China’s Blockchain Expert Xiao Feng: There are Two Big Problems With ICO
Dr. Xiao Feng, Chairman and CEO of Shanghai Wanxiang Blockchain Inc and a heavyweight figure in China’s blockchain space, said in Shanghai on Februray 28 that blockchain technology can develop much faster than the Internet as it does not rely on Moore’s Law, and blockchain economy is the “true” sharing economy, according to 8BTC’s report.
Dr. Xiao is also the vice president of Wanxiang Group, best known as one of the nation’s largest auto parts manufactures. Wanxiang Group, an early and well-known player in the blockchain industry has created a $50 million blockchain fund and set up the Blockchain Labs in 2015. Last March, Wanxiang launched China’s first dedicated blockchain accelerator, dubbed the “Chainbase accelerator,to fund blockchain entrepreneurs.
Here is the summery of Dr. Xiao’s speech :
Blockchain Can Develop Faster Than the Internet
Blockchain is the trust machine. The “decentralized” nature of it can be explained from four aspects:
1.we do not need a third party to complete transactions with blockchain;
2.Blockchain-based economic activities do not need the institutions or organizations like a company;
3.In the blockchain world, commercial organizations are not required to help economic exchanges;
4.Incentive mechanism is not established by centralized organizations any more.
Blockchain does not depend on Moore’s Law and does not rely on improvements in hardware technology,so it will certainly develop faster than the Internet, several times faster.
Blockchain Economy is the “True” Sharing Economy
Blockchain economy is the “true” sharing economy as there is no shareholder to split profits from you. Anyone who joins the blockchain network can get his own value and the gaining generated in the network will be distributed evenly among all users.
Digital currency is commonly divided into two categories: Coin and Token. Coin refers to the cryptocurrency that are pre programmed in general blockchain network, and can function as incentive mechanism.Tokens or utility tokens have to be combined with application scenarios, and they can be used to secure or deliver a service.
But in China, tokens used by so many ill-intended individuals have acquired a notorious reputation. There are two types of ICOs in the world, one of which is called Chinese ICO, referring to a large amount of fraud schemes pop in in the nation.
There are two big problems with ICO: First, if a company pursues an initial public offering or IPO, it must have at least 3 years of operating records in China, that is , its business model has to experience a test during this period. Only those that pass the test and achieve profits can go public. The model of public raising funds which allows people who lack professional knowledge to buy tokens must be changed.
Second, in terms of ICO token trading, ICO tokens must be prohibited trading immediately after their ICO concludes.
What is Distributed Business?
Economic institutions on the blockchain network are not run by people, not run by companies, but are based on algorithms.When the marginal cost plunges to zero, we don’t need companies any more. Without companies,it is meaningless to protect property rights. Therefore, all of the ICO projects, including every public blockchain project, belong to non-profit organizations, and their intellectual property rights are open-source.
In this sense, blockchain challenges two two foundations of the modern economic system: the corporation system and property right theory.
Then, distributed business will emerge. Distributed business is not intended to supplant our existing companies nor does it replace government’s control of the market, but it is a complement. The centralized oversight of the market is indispensable when the market fails to function properly.
Meanwhile, corporations have their own value, but a new set of rules will be created to govern the digital economy in which more efficient distributed business and self-organization will flourish.
Therefore, the so-called market mechanism, government regulation and self-organization governance will complement each other. It neither a revolution nor a subversion.When the other two parts fail to work, government can play its unique role in regulating the market.