Bit University Q&A with Rong Chen — “The operating system is like a country.”

- Comparing Elastos with Ethereum and EOS

Time: March 27 21:30

Wechat community: Bit University

Guest: Rong Chen, Founder of Elastos

Moderator: Zhang Feng, the founder of Digital Age Blockchain Alliance; guest lecturer of Golden Academy; legal counselor of Bit University, a blockchain research community; special expert of Yirongbang, a financial knowledge sharing platform, practicing lawyer of Beijing Jinchengtongda Law Firm (Shanghai branch), legal counselor for blockchain founding teams and investors.

The following is the text of their dialogue.

Question 1

Zhang Feng: As a blockchain operating system, how will Elastos plan its ecosystem and applications? In fact, the development of the operating system requires a very heavy workload. As a start-up team, what kind of preparation does Elastos have to complete the task? Where does confidence come from? What are the means of implementation?

Rong Chen: We all know that some people think there are three generations of blockchain. The first generation is Bitcoin. The second generation is the smart contract of Ethereum. And the third generation is DApp. DApp interests me because an app requires a running environment, in other words, an operating system.

Many people find the operating system very mysterious. I started to do operating system-related work in 1985 and it has been more than 30 years now. From 2000, when I came back to China to start my own business, until now, I’ve experienced many setbacks during the 18 years. These can be deemed as my preparation work. We have gone through a lot of detours, but we still have some accumulation. Based on our previous experience, and then looking at blockchain, I think DApp is an opportunity indeed.

In terms of blockchain, most people still pay more attention to the blockchain itself, such as mining, consensus mechanism, or the so-called social impact, including building trust, finance and so on. But I think no matter what technology is, the end goal should be letting the people benefit, in other words, letting the consumers get benefits, which is what “application” is all about.

Our confidence comes from our understanding of the computer. After all, the digital world and intelligent economy have a lot to do with computers and information technology. No matter if it’s apps or smart contracts, many people bring up Turing. Basically, programming aims for the completion. (He then talks about Turing’s completion concept: Every computable problem was completed by Turing). To implement them to mobile phones or the internet, we aim to make a new internet. From another perspective, if we put aside blockchain, there’s no ID on today’s internet. Anyone can add a server as a node on the internet. That’s why the internet has developed so fast — there’s no approval system. But it also creates a series of big problems such as viruses, forged identity, and theft of user privacy. It’s all because there’s no ID. Now we are more inclined to use big applications, such as Wechat and Google. In other words, oligopoly companies such as Tencent, Google, Microsoft and so on have issued us an ID, which is safer.

The blockchain we’re talking about now has a principle feature — it has issued the internet an ID, which is not under the control of any country. It can issue wallets, and the wallet itself is a kind of ID because the wallet is used for payment and it definitely uniquely identifies a subject. So we don’t need to dwell on the final stage or efficiency of blockchain. If we can utilize blockchain’s mature characteristics and use them on the internet, for example, issuing the internet an ID, it’ll be the beginning of security.

The second feature is that we’ll have the deposit certificate, which can serve as a fair and impartial notary office. This notary office does not belong to any country and uses mathematics to prove problems. Bitcoin can do six operations a second, whether the computer’s speed is fast or slow, it’s always six operations. So it means the number of deposit certificates shouldn’t be deemed as a speed-sensitive problem. So the speed of blockchain is not a serious issue.

The third feature is scarcity, and the fourth feature is the consensus. Applying these four features to the Internet is enough to bring great changes. The key is implementing them.

Question 2

Zhang Feng: What kind of hardware will the blockchain operating system Elastos was going to make be running on? In today’s hardware market where the competition is so fierce, how do you persuade your partners into betting on the future?

Rong Chen: Allow me to first explain the operating system. When it comes to operating system, most people think of Linux, Windows, PC, or mobile phones. But some people may have noticed virtual machines, which means several virtual operating systems can run on one operating system. Linux used to be Unix. The R&D of Unix started around 1970 and went on until 1984. It matured around 1985 after 15 years. But it has been over 30 years now since 1985. During that time, many people attempted to challenge Unix or Windows. But in the end, it has proven to be the same, which means the architecture of our operating system today is the same as it was 40 years ago.

At this stage, the R&D of the new generation is not the operating system on a physical machine, instead, it’s making a virtual machine, the so-called cloud computing. Cloud computing is also known as elastic computing. Amazon called it “elastic compute,” not computer nor computing. Computer refers to the hardware computer and computing is about the operation of the program. Compute is the virtual machine.

So elastic compute comes down to how many virtual machines can be started on demand and how many virtual machines can be destroyed after their use. The English name Elastos actually refers to the virtual machine operating system.

I came up with the name in 2002 because I was involved when Microsoft designed the operating system .net from 1998 to 1999. This operating system treats the network as a computer where virtual machines run on it. “Elastos” actually refers to a virtual machine of such kind. The term “elastos” came out in 2006. It didn’t exist back in 1999. I came up with the name Elastos in 2002. Four years later, Amazon used the same word but we can’t say Amazon is plagiarizing us because at that time I had already returned to China.

So the network operating system we’re doing now is not very much related to hardware. We are more willing to call it the Smart Web, which means a World Wide Web that can have programs run on it. If you click the URL on the previous generation of the Internet, which is the browser, which was born in 1995, the website page will be presented to you. For the next generation of the World Wide Web, once the URL is clicked, a program will be presented to the user. Google called this Instant App. So just like Smartphone refers to a phone that can run applications, Smart Web refers to a web that can run applications.

Having figured this out, it’s easier to convince partners. The cost of making the hardware is very high and the supply chain is also relatively long and time-consuming. In addition, the consumption of funds is also very large. Making a virtual machine only requires the software development cost. The production cost is almost zero. Just like the browser, once it’s installed on your cellphone, it can run immediately. So the Elastos virtual machine we’re making right now is called Elastos Runtime. It can run on iPhone, Andriod phones, Ubuntu, and PC with Linux installed as a simple “hello world” application now.

Besides, our decentralized web platform was opened source in February 2018. So our progress is very fast. So at this time, just like when the browser was born in 1995, all we need to do is to make some typical applications. I’ll explain the details later. In fact, we don’t need to spend too much money to persuade these high-cost big partners. Instead, we hope more grassroots start-up companies can use our product.

Therefore, a web with blockchain’s features, such as having ID and deposit certificates and being able to create scarcity, can bring in many new business models and profit models. So we hope to have an entrepreneurial tide and some small start-up companies using our product. We have issued tokens, which can be used to reward and encourage them to use our web.

He Bing: Like Wechat which can have small programs run on it?

Rong Chen: It’s kind of like Wechat’s small programs. But Wechat’s small program feature is not decentralized like blockchain does. It’s centralized and controlled by one company.

Question 3

Zhang Feng: Thank you, Mr. Chen. Let’s get to our third question. As for the ecology of Elastos’ token and the ecology of different DApp’s tokens, how do you handle the relationship between competition and cooperation?

Rong Chen: Let’s talk about the two types of tokens. Tokens issued by a public chain are called cryptocurrency. There’s another type of token, which is called a utility coin, that’s the token we usually talk about. Recently some people have started to call public chain-issued tokens ‘currency’ and call security tokens, ‘tokens’, to differentiate the two types of tokens. The US government has very tough regulations on security tokens. For example, it costs only several thousand RMB to issue tokens like ERC20 and make it possible to raise money. So the US government has very strict regulations of such activities. Those who are really working on the public chain have deployed nodes all over the work to mine coins. Every country encourages innovation. The public chain is the foundation of trust but it doesn’t mean all public chains should be naturally trusted. Bitcoin and Ethereum can be trusted because they have many users. So people put trust in them and believe there’s nobody behind them to control everything. For Elastos to build the Smart Web, as long as there’s enough traffic, DApps, and users on it, users will naturally have trust in Elastos. Therefore, Elastos’ public chain will gain more trust. So it requires time and traffic to build the trust.

We don’t consider Elastos as Bitcoin’s competitor because we are co-mining coins with Bitcoin. We don’t consider Elastos as Ethereum’s competitor either, because in the future, some Elastos’ websites will also be based on the consensus and the smart contracts, which will also support Neo smart contracts. It’s just like developing a web. Some people are willing to develop with Java, some prefer C language. Some prefer English and some prefer Chinese. We won’t have any restrictions on what they want to choose. We will support all of these.

We will also help some apps on the Elastos system. So the so-called rights and interests will appear. For example, if I wrote a book, and there were 10,000 copies issues for publication, whoever owns one copy will have 0.1% of the copyrights. This is what we call the rights and interests. Let’s have another example. Let’s say you had a blog and I gave you a donation. It’s kind of like circulation but the core is still rights and interests. To encourage DApps to form an ecosystem on the Elastos platform, we need support and cooperation rather than competition. For a web, if there’s no website or DApp, there will be no ecosystem. Of course, there will be similar DApps in the same category to create competition in the ecosystem. It’s like in the current mobile phone OS, such as iPhone, there are several different cloud notes apps and gaming apps. It’s not competing with Elastos. It’s normal market behavior.

The conclusion is that Elastos is a platform. It doesn’t compete with anyone. And we welcome people to develop DApps for our platform.

Fion Wu: Mr. Chen, as a follow-up to the second question. (2.1) Blockchain is generally considered as a tool which can be embedded into other mature operating systems and compensate each other. The release of your product made me see the hope of the fast access to the internet of things. But based on the relations between the main features of current mobile devices and smart hardware and the blockchain ID, how do you make sure the functionality will take care of both? (2.2) The personal ID generated by Elastos’ system is a huge advantage. Even if we don’t think about the security and stability of the elastic system, we can still imagine it can be used for building the personal internet of things chain. Mr. Chen, have you thought about the dependency and association of the ID?

Rong Chen: I’m not quite sure about your two questions. Speaking of the blockchain embedded into mature operating systems: Has blockchain got embedded into operating systems such as Linux or Windows? I’m not so sure. When blockchain projects such as Ethereum develop applications, it’s more focused on virtual machines or the development environment, such as EVM. The programming is very different from Windows or Linux. It’s not embedded into the operating systems.

He Bing: Fion Wu might have asked the questions because she’s working on IOT. She might mean the operating system of IOT devices.

Rong Chen: Speaking of the relationship between DAG and IOT, it’s more of a special case. I don’t think we should call it an IOT. We can talk about this in private because to figure out our basic point of views and positions, we need to communicate face to face and ask more questions.

In fact, in my opinion, according to Chinese, the term “internet of things” is referring to a web. Two adjectives in the beginning and the last one is a noun. The IOT OS people talk about is referring to the sensor operating system, which is OS of things. So in the end, no matter if it’s OS of things or OS of the web, they’re two different concepts.

So as for the OS of things, for example, if we’re making an operating system for a CPU-embedded sensor, because there are different types of sensors, it’ll be hard to make an operating system that’s suitable for all sensors. One size doesn’t fit all. Thus, we have all kinds of different operating systems. The methods used may vary, but the principle is the same. These operating systems do not deviate from the classic operating system design. They are all tailored classical operating systems in different ways, which is far from the network operating system. Some may know that when we planned to make the Microsoft .net system, we were really trying to make a network operating system. It’s been 18 years since I returned to China and I’ve been working on Elastos the whole time. I’ve always dedicated myself to making a network operating system, which I don’t think anyone else is doing now in China.

Question 4

Zhang Feng: Thank you very much, Mr. Chen. When bringing benefits to distributed applications, how will Elastos earn its profit? And how would the profit support the ongoing large-scale development?

Rong Chen: When it comes to Elastos’ profit, people might not believe what I’m about to say. Operating systems, such as Linux, are open source projects. They’re mainly for nurturing an ecosystem. We all know that if we build a science and technology park to attract investment, its role is different from a corporation. Just like a country, it sustains itself through collecting taxes. Corporations need to pay tax because they’re making money. So they’re two different things. The operating system, in fact, is like a science and technology park, like an incubator, like a country. They’re nurturing an ecosystem. So the priority is to let our eco-partners gain the benefits.

The ecosystem’s value will be reflected when there are many users. For examples, Windows is valuable because it has many users. Android is valuable because it has many users as well. So the profit is not directly reflected. As for Elastos, first, we financed some bitcoins to develop Elastos’ so-called Smart Web, so the funding is sufficient. So after the development, our operating fee will be 1% of the market value. Besides, 1% of the mining income will be allocated to the developers, to support the maintenance and improvement later on.

In the additionally issued 4%, 70% of it, which is 2.8%, will be allocated to the mining owners. 30% of it, which is 1.2%, will be allocated to developers and operators. So our operating and development teams are going to sustain ourselves by 1.2% of the GDP.

Zhang Feng: Elastos is like a science and technology park, which is a smart economic platform.

Question 5

Zhang Feng: In a world full of whitepapers, everyone claims they’re making a blockchain operating system. What is the difference between Elastos and its competitors? Has Elastos found any respectable competitor yet?

Rong Chen: To answer the question, I need to eliminate the illiteracy and talk about some common sense. I’ll define operating systems in two different angles. For example, we don’t usually describe the operating system as how many times it can compute per second. That’s the computer. To have a basic understanding, from the point of view of someone who majors in computer science, I consider the blockchain as a computer. Although a blockchain has many nodes, such as 6,000 points or 10,000 nodes, and each node is a computer. The 10,000 nodes of computers thus form a larger computer. It’s like we use four cores to assemble a cellphone. And 128 cabinets can form a galaxy computer. In other words, small computers can form a big computer. Then we can say what’s the frequency and processing speed of the computer. We wouldn’t define an operating system’s frequency or processing speed. The faster the machine, the faster the operating system.

Secondly, of course, I want to talk about the difference between system programs and applications. What’s an application? Programs that can be seen and used by end users (or consumers) are called applications. For example, software like browsers and Microsoft Word are applications.

If we open up the computer and take a look at the hard drive, we will see the circuit board. It has its own operating system and software. For example, one of the sectors of the hard drive is broken, it will automatically get skipped. Since the hard drive is very large, such as 1T hard drive, not every sector or record is good. It will have certain fault tolerance. The skip is done by the software, which was written and created by the system coders. End users cannot see it directly. The Linux system is backing up the camera. So in this scenario, is the Linux system running applications or running the camera? When the Linux system is running the camera, it will be considered a system software. Instead of an application that’s a device.

EOS always emphasizes that it’s faster than Ethereum. But it’s not talking about the operating system features. Secondly, the general operating system needs to run applications. So the operating system will provide something called SDK (Software Development Kit). Linux will provide a Linux SDK, Windows will provide a Windows SDK, and Android will provide an Android SDK. In a nutshell, the manufacturer of the operating system will always provide the original SDK.

When it comes to Android, for example, Huawei phones and Xiaomi phones are both using the Android operating system. And to develop applications for these phones, Android SDK will be used. So from this perspective, there is no big difference between the SDK of Xiaomi phones and the SDK of Huawei phones. They’re basically the same. They’re both from the same company, Google. In other words, the operating system is made by Google, not Huawei, or Xiaomi. So to apply the same concept to today’s blockchain, which blockchain company will provide the SDK?

First, we know that EOS is using an SDK called Web Assembly, which is a standard agreed upon by browser publishers such as Microsoft, Apple, and Google. It’s not provided by EOS. Huawei didn’t make the operating system. Google made it. In other words, EOS didn’t make the operating system because it doesn’t have an SDK.

Now let’s talk about Ethereum. Ethereum has EVM, which supports smart contracts. According to the whitepaper of Ethereum, EVM can’t be used to develop non-financial or non-record keeping applications. So games like Cryptokitties are running off the chain, not on Ethereum’s chain. That is to say that in fact, Ethereum’s smart contracts are like the programs within a hard drive or the macro in Excel, or the store procedure in a database, which means, the database or Excel is programmable. The hard drive is also programmable. But no matter if it’s the database, Excel, or the hard drive, none of it directly faces the customers.

So Ethereum’s applications are not DApps. A lot of people confuse smart contracts with Dapps, which is not rigorous. Therefore, Ethereum is not an operating system, at least not the traditional operating system on Windows or Android. It’s not like that. It can be only deemed as an operating system on the hard drive or camera, which has nothing to do with the consumers. EOS is only a computer, a dedicated computer. It can be used for bookkeeping but it can’t support an ecosystem.

Question 6

Zhang Feng: Can Elastos co-use/connect the established blockchain platforms owned by big companies, such as Microsoft’s Azure or IBM’s blockchain platform?

Rong Chen: Simply put, it’s not compatible with Microsoft or IBM. Elastos has its own SDK, programming style, and programming language. Elastos uses the standard C or C++ language. It didn’t invent any language like solidity or EVM.

In other words, blockchain requires credibility, especially for the public chain. So the public chain is generally required to be open source, therefore people can believe that nothing is hidden. Then we’ll make a smart World Wide Web called Smart Web. Now it’s also fully open source, and the C + + virtual machine on it is also 100% open source. We just finished the simple prototype. We will be able to finish the 0.1 version by this summer. And it’ll be 100% open source.

Having the user ID doesn’t mean the user’s true source will be revealed. Like Bitcoin, anyone can apply for a bitcoin. But you don’t know which country the wallet owner is from. And of course, you know there must be a person behind the wallet. This is already way better. Because if this person harasses me all the time, I can just block him. Or let’s say this person wants to launch a DDOS attack, like hijacking 1 million cameras to attack one website at the same time. To achieve it, he must have at least 1 million different IDs. Otherwise, they won’t be able to launch the DDOS attack.

But if it’s on today’s internet, since the ID is not required, theoretically you can hijack 1 million cameras and launch the attack right away. You don’t even need to have 1 million semi-anonymous IDs. Another point is a philosophical issue. It’s hard for Microsoft, IBM, Google, and Apple to achieve 100% open source, which comes down to the same question — if it’s open source, how can they profit? It is impossible for every company to make its own public chain or internet. The internet should connect all companies and all websites, therefore it needs to have credibility. Besides, it needs to be open source and not putting profit as its priority.

This philosophy is very different from the philosophy of a company. A company’s first goal is to make money. It’s for profit. So it’s a totally different concept compared with the internet. Products compete with one another. Companies exist to profit. Smart economy is like a country and the goal is to incubate its ecology. A country aims to make its people live a comfortable life, not winning anything in the competition. So the concept is very different.

That’s why you consider Linux or Windows as an operating system. Technically speaking, they’re quite similar. But they have very different positioning. The internet boom has led to Linux to get ahead of others as the latecomer. Technically speaking, in 1990, when Linux first came out, Windows’ technology was far more advanced. Linux was basically created by a graduate student and its technology was very limited. Then, since the internet required that an operating system had to be fair, impartial, and open, Linux started to gain support from some users and slowly started to grow.

Question 7

Zhang Feng: How does Elastos build the user ID system and confirm the true source of the user ID?

Rong Chen: Based on this semi-anonymous ID, we can also make certain requirements, such as KYC (know your customer). If you use this ID to run a website, we require that the website must comply with local laws and regulations. For example, in China, the true identity is required to open a website, which means you’re going to have to bind your real ID with this semi-anonymous ID. So the semi-anonymous is a worldwide ID card number. The only difference is you don’t know who’s behind the ID card number and what nationality he/she is. But if you want to open a website, you must go to the Public Security Bureau to do real name certification. And you must bind your mobile phone number with your UnionPay. In this case, if you sell any illegal products, you have to assume the legal responsibility and people can sue you. Of course, this is not entirely a technical but a legal compliance issue. On this topic, there are many lawyers in this group who are more professional than I am.

Question 8

Zhang Feng: Why peg the circulation of ELA to the circulation of Bitcoin? What’s the face value of ELA? Can you use the exchange of US dollars and RMB as an example?

Rong Chen: The distribution of Elastos tokens has been designed according to Bitcoin. So the circulation and mining speed of ELA is double what Bitcoin has. So far, there are 16 million Bitcoin mined. So ELA has a circulation of 33 million, which doubles what Bitcoin has. Every 10 mins, there are 12.5 Bitcoin getting mined, so for every 10 mins, there are approximately 25 ELAs getting mined. Our circulation and mining speed is double what Bitcoin has. So it’s double the size.

There is another difference we have compared with Bitcoin. The more Bitcoin you mine, the less there is. Now there are 12.5 bitcoins mined every 10 minutes. In 4 years there will only be 6.25 bitcoins mined every 10 minutes. ELA will additionally issue 4% every year because we want to be an economy with a 4% inflation. In other words, Bitcoin is deflationary and ELA is inflationary.

Our basic idea is to make a smart web, which is a smart economy. My partner Mr. Han Feng has a very good understanding of the smart economy. And I very much agree with the idea that we can have P2P direct sales of digital merchandise. For example, if we only make 10,000 copies of a book, if I buy one, I can resell it after I finish reading it, which forms a smart economy.

We have designed the 4% inflation for this smart economy. I’ve read some literature that said when Satoshi Nakamoto designed Bitcoin, he predicted that in 2020, the circulation of US dollars will be approximately 2100 trillion, that’s why he decided to issue 2100 Bitcoin. So we used the volume of the circulation of fiat currency as the reference when we designed the face value of ELA.

It is said that Bitcoin is equal to digital gold. So ELA is circulated on Elastos’ smart web. In fact, ELA doesn’t have to be the main token circulated on the platform. If you opened a website on the platform, you could choose to settle in US dollars or RMB. Different websites from different countries can charge different currencies.

We require the ELA to have value. Otherwise, we wouldn’t be able to motivate the miners. So it should be similar to gold. Miners can trade it in different exchanges into fiat after mining it. So for our smart web, if a user wants to register an ID, like a Bitcoin wallet, it’ll be free and semi-anonymous. But if the user wants to name the wallet Zhang San, real-name certification will be required when he/she makes the payment. So if someone wants to start a website sina.com.cn, real-name certification will be required. It’s just like today’s internet domain authentication. It can’t be free. Otherwise, websites like Sina, Sohu, and Google will all be taken. So to register under a certain name, a fee will be charged.

Due to the real-name system, if someone wants to use the ID Zhang San to visit Sina’s website, this person will need to pay for the name Zhang San, and Sina needs to pay for the name Sina. When a name gets registered, we will charge ELA. Of course, we also need to use ELA to invest in the aforementioned DApps. It’s just like using Bitcoin to invest in some ecological applications. We need to give ELA some usage scenarios.

This is also for the circulation and value of ELA. But we don’t require websites to settle in ELA. We don’t charge GAS either. We don’t have a GAS model.

There’s something else that requires ELA. Since we are making a smart web, when some people help drive traffic or provide cloud drives, they will be compensated with some ELA. In other words, people who register websites will need to spend ELA while people who provide hard drives and servers will be compensated with ELA.

Question 9

Zhang Feng: How does Elastos deliver value?

Rong Chen: Speaking of value delivery and the internet of value, we have to talk about the scarcity characteristics of blockchain. Ethereum is based on the public chain while Elastos is based on the side chain. Speaking of the public chain, ELA is used for issuing IDs, automatic running, token mining. And the side effects causes automatic running of the smart web. Then there’s the ID. The decentralized notary office deposit certificate and the ELA tokens are all made possible by the public chain. Conversely, if we release 10,000 books, from the user’s end, there will be a side chain of the book.

If I bought a copy from the 10,000 copies and resold it to Mr. Zhang Feng after I finished reading it, I would no longer possess the book. In this case, the smart contract will be used to complete the so-called value delivery. Value transfer is a user mode issue because today’s blockchain does not distinguish between the user mode and the system. But for people like us who work on operating systems, it’s very clear to us which software is a system and which software is an application. It can be counted as our “occupational disease”.

As for the technical methods, there’s no big difference between us and other blockchain technology, such as Ethereum. We tend to utilize some mature technologies. The only difference is we want to put smart contracts in the user mode and separate smart contracts and the public chain. This is an absolute principle that we have to emphasize.

Zhang Feng: Some group friends were just discussing the main use of Elastos Runtime. In fact, I’ve asked Mr. Chen this question in private before. Mr. Chen, why don’t you explain to us again?

Rong Chen: Actually, Elastos Runtime is kind of like Ethereum’s EVM. It’s mainly for running DApps. And Ethereum’s EVM is for running smart contracts. The difference is that the smart contract is run on the nodes of the blockchain while DApps are running on mobile phones and other user terminals.

In general terms, Runtime is called the App Sandbox, which is the application sandbox. It’s for avoiding viruses, privacy leaking, and network attack from the applications. So the sandbox is here to determine what the application should do or should not do.

It’s our final touchstone. Our sandbox is very flexible. Eventually, it’ll be able to run C programs, in other words, CPU instructions. In this case, it can be a program for all CPUs to run on it. They can all run in the sandbox. It’s not as simple as blockchain. Many people say Turing Equivalence means that you can write any program, which is a very confusing concept.

Question 10

Zhang Feng: The group friends have one last question to ask Mr. Chen. Since the Elastos operating system will be supporting DApps, what will be the requirements of the DApp development? Will requirements be made just like any other development language?

Rong Chen: Being able to write a program doesn’t mean being able to make applications. Turing machines can run at an infinitely fast speed. Our mobile phones and computers cannot be infinitely fast. Compared with an infinitely fast Turing machine, the program might have to run on the mobile phone for 100 years. Theoretically, it can be achieved on a Turing machine, but the human lifespan is no more than 100 years. So the program would not finish running even after we’re dead. That would be simply unacceptable. But the program will be Turing complete. Now it’s easy for us to understand, being Turing complete doesn’t mean a program will be accepted by the consumers. It might be too slow. So the ultimate measure of acceptance is whether the CPU can run at a certain speed or not. If the CPU is too slow, you have no choice but to buy a new machine.

As long as the CPU can run, this program should also be able to run. Many people don’t understand this either. For example, some people use Java to develop programs, some use Javascript to develop programs. Java can work for most programs because computers are faster than humans. But on the contrary, a Java program can’t be used to develop game engines or for the so-called deep learning. It can’t be used to play chess. So deep learning and smart driving will consume lots of CPU’s computing power. The Java language will be too slow and therefore unacceptable. In this time, we must use hardware acceleration, which means the CPU itself is not enough. The hardware acceleration is needed to run the machine with the machine instructions.

This is what we just said. When talking about machine instructions, many people immediately think of the operating system because it must be running on an operating system. So in a virtual machine, we can achieve the speed of the machine instructions. This has never been done before. And this is also what we feel proud about Elastos.

Besides, Elastos does have requirements for DApps. Let’s first talk about the difference between DApps and Apps. DApp refers to decentralized app.

We will be getting rid of two intermediaries. For example, when we are using Wechat, like I’m having a class on Wechat for you guys, which is P2P. And the carrier Tencent will be the intermediary. Let’s have another example. If I’m calling Mr. Zhang Feng, I’m using a Unicom cellphone while he’s using a China Mobile cellphone, in our phone call, two carriers will be the intermediaries, which are Unicom and China Mobile. If we want to get rid of the carrier, in other words, making a decentralized carrier using blockchain, the carrier will automatically operate. It’ll be a robot carrier.

Blockchain means the robot will be the center. The so-called decentralization doesn’t mean there’s no center, instead, it means the machine will be the center. The biggest issue of the internet is that there is no carrier and anyone can access it. That’s the internet’s biggest advantage. But it’s also its biggest disadvantage, which means anyone can release avirus or wiretap other people.

Zhang Feng: So a DApp means a decentralized application. And the app we usually talk about is a centralized application.

Rong Chen: In this case, if we make a carrier for the internet, the internet will be safe. It’s just like Tencent being the carrier of Wechat. But it’s not fair enough. For example, Tencent doesn’t allow users to access Alibaba’s websites directly via Wechat. So how do we make the internet have a carrier and in the meantime make sure it’s fair and nobody’s posts get deleted for unfair reason? We need to use blockchain’s automatic operation mechanism, letting the robot be the carrier.

Wechat without the carrier will be a DApp version of Wechat. For example, there’s an app called Telegram that’s very similar to Wechat. Its company raised about 1 billion USD recently. They’re aiming to make a decentralized Telegram, which is a Telegram without telegram.com. So it’s like a Wechat without Tencent, which is the decentralized Wechat.

If I write a blog on Sina and there’re readers to read it, in this case, Sina will be the carrier. The carrier could also be Facebook, Youtube, Youku, or Twitter. By extension, there are carriers for many cellphone apps. If we can put everything in the perspective of decentralization, most apps will have their decentralized version.

The decentralized Telegram cannot be a smart contract because it’s just a stand-alone game running on the cellphone. If it crashes, so be it. No permission or consensus is needed. So it’s very different from a smart contract. DApps don’t equal smart contracts.

But on the contrary, smart contracts must be DApps. Because there’s no carrier behind smart contracts. Ethereum doesn’t have a carrier. Bitcoin doesn’t have one either. There is no carrier behind the smart contract, so the smart contract must be a DApp but a DApp is not necessarily a smart contract.

Besides, like I mentioned, DApp is an app without a carrier. This DApp would be called removing the media player intermediary. For example, if I make a short video and the codec is H.264. If I upload the H.264 video online, I wouldn’t know it’s played for 10,000 times or 100,000 times. Then who knows it? The media player knows it. The media player planted ads before my H.264 video. It knows how many times but it often doesn’t tell me the truth. For example, per our agreement, if the video got played 10,000 times, I got a portion of half of the revenue. But whether it’s played 10,000 times or 100,000 times, the carrier often lies to make the portion its net profit.

It’s called second-time piracy or second-time piracy through the media playing. Same concept. Movies, songs, and e-books can all be pirated for the second time. If a database I made got run by a software, as the intermediary, the software often bullies the weak. The content creator created the H.264 video but often gets bullied by the media outlet. Or if I wrote a book, I could be bullied by the e-book media player.

Most softwares are actually intermediaries. It all boils down to how should we get rid of the software intermediary and make the author benefit more. When it comes to blockchain, many people talk about removing the intermediary. Let’s think about it, how many types of intermediaries are there? Can they all be removed? For example, if you get rid of the software, how do you play the song? If you remove the intermediary of the book, how do you read the e-book? So we did nothing but use blockchain to record the scarcity. But it never occurs to most people that if it’s recorded online that there are 10,000 books, once it’s been played, it will be pirated. In this case, what’s the point of counting the numbers? So blockchain can only count numbers. If we want to eliminate piracy, we have to tamper with the operating environment.

That’s why in this case, the operating system is very important. The EOS we mentioned before is not an operating system. Ethereum is not an operating system either. Nobody can figure it out quite yet.

So is what we need to do to get rid of the software intermediary? We need a software tool and a template. For example, if you give me an H.264 video, I will make a tool for it. It’ll process the video like a meat grinder processes the meat. If you give me an H.264 video, I’ll make an online game out of it. The goal of the online game will be to fast forward or rewind the video. We all know “White Deer Plain” is a book. And the book clearly has an e-version. But have you thought about it? Has anyone tried to find “White Deer Plain” the app in the Apple App Store?

I specifically checked and found an app called “White Deer Plain”. It’s an Apple app. If you open it, you’ll see it’s an e-book. You can turn pages and add labels. So a cellphone app has been generated for the PDF book. It’s a very simple task for software developers.

But in this case, the revenue model is very different. Because it’s a free app, a free tool. If I put the e-book of “White Deer Plain” in it, it’ll be a “White Deer Plain” game. The game will be reading the book. But whose ads can be run on the game or whether the reader should be charged after turning five pages shall be determined by the author. There will be a tool for you to choose, you can fill in the blanks as you want. A game will be generated. You only need to pay a one-time fee to buy the tool. Next time, no matter how many books you write, you can always generate games out of it. In this case, you can take control of your own destiny and revenue model.

In other words, you get rid of the software intermediary because you become the software itself and your book “White Deer Plain” becomes the game. You don’t need a media player anymore. You can play your own content and design your own player. But why hasn’t it been done before? It’s not hard to generate a game out of “White Deer Plain”. But if I send the game to you via email, do you dare hit the play button? It’s because the traditional operating system has viruses. So people learned this lesson and did not dare open the game in the email. And if I send you the game through a social software, such as Wechat, do you dare to click it? It might still have viruses. So nobody dares to open it. And it all comes down to if I can design a virtual machine to eliminate the virus.

With such a virtual machine, we can let users have their own data so they can take control of their own revenue models. For this, Elastos has a secret weapon, called Elastos Runtime. This virtual machine can run C code and doesn’t transfer any virus. That’s what we want to slightly brag about today. In all blockchain projects, Elastos is the only can who can make this happen. That’s how we want to market it in terms of removing the intermediary.

Finally, in conclusion, Elastos has six features: First, it has decentralized and automatically operated ID. Second, the Smart Web can trace all the way back like there’s a notary office. Your website can prove you are the first one to write the article. Third, there is scarcity. If you issue 10,000 copies of a book, it can create scarce commodities, which form a smart economy. Forth, websites can have a consensus. In today’s internet, a website is controlled by one company. In the future, a website can be controlled by consensus, by smart contracts and consensus through the supply chain finance by several parties. Fifth, it can remove the operating intermediary. Sixth, it can remove the software intermediary.

Of course, blockchain technology has been developing rapidly. But I think, instead of waiting for blockchain technology to mature, it’s better to utilize what we have so far and push it to the market, to the consumers.

In the past, the internet was all about traffic. When it comes to blockchain, it’s all about the agreement. To make ICO’s money, you have to have agreements. It’s like when we say, in the past, the internet was C, you want to make money from the consumers. Then it was about B where you want to make money from businesses. After that, it was about VC. At first, the money was made from the market. In the end, it’s all about scamming VC’s money. So using today’s blockchain for agreements is basically scamming ICO’s money. I don’t think that’s the way to go.

Group Friends: Mr. Chen, I understand when it comes to the conventional blockchain, the blocks are related. Elastos’ blocks must be different from Bitcoin’s blocks. I’m not sure about how Elastos can utilize Bitcoin’s computing power to mine coins without consuming extra computing power.

Zhang Feng: Like I mentioned, every miner gets a hash, which means it gets the right to account for both Elastos and Bitcoin.

Rong Chen: Actually, it is a mathematical problem, which means the trust can be passed. Elastos’ ledger and Bitcoin’s ledger are quite different. But they can hash their individual digital signature together, which would cause an interruption of the Bitcoin mining machine. Then the ledger would be notified and one algorithm can be used to dig two ledgers. So with the same algorithm, a number of ledgers could be dug out. In this case, we all hope all public chains on our smart web can use the same set of mining machines and consume the same electricity, which can generate coins using a number of public chains. It’s kind of generating fiat currencies such as USD, RMB, and GBP.

In fact, long before we started to work on Elastos, we had the same discussion. Some people were discussing co-mining. There are also related articles you can find. Bitmain also has two types of mining machines. One of them can already support co-mining. With a bit of alteration, the other mining machine can achieve the same thing. Right now, the value of Elastos is only 1% or 0.5% of Bitcoin’s. But if there are 20 public chains dedicated to mining and rewarding the miners, the benefit is considerable. Mining machines will become the root of trust for the whole internet. Now POW(proof of work) is still the simplest and fairest algorithm. The energy is consumed and the trust is earned.

Zhang Feng: Thank you, Mr. Chen, for sharing with us. If you’re interested in knowing more, you can continue to pay attention to Mr. Chen’s thinking and practice, as well as the Elastos community!