How To Tell Whether A Blockchain Project Is Authentic Or Fake?

The right bubble can allow capital to drive the development of a new technology, but now it is simply destroying the industry. Of the thousands of projects popping up out of nowhere, which one is real? What is worth investing in? Today we will talk from the perspective of a blockchain product practitioner.

First, you need to understand some basic concepts to avoid being fooled by the rhetoric in the white paper.

What is the essence of blockchain?

Blockchain technology is essentially a distributed Internet protocol + value network.

Blockchain uses technical means (algorithm + mathematics + consensus mechanism) to allow various users distributed throughout the network to collaborate to achieve goals recognized by everyone, and at the same time there is basically no learning cost. Take a flock of birds as an example: When migrating, a flock of birds arrange themselves neatly. They do not follow the orders of the leader (centralized node). They just need to remember to stay within half a meter of the nearest bird and not to collide with it. This is the essence of blockchain distributed protocols.

Blockchain is a value network because it confirms ownership of data. Only verified data can be priced, and only valuable data can achieve value dissemination. This is a unique feature of the blockchain, which cannot be achieved by the original Internet based on information transmission. What are the advantages of blockchain technology?

From the perspective of protocol attributes, blockchain solves the problem of trust between strangers (information asymmetry problem), and at the same time solves the information monopoly and single point of failure hidden dangers of centralized services. Simply put: due to information asymmetry, banks act as intermediaries between borrowers and lenders, providing credit to both parties at a very high cost. What if the bank commits fraud? Did Guangfa Bank Huizhou Branch really provide credit in the Qiaoxing debt incident? Has Ant Financial generated credit?

From the perspective of value attributes, blockchain can promote the active development of all participants in the ecology, spontaneously maintain the ecology, and at the same time ensure the maximization of the private interests of individual participants. Let’s take Bitcoin as an example. There is no authoritative organization in the Bitcoin system. The Core Development Team (Core) team wanted to increase the block size and argued with representatives of participating parties for several years but could not resolve it. However, the Bitcoin network still operates perfectly. , continue to maintain the characteristics of Bitcoin, and all participants can obtain their own interests. This is the subtlety of the blockchain value network model.

Is blockchain technology a black technology?

Blockchain technology is not a black technology. It just cleverly combines mature technology with a set of exquisite value incentive mechanisms designed to promote the healthy development of the network. There are several core technologies here: P2P broadcasting, everyone has used BT and Thunder; hash encryption: Do you know the MD5 check code of the software you downloaded back then? The essence is the same... So do you think there is any black technology in it?

Now let’s start with the focus of this article, how to choose a reliable blockchain project?

1. Does structured data exist, or is the cost of data structuring very high?

The blockchain itself is still an Internet protocol, so the basis of its existence is data. If structured data does not exist in the scenario, or the cost of data structuring is high, then you need to consider whether it is suitable for a blockchain project. There are now several so-called precision poverty alleviation blockchain projects, including supply chain traceability from seed to table, fertilizer testing, etc. How to do data entry? Do we have to rely on people to test and enter them one by one? Are there soil detectors that can track fertilizer usage?

2. Is there a strong need to confirm the authenticity of the information in the existing scenario, and is the cost high?

Blockchain is essentially a value network that confirms data rights or authenticity. Then, whether the applied scenario has a strong need for authenticity confirmation becomes a necessary factor. For example, the Learning Chain project tracks student evaluations and class status via blockchain. Is it necessary to use blockchain to resolve the authenticity of this data? Is it more efficient to use blockchain to solve word-of-mouth communication in the education market, or is it more convenient to use WeChat to check in? Do I need to let others know the authenticity of my evaluation of the teacher?

3. Does the existing scenario strongly require consensus, and is it recorded through distributed nodes?

Blockchain records information through distributed ledgers and broadcasts it to the entire network, ensuring data consistency while achieving large-scale network-wide consensus. So, is it necessary for many projects to adopt large-scale consensus? Unnecessary network-wide consensus hype or money-making? This is a matter of opinion.

A project that claims to be an all-Japanese team but only has a Chinese version of the white paper claims to rent and buy houses in Japan through blockchain, based on shares, with reference to the ABS model. Claims to realize house sales and rent sharing through TOKEN. The number of TOKEN is certain, but in the future there will be more and more houses, and the rent will be higher and higher, so it will become more and more valuable. To put it bluntly, it is an equity crowdfunding project. Is it necessary for this kind of project to be solved through a large-scale consensus mechanism? Record your share in the consensus node and also provide rental income? In this case, it is better to go to Japan directly with a lawyer.

Signing a contract is reliable. Don’t forget that blockchain technology cannot map real assets at all. How are your rights and interests protected?

4. Are there network effects in the application scenario? Does it comply with the two-sided market model?

The network effect or two-sided market model theory refers to whether the continuous increase of users in a project can have a positive impact on the entire project. The core value of the project is the user's own network connection. The blockchain itself is a network protocol. Without network effects, it is nonsense. A real-life example is an e-commerce platform. The more consumers there are on the platform, the more merchants there will be. In the model, both parties continue to promote and promote the healthy development of the e-commerce platform, while the e-commerce platform uses payment methods (such as Alipay) to manage both parties on the platform and maintain the normal operation of the network.

Applied to blockchain projects, the consensus protocol is Alipay. Each participant participates in the activities in accordance with the agreement and obtains benefits. Whether a project meets these elements then determines whether it is reliable. For example, the popular DD coin is now. Will there be a network effect if you buy this? Can it facilitate any of the parties involved? In addition to the speculative effect and the MLM effect, what else is there?

5. Does the project have a reasonable value incentive model?

As mentioned earlier, the blockchain is a value network that promotes the healthy development of the ecosystem through a beautifully designed value incentive model, such as Bitcoin, which I will not go into details here. Then, whether the value incentive model in the project is reasonable is the key to judging the reliability of the project.

For example, a certain content project claims to use blockchain technology to solve content value dissemination and change the status quo of vulgarity and fake originality. It does look reliable. 1. The content naturally has structured data and is suitable for Internet dissemination; 2. There are strong requirements for copyright authenticity; 3. Suitable for large-scale consensus. But one thing is that this project's incentives for the original authors are through tokens, and there is no clear value incentive model.

We need only look at last year’s knowledge wars to see the consequences of using money as a reward. In the end, there will only be a large amount of gray production, and bad coins chase good coins. If this model cannot be improved, the project is bound to encounter development problems in the future.

6. Can the problems solved by this blockchain project be solved using existing Internet technology? Is it suitable for blockchain scenarios?

Blockchain is not a panacea. Existing blockchain technology is still in its infancy, and there is still a big gap between transaction speed and current centralized projects. Then, the application scenario of a certain project requires the use of low-efficiency areas. Blockchain technology solves this problem, which is the key element.

For example, many current B-side projects for enterprise application scenarios require enterprises to pay to purchase TOKEN in order to participate. So let’s ask the simplest question: Are companies willing to support large fluctuations in service prices? Spending 5 yuan on a service today may cost 500 yuan tomorrow? Hyperledger can solve the sharing needs within enterprises, but does it not require the issuance of tokens? Is mandatory issuance for the purpose of making money or just to make money? Is there a reasonable value incentive model for issuing tokens?

7. Can the project team survive due diligence? Is there a feasible roadmap for project implementation?

Due diligence is an on-site confirmation of the actual development capabilities and past performance of the project team. Blockchain projects are still technology-intensive projects without strong technical teams. Do you believe in the subsequent progress? For users who are inconvenient to conduct due diligence, there is a simpler criterion: Does their white paper have a reasonable plan for the project implementation roadmap? Simply put, the implementation plan takes up more than half of the total length.

There are now many so-called white papers, which are filled with countless technical names and describe future prospects. Sandbox model, dynamic encryption, Byzantine Generals Problem, Prisoner's Dilemma... the key development roadmaps are simply listed, XXXX1.0 is online, etc. If even the person who wrote the white paper has no plan for the future, would you dare to invest?

Having said so much, the core is just one sentence: Blockchain technology is one of the foundations of the future Internet. Artificial intelligence needs to be based on data sharing at the core of blockchain. However, blockchain technology is not omnipotent, and it is also difficult to implement. This is uncontrollable. Please consider carefully before investing. Indeed, you will not be cut off from others.

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