Author: Will Wang
Time has come to 2025. For those in the industry, this crypto market, which has developed over a long period of time (more than a decade), has experienced multiple bull and bear cycles with turbulent and grand waves. Each surviving code Ticker, we are familiar with them like the back of our hand, and they all carry a sense of historical weight.
However, the actual scale of crypto assets is only $3 trillion, which is less than 1% of the $400 trillion - $600 trillion traditional financial market. Although last year, the Bitcoin ETF pushed by Grayscale made a disruptive entry into Wall Street, it still seems difficult to carry the flag of digital gold, resonate with Nasdaq, and deviate from REAL gold.
In this crypto market that we are so eager to pursue, is it the survivor bias? Or is it the experimental field of the new financial revolution?
As Dr. Xiao Feng said, to answer this question, we need to start from the origin of Blockchain, from the first principles, from the basics, to examine the currently much-discussed digital currencies/crypto assets, the crypto market, and the underlying Blockchain technology.
I. Blockchain: New Financial Infrastructure
If we look at crypto assets from a single dimension, such as the US SEC, they may only classify these assets as commodities and securities; if we look at the crypto market from a macro perspective, it may be a niche sector in the development of the digital economy; but if we look deeper into Blockchain, and combine it with the previous industrial/technological revolutions, then Blockchain as the new financial infrastructure will present a picture of the Age of Discovery, setting sail, riding the wind and waves.
All of this is built on Blockchain technology. Therefore, we need to return to the original intention and explore what Blockchain is.
1.1 First Principles of Blockchain
The first principles of Blockchain are not a single technology, but a systematic combination of elements such as decentralization, cryptography, consensus mechanism, transparency, and incentive mechanism. This systematic combination is embodied in Satoshi Nakamoto's 2008 paper:
The Bitcoin whitepaper, by combining various innovative technologies and the design of changes to social production relations, hopes to change the centralized financial system with traditional banks as the core, solve the centralized trust problem existing in the current financial system, and provide users with a more secure, 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).
Bitcoin: A Peer-to-Peer Electronic Cash System
From the perspective of Bitcoin, the endowment of Blockchain is the financial infrastructure, and its initial construction is to solve the final consistency problem of payment clearing. Digital currencies built on Blockchain, combined with smart contracts, can unleash the great advantages brought by digital currencies and Blockchain technology: near-instant settlement, 24/7 availability, low transaction costs, as well as the programmability, interoperability, and composability with DeFi of digital currency Tokens. These are what the traditional financial payment system has been longing for and difficult to achieve.
Investor Will Wang summarized it well: In Trustless We Trust. If I had to add a time frame, I would say: ten thousand 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 methods are changing: from no banks to having banks, from no central banks to having central banks.
The new finance based on Blockchain can greatly improve the efficiency of finance:
A. Across Time
On the one hand, it is reflected in the time value of money, which is equal to using tomorrow's money today, and I have to pay a time interest for tomorrow's borrowing. This interest rate model, running through DeFi, will unlock the limit of traditional bank cash flow (12 times a year), and the capital efficiency will be greatly improved. On the other hand, it is the instant settlement of value, where a remittance from Hong Kong to the US can be credited to the account in seconds through Web3 payment, with near-zero fees, and without the need for five institutions to reconcile, which is the optimal choice.
B. Across Space
The most intuitive case is that in 2023, investment guru Warren Buffett issued near-"0" interest rate yen bonds and heavily invested in high-return Japanese trading companies. However, the financial service institutions such as banks and central banks in the financial service model will be the bottlenecks and obstacles to the global flow of value. This is the point that the new finance can break through: the value allocation across space on a global scale. In the Blockchain and Web3 industry, there is no such thing as "going overseas", because we are Day One Global, we are different.
C. Value
Stablecoins, synthetic US dollars, or dedicated currencies are essentially Tokens pegged to the US dollar. Through digital currencies and Blockchain technology, they further highlight the essential attributes of money and strengthen its core functions, improving the efficiency of money operation and reducing operating costs. In addition to this, the Tokens circulating on the Blockchain can also carry other assets, such as Tokenized MMF, and the transmission of such value Tokens can also be completed instantly. Visa's outward rhetoric has always been "Money Transfer", but with Blockchain, it should be changed to "Value Transfer".
Tokenization and Unified Ledger - Building a Blueprint for the Future Monetary System
Just as the essential attributes (value measurement) and core functions (exchange medium) of money are unchanging, although the carriers or forms of money have gone through shells, coins, cash, deposits, electronic money, stablecoins, etc. The essence of new finance is also unchanging, what needs to be changed are the service methods of banks, exchanges, etc., and we need to think about how to provide better financial services in a distributed, digitalized, and cross-time and space scenario.
1.3 New Financial Revolution
Compared to traditional finance, the biggest innovation of the new finance is the change in the accounting method - the Blockchain, a public and transparent global public ledger. The change in human accounting methods has only occurred three times in thousands of years, and each time it has profoundly shaped the economic form and social structure, and each breakthrough has reflected the co-evolution of technology and civilization.
The single-entry accounting in the Sumerian era (3500 BC) enabled humanity to break through the limitations of oral transmission for the first time, promoting the formation of early trade and nations, as commercial dispute clauses appeared in the Code of Hammurabi of ancient Babylon.
Double-entry accounting played a role in promoting the commercial revolution of the Renaissance (14th-15th centuries), with the prosperous trade of the Mediterranean city-states, the investment of the Genoese fleet, and the emergence of the Medici family's multinational banks, all requiring complex financial tools, driving the emergence of banks and multinational companies, and the establishment of commercial credit.
Subsequently, the distributed accounting driven by Bitcoin in 2009 has led to the rise of decentralized finance, the change of trust mechanism, and the emergence of digital currencies.
This new finance based on the change in distributed accounting methods is inseparable from Blockchain, smart contracts, digital wallets, and programmable currencies. Blockchain, as the financial infrastructure accounting and settlement layer, is initially designed to solve the final consistency problem of payment clearing. The digital currencies and smart contracts built on the distributed ledger can bring unlimited possibilities to the new finance: near-instant settlement, 24/7 availability, low transaction costs, as well as the programmability, interoperability, and composability of digital currency Tokens with DeFi.
Thus, the new finance mainly presents three major changes:
1. The accounting method has changed from centralized double-entry accounting to decentralized distributed accounting;
2. Accounts have changed from bank accounts to digital wallets;
3. The accounting unit has changed from legal tender to digital currency.
And the most important distributed accounting is born out of the cross-time, cross-space, and cross-organizational characteristics of digitalization, which is the financial foundation of the Fourth Industrial Revolution.
II. The First Three Industrial Revolutions
Dr. Xiao Feng cited the research findings of a Nobel laureate in economics: "The industrial revolution had to wait for a financial revolution." This Nobel laureate believed that all industrial revolutions relied on the support of new financial service models in order to promote, develop and expand the new industrial revolution. Conversely, without the support of a financial revolution, the industrial revolution in human society may not have been successful. Similarly, another economist further pointed out that each industrial revolution is a superposition of an energy revolution, an industrial revolution and a financial revolution, with the financial revolution often being the prerequisite.
His research findings cover the first three industrial revolutions, and now we have entered the fourth industrial revolution - the era of intelligence and digitalization. Let's first review the previous three industrial revolutions:
The First Industrial Revolution (1760s-1840s) was marked by the steam engine, occurring in Britain. The British government debt system and joint-stock banks provided financing channels for railways and factories, greatly improving productivity.
Douglass North in "The Rise of the Western World" (1973) pointed out that Britain, through financial system reforms (such as the government debt system and the improvement of the banking system), property rights protection, and the reduction of transaction costs, provided a mechanism for capital accumulation and risk sharing for technological breakthroughs (such as the steam engine and textile machinery) before the industrial revolution. He believed that "the industrial revolution had to wait for the financial revolution" was a summary of this stage.
The Second Industrial Revolution (late 19th century to early 20th century) was represented by electricity and wireless communication, occurring in the United States. The development of the US financial system (such as investment banks and stock markets) in capital aggregation was the prerequisite for technological innovation, providing a channel for large-scale corporate financing. For example, the construction of railways required a large amount of long-term investment, and the US attracted domestic and foreign capital through the issuance of railway bonds and stocks, with investment banks (such as J.P. Morgan) playing a key role in integrating dispersed capital.
The Third Industrial Revolution (late 20th century to early 21st century) was marked by computers, code and the Internet, also emerging in the United States. At that time, the Silicon Valley venture capital model (such as Sequoia Capital and KPCB) became the core financing mechanism for the Third Industrial Revolution. VCs provided early-stage funding for high-risk, high-return start-up tech companies (such as Apple, Microsoft, Google) through equity investment, for example, from billions of dollars per year in 1970-2000 to hundreds of billions of dollars, directly driving the commercialization of semiconductor, software and Internet technology.
On this basis, the NASDAQ stock market established in 1971, with low thresholds, high liquidity and inclusiveness for tech companies, became the main channel for tech companies to go public and raise funds. For example, Microsoft (IPO in 1986) and Amazon (IPO in 1997) obtained expansion capital through IPOs. At the same time, tools such as stock options and employee stock ownership plans (ESOPs) attracted talent to join innovative companies, linking human capital and financial capital.
III. The Fourth Industrial Revolution
If the fourth financial revolution based on blockchain has already laid the basic prerequisite conditions, then according to the statement that "the industrial revolution had 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 officially proposed by Germans in 2013, the core idea of which is to use information technology in the manufacturing sector, thereby changing traditional standardized, large-scale production, and establishing a highly flexible, intelligent industrial production model. However, simply limiting the application of intelligent information technology to the industrial field obviously has not truly recognized the far-reaching impact of the technological revolution represented by AI and blockchain on human civilization.
3.1 Cathie Wood's View on the Technological Revolution
Cathie Wood, known as the "Queen of Tech Investing", released the ARK Invest "Big Ideas 2025" report at the beginning of the year, stating that although the International Monetary Fund (IMF) forecasts global economic growth to be 3.1% by 2030, she believes that the annual economic growth rate at that time should exceed 10%!
ARK Invest believes that changes in macroeconomic growth are in line with historical patterns, presenting a phenomenon of step-by-step leaps, and each leap is brought about by major technological changes.
Since the beginning of human history, the economy has been stagnant for 100,000 years, and innovation (especially writing) has enabled empires to connect all continents, doubling the actual growth rate in 1000 AD. Subsequently, agricultural innovations led to increased population density and labor specialization, causing the growth rate to double again in 1500, reaching 0.3% per year.
Subsequently, the First Industrial Revolution swept the globe, bringing human economic growth to an average of 0.6% per year. The Second Industrial Revolution, marked by electrification, automobiles and telephones, ushered in modernization, allowing humanity to increase its economic growth fivefold over the past 125 years, reaching an average of 3%.
Without a new technological revolution, the IMF's forecast is likely to be correct, but Cathie Wood believes that breakthroughs in areas such as AI, blockchain, and smart robots may again increase productivity, representing a major technological revolution, and could drive economic growth to the next level within the next 5 to 10 years.
www.ark-invest.com/big-ideas-2025
3.2 AI Reconstructing the Spatial Dimension of Human Economic Activity
I fully agree with the two logics Cathie Wood mentioned:
1) Each technological revolution will take the economic growth rate to the next level;
2) AI is a major technological revolution.
This should not be controversial in 2025, so what I want to express is:
Each technological or industrial revolution essentially reconstructs the spatial dimension of human economic activity through technological breakthroughs, breaking through the original physical or institutional boundaries, and creating a completely new value exchange domain. This "expansion of economic space" is not simply an expansion of geographical scope, but a transformation of the technology-economic paradigm, achieving an upgrade in the three layers of production factor composition, value creation boundaries, and transaction rule systems.
For example, in the First Industrial Revolution, the use of steam engines shifted production from home workshops to factories, and railways and steamships expanded the scope of trade, allowing raw materials and goods to be transported across regions, which was indeed an expansion of geographical space, but the essence was to incorporate surface resources and colonies into a single capitalist production network. The Second Industrial Revolution, with electricity and internal combustion engines, led to urbanization and the rise of multinational companies, and economic activities were no longer limited to the local, but to the national or even global scale. The information technology of the Third Industrial Revolution, especially the Internet, created a virtual economic space of e-commerce and digital services, completely breaking geographical constraints. The Fourth Industrial Revolution may involve AI, blockchain, and the Internet of Things, further integrating the boundaries of physical and digital space, or even encompassing the economic activities of the silicon-based world of AI agents.
The greatest value of AI lies in embodied intelligence and spatial intelligence, which requires a large number of physical robots as well as virtual AI agents. Investor Wang Chao previously mentioned that if the future is a society composed of millions of AI agents, then Crypto is a relatively viable solution for agent-to-agent interaction and machine-to-machine interaction.
Cathie Wood stated that AI agents will change the logic of people's search and shopping, and be carried by digital wallets; digital wallets can further integrate traditional banking financial services such as savings, lending, insurance, investment, and consumption, and through the innovative paradigm of AI agents, can move the value chain of downstream platforms' global e-commerce and digital consumption upstream.
Similarly, I also believe that programmable cryptocurrencies based on blockchain smart contracts are the only ones capable of facilitating value flows in the silicon-based civilization of AI, and can be carried by Web3 digital wallets. This means that the Fourth Industrial Revolution must be based on new finance built on blockchain, otherwise it will degenerate into the old concept of traditional finance reducing costs and improving efficiency.
IV. The Token Economy Engine
The UK relied on the credit and bond markets to support the first industrial revolution, the US relied on investment banks and capital markets to support the second industrial revolution, and the third industrial revolution was supported by venture capital (VC) and the emerging Nasdaq stock market in Silicon Valley, USA. So, does the fourth industrial revolution not need a new financial model?
As Dr. Xiao Feng said:
Many people are reluctant to admit that blockchain is the infrastructure supporting the fourth industrial revolution, so we often mention "consortium chains" or "non-currency blockchains". But the practice of the past decade has proved that most of these attempts do not work. We must bravely admit that the core entry point of blockchain as a tool for adjusting production relations is finance. If there is no financial demand, we do not even need blockchain. This means that when humanity enters the fourth industrial revolution and innovates the digital and intelligent production relations, a new financial revolution is indispensable. Otherwise, all of this may not happen or cannot succeed.
Clearly, the new financial model based on blockchain is already in place, and the token economy engine on top of it has already started roaring.
Although the classification of tokens can have many types, from Dr. Xiao Feng's original three-token model to the five types of tokens today, and the recent framework of seven token types by a16z, and although it is said that "Online is New Onchain", and all assets will be tokenized on-chain, I believe that utility tokens, which are based on the functional use of the project network, are the key to leading the crypto market. If other token types are upgrades and transformations, then utility tokens 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, and I also wrote an article in July 2023 titled "Value Capture and Compliant Advancement, Exploration of the Application of the Three-Token Model in China" on the discussion of utility tokens, which still seems very applicable.
Dr. Xiao Feng's closing speech at the 2023 Hong Kong Web3 Carnival
Web3 based on blockchain networks is an economic model based on a value network (stakeholder capitalism), emphasizing data credibility, data sovereignty and value interconnection. With the premise that all value can be tokenized, value not only includes ownership, but more importantly, the right of use.
The right of use is non-exclusive, has multiple sharing properties, can be authorized and licensed multiple times, and can even achieve open source, CC0 infinite circulation, which is conducive to the participation and value sharing of ordinary users. The core of the use right system is stakeholder capitalism, and the original organizational form may not be suitable, and decentralized autonomous organizations (DAOs) based on open source organizations and non-profit organizations are naturally in line with stakeholder capitalism, and have become the main organizational form of the new economic model of Web3.
Under the use right system, all participants in the decentralized organization participate as stakeholders, make their own contributions, and share the value of the organization. In this context, the shareholder ownership represented by the shareholders of centralized projects has become meaningless, and the real value is the use right of the project.
The use right cannot be share-based, but can be tokenized. Combining blockchain distributed ledger technology, the use right can be standardized and fractioned in the form of Tokens, which is related to the interests of each participant in the project network, and this token is called a Utility Token.
In this new Web3 economic model, tokens are essentially carriers of value, and only by deeply understanding the essence of the value of tokens can the optimal economic model be designed for Web3 applications, realize multi-layered growth flywheel, and achieve incentives for all participants.
The New Web3 Economy and Tokenization
Let's look at a vivid case of the token economy engine - the Web3 decentralized telecom operator Roam. This project can truly solve the pain points that are difficult to solve in the Web2 scenario through the way of Web3, and can be said to be a typical example of Web3 moving from virtuality to reality.
Roam is committed to building a global open wireless network to ensure that humans and smart devices can achieve free, seamless and secure network connectivity whether stationary or mobile. In contrast to the geographical limitations and homogenization of traditional telecom operators, Roam, with the inherent globalization advantage of blockchain, has built a decentralized communication network based on the OpenRoaming™ Wi-Fi framework, while also integrating eSIM services, to create a global open and free wireless network.
In just over two years of construction, Roam now has 1,729,536 nodes in 190 countries worldwide, 2,349,778 app users, and performs 500,000 network authentication activities per day, making it the world's largest decentralized wireless network. In addition, Roam users can also receive free eSIM data when building and verifying Wi-Fi nodes, making Roam a telecom service provider that can adopt the Internet operating model.
depinscan.io/projects/roam
Globally, although traditional Wi-Fi still carries over 70% of data traffic, its outdated infrastructure and privacy data security issues have limited its potential. To address these challenges, Roam has collaborated with the Wi-Fi Alliance and the Wireless Broadband Alliance (WBA) to build a decentralized communication network by combining traditional OpenRoaming™ technology and Web3 DID+VC technology. This not only reduces the high upfront cost of global network construction, but also achieves seamless login and end-to-end encryption similar to cellular networks.
Roam encourages users to participate in network co-construction through the Roam App, sharing Wi-Fi nodes or upgrading to the more secure and convenient OpenRoaming™ Wi-Fi. Users not only can enjoy seamless connectivity among the 4 million OpenRoaming™ hotspots worldwide, but also can find Roam's self-built network nodes in remote areas such as Siberia and northern Canada, greatly expanding the network coverage and improving the user experience.
Roam has driven the rapid development of the decentralized network through its global free access via Wi-Fi+eSIM and diversified project network incentive mechanisms. The ideal nation 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 nation.
Combining the narrative of the fourth industrial revolution, projects like Roam can obviously become the communication infrastructure of the AI silicon-based civilization, and can also bring the speed of the Internet to the global transmission of value. This new economic model of Web3 that has sprung up in 2 years can be said to be a disruption of the traditional economic model of Web2, and the token economy engine is crucial.
V. In Conclusion
Professor Yang Peifang said: "Looking back on human history, the Chinese nation once dominated the agricultural civilization era with agriculture, sericulture and a vague holistic philosophical view; Europe and the United States also dominated the industrial civilization era with mechanical power and a precise reductionist philosophical view."
So in this fourth industrial revolution, although the tide of anti-globalization has been caused by geopolitical factors, we will still be pulled together by the unified ledger of blockchain, and you will find that this world is really flat. As a book says: "We wanted to fly across the ocean, but we invented Zoom."
In this parallel global market, we can ignite global momentum through the token economy engine, we can achieve instant global value transmission through the blockchain settlement network, we can achieve global financial inclusion and financial equality through the new financial infrastructure, and of course there is much more that can be done and many more things that need to be done.
