Computers and Casinos: Two Cultures in the Blockchain World

There are two distinctly different cultures in the blockchain field. One views blockchain as a computer culture for building new networks, with its core being that blockchain has driven a new computing movement. The other focuses on speculation and making money, seeing blockchain merely as a tool for creating new trading tokens.

Media reports often exacerbate the confusion people have about these two cultures. Dramatic stories of making and losing money are easy to understand and captivating, while stories of technological development require more background knowledge to be understood.

The casino culture has obvious problems. An extreme example is a certain defunct offshore exchange, the impact of which was devastating. It took tokens out of context, wrapped them in fancy language, and encouraged speculative behavior. While responsible exchanges provide valuable services such as custody, staking, and liquidity, reckless exchanges encourage bad behavior and can even evolve into Ponzi schemes.

Fortunately, the fundamental goals of regulatory agencies and blockchain developers are aligned. Securities law aims to eliminate information asymmetry in publicly traded securities, while blockchain developers are committed to decentralization and reducing users' reliance on trust in other network participants.

However, the current regulatory environment remains complex. Applying pre-Internet era laws to the modern web not only provides advantages to bad actors but also leaves a large gray area. There are even disagreements among regulatory agencies regarding the classification of certain crypto assets.

The Indivisibility of Ownership and Market

Some rules proposed by policymakers may effectively ban tokens and even impact the entire Blockchain ecosystem. However, tokens are not purely for speculation; they are necessary tools for the community to own the network.

Well-designed tokens have specific purposes, including incentivizing network development and driving the virtual economy. Tokens are a core feature of the Blockchain network, not just optional accessories. Without tokens, community and network ownership cannot be realized.

Some have suggested whether it is possible to use legal or technical means to make tokens non-tradable, in order to eliminate speculative risks. But this is essentially equivalent to depriving ownership. No trading means no true ownership, and these two are inseparable.

A proposal worth discussing is to temporarily restrict token resale after the initial launch of the new Blockchain network until specific milestones are reached. This may help align people's incentives with broader social benefits and avoid early excessive speculation.

The industry indeed needs further regulation, but regulation should focus on punishing bad behavior, protecting consumers, stabilizing the market, and encouraging responsible innovation. Blockchain networks are key technologies for rebuilding an open and democratic internet, and the importance of regulation is self-evident.

Limited Liability Company: A Model of Regulation Promoting Innovation

History shows that wise regulation can accelerate innovation. Before the mid-19th century, partnerships were the dominant corporate structure, with all shareholders bearing full responsibility for the company's actions. This structure limited the company's ability to raise funds.

With the prosperity of railways and industrialization in the 1830s, the demand for large-scale capital led to the popularity of limited liability companies. Although this transformation sparked controversy, industry and legislators ultimately reached a wise compromise, establishing an appropriate legal framework. This not only made limited liability the new norm, but also gave rise to public capital markets, laying the foundation for future economic development.

The Future of Blockchain

The history of economic participation shows the interaction between technological and legal advancements. From partnerships to limited liability companies, and now to blockchain networks, the scope of ownership continues to expand. Future networks may have billions of owners.

In the era of the internet, enterprises need new organizational methods. Imposing traditional legal structures on new network structures has led to many problems, such as having to shift from user-attraction models to value-extraction models. The world needs digital-native approaches to achieve coordination, cooperation, and competition.

Blockchain provides a rational organizational structure for the network, and tokens are a natural asset class. Policymakers and industry leaders should work together to establish an appropriate regulatory framework for blockchain networks, just as predecessors did for limited liability companies. These rules should encourage decentralization rather than default to centralization.

By balancing regulation, we can control the culture of speculation while encouraging technological innovation. Thoughtful regulation will provide space for innovators to focus on building the future.