Recently, I traveled half the world, including Accra, the capital of Ghana, Zurich, the largest city in Switzerland, Dubai, the economic gateway of the Middle East, and of course Singapore, which radiates to Southeast Asia, and Hong Kong, which is backed by mainland China. Mainly to participate in several Industry conference, and take a look at local Web3 industry development opportunities. In addition to Rwanda, which I traveled to last year, Australia where I have lived for a long time, and Mainland China, which I have always paid most attention to, I now have some intuitive understanding and judgment about the current situation and development prospects of blockchain and Web3 in these places, and I will share it with everyone. share.
Bulletproof with tilted head
First of all, we must clearly define what "blockchain and Web3" I mean, because every time I talk about these contents, a group of people will jump out and say, what is blockchain? What Web3? What does it have to do with Crypto? In order to deal with these sneak attack bullets, let me tilt my head and explain my position.
Well, blockchain technology has given birth to a new industry called the encrypted digital economy, or Crypto for short. Like other industries, Crypto also has a physical part and a transaction part. What is different from other industries is that since the blockchain itself is a value network protocol and comes with its own transaction infrastructure, Crypto can complete the expression and transaction of assets internally, instead of having to go to a specialized platform like other industries. external venues to trade. This feature is so prominent and eye-catching that almost all the hot spots in the Crypto industry in the first ten years revolved around the transaction link. But this does not mean that Crypto has no actual business. Just ask, what are the assets you are trading? That still has to be decided by the actual business.
Now in this industry, there are three approaches around actual business:
The first way to approach is speculation and gambling. Many projects in this industry are like this now. There is only one coin at the front, but all the drama behind it. The better thing is the meme, which clearly tells you that I have nothing, just a cultural shirt, and an open bet. The worse thing is to pretend to do business. What the outside world thinks is fake is actually a Ponzi scheme.
The second approach is "industrial blockchain" or RWA, which is to connect blockchain digital assets to real-world businesses.
The third approach is Web3. Typical representatives are Bitcoin, Ethereum, and Solana. There are indeed businesses below, and this thing is infrastructure or applications in the open network.
I have been focusing on the two paths of industrial blockchain and Web3, and believe that this is the right path for long-term sustainability. The projects I initiate also emphasize actual business, a little slower, but I feel at ease, and I firmly believe that in the long run Say the benefits are greater. Of course, most of the players I have come across in this industry are transactional, capturing trading opportunities to make profits, and not paying much attention to actual business.
In fact, both types of people are needed, those who engage in actual business and those who engage in transactions. But when people like me express opinions, they are often misunderstood or even ridiculed by trading players, so I would like to explain here that I am talking about the "physical business" part of the Crypto industry, so when discussing, I often use "Blockchain and Web3" is such a lengthy statement. As for the many people who are only engaged in trading and are not very good at thinking, they insist that there is no actual business in Crypto and it is just a pure gambling game. I will not spend time to refute this shallow and stupid view.
Blockchain and Web3 in the large information architecture
Whether it is industrial blockchain or Web3, they should actually be viewed in an information architecture. Informatization is a continuous process of the entire human civilization. It has lasted for tens of thousands of years and is a large framework. However, the informatization we usually talk about in the past few decades is mainly based on digital computers and the Internet. This process actually sprouted from the military industry and developed on the corporate side. Later, the consumer Internet suddenly emerged, which greatly changed the path and pattern of the entire informatization and created a new paradigm.
Now, technologies such as blockchain and zero-knowledge proofs have the potential to create a third information paradigm. The development of this new paradigm on the enterprise side is industrial blockchain and RWA, and the development on the consumer network side is Web3.
Why do you dare to say it is a new paradigm? Because the blockchain redefines the account system and resource custody model in the Internet, which is different from the current centralized network in terms of DNA, so it will either not develop at all. As long as it develops, it will definitely be a traditional network. A new species that I have never seen before.
In the digital age, no matter how weak a new species is now, it cannot be ignored, because once it grows up, it may bring about a new dimension of competition that you are completely unable to resist. As for the difference between industrial blockchain and Web3, my basic view is that Web3 will come faster and more fiercely than industrial blockchain, so now we should focus on the discussion of Web3. To discuss the development opportunities of Web3 in different regions around the world, we must first look at the forms of information development in each region.
What is the overall situation of global informatization now? In short, China and the United States are engaged in artificial intelligence and robot competition, Europe and Australia are suffering from insomnia, while high-growing countries in Africa and Southeast Asia are carrying out their first large-scale information construction, while Singapore and Dubai are I hope to get the biggest dividend in this process.
Let’s talk about my impressions based on different regions.
Insomnia in Europe and Australia
The situations in Europe and Australia are superficially similar. The network infrastructure in both regions is pretty good, but there are no leading large companies. Compared with China and the United States, the depth of practical applications and the level of innovation are far behind. They all know and pay attention to new technologies and trends such as blockchain, Web3 and tokenization, but their actual attitude is that Ye Gong loves dragons. In other words, in principle, since it is innovation, everyone welcomes and supports it, but if you take it seriously and promote it seriously, you will immediately stop moving forward when you encounter specific problems and specific contradictions. So now the two regions are like this. They are watching helplessly, unable to fall asleep and get up, so it is said to be insomnia.
However, I think the underlying logic of insomnia in the two regions is different. Australia's problem is that it lacks motivation and its own life is too good. For things like innovation, just go with the flow and follow the lead of the United States and Britain. The United States does not have the technology to do it, so we are not in a hurry to grab the jackpot. The UK has not set regulatory rules, so we will wait first. In fact, I have lived in Australia for many years. Regulations here are relatively loose, and the market is neither big nor small. If you really want to actively do things, there is room. But as soon as you cooperate with local companies or people, you will find that they are not very motivated. Whenever there is any difficulty, I just back down. Six words float from the sky: "I'm too lazy to move, there's no need."
Europe is different. It’s not that they don’t have the idea of independent development, nor that they don’t see the value of blockchain technology, but their governance mechanism is too complex, the regulations are cumbersome, and there are too many constraints to do it. I attended a European FinTech conference in Switzerland, and Tokenization was the absolute protagonist. However, the speeches of various princes were all in the same format. They first fully affirmed the value and significance of blockchain and tokenization, expressed their confidence in its long-term prospects, and then when they talked about the present, they pulled out a long list. This Constraint, that limit. The most unavoidable thing in the world is called the only way, but in fact it has unexpected pitfalls. In my opinion, things in Europe are difficult to deal with.
So there was insomnia in both places, one was too lazy to move, and the other was tied up and couldn't move.
Interlocking Mainland China and Hong Kong
China is the biggest winner in the mobile Internet era, and it is logically the most qualified leader of the Web3 revolution. But history has repeatedly proven that the winners of the previous cycle are particularly likely to fall behind in the next cycle. Many people attribute this to path dependence, which means that even if interest groups clearly know the right direction, they will sacrifice their own interests to protect their own and choose a conservative path for the purpose of safeguarding vested interests. But I think that in China's Internet industry, the spirit of adventure and the spirit of self-revolution still exist, because path dependence is not the main problem. If there is a problem, the problem mainly lies in understanding.
Ideally, China's best attitude towards Web3 is of course to let the water go and the fish will grow. As long as some key joints are controlled well, there will be no trouble, but big gains. However, as we all know, China is now in a period of strengthening government control guided by national strategies. If the government forms a fixed opinion on a certain scientific and technological direction, then the space for exploration and experimentation will be limited.
So what opinions does the government have on blockchain and Web3?
When many people talk about this topic, they sigh and say that China has completely blocked this direction. I don’t agree with this. I think China has not yet formed an opinion on the technical direction of blockchain and is still investigating it, but it is currently acting illegally.
After the development of the science and technology industry in the past few decades, China actually has a relatively deep understanding of the unpredictability and subversiveness of scientific and technological innovation, and will not easily deny a specific scientific and technological direction. There are plenty of lessons learned both positive and negative about this. The former Soviet Union's failure to accurately foresee the development of silicon-based semiconductors, large-scale integrated circuits, computer miniaturization and network technology was an important reason for its failure in technological and economic competition and its complete collapse. In the mobile Internet era, China has successfully fissioned and hatched a large number of new business species, which is also one of the key reasons why China's Internet industry was so proud of the world in the last cycle. The current situation of competition between China and the United States is difficult to reverse. If you choose the wrong technology tree, the price you pay may be global. Therefore, Chinese officials will definitely be particularly cautious when making decisions on the direction of technological development. China has recently proposed new productive forces, mainly to provide key support for scientific and technological directions of great strategic significance in the comprehensive competition between China and the United States. Blockchain is definitely one of the candidates.
But the elusive thing about blockchain technology is that if it is analyzed only theoretically, its value logic should be smooth. As early as October 2019, China's top leaders had already reached a conclusion on this issue. However, in practice, there are various resistances and frictions, and the results are never achieved.
For this reason, many people assert that blockchain and Web3 are false propositions that cannot be used in practice or have little value. But I think policymakers are not so shallow. It should not be difficult for them to think of the reasons, because China has experienced similar situations in the history of informatization development.
I have mentioned before that when China was engaged in informatization in the late 1990s, it originally copied the American model and started to transform it from the industrial side, but the development was very slow. As a result, unexpectedly and unintentionally, the consumer Internet emerged suddenly and rapidly in what was once a wilderness, changing the overall paradigm of China's informatization. Therefore, the Chinese people all understand that it is difficult to transform an old thing. Problems in development must be solved during development, and efforts must be made in increments. Leave the old alone and let the new grow wildly. When it grows up, it will naturally force the old to transform. If the Chinese people don’t understand this principle, then no one in the world understands it. The situation is the same now. If you have to force current enterprises and network platforms to transform to Web3, it will be very difficult. But if you can free up a space for Web3 to grow wildly, then maybe you can create some new species.
But the problem is that Web3 is indeed not an ordinary industry. It is highly transactional and speculative, and it is full of activity. If it is not properly controlled, it will cause financial troubles. And now China is in a cycle that is particularly sensitive to trouble and has particularly high requirements for stability. Faced with a "bad boy" like Web3, which is both good and evil, it is not easy for policymakers to make a decision. If we follow up, it may impact the existing large enterprises and industrial structure, may cause some chaos, and may also increase the burden of financial supervision. Don't follow it, let this thing be put into fission reaction internationally. I don't know what kind of monster it will fission into, and I don't know how much impact such a monster will have. If not, it may turn out to be a very disadvantageous position. .
Therefore, China is somewhat hesitant in developing Web3. If it advances, it will be too cautious, and if it retreats, it will be short-lived. Many people believe that Hong Kong, as a blockchain experimental zone, has a special mission to help mainland China touch the Web3 stone.
However, although Hong Kong is an international financial center, its core advantages are actually focused on financial transactions. If you let him do some real economic work, "I haven't been a big brother for a long time." The internet didn't take off back then, and now he can't even make movies. Now he is expected to independently explore the new paradigm of the global internet industry. Whether it is in terms of industrial foundation, talent pool or market size, it is actually a difficult task. . So in practice, for Hong Kong companies, no matter you are on the Heavenly Sphere River Map or the Golden Man and Jade Buddha, I only focus on "transaction", because this is the only thing that is Hong Kong's comparative advantage. This is obviously far from the need to explore a new Web3 paradigm for the mainland.
Of course, digital asset trading is a key node in Web3. If the Web3 industry in mainland China can develop and Hong Kong can do well in trading, it will be enough. But the problem now is that the mainland is waiting for you, Hong Kong, as a special zone, to find a way to develop Web3, and Hong Kong is waiting for you. The mainland's Web3 industry provides digital assets for transactions to earn handling fees. Both sides are waiting for each other, and no one can break the situation. , it becomes an interlocking situation.
Big opportunities in Southeast Asia and Africa
If China does not break ground in Web3, then the regions in the world that are most likely to open up new situations and create new monsters are of course the United States, and the other, I think, is Southeast Asia and Africa. I haven’t gone to the United States yet. Without investigation, I have no right to speak. But in the past two years, I have traveled to Africa and Singapore a lot, stayed there for a long time, and made some observations.
In recent years, some countries in Southeast Asia and Africa have begun to enter a stage of rapid economic growth. Although the economic scale is not large, it involves hundreds of millions of people and has great potential, which has put forward an urgent need for information construction. So these countries are experiencing the first large-scale IT and network construction. China has also experienced such a process since the 1990s, so we are familiar with it. As the saying goes, if you climb the technology tree for the first time, you will be most curious, open-minded, sincere and motivated. These countries are at this stage now.
However, compared with China, many of their basic logics are different. When China's IT construction started, it was the historical stage when the Cold War ended and globalization was unstoppable. Therefore, China basically adopted the adoption doctrine and directly introduced American technology and complete solutions without giving much thought to independent controllability, data sovereignty, Requirements such as privacy protection. It was not until the 2013 Hong Kong scandal broke out that we came back to make up for this lesson, and embarked on a characteristic informatization path with consumer networks as the core architecture and super network platforms as the main force.
Nowadays, the economies of Asian and African countries are developing rapidly and they also need supporting IT construction. However, times have changed and the logic has also changed. First, the era of globalization is over. China and the United States are competing fiercely in many industries. The two tigers are fighting each other and the fishermen are benefiting. These countries have a larger space for choice. Second, the concepts of data sovereignty and privacy protection have become stronger. Even the weakest countries and companies are not willing to run naked in the digital world of large foreign companies. Third, the demonstration effect produced by the great success of the Internet has made economies of a relatively large scale hope to support and establish their own platforms so that the benefits do not flow to outsiders.
What are the consequences of these changes? The expansion model of large companies that was originally created by large American companies and later taken to the extreme by Chinese companies like Huawei is now unworkable, or at least the resistance has greatly increased. Take data privacy protection as an example. In the original model, large companies only needed to sign a commitment with users, and then send out public relations releases every now and then to promote themselves. Then they could go straight in and get all the users' data. What were they thinking behind the scenes? Sell it how you want, analyze it how you want, put all the profits into your own pocket, and users don’t even know about it, let alone objection. Such a good thing will never happen again.
Nowadays, these countries are engaged in the Internet and hope to support their own platforms. Large foreign companies can come in and sell equipment, sell technology, participate in construction, and help cultivate talents, but you have to extend your tentacles directly to the end of my economy and let us join your network unconditionally and become a member of your great country’s network platform. A prefecture-level subnet, sorry, I understand this, this is called digital colonialism, we are not so naive.
But the problem is that the Internet has network effects. China's Internet platform targets the whole of China, and American Internet companies target the whole world except China. Only the network established in this way can achieve economies of scale and become stronger only when it gets bigger. Each of your countries is unwilling to join a large network and must support its own platform. As a result, this small area and that small area are stunted. Not only do they have no economies of scale, but they also bring endless difficulties to cross-border cooperation. trouble.
Insightful people in these countries understand this issue. When I attended a conference in Ghana, a South African industry leader spoke and said that Africans must call themselves Africa, but where is Africa? This is just a continent fragmented by colonizers, with more than 50 countries and 48 currencies. Internal economic exchanges are extremely cumbersome, and foreign trade far exceeds mutual trade within the continent, so he wants to build an African Digital Economic Community. When I went to Rwanda, I found that in a country with more than 13 million people, there are more than a dozen payment networks like "Alipay", most of which only have tens to hundreds of thousands of users. It is difficult to cut such a small market. It’s all sparse, and no one can become big or strong. The same problem also exists in Southeast Asia.
Having said that, the value of blockchain and Web3 to the information construction of African and Southeast Asian countries is reflected. One is clear ownership, the other is tamper-proof, builds consensus, and delivers trust, the third is the value network sinks to the network protocol layer, and everyone’s business is separated, but transactions can be integrated and interconnected, and benefits can also be shared, and the fourth is cooperation with zero knowledge Proof and other technologies, privacy protection can also be solved very well. With so many advantages, coupled with the fact that they are new to informatization and are not obstructed by very powerful vested interest groups, it is not difficult to explain why the world is now the most enthusiastic and curious about blockchain and Web3 technology. The regions are concentrated in Africa and Southeast Asia.
When I communicate with people in these places, I can really feel their enthusiasm and expectations for Web3 technology. They really want to use Web3 technology to solve practical problems. In other places, this kind of simple enthusiasm is now relatively scarce, and more people only care about how to make money. And this is also an important risk I think for African and Southeast Asian countries in the construction of Web3. Their supervisory ability is relatively weak. If they are accidentally misled and a few surprises are made, their attitude may change 180 degrees in an instant. Fortunately, a lot of things like this have happened before, so they are generally more cautious now and are not so easily fooled. In terms of blockchain and Web3, they prefer institutions such as Singapore and the Bank for International Settlements. This also brings a unique historical opportunity to Singapore.
Singapore and Dubai: both hubs, but very different
Singapore has clearly seen the major opportunities in the information technology and digital economy in Southeast Asia and Africa. The Monetary Authority of Singapore (MAS) has launched a series of projects and plans since a few years ago, and has held meetings all over the world. Recently, MAS proposed the "Global Layer 1 Chain (GL1)" plan, taking the lead in creating a cross-border blockchain that is supported, jointly used and shared by commercial banks, financial institutions and commercial institutions from various countries, which embodies Singapore's Strategic intentions in the blockchain and Web3 industries.
It is not difficult for anyone with a discerning eye to see that Singapore’s strategies on blockchain and Web3 are not at all considering its domestic market, nor is it planning to be as domineering as the big Internet companies and directly spread its business to the economic terminals of other countries. , but uses Southeast Asia, Africa and other regions as the market hinterland to provide enterprises with a value network that is compatible with the existing paradigm, voluntarily joins, and shares benefits. This is undoubtedly the greatest common denominator of blockchain applications and meets the needs of developing countries in Southeast Asia and Africa. Singapore itself has a global reputation in financial supervision and the financial technology industry, especially in the minds of Southeast Asian and African countries. Therefore, in the African and Southeast Asian countries I have contacted, whether it is the government or the enterprise, there is no need for Singapore-led blocks. Chains and Web3 plans are generally recognized and trusted, and less defensive. So it is indeed possible for Singapore to do this.
This matter is of great significance to Singapore. If Singapore can act as a major leader in the information construction of Southeast Asia and Africa, and truly use transnational digital economic blockchains such as GL1, then it can strive to become a The capital of the digital economy in the Indo-Pacific region.
However, the route chosen by Singapore actually also contains a strong assumption that blockchain and Web3 can be hidden behind the traditional network and are the infrastructure of enterprises instead of facing ordinary users. Chains like GL1, which we call "open consortium chains", are only open to existing institutions. Ordinary users still use centralized network platform services in the same way as today and are isolated from the blockchain. In this way, the implementation of the entire Web3 can be led by existing government agencies and enterprises and promoted in an orderly manner without destroying the existing industrial structure. But what if something goes wrong with this assumption? If Web3 directly moves towards large-scale application through social networking or games in the future, what will happen if ordinary Internet users start to have one or more Web3 accounts and communicate and trade with each other in them? There is no doubt that this is the most natural business format of Web3, and this business format is bound to subvert the existing Internet industry structure and application paradigm. If this happens, Singapore will have to adjust its strategy.
In contrast, Dubai has adopted a do-nothing attitude toward Web3. Dubai is built like a future city, but in fact it is just a superficial appearance. The real center of wealth in the United Arab Emirates is Abu Dhabi. Dubai itself knows this, so their core competitiveness is to rely on advanced infrastructure, loose supervision and currently good cost advantages to attract foreigners to settle on a large scale. Dubai itself does not have any industrial policy. It is "building a nest to attract phoenixes and letting freedom go." Dubai is sincere and it is something written in Dubai's genes. While in Dubai, I visited its historical museum and studied the history of the city. Before oil wealth changed the country's destiny, Dubai was just a poor Arab state that made a living by mining natural pearls. The rulers here have adopted an extremely relaxed and friendly attitude towards businessmen. In the past, Dubai relied on this policy to survive and develop, and now it hopes to rely on this policy to develop.
Compared with Singapore, Dubai's understanding of Web3 is far behind. The Singapore government may be the government that understands blockchain and Web3 best in the world. Because it understands it, Singapore has the confidence to design strategies and actively guide the development of this industry. But because I understand, I will say no to certain businesses. But Dubai is different. In this city of more than three million people, 90% are foreigners. They bring 360 people from all over the world. It is impossible for the Dubai government to understand every line. Since it does not understand, it will not formulate industrial policies and provide industrial support, but at the same time it will not refuse. Therefore, the Dubai government also thinks very clearly. It can only fully relax and allow talented people from all walks of life to show their talents.
In this case, Dubai's advantages are outstanding. If you have a business with high requirements for loose supervision, it is most suitable to place it in Dubai. Now, Dubai has become the main base for Crypto centralized exchanges, which clearly shows its positioning.
Another advantage of Dubai is cost. Of course, the cost in Dubai is not low, but compared with who else, compared with Southeast Asia and mainland China, it is definitely very high. But if compared with Hong Kong and Singapore, the cost in Dubai is too competitive. For the same thing, it is not a difficult goal to achieve operating costs that are half that of Singapore. Therefore, for businesses that are oriented to the international market, have a relatively large team size, and require loose supervision, Dubai may be the best choice.
Therefore, in comparison, Singapore has a clear on-chain digital economy strategy, and is equipped with relevant policies and support. The goal is to seize the rapid growth of a large number of countries in Asia and Africa and become the international digital economy capital. Dubai does not have such a strategy, but it is more relaxed and inactive, and its costs are still competitive.
Summarize
Unless there is a sudden and dramatic change in the attitude of China and the United States towards the Web3 industry, blockchain and Web3 will not be able to find a single large market that combines various favorable conditions like the Internet and mobile networks did back then. Therefore, the Web3 team is forced to consider the global layout at the start-up stage. In my opinion, a more ideal strategy is to base ourselves on Singapore and Dubai, actively cooperate with Singapore's strategy, seize the market opportunities for the first informatization in Southeast Asia and Africa, and at the same time make good use of Dubai's regulatory environment and cost advantages to do so. Good global optimization.
This article does not mention Japan, South Korea and the United States, which is an important omission. Mainly because I haven't been there during this time, so I don't have a say. Fortunately, I will have the opportunity to go to the United States in the second half of the year. If I gain something by then, I may add an article.
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
This article is reprinted with permission from: "Deep Wave TechFlow"
Original author: Meng Yan
