Author: Yan Meng, Source: author’s twitter Yan Meng @ Solv Protocol | ERC-3525
What can be called “digital assets” and what are “electronic assets”?
Previously, I naively thought that only those on the blockchain could be called “digital,” while those in centralized databases were only qualified to be called “electronic.” I recently rethought this and have a new perspective: The key is not whether the form itself is “digital” or “electronic.” Even if the difference is not ambiguous, it is still far-fetched. We all remember that in the 1990s, people talked about “digital survival” rather than “electronic survival” when the Internet was just emerging. Therefore, whether it is stored on a decentralized ledger should not be regarded as the essential issue. The key is the “asset.”
Assets are a legal concept that is an institutional arrangement and have the connotation of “trustworthy” in itself. In this sense, broad digital assets did not appear only after the emergence of blockchain, but had already appeared in the era of the Internet. The most familiar type of early digital assets was the order on e-commerce websites. By interacting with the e-commerce website or app, you created an order as a digital asset that existed in the website’s database. However, its significance is only recognized when the order is fulfilled as a contract, and the rights and obligations specified in the contract are fulfilled, that is, you have indeed received qualified goods, and the seller has indeed received payment before it can be finally confirmed.
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In 2003 and 2004, I witnessed the early development of an e-commerce website. At that time, China’s e-commerce was mainly based on the “cash on delivery” model, and the biggest problem was that after the courier or courier company received the money, they disappeared. In abstract terms, this was the difficult exploration stage before the “order” became a true “digital asset.” Later, the third-party escrow transaction model led by Alipay was established, which basically solved the logistics and credit problems of e-commerce, and made the “order” truly upgraded to a “digital asset.” In a sense, the e-commerce industry mainly solved the “creation of trustworthy assets” and gained such tremendous development.
In blockchain, the question becomes who can create trustworthy digital assets? Trustworthy means that the rights and obligations promised by the digital asset can be fulfilled with a high probability. Why are there so many projects that cheat investors? Because project parties do not have the ability to fulfill the rights and obligations promised by their tokens. Once the problem is attributed to “creating trustworthy digital assets,” we immediately realize that there are not many people and institutions qualified to create digital assets. If you are a nobody and create 100 gold coin tokens, promoting that each token corresponds to an Alexander gold coin from ancient Macedonia, who will believe it? If it is not trustworthy, it cannot be called a digital asset. The beginning of blockchain started with Bitcoin and solved this problem in a clever way because Bitcoin has no external value commitment, so there is no problem with trustworthiness, and it relies entirely on consensus to give it intrinsic value. This method is clever, but it is also not replicable.
There is only one mystical existence that can’t be clearly explained but can establish a consensus of value, and that’s “money”. After all, abstract value scales should have only one. Nowadays, many people play Memecoins for an inner reason that they think the tokens created by your project team cannot fulfill the value promises. In that case, why not play Memecoins, where there are no value promises at all? I’ll tell you that I’m just a blank sheet of paper, and there is no risk of breaking a promise. Yes, there is indeed no risk of breaking a promise, but it actually becomes a pure gambling game. The probability of loss is still infinitely close to one if you intend to invest in it. We still need to analyze what the next step of industry development might be around the theme of “creating trustworthy digital assets”. RWA may indeed be a breakthrough, and I analyzed this from this perspective.
The breakthrough advantage of RWA over Web2 direct transactions is transparency and borderlessness. Transparency brings trust, and borderlessness brings freedom. Because it’s been said so much, it’s a cliche, and everyone is numb to it. But trust and freedom can achieve a goal that will turn the world upside down. For example, Web2 has also developed for so many years, and its ability boundaries and shortcomings are very clear. Solving this problem will upgrade civilization.
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