From “hybrid order” to “VISA” in the Web3.0 generation

I met Linlin @SunLilin on the X social platform. Everyone is obsessed with the exploration of Crypto Payment and saw the huge potential impact Blockchain/Crypto can bring to this world, just like the rising sun in front of me, it is slowSlowly light up the vast Serengeti grasslands.

Lilin shared with me this article he wrote on April 9, 2023, and was reproduced here after obtaining consent.

Between the lines of his brief communication with Lilin and his article, he can see his profoundness and erudition.Lilin said this is just a pick-up of wisdom. I said I will continue to relay, “There will always be someone who lights up the road ahead of a certain stage. Our best choice is to follow the footsteps of many sages, walk on a high level, and practice the concept carefully.The power of

Blockchain technology provides a new perspective to re-examine and process the entire composition of transactions (payment-clearing-close). We will no longer be bound by the traditional bank/payment system. The awareness should change, and use a moreThink about it in the fundamental way: What is Crypto Payment?How to build global payments and credit in payments through Blockchain?In the face of a global payment system, what organizational form should be used to manage it?

This article seems to be a dialogue between Lilin and Senior Dee Hock in the interlaced time and space, pointing the direction for those doubts and bringing the power of faith to these directions.

Here, enjoy:

From “hybrid order” to “VISA” in the Web3.0 generation

At the end of 2017, because he had participated in the blockchain business platform of a central securities registration agency, he had exchanged blockchain technology with SWIFT and was invited to attend the SWIFT China Annual Meeting to give a special report on blockchain technology.During the four-hour plane trip from east to west, I also reread “One From Many-Visa and Rise of Chaordic Organization”, which is translated as “Invisible VISA: A Future-oriented Mixed Organization”. The author is involved in the establishment of VISADee Ward Hock, who served as the first CEO.

In 2007, I just entered the UnionPay Strategy Department and happened to translate the document inside Visa, calledThe Power of Ideas.At that time, the layout and thinking of the innovation strategy of Internet/mobile payments were also based on the strategic comparison of Visa/Unit, and were deeply influenced by the concepts of Dee Hock’s predecessors.After ten years of rereading this book, I realized that from the perspective of “decentralized” Blockchain/Crypto, many of his thoughts and expressions have traveled through history so profoundly.Just at this time, the sunlight on the stratosphere passed through the portholes and shone between the lines of the book. A deep feeling surged. I just felt that if I concentrate on paying and liquidating in this life, I would be willing and almost ashamed of myself.

He later summarized a passage:

“Visa’s true and lasting success will be two unparalleled things:

a. Quality of cooperative relationships with different partners;

b. To what extent is the extent to which the community is successfully served and to provide greater benefits as a whole.”

This should be considered the current so-called “community is higher than code” version of the comments fifty years ago.In that era, Visa was not yet called Visa. After many years of preparation, a new global electronic payment network also gradually led to the rise of many innovative technologies and businesses such as data centers, POS terminals, and credit cards. Its historic creation and construction have been carried out fromJudging from the historical path points, it is far ahead of the electronic cash created by Satoshi Nakamoto/Cyberpunks, not to mention the later Blockchain/Crypto wave.

Just as “freedom is not passed down from generation to generation, and individuals in every generation must constantly defend and strive for it”, the same is true for the pursuit of most basic issues and the acquisition of common sense.Everyone knows that KK is out of control/sovereign individuals/network countries/programmable currencies and other fresh products, but Visa’s founder Dee is forgotten by the public and hidden in the corner of time.

Dee successfully searched and verified many concepts and judgments with Visa Network in this life.Including but not limited to:

a. What is currency? What is the “value exchange network” of currency?

b. What is “decentralization”?What kind of institution can become a “decentralized organization”?How to govern a decentralized organization?

These two issues are expressed today as core features of the Web3 generation, both Crypto and DAO.

Based on the two books “The Power of Concept” and “The Mixed Preface”, we have briefly compiled them, absorbed some of the essence and commented a little.There is no specific sage that has completely laid the complete path, but there is always someone who lights up the road ahead of a certain stage.Our best choice is to follow the footsteps of many sages, walk at a high level, and practice the power of concepts carefully.

Note: The following paragraphs that start with “DEE” represent the quotation text in the original book; the paragraphs that start with “Lilin” represent my personal comment.

(Also: In fact, why do you need to comment? The truth is between the lines.)

1. About currency

DEE:“What if most of the data starts to move like an electronic pulse—radio wave—even a beam of light? It’s clear that everything seems to be moving in this direction and keeps accelerating. WeThe old views gradually disappear, and traditional concepts begin to change. This makes us look at things with different perspectives, even with different mentalities, and even surpass the first two:Therefore, we observe all things with different consciousnesses.This is simply so exciting.”

DEE:“Money will become alphabetical data expressed in regular pulses of energy,And it will move globally at the speed of light through countless paths of the entire electromagnetic spectrum, and at a negligible cost.If any institution can move, manipulate and ensure that the letter-based data expressed in regular energy, and these letter-based data are widely used and trusted by everyone as equivalent measurements and exchange mediations, then this type of institution isbank.We can go further and say that these inherent properties of money have the potential to lead to the generation of a new form of global currency.”

Lilin:This gave birth to different “letter data” currencies, and also had different “equivalence measurements and exchange mediations”.In the era of “online/mobile banking” that we once cheered but had long been accustomed to, there were bank/payment institutions as agents to record, store and transfer currency.But Blockchain changed everything.

DEE:“If electronic technology continues to develop, it seems obvious that the oligopoly control of currency custody, borrowing and exchange by the banking industry over the past 200 years will be irreversibly destroyed. The state’s monopoly on currency issuance and control.It will also be eroded. Banks or governments may have traditionally been the last liquidators that people rely on—the last processor of a huge and growing number of currency value transfer operations. But that doesn’t matter. In the new system, the advantage willIt will fall on those organizations that are best at processing and ensuring letter value data in regular energy particles. “

Lilin:Although Dee cannot foresee all technological creations, it still gives a great guess: the new form of infrastructure and its organization represented by Blockchain are indeed “best at processing and ensuring “value data”, and “regular energy particles”It appears in the form of Crypto/Token.

2. About credit cards and their business nature

DEE:“What is the nature of the credit card business we are engaged in? Is credit really the nature of our business? What is the essence of this transaction when a customer handes a plastic card to the merchant? It is obvious that it meansMerchants are willing to sell goods to customers who want to buy their goods. In this regard, credit cards replace driver’s licenses, social security cards, ID cards or other means of identity confirmation. In this way, the first credit card is mainlyThe function is to make the seller identify with the buyer and also make the buyer identify with the seller.”

Lilin:Dee is good at first-rate thinking about the essence of business.No matter what kind of transaction terminal, medium and form it is manifested, the essence of transaction is the “trust” and “performance of contract” between the two parties.Behind the trust is a series of “authorization” or “delegation”, and there is also “verification” for both parties to the transaction.Are you very familiar?Don’t Trust, Verify It!

This brings up the second question: Why is the existing financial system “centralized”?Because an institution that can be “trusted” as the object of “authorized”/”entrusted” must meet several qualifications or certificates, that is, the so-called “licensed institutions”, all financial games are “institutions” between these institutionsInstitutions that cannot obtain licenses for various reasons cannot be included in the business.Back to the originality of each transaction, of course, everyone will choose the “agent” they trust, while those who are not qualified will naturally try to subvert and innovate, which is for the so-called “financial innovation”.

But in fact, the financial system has long been “decentralized” and its scope is limited to institutions. In order to avoid a single institution from fully controlling all transactions and thus tampering with/forgetting/destroying the transaction itself, financial institutions need to be decoupled.The premise or essence of decentralization is to identify the risk-responsible entity and agent of the “authorization”/”entrusting” parties, and constantly decouple their transaction relationships.Make “trust” more “simple” and “object-oriented”.”Simple because of trust”?In fact, “because it is simple, it is trusted.”

DEE: “Obviously, the credit card guarantees that both buyers and sellers can exchange value safely: the merchant provides goods or services, and the customer signs and confirms the bill, which is stored by the merchant as a certificate of credit for currency. The seller receives itThe payment is the local currency, and the buyer will pay the bill in his own currency in the future. It can be seen that the second main function of a credit card is to act as a guarantor of value data. “

DEE: Obviously, the credit card system ensures that buyers and sellers do not have to understand each other’s language, laws, currency, customs or culture to initiate the exchange mechanism.In fact, many card issuing banks allow customers to pay money within a period of time after the transaction (the banking jargon is called “deferred credit”), but this is nothing more than an auxiliary service than a credit card’s main function.When you put your credit card on the card reader to swipe it, it only created a financial information in the form of alphabetical data – replacing paper and pen.From this point of view, the third main function of a credit card is the creation and transfer of value data.

Lilin:Blockchain technology provides a new perspective to re-examine and process the entire composition of transactions (payment-clearing-closing), let us forget the various technical gimmicks in Layer0/1/2 and cryptography, and seemingly endless but actually heavy-tongued.Only when we start from the business itself can we have a true prosperity of the ecosystem.Looking back, no one will remember the complex and exquisite concepts of WCDMA/CDMA2000/TD-SCDMA on the eve of 3G. Everyone only pays attention to what time my takeaway will arrive.Although tickets for one of the 3G conferences in China Trade Center were hard to come by, far exceeding today’s consensus conference and various Web3 summits.

DEE: When we abandon traditional perspectives and challenge mechanical models about reality, we are no longer bound by the existing jargon of the banking and payment systems.At that time, we will think in a more fundamental way, and another change of consciousness will follow.Now this idea seems to be both ordinary and obvious, but it is quite revealing at that time.We are not in credit card business.The term “credit card” comes from the slogan of the banking industry, and it is actually a misnomer.This card is nothing more than a tool that loads symbols as exchange of currency value.It is adopted in the form of a plastic card, which is just a coincidence of the times and environmental factors.What we are really engaged in is actually the business of currency value exchange.

3. About the payment clearing network

DEE:“The old monkey’s mind and I began to quickly put these fragmented thoughts together.If our business is to guarantee and handle the exchange of value between the buyer and the seller, then when and where will the buyer and seller conduct the transaction?Due to the development of modern transportation, time has been greatly reduced, and buyers can appear anywhere and at any time, all over the world, day and night.With the development of catalog mail order and electronic markets, sellers can provide goods or services to customers anywhere and at any time without showing up in person.therefore,The demand for exchange of value in electronic form will arise at any time at any time at any time in the world, 24 hours a day, 7 days a week.”

Lilin:This was achieved at a speed that traditionally could not imagine in the Crypto generation pioneered by Bitcoin.Crypto’s basic changes come from changes in financial infrastructure: the liquidation time goes from T+N to 1 second in theory, making traditional bulk credit transactions that require investment banks to intervene into fast, flexible and abundant liquidity retail transactions; cancellationIf the concept of time is replaced by block height, it will infinitely break the pricing monopoly brought by global time zones.

Dee’s 7*24-hour transactions have been fully evolved: from globalized transactions that simulate the generation, entering the real digital age.Its significance is similar to going from an analog communication network to a digital communication network. Although the signal is still not very good, LTE has already given a direction to move forward.Humans only need to imagine scenarios and invest in infrastructure without brainstorming, and no longer have to worry about what excess bandwidth can be used to do.Although there are always people who love to worry about in every era.

DEE:”Exciting insights come one after another.Any organization can guarantee, transmit and process transactions in regular electronic form at any location around the world, 24 hours a day, seven days a week, and obtain a large market beyond our imagination – all the worldValue exchanges are all in it.Necessary technologies related to it have also been invented, which will accelerate its popularity at a rate of increasing geometrical sequences when its cost decreases by geometrical sequences.But there is a problem with this: no bank can do it, no large joint-stock companies can do it, and even the state can’t do it.In fact, we can’t think of any current organizational form that can do so.I intuitively estimated the financial resources of all banks in the world, and found that the financial resources of most countries also pale in comparison.Therefore, if banks are connected, they can do it, but how to connect it?This requires an extraordinary organization to connect these extremely complex and diverse institutions and individuals in a completely new way.”

Lilin:Dee’s technical limitations clearly led to his over-optimism, just as physicists in the Golden Age claimed that all physical problems had been solved.But foresight judgment only a extraordinary organization can navigate the global wide area transactions, not any single country/institution.Judging from the evolution history of Crypto over the past 15 years, it is fundamentally because under the conditions of globalization, no single entity can reach such a “consensus”, but Bitcoin appeared under the right opportunity.

4. Organization

DEE: “We must build a global organization that connects a large and complex system of shared theoretical and empirical learning, and a joint care system that fails and promises to do its part to improve this situation.The organization must follow the principles it believes in and make itself a successful example of a mixed-order organization. The purpose of this organization should be to develop, disseminate and implement a new and moreThe concept of a mixed-order organization. If this global organization can be carefully conceived and properly constructed, it will surely be organically integrated into the fruits of its labor.”

Lilin:“Mixed order” may give the future direction of DAO, and absolute “decentralization” only means the dissolution and non-existence of order.It is always necessary to clarify the risk responsible parties, which is the basic path to building “consensus” and reaching “republican” innovation.

DEE: “Dee racked his brains, and he knew clearly that most companies were using: the kind of “command and control” rigid hierarchy he hated. Now he and his “monkey-like idea” will put it aside, directly enter the essence of the company: What is the core of the company? Dee wrote in his memoir: “The essence of a business company or other organization is concept. All institutions are nothing more than different people gather their talents in order to achieve common goals.Together.An ancient and authoritative idea embodies this concept as a “community.””Community”, haha, “Community means common goal”.

This also means common beliefs, common values, and common ideas and principles. Are these the ideal genes that make up the company?Can these become the DNA-like cornerstones needed to create new financial institutions?

Dee sees the direction of progress: If we start to study common goals, common ideas and principles, where will this path point?A few hours later, Dee went to meet his companions with his mind full of thoughts.He said: Today we will no longer discuss banks, money and credit cards; we will discuss ideas, principles and common goals…. Find common grounds that can unite banks into autonomous organizations, which will develop into data clearing institutions as Dee expected.According to the scenario described by Dee, when discussing ideas and principles, he and his colleagues are not like four bankers talking about money and cooperative institutions.They seem to be more like Thomas Jefferson, James Madison, James Monroe and Alexander Hamilton discussing the fundamental principles of the Declaration of Independence and the United States Constitution.In fact, Dee later called their small group “the father of Visa’s founding.”

“What ideas and principles did he and his companions eventually come to?” As Dee wrote in his memoir, the four men made a big list together:

Article 1: This organization is jointly owned by all members and is completely equal among members.No member has control or privilege;

Article 2: All members enjoy equal rights and obligations;

Article 3: This organization is open to all qualified members;

Article 4: Powers, responsibilities and resources should be appropriately divided and shared;

Article 5: Power is equally enjoyed by all independent institutions;

Article 6: Make sure that everything is voluntary as much as possible;

Article 7: This organization should change naturally, not be forced to change;

Article 8: The management agencies should be parallel, flexible and permanent.

Lilin:The formation of Visa certainly depends on more complex factors.But why do similar creative constructions appear again and again in modern society represented by the United States, especially Silicon Valley?(Visa is headquartered in SF, this is another story, and you can write another article.)

Just like why none of Crypto’s core innovations appeared in the East?The reason is not implemented in intelligence, diligence, capital, etc., and it is not even rooted in the so-called “system”, nor is it the general “human nature”.”Innovation” originates from the “consensus” of having sufficient legal system of “legality” and “legality”, which is the so-called “republic” republic.If you are unwilling to accept long-term seemingly unprogressive, various ineffective or even stupid arguments, confrontations, oppositions and differences in time scale, but instead cut the mess with Napoleon/Gao Huan-style quick knife, you will fall into the “tyranny-style” “overtaking on the curve””trap.People who pursue “efficiency” are the priority, no matter how smart, agile and extremely capable, once they decisively take this step of expansion and development of “radicalism”, they will lose the legitimacy and legality of the source of innovation in a decisive way.Sexual blessing.

In this sense, Satoshi Nakamoto’s retreat and disappearance perfectly solved the St. Martin/Washington issue, and then the subsequent “emergence”.Eastern society takes achievements and wealth in this life or even five or ten years as the first priority, and then it will forever lose the opportunity to reach the source of innovation, let alone global leadership and pricing power.This not only explains the true status and long-term positioning of Chinese society in the Crypto world, but also explains all the dreams of “independent innovation” in the past forty years. Today, the surging domestic LLMs have once again taken the lead in the Hongqi/Longxin predecessors.the way.Of course, they have different profit models 🙂

DEE: If their essence is extracted, their basic philosophy and principles are:

“Cooperation”, “partnership”, “procedural democracy”, “equality”, “power sharing”, “openness”, and “trust”, that is, the spirit of the community.

Dee was happy that he and his colleagues portrayed the vision and guided the principles that made the vision come true: to create a democratic, autonomous cooperative banking organization through which banks can jointly manage and clear credit card transactions that occur anywhere in the world.In the short term, the cooperative can handle bank card transactions in the Americas, but in the long term, it can develop into what Dee portrays: the world’s leading digital transaction processing system.

Dee believes the new partner organization will not be controlled by Bank of America or any other bank.Instead, he is a cooperative institution that operates on a common trust, people and their respective banks come together based on shared interests and benefits — the greater benefits are their customers and communities.Others also basically agree with Dee’s idea, so there is another principle that, although not explicitly stated, has been imprinted in their philosophy and principles: “Independence”

Dee knows clearly that the integration of relationship networks and expert resources (i.e. building a Visa community, not any hardware or software, or any indicator of transaction volume or member profit) will have a more profound meaning for its ultimate goal.

On July 16, 2022, Dee passed away at the age of 93.

The story is far from over.

Even at the beginning of the story, there is another hidden and glorious clue.The Italian who founded the BOA Bank of America: the legend A.P.GIANNINI.

On July 21, 2018, I had a meeting in San Francisco and encountered 555 California Street.

The legend has left, and the legend will never end.

Over the past decade, I have met many top economists in the world/or at least called first-class economists, and a large number of Crypto leaders/experts, and found that the vast majority of people have never figured out “clearing” and “settlement”The difference is just called “payment”.Countless generations of people will forget the true meaning of “learning”: just like not returning to the history of science, there is no way to talk about the evolution of science, and not returning to the history of payments, clearing and currency, it is also impossible to truly understand the great significance and journey of Crypto’s transformation.The stone tablet of glory on it.

Fortunately, my friends and I have not forgotten this. The “power of concepts” is different from the “beliefs” who need to be recharged. They can only end up doing whatever they want without breaking the rules.Fortunately, a robust, stable, scalable public ledger infrastructure and almost all peripheral tools/technology middleware have been completed and tested in the past five years.

Based on this, business-oriented payment and clearing is imminent. Just like the eve of the mobile Internet from 2005 to 2010, the new payment and clearing infrastructure is on the way, which means that the new globalization 2.0 and its business wave are obvious.2023 will be fully unveiled, and it is the prelude to the new generation of financial infrastructure around the world.

At present, Lilin is building PlatON, a fully digital public infrastructure, to practice the power of his beliefs, let us wait and see.