Interpretation of the ideas of the Chainless platform and DW20 standard currency

——Blockchain does not represent everything about cryptocurrency

Decryption White Paper Series

As the airdrop approaches, we have begun to publish DW20 white papers, chainless white papers, and comments from experts. The knowledge span of cryptocurrency is enormous. Based on our learning experience, we have launched a white paper series with various authors and perspectives. There will always be one that suits you. There are five versions of the DW20 white paper; there are two versions of the chainless white paper, suitable for different readers. We will publish them starting with the most readable version. Interspersed with commentaries.

Cryptocurrency chaos started with the mention of blockchain

Cryptocurrency is a new field filled with conceptual confusion and imprecise definitions. For example, using blockchain to summarize cryptocurrencies is not accurate enough. When it comes to cryptocurrency, it must be called blockchain. I noticed that Mr. Zhu rarely uses the word blockchain. Does every project require a blockchain? When discussing the chainless platform with me, he said that the uniqueness of the hash algorithm guarantees the credibility of the cryptocurrency account, so Satoshi Nakamoto used the term “hash chain” in the white paper. When there is a trustworthy chain, if you are not a currency issuance project, you ensure the credibility of the ledger. There is no need for multi-party competitive accounting. Unilateral accounting uses the uniqueness of the hash value to protect the credibility of the ledger. The hash of the page is uploaded to the Bitcoin system, enabling low-cost and trusted accounting.

Will unilateral accounting result in someone getting away with the money? Mr. Zhu proposed seven criteria for judging the trustworthiness of a machine. He believes that you must still trust the machine system and programmers if you don’t trust a third party. According to Satoshi Nakamoto’s theory, why choose to do evil when it is more advantageous to be an honest node? The operation of the Bitcoin system confirms Satoshi Nakamoto’s judgment. The system data is transparent, and the hash of the running account is uploaded to the chain. It can be reconciled but cannot be tampered with. Why is it evil if the benefit of keeping accounts is less than that of honest work? Just like, why doesn’t Google run away with the money? Centralized exchanges have the opportunity to do evil because they are opaque. Suppose they are transparent, and regulatory agencies can monitor the transparent ledger in real time. In that case, it will play a supervisory role for both project parties and users, and the possibility of doing evil is very slight.

Mr. Zhu raised Satoshi Nakamoto’s longest chain principle to “using economic means to solve technical problems” in “Invite Out Satoshi Nakamoto to Welcome the New World Series Ten: The Significance of Satoshi Nakamoto’s Nobel Prize.” Some people in cryptocurrency use blockchain to solve non-existent security problems. They have no concept of cost at all, and inevitably, the project will not succeed.

The concept of blockchain has affected the progress of cryptocurrency. It took 10 years from Ethereum’s development in 2013 to its upgrade to 2.0 in September 2022; the completion of sharding will take at least 5 years, according to the road map. Just imagine: Has the Internet had projects developed for 15 years? There are primarily technical R&D personnel in cryptocurrency and very few product researchers, which makes the standards for evaluating projects tend to be technical standards, which is ridiculous!

Ethereum programmers are excellent programmers but are novices in finance and products. For example, transaction fees are paid using Ethereum, and the fluctuation of Ethereum makes the charges for projects in the Ethereum ecosystem very unstable. Have you ever seen that web2 financial project charge this much? Ethereum has not changed in ten years. It is the arrogance of technical personnel. The two-token model of the market, separating equity tokens and transaction tokens, was proposed to address this issue.

Another example is using ETH to represent the tokens of the two POW and POS mining modes. The costs of these two tokens are entirely different. They are two tokens, showing they also lack a basic understanding of the product.

I recently saw Vitalik’s explanation of proof of personality: “A world without proof of personality seems more likely to be dominated by centralized identity solutions, currencies, small closed communities, or all three. A world dominated by a certain combination.” Isn’t centralization possible? Only decentralization is proper? Centralization and decentralization have different scenarios and have their respective uses. Proof of personality is a straightforward secondary verification problem, which makes them think it is complicated and insist on solving a two-dimensional problem with a number line. It is a misunderstanding of cryptocurrency opinion leaders. Internet identity confirmation generally uses two-step verification, which is simple and secure.

So far, the blockchain is the same as it has been for more than ten years. The ledger is a one-way sending system without any progress. When we use it to transfer money, we must first transfer a small amount to verify that the account is correct and then transfer a large amount. Why does this phenomenon not occur during Alipay transfers and bank transfers? Because if you make a mistake, it will be returned; if you make a mistake in cryptocurrency, you will cry. Mr. Zhu designed the transfer on the chainless platform as a reconciliation system, which does not require centralized manual intervention and will not cause miscounts. It is much more advanced than cryptocurrency transfers. Blockchain seems innovative, but it adheres to the incomplete and old-fashioned, which is far out of step with the development of Internet technology.

Let’s look at what has risen in the ranking of cryptocurrencies in recent years. The most prominent ones are exchanges and stablecoins. They are all centralized. Although centralized exchanges misappropriate customer funds and have no transparency, users still choose them. Because so-called blockchain projects either have too expensive transaction fees or are challenging to use. UNISWAP, the best-distributed transaction, is only ranked 24th. Ironically, centralization has developed more than decentralization.

What exactly is the core of decentralization? Is it distributed accounting? Is it distributed storage? Is it a blockchain ledger? It’s a techie’s distillation of cryptocurrency. According to Satoshi Nakamoto’s point of view in the white paper, cryptocurrency is “public.” Only when it is public can it be transparent, only when it is transparent can it not be tampered with, and only then can it have credibility. It is the simplest way to increase credit and reduce supervision. A suitable method must be simple, and many of the methods that technicians have come up with cannot be easily understood, let alone adopted.

What is the core idea of cryptocurrency? Mr. Zhu’s summary is openness, fairness, impartiality, and competition, thus ensuring that the ledger cannot be tampered with. Using Web3 to refine cryptocurrencies is already higher than refining from a blockchain perspective. It is refining from an application perspective. Openness, fairness, justice, and competition are refined from an ideological perspective. Cryptocurrencies cannot connect with the mass market without breaking the blockchain nightmare.

Mr. Zhu uses transparent centralization to achieve the essential characteristics of decentralization. It can completely replace the Ethereum system. History is such a cycle. The cryptocurrency created by David Chaum was centralized, with ledgers and accounting centralized, and finally died. Satoshi Nakamoto’s cryptocurrency is a centralized ledger, decentralized accounting, and has no operating costs, so it will not die. Ethereum inherits the characteristics of Bitcoin and has no operating fees. Ethereum is too difficult to use, so many alternative public chains have emerged. And none of them have jumped out of the blockchain rut. There are minor improvements but no major innovations. The basic foundation of most projects is still the blockchain. Replacing blockchain ledgers with transparent centralization is a major ideological reversal. It is new thinking in the cryptocurrency space. This thinking is not without signs. Centralized exchanges represented by Binance use Merck tree ledgers to achieve transparent accounting. Although imperfect, this is obviously the only way for centralized trading.

Traditional regulation is not suitable for cryptocurrencies

Centralized exchanges must be transparent to prove they have not been tampered with. Let all cryptocurrency exchanges move toward a transparent approach rather than incorporating cryptocurrency exchanges into the current regulatory approach. Otherwise, it will be a retrograde step that ignores the innovation that cryptocurrency has achieved and stifles innovation.

The biggest feature of cryptocurrency is its ability to change production relations and simplify regulatory structures and objects. Bitcoin is a $700 billion project with only four maintainers. Does it need supervision? Because it is transparent in real time and exceeds that of all listed companies, if Bitcoin needs to be supervised, intelligent robots can be used to supervise it in real-time. Bitcoin is often accused of money laundering. This phenomenon exists. But who should be regulated? It is impossible to supervise project parties, and obviously, only suspicious accounts can be supervised. Centralized supervision of money laundering is through banks, and banks often make mistakes in determining customer behavior. Cryptocurrencies do not lend themselves to such regulation.

Cryptocurrency has broken through the traditional regulatory boundaries. The most challenging problem is that cryptocurrency projects generally do not have conventional corporate structures, and of course, many tokens do not represent the value of the project. It is valid for Bitcoin, Ripple, and even Dogecoin.

Mr. Zhu’s suggestions are as follows:

“Based on our research and understanding of the cryptocurrency field, we propose the following regulatory recommendations:

1. Supervision is based on the degree of transparency and decentralization. The essence of decentralization is still reflected in transparency. The more opaque it is, the more regulatory intervention is needed. The more centralized it is, the easier it is to be opaque, and the more regulatory intervention is required. For example, centralization and transparency Low-level USDT, USDC, and various exchanges require intense supervision. Completely transparent BTC and ETH require no supervision and cannot be supervised. Centralized exchanges such as Binance are extremely opaque and must be strictly supervised. The U.S. SEC can catch people accurately, but the method is inappropriate.

2. The degree of machine trustworthiness represents the degree of automation and transparency of the project. Any areas where automation is insufficient require supervision. For example, human operation, breaking of rules, and secret operations without disclosure require supervision.

3. Supervision based on the core team’s commitment: Cryptocurrency does not succeed by iteration; it must be carefully designed in advance, and the white paper must reflect the project’s central idea. The white paper can be changed but must be announced in advance. It is like the prospectus of an IPO. You can sue the team if you change the use at will because they can’t do it.

4. The team must have real names, and real names represent responsibility.

5. Currency circulation is equivalent to listing, and the supervision of team members basically applies to the management regulations of listed companies.

6. The circulation listing process is a simplified version of the IPO process

7. Supervise financial entrances and exits because platforms like Ethereum cannot manage them. But USDT and bank deposits and withdrawals can be managed.”

Mr. Zhu’s observations are more profound than those of many cryptocurrency opinion leaders, so it is unsurprising to write about the creation of decentralized currency.

None of the stablecoins in the market are stablecoins

Stablecoin is also another inaccurately defined term in the field of cryptocurrency. The so-called stablecoins that have appeared in the field of cryptocurrency until now are not stablecoins but are anchored coins. Stablecoins do not exist. The exact definitions are anchor coins and standard currencies. Current stable coins can’t become standard currencies. Without a standard currency, establishing a new financial ecosystem is empty talk. DW20 fills this gap.

The DW20 decentralized standard currency is very creative. The use of distributed airdrops, mortgage issuance, and market makers has set a benchmark for Bitcoin, making the Bitcoin standard that cryptocurrencies have used for many years show the possibility of implementation and benefit everyone. I speak highly of this plan, which is the culmination of cryptocurrency ideas after the emergence of Bitcoin. If there are no problems with the technical solution, DW20 has a great chance of success.

Real names and anonymity coexist

Cryptocurrency emphasizes anonymity and protects privacy. The DW20 white paper states: “It must be emphasized that anonymity is not the core concept of Bitcoin; ‘privacy is not a secret,’ the essence of privacy is that ‘anonymous systems allow individuals to disclose their identities,’ for which I have read Eric Hughes’ CryptoPunk Manifesto’ Know It.” Do we see cryptocurrency systems like Bitcoin allowing individuals to reveal their identities? That’s not what Eric wanted. Eric’s idea of privacy classification is implemented in the DW20.

The real world comprises real identities, and personal privacy should not become a tool for centralized organizations to make profits. Solving this problem through legal means must be easier than technology, and the view that privacy and anonymity are equivalent is the wrong idea in the cryptocurrency space.

Regardless of real names or anonymity, supervision will be similar when data transparency and artificial intelligence are developed. The degree of regulation depends on the law. The responsibility for supervision does not lie with the project side but rather with the supervision authorities directly supervising individuals by the law. Current regulatory rules and regulations will apply if the data is not transparent.

How to get Bitcoin Standard accepted by the mainstream

DW20 has a medal design, and I read Mr. Zhu’s “Bitcoin USD Standard” article. I know what he thinks. This move is brilliant. There is a sentence in the white paper: “This is a gold mountain,” and it is a gold mountain without an owner. How to take care of the interests of all parties in a project must first have interests. It is worthy of being an entrepreneur with a unique vision and sophistication.

There are still a few unresolved issues

1. What role will the basic funds play? It is a new concept and needs further research.

2. Using Bitcoin to measure total social wealth and DW20 as a yardstick is innovative. If successful, it could make an outstanding contribution to humanity. But his basis is only the free market theory of Mises and Hayek. This theory has many market opponents and touches on the fundamental interests of the powerful.

3. Will market-making funds excuse regulatory authorities from killing projects? From research on the white paper, it appears this is not illegal.

Blockchain doesn’t represent everything about cryptocurrencies

Return to the title of this article. Stornetta is revered as the co-inventor of blockchain, along with Stuart Haber. Their invention is cited in Satoshi Nakamoto’s white paper. However, “blockchain” is not in Satoshi Nakamoto’s white paper. When answering user questions, Nakamoto affirmed the concept of cryptocurrency. In the eyes of Satoshi Nakamoto, blockchain is always a technical means and only a part of cryptocurrency. The essence of Bitcoin is finance, and the Bitcoin system was born to solve financial problems. Using blockchain to summarize cryptocurrencies is the fundamental reason for the slow progress of cryptocurrencies for more than 10 years. Using encryption technology to make the ledger open, transparent, and non-tamperable is not just a blockchain technology. Blockchain technology is the most suitable technology to implement the Bitcoin system. Still, it is not the most appropriate technology for the financial ecological platform, so ten years of development of Ethereum. The indexing technology of the chainless platform has more advantages. Using cryptocurrency and cryptoeconomics to summarize Satoshi Nakamoto’s thoughts is obviously more accurate.

Mr. Zhu returns the true face of the blockchain, not sticking to the blockchain structure but realizing the DW20 distributed stablecoin based on the chainless system. The idea is bold and reasonable.

Human progress is fundamentally driven by technology, and the emergence of DW20 allows us to see the dawn of a fair world.

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