial Revolution in 1700 AD, Europe was at war 95% of the time during these 200 years. In order to win one war after another, European countries must spend an average of more than 80% of their fiscal revenue on military expenditures every year. The emergence of war capitalism began to have a profound impact on Western civilization and the formation of the global economic structure. The fundamental reason is that in an era when regional expansion and population annexation were the main growth models, the economic benefits of violence were the greatest. City-state countries needed the protection of a more powerful government to fight against violence. In the century-long war between Britain and France, the British hegemony rose. English has become the main language for global knowledge and business exchange. The victory on the Plains of Abraham set the stage for the success of the American Revolution. India has become the country with the largest English-speaking population. The continuous inflow of wealth provides fuel for the Industrial Revolution. Powerful governments and competition for world hegemony have become the main logic of major economies.
However, today human beings have evolved from the industrial age to the information age. The social structure and the logic of economic growth have fundamentally changed. The costs and benefits of violence are declining, and the methods are changing.The fundamental conflict of mankind has changed from the hegemony of great powers to the contradiction between highly developed technological productivity and limited resources.Interstellar exploration to expand resources and promote production relations to allocate resources more efficiently are the paths and solutions that humans are exploring. In the information age, the network economy will surely flourish, giving birth to more advanced organizations and individual forms - NETWORK STATE (Network State) and TSI (The sovereign Individual).
The importance of gunpowder weapons and navigation technology has been replaced by long-distance communications and high-throughput computing. The late fifteenth century was a dark age and an age of despair. However, this is not unique in history. Among all changes, Before it comes, social turmoil and unrest are inevitable products. Today, the winner-take-all competition model, the long-arm jurisdiction of power politics, high-cost division of labor and collaboration, and the migration of large-scale production will all face changes. Changes have already begun and will intensify, based on the following background and facts:
Market efficiency is effective in the distribution of power
From the perspective of Marxism and institutional economics, the determinant of resource allocation is not the market, but the power structure in institutional arrangements. Institutions and resource allocation are the two main endogenous variables, and the power of different groups is the main factor in institutional changes. The sources of power include legal political power under the political system and actual political power under the resource allocation state. In essence, Its economic power. It is the distribution of power that determines economic institutions, resource allocation and economic growth rates.
We can easily find that the presuppositions of this view meet two conditions, one is the strength and stability of power, and the other is the growth rate of economic growth. In todays world, governments around the world are in debt and running deficits and issuing additional currencies to pass on costs. Economic growth cannot find an outlet, and the world has entered an era of stock games. The protection and leverage of power are weakened. After taking into account risk cost and preference factors, resources will sooner or later choose to flow to markets with higher allocation efficiency and tax-friendly.
Government fiscal expenditure burden remains high
Take the U.S. government as an example. In the thirty years since 1990, only in 1999 and 2000 did the U.S. federal governments fiscal revenue and expenditures have a slight surplus. In the other 28 years, the U.S. federal governments fiscal revenue and expenditures were all fiscal deficits. In the next nine years (2022-2031), the comprehensive fiscal revenue of the U.S. federal government is expected to maintain an average annual growth rate of 3.45%. By 2031, the U.S. federal governments fiscal revenue will reach US$5.957 trillion. At the same time, the federal government’s comprehensive fiscal expenditures are expected to maintain an average annual growth rate of 3.88% during these nine years; by 2031, U.S. fiscal expenditures will reach $7.812 trillion. According to this estimate, the U.S. federal government’s fiscal deficit is estimated to reach $1.855 trillion in 2031. (Data source: U.S. Congressional Office) Against the background of the rise of the Internet economy, it is foreseeable that the tax capacity of fiscal revenue will further decline.
Intensification of monopoly and concentration of capital investment
Monopoly and concentration are the results of the development of the industrial age, and economies of scale gave birth to modern giant companies. Since the 20th century, due to the standardization and divisibility of the division of labor, the scale of equipment and industry has soared rapidly. Effective economies of scale have increased the threshold for industrial iteration and replacement, and the product cycle has been relatively long. We have seen that China and the United States have emerged in their respective dividend eras and have relatively stable market situations and corporate profit models in the process of economic growth. However, as society develops and the market matures, companies will need to further develop their scale or undergo structural transformation, and their investment requirements for fixed capital will become higher and higher, which will inevitably lead to rigid production efficiency. In the information age, information technology has reduced equipment investment costs, shortened product cycles, made iterations faster, and intensified competition.
Complexity goes beyond primitiveness
The world has developed to this day and has become an extremely complex and sophisticated behemoth.
Darwins theory of evolution proposes that living things evolve through genetic variation and natural selection and believes that this variation is random. However, with the development of modern biology, research has discovered that living organisms are a complex cyclic feedback system based on biomolecules, and shape changes are affected by various factors. In this system, although everything is traceable, we can foresee its complexity and the precision and hugeness of the algorithm. The development of society is constructed by countless living organisms and the material world.
In Hidden Order: Adaptability Creates Complexity, the Santa Fe Institute, a representative school of complex systems science, analyzed cities, the human immune system, the central nervous system, and ecological systems, and found that although these systems have very different details, they have the following commonalities. : In the face of change, the system demonstrates coordinated operation and persistence. These properties rely on extensive interactions, the aggregation of multiple elements, and adaptability or learning. These challenges, such as the economic system, the Internet, and embryos, such as trade balance, computer viruses, and birth defects, have many similarities in terms of mechanisms.
From as small as a speck of dust to as large as the vast universe, only adaptive complex systems that do not rely on central authoritative control will be the longest-lasting advanced systems. And everything that follows will only become more complicated.
The mathematical nature of the unity of all things
The evolution of the world structure and geopolitics in history is rooted in the influence of violence and leverage. The original conflict between violence and prevention in the information age is based on the logic of property preservation. In a world constructed of 0 and 1, it can be solved by using mathematical characteristics, and mathematics is the most rigorous science. Although mathematics itself is equivalent and symmetric, the consumption of resources on both sides of the equal sign is asymmetric, such as multiplying prime numbers and factoring. This essential feature has begun to dominate the shaping of the network economy. Asymmetric cryptographic algorithms (RSA) and elliptic curve cryptography (ECC) also use cryptographic proofs to build the foundation for property preservation in today’s crypto world. The encryption bible Sovereign Individual clearly foresaw this possibility in the 1990s. This feature discovered by high-throughput computing will lead to the emergence of a new economic model that will rely more on spontaneous adaptation mechanisms and more on Rely less on conscious decision-making and the allocation of resources by bureaucracies. A new system led by protection will be completely different from the old system led by coercion during the industrial period.
Based on the above background and facts, we can clearly see the inevitability of change and predict it:Cyber states that do not rely on powerful governments and jurisdictional systems will emerge, and TSI will rise.
As described in the previous Homers Epic, in the age of the gods, gods and humans lived together, with no difference in appearance. However, the productivity and intelligence of the gods are at their peak, and they have more rights to allocate resources. Olympus, which belongs to the gods, is mysterious and fertile, but it is difficult for ordinary working people to reach it.The earliest imagination of the origin of human spiritual civilization may be our ultimate form. In the not-too-distant future, powerful TSIs live in the same physical environment as those dominated ordinary people, but they are also in a more independent cyberspace, just like the children of Zeus in Greek mythology, enjoying their own unique The culture and system of the country cannot be reached by parliament and royal power.These TSIs will have more resources at their disposal and will be more powerful than the powerful. In the new world, there will be an independent, reasonable and efficient configuration system and consensus rules. With the arrival of this day, everything will be restructured.
The definition of TSI is not limited to a single natural human being, but should include all collections that embody complete free will and independent consciousness.Therefore, a TSI can be a natural person, a highly cohesive organization, or a set of logically unified account identities. As long as all historical data of physically extinct human individuals can be unified and integrated in cyberspace, and the logic representing personal will can be realized through algorithm simulation and programs, theoretically, TSI will not disappear in cyberspace. And this will also be the first time in human history that we break away from physical limitations and realize the beginning of immortality in the digital world.
The emergence of Chat-GPT will accelerate the lifting of the seal, and the improvement of computing power under Moores Law will summon the talking tools described by Aristotle, and the tools he mentioned are people. In our next In the world, this tool person refers to all applications that can interact, execute, and even learn and improve themselves.
All this will cause great changes and have far-reaching impacts on the entire society, including but not limited to the following aspects:
1. Globally settled digital nomads
The identity form of the future will take root and grow in cyberspace, and will extend the corresponding social and hierarchical relationships on this basis. It will have bottom-up attributes and is fundamentally different from nationality, which is a product of systemic coercion. Digital nomads are free to choose their place of residence and offshore registration (if necessary), but the difference is that they have the option to enter or exit and will not pay high imposed tax burdens. In other words, the government provides in the physical space Protection is an optional service for digital nomads, who are customers of the government, not objects of rule. Some of these early digital nomads will return to the real world and continue to become citizens. Others will choose and adapt to this new identity and model, becoming real TSIs, continuing to build in the network country, and accumulating more wealth. and resources.
2. The Internet economy will not be universally welcomed.
Individual liberation and freedom have never been the common needs of human nature, and not everyone wants to be the winner in the next game. Risk-averse seeking refuge and a sense of belonging will still be the mentality of most people. Facing uncertainty about the future can inspire dissatisfaction, and dissatisfaction with the present is always accompanied by nostalgia. Those who are most afraid of the emergence of new things may mainly come from the middle class in currently wealthy countries. They will feel the threats posed by technologies such as artificial intelligence and blockchain in the information age, and this group of people is very large. At the same time, most people at the top of the pyramid in the current social structure will also be dissatisfied with TSIs new freedom and will criticize it from the height of morality and public opinion.
3. The resource allocation and taxation capabilities of the governments of major countries have declined significantly.
The need to seek power protection will decrease. Capital and wealth individuals will transfer funds to jurisdictions that are better than market-oriented allocation and tax-friendly, and can withdraw at any time. The decline in taxation capabilities will lead Western governments to use totalitarian means to suppress the network economy. The recent CFTC lawsuit against Binance and the SEC’s previous definition of all cryptocurrencies except BTC as securities will lead to more stringent measures and means.
4. Large organizations disintegrate, the original division of labor is broken, and work forms and functions change.
The bloated and inefficient platform organization has laid off a large number of employees, and there are no longer cost-effective jobs that “work less and make more money”. The employment forms of work tend to be project-based, time-based, and workload-based, and not necessarily a certain position within the organization. The rewards for the work of extreme and outstanding individuals are greater than ever before.
5. Artificial intelligence and encryption technology are two ends of the scale, interpenetrating and influencing each other, restricting and balancing
Chat-GPT is the ultimate embodiment of optimized efficiency after resource concentration. Encryption technology is the basic technology of decentralization. It is like the two ends of a scale. Everything develops and balances in contradictions, and future business model innovation will be in Make trade-offs between the two extremes.
6. The emergence of cyberspace commercial entities and super TSI
Metaverse, DID, DEFI, Gamefi, and other applications emerging today will eventually be connected and circulated through an information network intertwined with various protocols and cross-chain bridges, forming a cyberspace commercial body. Super TSI masters super resources in this space.
7. Cognition and thought are equal to individual wealth capabilities, and the network economy has become the largest economy.
By 2025, there will be millions of participants in the network economy. Cognition and ideas will become scarce and valuable resources in the era of information explosion. Many Bill Gates will appear among them. The greatest economic phenomenon in the next 30 years will be the network economy, not the BRIC countries.
The existence of the network economy will accelerate self-growth and iteration due to more efficient resource allocation and elimination mechanisms and adaptive bottom-up complex systems. Its vigorous development will inevitably lead to the emergence of new organizational forms and business models. Network countries It emerges as the times require and exists independently outside the system, but will organically integrate with the real world and become a unique and huge economy. Digital Nomads and TSI are the main components of this economy.
It is never easy to predict the future. Trying to outline the fuzzy image of the future is to see more clearly the present. In the business development and track investment in the encryption world, the following trends may appear:
1. The boundaries between infrastructure, protocols and application layers will be broken
Due to the development threshold of application products and the unpredictability of user preferences, competition on the application track is often more intense, and the current ecological niche is relatively weak. Today, large funds tend to prefer investing in infrastructure and public chains. This also leads to extremely high valuations in these tracks, too concentrated resources, but low output efficiency. After all, not all public chains can complete ecological development in the short term. Build. In the cyber business space, one possibility in the future is that products that solve certain pain points of user needs may themselves be an open source protocol, or even L1 itself, such as the emergence of specific application chains. The so-called fat protocol, light application means distinction based on functional attributes, not necessarily technical architecture. Applications must be the ultimate weapon to explode the size of the network economy. Infrastructure without application scenarios is meaningless. The continuous improvement of infrastructure such as L2 reduces costs and improves performance for application development. The two are complementary and can even be combined into one in some scenarios.
2. User application scenarios based on a new paradigm
From 2017 to the present, we have seen the emergence of countless application forms, but so far no products with large-scale users have emerged. On the one hand, it is due to time and cycle factors, and on the other hand, because new business forms are still in the process of forming, entrepreneurship The team needs to have very deep thinking skills in order to build based on the underlying needs. This is undoubtedly a huge challenge. Based on previous analysis, although users’ experience needs and product forms are still uncertain, under the premise of the general trend of cyberspace and cyber commerce, we can basically predict the following aspects: tool platforms for building content based on technology, new contractual relationships Network construction, cross-chain identity and social networking, convenience of decentralized transactions and asset preservation, network national governance, etc. I am glad to see that ChainIDE is a platform for developers to build smart contracts. More than 70,000 dapps have been built and deployed based on its front-end and back-end; and more than 180,000 contracts have been signed through Ethsign. Based on this new contractual relationship, The commercial infrastructure Token table has also started to go online on the testnet. These are all product forms that are based on solving pain point needs and providing platforms and underlying facilities. Although these numbers are still insignificant today, with the advent of a new era, explosive growth is expected in 2025.
3. Outside the native encryption space, there will be an intermediate layer that is integrated with real business.
Not everyone needs complete autonomy and the ability to preserve their own property, but based on the expectation of traditional financial explosions and currency over-issuance, certain asset allocation will still be carried out in the encryption field. The current centralized exchanges assume this function and at the same time absorb more liquidity. In the future, there will be mezzanine applications with the same ecological niche but richer functions. The business model will mainly continue the original Internet demand, but in terms of payment and content, there will be more connections with the encrypted network space.
Finally, standing at the crossroads of the times, looking into the distance, we can already see the looming Olympus peaks, and the gods are waking up.
