The entire blockchain industry currently finds itself in a state of emptiness. Over the past few years, from ICOs to DeFi, from NFTs to meme coins, few projects have offered real innovation or value to the general public; most are simply chasing short-term gains and speculative opportunities. For many experienced professionals, doubts about the industry’s current path have been growing.

Ethereum core developer Péter Szilágyi tweeted a few days ago, expressing concerns about whether he had chosen the wrong industry, revealing deep disappointment. In his view, the blockchain industry is becoming a casino, having little to do with innovation or value creation, let alone mass adoption. The original ideal of blockchain changing the world has been replaced by the game of pumping and dumping.

This prompts us to ask: why has this happened? We believe the reason ultimately lies with Ethereum, the blockchain currently with the largest number of users and applications, leading the entire industry down the wrong path.

Ethereum’s Misguided Path: Putting Everything On-Chain

The biggest mistake in Ethereum’s approach is the insistence on being fully on-chain, attempting to put all business processes on the blockchain. Even transactions that could be easily completed peer-to-peer off-chain by two individuals are forced to rely on network-wide consensus.

In Ethereum’s worldview, it seems that only fully on-chain applications are considered true blockchain applications. Whether it’s finance, gaming, or social apps, putting everything on-chain is the “politically correct” approach. When the main chain gets congested and insufficient, more chains are created — Layer 2, even Layer 3. In any case, all business processes must be placed on the blockchain. And the lower-layer chain must publish its transaction data to the upper-layer chain or a third-party chain to ensure so-called data availability, and so on.

The result of putting everything on-chain is an unnecessarily overloaded blockchain, with performance unable to keep up, leading to congestion and high transaction fees. This gives the impression that blockchain is slow and expensive, resulting in a poor user experience. There’s a saying that you need to offer a product ten times better than what’s already available to succeed — like how Apple’s phones were ten times better than Nokia’s. However, the user experience and cost of blockchain applications today is far worse than that of Web2, let alone ten times better. This makes mass adoption an impossible goal. As a result, blockchain can only serve a small group of people, such as speculators and those in gray industries, inevitably resulting in a casino-like state.

Back to First Principles: What is Blockchain Really About?

First of all, we need to be clear that blockchain is a tool, a means to an end. A true blockchain application does not require all business processes to be fully on-chain. The key is to meet user needs, including monetary freedom, market freedom, content freedom, social freedom, and more.

As we all know, Bitcoin, the origin of blockchain, is widely recognized as the most decentralized blockchain and the most valuable cryptocurrency. However, few people realize that in the Bitcoin whitepaper, Satoshi Nakamoto never mentioned “blockchain” nor “decentralization.” Instead, he used the term “peer-to-peer” (P2P), even placing it directly in the title — “Bitcoin: A Peer-to-Peer Electronic Cash System.”

A P2P service is a decentralized platform whereby two individuals interact directly with each other without a third-party intermediary. When we return to first principles and rethink what blockchain truly is, one straightforward explanation comes to mind — blockchain is essentially a P2P network.

The truth is, what we refer to as “on-chain” is actually the consensus layer built on top of the P2P network. However, many business processes don’t need to be on-chain and rely on the consensus layer; they can be handled directly at the P2P network layer. For example, if Alice wants to pay Bob, the ideal way would be for Alice to send the money directly to Bob in a peer-to-peer manner rather than through unnecessary intermediaries (e.g., consensus validators or block producers). This approach is not only faster but also naturally provides privacy protection.

Moreover, building applications at the P2P network layer avoids performance bottlenecks and high transaction fees, enabling the creation of truly useful applications that can achieve mass adoption.

P2P Economy: Make P2P Great Again

We advocate for a P2P Economy where people can autonomously execute transactions in a peer-to-peer manner. The role of the blockchain consensus layer here is to facilitate and coordinate the formation and settlement of transactions, not to take over their execution.

In this architecture, the P2P network and the consensus layer operate in parallel. The P2P network serves as a marketplace for information exchange, where consumers and producers negotiate and exchange offers. The consensus layer can provide smart contracts if necessary, ensuring the decentralized market functions smoothly.

The P2P Economy can truly meet user needs and provide better solutions than traditional centralized services. Practical use cases include peer-to-peer payments, decentralized storage, decentralized computing, and more. Here’s a specific example.

In a P2P computation network, Alice wants to outsource a heavy computation task to Bob’s computer cluster for one week. They reach an agreement peer-to-peer. Bob, as the provider, offers the computation service, while Alice, as the user, pays in stablecoins using a “streaming payment” method through a payment channel based on the amount of computing resources consumed. If Bob fails to provide the computation, Alice can stop the payment; if Alice does not pay, Bob can discontinue the service. The entire process is straightforward, protects privacy, and does not rely on intermediaries. More importantly, it does not place an excessive burden on the blockchain consensus layer.

Similar decentralized services, like BitTorrent, have been popular on the internet for many years, proving that they effectively meet user needs and are, to some extent, superior to centralized services. The P2P Economy can build on this foundation by incorporating stablecoin payments to enhance such distributed systems. We believe that in the coming years, peer-to-peer stablecoin payment infrastructure, such as Bitcoin’s Lightning Network and CKB Fiber Network, will mature significantly, greatly advancing the development of the P2P Economy.

P2P Economy Will Lead a Blockchain Renaissance

The P2P Economy opens up a new paradigm, offering a fresh development path for the blockchain industry. Compared with the current path dominated by Ethereum, the P2P Economy has the following advantages.

1. The P2P Economy addresses real-world problems with genuine user demand and practical application scenarios (e.g., P2P payment, decentralized storage). This has been thoroughly proven for years rather than being an imaginary need. It can truly create value rather than merely providing tools for speculation.

2. In the P2P Economy, most business logic does not need to be on-chain, eliminating performance bottlenecks and transaction fee issues. As a result, the user experience is greatly improved, making mass adoption more likely.

3. The P2P Economy uses stablecoin payments, making it easy for users to understand and convenient for participants to evaluate service costs and revenue. The use of stablecoins also weakens the speculative narrative of token issuance.

Furthermore, the P2P Economy will bring about a renaissance, helping the blockchain industry rediscover its original vision of changing the world in the following ways.

• Service Decentralization: Many services can be re-implemented in a P2P decentralized manner, such as payments, storage, computing, and even VPN services. The P2P way can offer a better user experience than existing centralized solutions.

• Payment Equality: P2P payments allow everyone to participate equally in transactions. There are no centralized financial institutions, no entry barriers, and no situations where large entities take advantage of smaller participants.

• Mass Adoption: P2P networks are more open and inclusive, better addressing user needs, and are more likely to bring the general public into the blockchain, achieving mass adoption.

Overall, the P2P Economy is poised to revive the long-overlooked concept of P2P, breathing new life into it and using it to inject fresh energy into the blockchain industry, leading a new blockchain renaissance.