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[BlockArk Conversation] Talk to Vitalik: From Ethereum to Yahoo

Recently, BlockArk is considering what will be the breaking point of the cryptocurrency market. If we take the market as a black box connected with a pipe, in which the pipe means the inflow of funds. Unfortunately, we will figure out that all the funds are from speculators.

It also explains why the market has little bull market in April when there was crisis for P2P financial platforms. Once the speculators don’t have enough inflow funds, people in this market will run to sell their coins.

The fundamental cause of this situation is because at current stage, blockchain doesn’t add real value to the society.

The core value of blockchain comes from DAPP, so only when the DAPPs can really work to create business value, the whole blockchain industry can switch from speculative market to an industry

What restricts blockchain to become an industry?

Lao Mao wrote in his article “Everyone can understand EOS”in Sep 2017: A well-completed blockchain public application platform should at least meet requirements as below:

  1. Support large number of users with low latency
  2. Easy upgrade and bug fixes
  3. No service fee

The third one should be the belockchain is not free.

In the Ethereum network, it will consume ETH for each transaction and contract execution. Imagine that you create a music and upload the copyright to Ethereum smart contract, but you need to pay some gas for the circulation of the copyright.

One day, after waking up, you find that 1000 people have used your music copyright! In addition to avoiding the piracy, you also earned 3000 RMB for the copyright. However, the transactions among the 1000 people also made some gas for the network.

For some “hot” applications on Ethereum, like cryptokitties, Fomo3D and so on, are all games with financial incentives.

Fomo3D

Conversation with Vitalik Burterin

Allen Su, founder of BlockArk, had an interview with Vitalik. In this interview, Vitalik explained his opinions about “whether the service on blockchain should be free or not”and EOS business model.

Allen Su:

When we want to make large number of transactions, it is almost free of charge. For example, if I make transaction with 1000 RMB on Alipay, nothing will be charged. But on Ethereum network, we need to pay gas for each transaction and contract execution

Vitalik Buterin:

Yes, you are right. And this is why we think scalability is quite important. No matter we take shading or off-chain technology to improve the scalability, it will reduce the gas to some point when the transaction fee is low enough.

Allen Su:

However, there will be some cost?

Vitalik Buterin:

If the transaction fee is as low as 0.00043 USD, does anybody care?

Allen Su:

Regarding to this question, EOS takes the mode of “deposit membership fee”, how do you think about it?

Vitalik Buterin:

I have to criticize EOS about this! It will actually cause large number of nasty problems if you only need to deposit money at the very beginning, but don’t pay for any transaction later.

Allen Su:

What kind of problem? Can you make an example?

Vitalik Buterin:

First of all, you actually pay even with the mode of “deposit membership fee”. Before i saw the statistics, if you compare Ethereum with EOS, the result is that you need to pay 15,000 USD on Ethereum, but 100,000 USD membership fee on EOS, which is much higher.

Secondly, users don’t know how many transactions they will make in the future. For example, it is impossible to know you will make 3 or 30 transactions per month. On Ethereum network, users pay gas when they make transaction, which is under their control. But for EOS, people need to pay “membership fee”, and also can’t pay with the frequency as they like.Don’t you think this is kind of taxation?

Thirdly, because blockchain resources are limited, if we choose to bid for that, undoubtedly it will be the best distribution method.

From Ethereum to Yahoo

Ethereum makes the right decision. Under the condition with limited resources, it is the best way to avoid resource abuse if we bid for the best resource distribution with gas, which is also the reason why there are not too many DDoS attacks on Ethereum network.

But if we look at longer period, when blockchain has the scalability to handle millions of transactions, what will be the difficulty?

Let’s review how Internet was developed to be mainstream.

In 10 years after Internet was invented, it was luxury goods like automotive for senior people in the society.The reason is because the Internet is chargeable.

At that time, people were required to pay dozens of dollars each month for Internet searching based on how many times you have used.The professionals in the university even wanted to learn how to search for what you want quickly to save money.As you could imagine, Internet users increased very slowly because nobody wanted to use something always need to pay money.

In 1995, Jerry Yang and David Filo established Yahoo, and unprecedentedly it was “completely free”. Everyone was able to connect Internet with no cost and search for materials, send emails and messages. This “free lunch of Internet” comes from Yahoo’s new business model- “wool does not come out of sheep”. It is fee to use the Internet but makes incomes from advertisements and electronic commerce.

“One hundred years later, if people only remember two most important persons who made the best contribution to Internet, then they would be Jerry Yang and David Filo.” written by Jun Wu in “ On Top of Tides”.

The contributions made by Yahoo is not only to establish the largest portal site, but also create the rules for Internet industry — open, free and profit.

Afterwards, Google, Amazon and Alibaba were created, then the era of Internet finally arrived.

All history is modern history.We can confirm that when blockchain is not luxuries for minority, the great age will finally come. Few days ago, Vitalik said that Ethereum will not apply PoW or PoS but one new consensus algorithm at Cryptocurrencies & Digital Asset Dialogue 2018(Vietnam Hanoi City). Will the future new consensus algorithm attract more participants, and will it break the existing situation with limited resources and bring more to the blockchain industry?Let’s wait and see.

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BlockArk

BlockArk

A Growth Accelerating Investment Banking For Crypto.