HashSpace — About Problems Faced in the Development of the Global Digital World
Information Silos, Data Silos, Value Silos
Information silos refer to the fact that global users cannot freely realize peer-to-peer communication, nor can they directly conduct commercial, trading, and financial activities. As a result, data from all countries in the world is deposited in their own borders. The data is not ascertained and does not circulate, which limits its realizable value. This leads to value silos. As a new production factor, data is actually a new asset and value carrier. The existence of data silos hinders the circulation value of data.
For many industries, the lack of visibility among data silos greatly affects operating efficiency and profits. In the financial services industry, if operations are divided by product and region and there is a lack of coordination in data model design, data silos may be formed. In the future, the transaction vouchers used for multinational companies will gradually be unified. From the current situation, this development is likely to be a digital token that is not affected by laws and exchange rates in various regions. In the inter-enterprise lending scenario, blockchain technology can make post-loan management more efficient. Application products such as Bitcoin debit cards and ATMs that have appeared in Europe and the United States also indicate that the digital currencies represented by Bitcoin will gradually be accepted by the mainstream market.
At the same time, traditional cross-border transactions/payments are usually affected by the fiat currency exchange rates, laws, and policies of the two countries. Based on the blockchain-based token economy, it will not be affected by the exchange rate at all, and at the same time, it will be able to overcome the negative impact of the laws and policies of various countries on payments/transactions to a certain extent. Also, based on a distributed database, all registered companies will be recorded on-chain, which will provide more choices for companies from all over the world, especially for small and medium-sized companies, which can avoid the economic costs caused by the problem of information silos. Also, the eliminated intermediary fees will reduce corporate expenses and costs.
The existing corporate information silos and information asymmetry make resource allocation inefficient, which will hinder the optimization process of the supply chain. According to relevant authoritative reports, the net operating capital in the international supply chain is approximately EUR 3.5 trillion. Traditional liquidity solutions are usually expensive and are not suitable for most companies. Liquidity optimization is especially important for supply chain participants. Only about 75% of the USD 70 trillion assets in the global supply chain is fully utilized. Storage through factories and warehouses and transportation through planes, ships, trains, and trucks are expensive, but there is still a large amount of scalable capacity in the supply chain network.
Fuzzy Value Logic of the Global Public Chains
2020 is the year when the value of the global blockchain re-launched. However, the irony is that about 50 million users now use blockchain-based wallets; and most of these wallets are used to store value or are not used for a long time. Moreover, these wallet users have rarely used blockchain-based applications. Take Ethereum for example. There are currently more than 5,000 distributed applications (DApps), but less than 900 of them are active.
There is no doubt that global public chains are still seeking large-scale application cases. Of course, many people will say that because of performance issues, DApps cannot scale on a large scale. However, in fact, the throughput of a public chain does not matter when a platform has sufficient application usage to require the corresponding throughput. Take DeFi DApps for example. DeFi protocols seem to have become the mainstream at present, but a survey conducted in July 2020 found that only 1% of the 5 million cryptocurrency traders use DeFi protocols. One of the reasons is the complexity of using the application and the poor UX. What we really lack is “end user usability”, which leads to the ambiguity of the value of global public chains.
If users don’t know the application of a public chain, why would they use it? The value logic of global public chains seems to have entered a technical misunderstanding. As public chains carry user value, the following questions need to be answered:
Why should users use it?
Surrounded by the “free” business model, Internet users can choose to use an application for free and then pay for advanced features. For new services on the market, providing a “free” version is an effective way to promote user acquisition. In contrast, on the current public chains, each time a user interacts with the application, the blockchain application will spend transaction fees. Such applications will face difficulties in acquiring users and will therefore limit their widespread adoption.
How to build applications?
For example, in order for developers to build applications on Ethereum, they must learn a brand-new language Solidity. It takes a long time for developers to learn and write smart contracts. Developers may make some simple mistakes. These mistakes may lead to serious consequences. Poorly written smart-contract code has led to some famous hacking incidents: in a Decentralized Autonomous Organization (DAO) hack, 3.6 million ETH was stolen; a loophole found in the smart contract used by Parity caused a loss of 500,000 ETH. In view of the difficulty of building DApps, developers limit their application design to the lowest viable product stage.
Why is UX always poor?
Blockchain developers put a lot of energy on the back end but forget to consider the front-end experience. For potential users who have never heard of blockchain, exploring DApps may seem more like an adventure. This problem limits DApps from reaching their full potential. Therefore, a new blockchain protocol model is needed. It needs not only to be extensible, but also to provide better blockchain development tools and optimize the end user experience.
Global Fragmentation of Backbone Networks, Protocol Layers, and Application Layers
The optical fiber communication system is fragmented on a global scale; and there are barriers in the network system between countries. The Internet is only a point-to-point communication protocol. It lacks the main network to carry application data, traffic, and value independently. The global growth of Internet users is shocking. In 2020, we have 5 billion connected users, accounting for 70% of the world’s population. However, as the number of online users has grown, so has the level of Internet censorship. In the future, most new users are likely to come from countries/regions with increasingly strict Internet censorship. Because these users usually have poor Internet connection, they are most vulnerable to this harsh censorship. These users are looking for effective solutions to remove these technological gaps in the Internet.
Even if blockchain brings brand new solutions, different blockchains have different systems and TPS. Take Bitcoin for example, it takes an average of ten minutes to generate a block. At the same time, in order to ensure the irreversibility of a transaction, a user must wait for six confirmations, which may make the waiting time more than one hour. High fees and long transfer time have become the stumbling blocks that hinder the widespread adoption of blockchain. Although blockchain will bring a disruptive technological change in the financial field, the application of this technology on the network is still in the development and exploration stage, and some new problems will inevitably arise.
Another major challenge is the lack of interoperability between a large number of blockchain networks. More than 6,500 projects are making use of various mostly independent blockchain platforms and solutions with different protocols, coding languages, consensus mechanisms, and privacy measures. The problem is that due to the existence of many different networks and the lack of a common standard that allows different networks to communicate with each other, the blockchain space is in a “state of chaos.” The lack of this uniformity of cross-blockchain protocols also makes basic processes such as security lose consistency, which makes mass adoption almost impossible. The establishment of industry standards for various blockchain protocols can help companies collaborate in application development, verify proofs of concept, share blockchain solutions, and make it easier to integrate with existing systems.