Original English article: https://www.nervos.org/zh/knowledge-base/ckb_understanding_our_ethos

This is an article about time preference and building a blockchain for the future.

The breakneck pace of change in the blockchain industry has increasingly shifted the space toward high time preference thinking. For investors and builders, chasing the “new meta” has replaced longer-term goals like building the future of finance and attracting the next billion users to Web3.

This way of operating is completely contrary to the ethos of Nervos, which has been largely misunderstood and underestimated. Our pursuit of our original cypherpunk goals has made us an outlier in the industry, something we never intended. Nonetheless, we believe that relentless pursuit of these goals is a noble and worthwhile endeavor, and we will explain why.

save time

The scarcity of time means the scarcity of choice, forcing all of us to constantly choose between alternatives. All decisions have opportunity costs, and even if the number of available resources were unlimited, our decisions about how to spend our time would necessarily exclude all other possible choices.

Just like a skill tree in an RPG, every decision we make opens a new branch of possibilities and closes all others. However, unlike in an RPG, saving time in real life is unique because time passes and cannot be stopped or reversed. There are no checkpoints or restarts in real life, only final decisions that can permanently change the outcome of our lives.

This makes time a unique commodity. Because we cannot choose between different quantities or time periods, valuing time is more problematic than valuing any other free market good. The inherent uncertainty of the future makes us prefer the present. After all, the future can only be achieved by successfully securing the present, making the needs of the present always more important than the needs of the future.

In economics, this phenomenon is explored through the conceptualization and study of time preference. Time preference refers to the value that an individual places on the present compared to the future. High time preference implies a high discounting of the future, while low time preference implies a low discounting of the future or a higher expectation of future appreciation.

All living things have a positive time preference, meaning they always value the future more than the present, albeit to varying degrees. For example, animals have a much higher time preference than humans because they act based on immediate instinct and impulse, with little concept of the future. While some animals may have the ability to build shelter that lasts, or to save a portion of their food for later consumption, their time preference is still significantly higher than humans.

This is because humans are the only species that can determine time preference through intelligence rather than simply instinct. Through logic and reasoning, we can make a more nuanced comparison between future needs and present needs, and thus more appropriately evaluate them. In fact, this ability is the mother of all capital creation. By reducing time preference, humans can perform tasks over longer time frames and produce goods that can be used not only for immediate consumption, but also for the production of future goods, i.e., capital goods.

As soon as time preference falls enough to allow any saving and capital formation, the civilizing process begins.

One marshmallow now, or two later?

Differences in time preference exist not only between species, but also between individuals, and its impact on individual life is significant. This was best demonstrated in the 1960 Stanford University Marshmallow Experiment, where psychologists had children in a room eat marshmallows, telling them they could eat them anytime. However, if they waited 15 minutes before eating, they were rewarded with a second marshmallow. In other words, children could choose between the immediate gratification of one marshmallow or the delayed gratification of two marshmallows.

An interesting finding from the experiment is that those children who were able to delay gratification had better lives decades later, including higher SAT scores, lower body mass index, and lower tendency to abuse drugs. In addition to this experiment, everyone can see and possibly experience the power of delayed gratification, either by giving up today's delicacies to get an ideal body tomorrow, or giving up today's overconsumption to invest and build an ideal retirement savings for tomorrow.

Sacrificing today’s needs and desires for future compounding gains is the essence of all progress. Yet, somehow, the crypto industry seems to have forgotten this, and high time preference thinking has become the default mindset for blockchain and decentralized application developers. While application development is generally more present-oriented and forgiving, building blockchains, especially Layer 1, with the same high time preference mentality will lead to undesirable outcomes that hurt the entire industry.

For example, this high time preference mentality gave us several Layer 1s that sacrificed security and decentralization for high throughput, and as a result experienced unplanned outages and deliberate stoppages during the last bull run. In order to attract more investors who were discouraged by Ethereum’s high transaction fees, these projects chose to eat the marshmallow immediately rather than delay gratification and receive two later. In other words, they gained a huge market share of users and developers at the time, but sacrificed the long-term viability of their technology.

To us, a "blockchain" that can be stopped and restarted at will is an oxymoron. Blockchains are, by definition, decentralized and immutable databases. If they are maintained by only a few colluding validators and can be tampered with, then they are not blockchains, but just centralized, inefficient databases. As a result, high time preference thinking has led many crypto projects to recycle the old flawed, exclusive, and fragile systems that have hindered traditional finance.

Building a blockchain with low time preference

Our low time preference approach to building a blockchain is what sets us apart from most Layer 1s in the industry today. Instead of rushing to market with an uninspired and unrefined technology stack, we took the time to design a blockchain that truly solves the key problems faced by existing solutions.

As a result, Nervos created the first blockchain architecture built with a modular framework in mind from the outset. We realized early on that the only way to scale globally without sacrificing security or decentralization was not through a single-layer architecture, but through a layered architecture. Most blockchains now adopt a layered architecture, a design choice that seems common today, but was completely non-mainstream when we launched. More importantly, our low time preference has paid off because now that our modular theory is being proven and accepted by the wider industry, we are better able to rely on it than others.

The decision to develop the CKB-VM and the Cell model based on the new RISC-V computer instruction set is the result of long-term oriented thinking. The Cell model and RISC-V combined make CKB the most flexible and interoperable blockchain in the industry, capable of supporting all cryptographic primitives and building a variety of new applications that cannot be implemented elsewhere. Due to these features, CKB can implement account abstraction by default, which is a well-known bottleneck of today's blockchains.

However, to get these features and future-proof CKB, we had to make certain sacrifices in the present. First, we alienated a large number of existing application developers who were used to coding in Solidity and building on account-based chains. RISC-V-based virtual machines allow developers to build on bare metal, and the Cell model — which fits a more functional programming style — gives them endless possibilities. While this is the only way to build a truly future-proof blockchain, it increases the workload for less tech-savvy application developers. That being said, CKB supports all programming languages, which means we can draw from a larger developer pool. When the next generation of developers are not hindered by the existing account-based model concepts, we will be here to host them.

Our low time preference mindset also led us to choose the Proof of Work consensus mechanism over Proof of Stake, despite its declining popularity and growing stigma around its energy usage. We knew that it would become increasingly difficult to defend Proof of Work to laymen, but we also knew that this consensus mechanism would provide CKB with greater security and decentralization. Rather than succumbing to the current social and political pressure, we chose what would be best for CKB in the long run. The correctness of this decision is already being proven today, as we see chains based on Proof of Stake becoming increasingly centralized and vulnerable to capture and censorship.

Summarize

Today, our spirit and approach to building blockchains seem fundamentally different than ever before, with the key difference being that our time preference is significantly lower. We remain steadfast in our commitment to the original goal of cryptocurrency, which is to create a strong, open, accessible, and permissionless financial system. The only way to achieve this is to abandon some of the needs of the present and focus on the needs of the future.

While there is still a lot of work to be done, we are one of the few on the right track. By lowering our time preference, we were able to get the fundamentals right and create an ideal, future-proof base layer for modular blockchain networks. Now, it’s time to build on this foundation.

(End) #CKB #PoW #BlockChain