The Two Cultures of Blockchain: Computing and Speculation

The rise of blockchain technology originates from two distinctly different cultures. One is computer culture, which sees blockchain as a way to build new types of networks, driving a new computing movement. The other is speculative culture, which primarily focuses on making money and trading, viewing blockchain merely as a means to create new transaction tokens.

Media reports often exacerbate the confusion between these two cultures. Dramatic stories of making or losing money easily attract attention, while reports on technological advancements are more subtle and slow, requiring a certain historical context to understand.

There are obvious problems with speculative culture. Some trading platforms detach tokens from their context, packaging them with marketing language that encourages speculative behavior. While responsible exchanges provide valuable services such as custody, staking, and market liquidity, some reckless platforms encourage bad behavior and even abuse user assets. In the worst cases, they may evolve into outright Ponzi schemes.

Fortunately, the fundamental goals of regulators and blockchain developers are aligned. Securities laws aim to eliminate information asymmetry related to publicly traded securities and to minimize market participants' reliance on the management team's trust. Similarly, blockchain developers are also committed to eliminating the centralization of economic and governance power, reducing users' trust requirements of other network participants.

However, the current regulatory environment still presents uncertainties. Applying previous legal precedents from the internet to the modern network not only provides opportunities for bad actors but also creates advantages for non-U.S. companies that are not bound by U.S. rules. There are also disagreements among regulatory agencies regarding the nature of certain crypto assets, which further adds to the complexity.

The inseparable relationship between ownership and the market

Some rules proposed by policymakers may actually prohibit tokens, thereby banning all their practical uses, and may even affect the Blockchain technology itself. If tokens are purely used for speculation, these proposals may have their reasonableness. But in fact, speculation is only a subsidiary function of the true purpose of tokens; the essence of tokens is as a necessary tool for the community to own the network.

Well-designed tokens have specific purposes, including incentivizing network growth and driving virtual economies. They are not accessories to the blockchain network, but rather its core features. Without tokens, true ownership of the community and network cannot be achieved.

Some have proposed whether it is possible to use legal or technical means to make tokens non-tradable in order to eliminate the possibility of speculation. However, this practice would actually eliminate the concept of ownership. Even intangible assets, such as intellectual property, can be freely bought and sold by their owners. No trading means no ownership; the two are inseparable.

One possible compromise is to prohibit the resale of tokens for a period of time after the launch of the new blockchain network or until specific milestones are reached. This could align people's incentives with broader social interests, forcing token holders to endure the hype cycle and realize value through promoting productive growth.

Although the industry does need further regulation, the regulation should focus on achieving specific policy goals such as punishing bad behavior, protecting consumers, providing a stable market environment, and encouraging responsible innovation. Blockchain networks are key technologies for rebuilding an open and democratic internet, so this issue is crucial.

Limited Liability Company: Successful Historical Cases of Regulation

History shows that wise regulation can accelerate innovation. Before the mid-19th century, the dominant company structure was the partnership, where all shareholders were fully responsible for the company's actions. This structure limited the company's ability to raise funds because potential investors had to bear significant personal risks.

The concept of a limited liability company has existed since the early 19th century, but it was not widespread. The establishment of such a company requires special legislative action, so most business enterprises remain limited to small-scale close partnerships.

With the prosperity of railroads in the 1830s and the subsequent wave of industrialization, this situation changed. Large-scale industrial projects required huge upfront investments, beyond the capabilities of traditional small teams. This gave rise to the demand for new and broader sources of capital.

Despite facing controversy, lawmakers ultimately found a balance. They established a legal framework that made limited liability the new norm. This transformation gave rise to public capital markets, laying the foundation for subsequent economic prosperity. This is a typical case of technological innovation driving regulatory change, embodying the spirit of pragmatism.

The Future Development of Blockchain

The history of economic participation shows the process of interaction between technological and legal advancements. From early partnerships to modern public companies, the ownership structure has continually expanded. Blockchain networks further broaden this scope through various mechanisms, and in the future, there could be billions of owners participating.

In the era of the internet, businesses face new organizational demands. Imposing traditional legal structures on new network structures has resulted in numerous problems, such as networks having to shift from user-attraction models to value-extraction models, excluding a large number of contributors. The world needs new, digitally native ways to facilitate people's coordination, cooperation, and competition.

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

There are many ways to control speculative culture while encouraging the development of computer culture. Wise regulation can promote innovation and allow founders to focus on building the future. With a reasonable regulatory framework, Blockchain technology is expected to become a key force in reshaping the future of the Internet.