About public blockchains

“Some public blockchain projects will not survive, but the space will carry on”

Honeycomb Finance: NEO’s vision to map real-world physical assets into digital assets on a public blockchain is also something that other projects aim to do. Based on your prediction, how much time will NEO need to make it happen?

Da Hongfei: It is difficult to make such a prediction. NEO’s vision is in fact to realize a Smart Economy; the current world that we live in is still an industrial economy.

Therefore, in the age of a Smart Economy, assets will be digitized and managed in a distributed and decentralized manner. At the same time, Smart Contracts will bind the rules and values of the assets on the blockchain, which ultimately reduces the cost of trust and increase business efficiency.

NEO aims to act as a technical-bridge to facilitate the integration of the real-world economy into the blockchain space and less as a marketing tool. Our position is clear — to build and solidify our foundations, and to be well-prepared for the moment when the world is ready to migrate.

In the end, NEO’s ultimate goal is to deliver an open network that serves the Smart Economy, which we are still carefully planning for. To give an instance, there are a few ways we can go about it — we can maybe first integrate the real-world with the digital space, or go on head first by building the digital-space (e.g. by having a digital-game ecosystem) and do the integration later.

Honeycomb Finance: At this point in time, there are more public blockchain projects than decentralized applications (dApp). Also, the cost for dApps to pick the right public blockchain is very high, because when the blockchain fails, the dApps that are developed on it will also follow suit. For this reason, some dApps came out to develop their own public blockchains. I wonder whether you have noticed this trend and what are your thoughts on this?

Da Hongfei: The chances of failing is bigger when you develop your own public blockchain. There are already functioning public blockchains out there, but when you have to develop your dApp and your own public blockchain, it is at least twice the work and the risk.

I can understand their rationale by doing so because of the market’s assumption that a public blockchain is able to fetch a high valuation. However, this assumption may eventually not hold and I, too, am doubtful about it. The analogy of it is like “I want to develop a game of my own, but I think ‘I might be using the wrong platform’, and Android and iOS are also unsuitable, so I will just develop my own operating system”.

Honeycomb Finance: How many dApps are there on NEO? Which ones are your favourite? And what types of dApps are still lacking? What suggestions do you have for ecosystem developers?

Da Hongfei: There are at least a 100 of them. You can check them out at www.ndapp.org. Plus, more than 60 dApps were deployed on nOS in recent weeks. nOS is another project that is being developed by one of our NEO communities in the Netherlands.

Image from ndapp.org, showing dApps developed on NEO.

My suggestion for ecosystem developers is to keep on developing interesting, seamless, and top-of-the-line games, and decentralized exchanges — these are more of what I hope to see. To provide some context, NEO is the only public blockchain out there that will never have a fork, which makes it very suitable for decentralized exchanges. On the flipside, dApps that are lacking would be stable tokens and games. As of now, games do not need to map the real-world, as physical assets are still not ready to be mapped into digital assets.

I want to advise developers to focus solving one problem at a time, because the success of a project is usually dependent on figuring out a core issue and not everything under the sun.

Honeycomb Finance: There are rumours in the space that public blockchains are going to die-off. Do you agree with this?

Da Hongfei: In the future, there is definitely no need for so many public blockchains — why do we even need so many of them? Because of the fact that public blockchain projects usually have a lot of space for imagination, they are able to fetch a much higher valuation that normally cannot be obtained from building blockchain applications.

Some public blockchain will not survive, but the space will carry on. The blockchain industry is quite different from the conventional stock markets, where it does not have a mechanism for delisting a project. Also, most blockchain teams usually do not have sufficient financial management skill sets and do not fully comprehend the concept of bankruptcy. Therefore, even if a project’s market valuation and liquidity shrinks to an unimaginable level, the blockchain will still remain in the space, and who knows, it may one day be reincarnated and may once again become a top-traded token in a bull-run.

Honeycomb Finance: Let’s assume the situation where most public blockchains projects die-off. What makes NEO an outlier of that event to survive that catastrophe?

Da Hongfei: NEO’s ecosystem development is very diversified and well-distributed across many countries. Plus, a single setback will not shake our team spirit; even if there was a series of setbacks, there are surely other catalysts that will push us forward.

Honeycomb Finance: In your view, what is the main factor that is currently withholding the use of blockchain by large-scale industries and enterprises?

Da Hongfei: At this point in time, there are many factors. Allow me to draw an analogy: what are the factors that limits a car to speed at 100 kilometers per hour? It might be that the engine is not complete, the road is not fully-tarred, the transportation rules are not set, the public’s acceptance level is still low — and as you can see, there are really a lot of missing factors for this car to speed-up.

Honeycomb Finance: Transactions per second (TPS) has always been used as an indicator of a high-performance public blockchain. So, does it really mean that the higher the TPS, the better it is? How can these be measured? And how much have NEO completed when we look at this factor?

Da Hongfei: If you look at blockchains from a particular perspective, they are of course better with higher TPS. Despite so, there are always trade-offs for a higher TPS. When implementing a high TPS blockchain, you must make sure that other factors within the system can keep up, i.e. storage capabilities. Nowadays, many blockchain projects use TPS as their marketing angle and making it their primary selling point. But if you really want to know how strong they are in terms of technical competencies, ask them for a live-test of their TPS.

In point of fact, TPS isn’t really the main factor. Except for Ethereum, which is most often congested, it is rare for most blockchains to have a transaction backlog. For industry experts, we know that the TPS-factor, for now, is not really that urgent.

To judge whether a blockchain is superior, one can look at a few other parameters — how much time will the blockchain need to get enough confirmations for finality, or how much time it will need to have a block that is 100% confirmed, or whether there is a risk of forking. Besides that, we can also look at the difficulty of developing smart contracts and the comprehensiveness of documentation.

Of all of the three points that I have just mentioned, NEO is still a little behind in terms of documentation and code specifications, which is why we are determined to make releasing our Yellowpaper our first and foremost priority in the following half of the year.

Honeycomb Finance: There is a saying in the Chinese blockchain community that the three treasures are NEO, QTUM and GXChain. What are your comments on the other two projects?

Da Hongfei: QTUM is different from NEO in a technical sense. NEO is a completely written ground-up Smart Contract platform, while QTUM has somewhat technical similarities to Ethereum. As for GXChain, I am unfamiliar with it.

Essentially, there is no right or wrong when it comes to choosing your project’s technical development model, which is really dependent on your project’s timing and your team’s ability. But, for NEO, we have always adopted a unique design philosophy by building our proprietary technical architecture.

Honeycomb Finance: There are a number of digital currency mortgage lending platforms in the market and some of them are not even based on a blockchain. What are your thoughts on these non-blockchain based projects?

Da Hongfei: Not all projects require a blockchain. If you can operate without one, then it is fine too.

Honeycomb Finance: If it is not based on a blockchain, does it still consider to be a blockchain project?

Da Hongfei: It makes no sense to debate whether or not it is one. For example, if we look at a centralized exchange, it is not important to categorize whether it is a blockchain project, but we can all acknowledge the fact that it is the most profitable one. An exchange is also a very crucial component in the blockchain industry.

Honeycomb Finance: When technology giants like BAT or Facebook enter the blockchain space, should domestic blockchain startups or smaller teams be worried about competition such as buy-outs or acquisitions?

Da Hongfei: There is nothing to worry about. By logic, local Chinese telecommunications and information technology giants are already doing very well and small startups have no match for them when it comes to the availability of resources, but the tables have now turned.

Business models based on blockchain technology are the polar opposite of conventional business models employed by existing technology giants — data ownership now belongs to the users themselves. The fact that this is possible has significantly changed business model landscapes, putting existing business models in a very difficult position. This is the dilemma that every innovation will face — a winner will never maintain its competitive advantage forever, otherwise, the ecological balance within an ecosystem will be tipped-off and ruined.