P2P Economy: Leading the Blockchain Renaissance

Source: Bytecoin CKB

The entire blockchain industry is currently in a state of emptiness. In the past few years, from 1C0 to Decentralized Finance, from Non-fungible Token to Meme coin, there have been few projects that truly provide innovation or value to the public. Most projects are just chasing short-term gains and speculative opportunities. Many industry veterans have increasingly questioned the current path.

ETH core developer Péter Szilágyi tweeted a few days ago[1]The above expresses disappointment with the industry, pointing out that the blockchain industry is turning into a casino, unrelated to innovation or value creation, let alone mass application. He believes that the ideal of blockchain is being replaced by the game of cutting leeks.

This inevitably leads to reflection: why is this happening? We believe that the reason lies in the fact that Ethereum, which currently has the largest number of users and the most applications, has skewed the entire industry.

Ethereum’s Wrong Path: Everything on Chain

The biggest mistake of Ethereum is insisting on putting everything on-chain and trying to make all business processes on the blockchain. Even transactions that could have been completed offline between two individuals are forced to rely on the consensus of the entire network.

In the Ethereum worldview, it seems that only fully on-chain applications are the “orthodox” blockchain applications. Whether it’s finance, gaming, or social applications, it must be on-chain to be “ZZ correct”. When the mainchain is congested or resources are insufficient, more chains are created, Layer 2, or even Layer 3. In short, all business processes must be on-chain. And the underlying chain must publish transaction data to the upper chain or third-party chain to ensure the so-called data availability, and so on.

The result of putting everything on-chain is that the Block chain cannot bear the burden, the performance cannot keep up, leading to on-chain congestion and high Money Laundering. This gives the Block chain the impression of slow speed and high cost, with extremely poor user experience.

There is an old saying that a product must be ten times better than the existing one to be successful - like the iPhone is ten times better than Nokia. However, the user experience and cost of today’s blockchain applications are far from Web2, not to mention ten times better. This makes it impossible for blockchain to be widely applied. As a result, blockchain can only serve a small number of people, such as speculators and the gray industry, inevitably turning into a gambling state.

Returning to First Principles: What Exactly is the Blockchain?

First of all, we need to clarify that Block chain is a tool, a means. A true Block chain application does not need to put all business processes completely on chain, the key is to meet user needs, including currency freedom, market freedom, content freedom, social freedom, etc.

As we all know, BTC is the origin of the blockchain, and it is widely regarded as the most decentralized blockchain and the most valuable cryptocurrency. However, few people realize that in the BTC White Paper[2]In the document, Satoshi Nakamoto never mentioned “blockchain” or “Decentralization”. Instead, he used the term “peer-to-peer (P2P)” and placed it directly in the title - “Bitcoin: A Peer-to-Peer Electronic Cash System”.

P2P service is a platform of Decentralization, through which two individuals can interact directly without the need for a third-party intermediary. Going back to first principles, let’s rethink what Block chain really is. A simple explanation comes to mind —— Block chain is essentially a P2P network.

In fact, what we call “on-chain” is actually the Consensus layer built on top of the P2P network. Many business processes do not need to rely on the Consensus layer and can be directly addressed in the P2P Network Layer. For example, if Alice wants to pay Bob, the ideal way is for Alice to directly send the money to Bob point-to-point, rather than through unnecessary intermediaries such as Consensus validators or block producers. This approach is not only faster, but also naturally protects privacy.

At the same time, building applications on the P2P network layer can avoid performance bottlenecks and high transaction costs, making it possible to create truly useful applications that can be widely adopted.

P2P Economy: Making P2P Great Again

We advocate for P2P economy, where individuals can autonomously trade in a peer-to-peer manner. The role of the blockchain consensus layer here is to facilitate and coordinate the formation and settlement of transactions, rather than taking over their execution.

In this architecture, the P2P network and Consensus layer run in parallel. The P2P network serves as a marketplace for information exchange, where consumers and producers negotiate and exchange quotations. The Consensus layer can provide Smart Contracts when necessary to ensure the smooth operation of the Decentralization market.

P2P economy can truly meet user needs and provide better solutions than traditional centralized services. Actual use cases include peer-to-peer payments, Decentralization storage, Decentralization computing, etc.

Let’s look at an example.

In a P2P computing network, Alice wants to outsource a computationally intensive task to Bob’s computing cluster for a week. They reach an agreement in a peer-to-peer manner. As the provider, Bob offers computing services; as the user, Alice pays stable coins through a payment channel in a ‘streaming payment’ manner based on the consumed computing resources. If Bob fails to provide computing services, Alice can stop payment; if Alice does not pay, Bob can stop the service. The whole process is simple, clear, and does not require an intermediary. More importantly, it will not impose too much burden on the blockchain consensus layer.

Services like BitTorrent, which have been popular on the Internet for many years, have proven to effectively meet user needs and are to some extent superior to centralized services. The P2P economy can be further enhanced by combining with Stable Coin payments based on this, We believe that in the next few years, peer-to-peer stablecoin payment infrastructure such as the Lighting Network for BTC and CKB Fiber Network will mature significantly, greatly promoting the development of the P2P economy.

P2P Economy Will Lead the Blockchain Renaissance

P2P economy has opened up a new paradigm and provided a new development path for the blockchain industry. Compared to the current path dominated by ETH, P2P economy has the following advantages:

1. The P2P economy solves real-world problems and has real user needs and practical applications (such as peer-to-peer payments, Decentralization storage). These needs have been validated for many years, not hypothetical needs. The P2P economy can truly create value, rather than simply providing speculative tools.
2. In the P2P economy, most of the business logic does not need to be put on the chain, avoiding performance bottlenecks and transaction fee issues. As a result, user experience is greatly improved, and large-scale applications are more likely to be realized.
3. The P2P economy uses Stable Coin payment, which is easy for users to understand and facilitates participants to assess service costs and benefits. The use of Stable Coin also reduces the speculation space for coin issuance.

In addition, P2P economy will bring about a revival, helping the blockchain industry to rediscover the original intention of changing the world, specifically manifested in:

• Service Decentralization: Many services can be re-implemented in a P2P decentralized manner, such as payments, storage, computing, and even VPN services. The P2P approach can provide a user experience that is superior to existing centralized solutions.
• Equal Payment: Peer-to-peer payment allows everyone to participate in transactions equally. There are no centralized Financial Institutions, no entry barriers, and no situations where large enterprises take advantage of small participants.
• Large-scale application: The P2P network is more open and inclusive, better meeting user needs, and more likely to bring the masses into the blockchain for large-scale application.

In summary, the P2P economy is expected to revive the long neglected P2P concept, giving it new life and injecting new vitality into the blockchain industry, leading to a new blockchain renaissance.