How can a piece of data prove that the development of Web3 is still in its early stages?

What qualifies as a ‘digital asset’?

Author: Meng Yan, Solv Co-founder

What qualifies as a ‘digital asset’ and what can only be called an ‘electronic asset’? Previously, I naively believed that only assets on the blockchain could be called ‘digital’, while those in centralized databases should only be called ‘electronic’.

Recently, I have rethought and have a new perspective: the key is not whether the form itself is “digital” or “electronic”, and the difference between them, even if not vague, is also far-fetched. We all remember that in the 1990s when the Internet was just emerging, people also talked about “digital survival”, not “electronic survival”. Therefore, whether it is stored in the Decentralization ledger should not be regarded as a fundamental issue. The key is “assets”. Assets are a legal concept and an institutional arrangement, and they have the connotation of “reliability”.

In this sense, the broad digital asset is not something that emerged only after the appearance of blockchain, it had already appeared in the early days of the Internet. The most familiar early digital asset is the order on an e-commerce website. Through interaction with an e-commerce website or app, you create such a digital asset - an order, which exists in the website’s database. However, its significance lies only in the fulfillment of the rights and obligations specified in the order as a contract, i.e., it is only confirmed after you have indeed received the qualified goods and the seller has indeed received the payment.

In 2003 and 2004, I witnessed the early development of an e-commerce website. At that time, the main payment method in Chinese e-commerce was ‘cash on delivery’. The biggest problem was that the courier or the delivery company would disappear after receiving the payment. In abstract terms, this was the difficult exploration stage before ‘orders’ became true ‘digital assets’. Later, the rise of third-party payment platforms like Alipay solved the logistics and credit issues in e-commerce, truly upgrading ‘orders’ to ‘digital assets’. In a sense, the e-commerce industry mainly focuses on establishing ‘trusted asset creation’, which has led to such tremendous development.

Returning to the Block chain, the question becomes, who can create trustworthy digital assets? Trustworthy means that the rights and obligations promised by the digital asset can be fulfilled with a high probability. Why are there so many projects that are played for suckers? Because the project party simply does not have the ability to fulfill the rights and obligations promised by their token.

Once the problem is reduced to ‘creating trusted digital assets’, we immediately realize that there are not many people and institutions qualified to create digital assets. If you, a nobody, create 100 gold coin tokens and claim that each token corresponds to an ancient Macedonian Alexander coin, who would believe it? If it is not trusted, it cannot be called a digital asset.

The beginning of blockchain started with BTC, which cleverly solved the problem in a way that BTC has no intrinsic value commitment, so there is no issue of breach of trust, relying entirely on Consensus to give Intrinsic Value. This method is clever, but not replicable. The only abstract existence in the world that can establish Consensus of value without clear value commitment is ‘money,’ after all, there should be only one abstract Unit of Account.

Nowadays, many people are playing Memecoins because one of the reasons is that they feel that the tokens created by you project party, which claim a bunch of value promises, cannot be fulfilled. In that case, it’s better to play Memecoins, which have no value promises at all. I understand that I am just a blank sheet of paper, and there is no risk of breach of trust. Yes, indeed, there is no risk of breach of trust, but it becomes purely a gambling game. In fact, if you invest in it, the probability of loss is still infinitely close to 1.

We still need to analyze the possible next steps in industry development around the theme of ‘creating trusted digital assets’. RWA could indeed be a breakthrough, and I am analyzing this matter from this perspective.