Self Preface for ‘The Wealth of the Quantum Era’
The following is a preface written by Sunny Feng Han for his new book ‘The Wealth of the Quantum Era’.
Authors often invite a well-known person in their industry to preface his or her new book. I had the same idea, initially. I had planned to reach out to Mr. Alan Greenspan, the former Fed Chairman, Mr. Hongbing Gao, Alibaba Vice President, or Professor Jiaming Zhu, one of the “Quad of Reform” (four men crucial to and once a symbol of the process of Chinese economic reform), to pen a preface. Each of these men provided great inspiration for the creation of this book. However, after serious consideration, I decided to write the preface myself, because I am the only person who knows how the comprehensive framework of this book evolves. This self preface is intended to give readers a systematic explanation of the work that follows.
As mentioned in previous articles, my understanding of the distributed computing systems of blockchain is based on quantum mechanics. After nearly 30 years of intermittent but systematic study with my tutor at Tsinghua University, Professor Zhang Li, I finally understood the quantum mechanics realism of big data (large data sets/ samples) that show both the gross and subtle correlations and connections in the whole world. With continued deepening of learning and research, I believe ‘quantum mechanics realism’ will be revealed to be a universal concept. It indeed transcends the description of the microscopic world. There have been many recent results of theoretical experiments proving that quantum entanglement is related to the Increase of Entropy Principle (See Chapter 6), and is applicable to complex systems of any scale (from the quantum fractional Hall effect to deep neural networks, and even including financial markets). Among them, Maxwell’s demon calculation mechanism plays a crucial role. In 2014, I proved that Bitcoin’s mining schema is a typical Maxwell’s demon distributed computing system. Compared with centralized systems, low-entropy decentralized consensus calculations are significantly more efficient ( See Chapter 7).
Precisely for this reason, after I joined the Bitcoin community, introduced by Tsinghua alumni Di Deng, I became a blockchain evangelist. I discussed the concept of Bitcoin’s distributed computing system and blockchain from the perspective of quantum mechanics on numerous occasions. My logical framework is surprisingly popular. To date, I’ve been invited to give lectures at more than 100 universities. I later went on to write Blockchain: A Quantum Wealth View with Professor Zhang Xiaomei of Southwestern University’s Finance and Economics department in 2016.
The formation of my concept of “quantum wealth” was deeply influenced by Mr. Gao Hongbing, Vice President of Alibaba and Dean of the Alibaba Research Institute. In early 2016, Mr. Hongbing invited me to visit the Institute. The day I visited, we discussed blockchain technology all morning. As a veteran of China’s internet creation, Hongbing firstly described the long term development process of the Internet from a macro perspective, then transitioned to the concept of “big data” as a focus. He believes Alibaba is no longer simply an IT company (referring to Information Technology innovation as the core foundation), but has developed into a DT company ( big Data Technology and accumulation). Big data has become the key for human beings to perceive and manage the future world, particularly as a foundation for establishing new forms of financial credit. This is completely consistent with my understanding of quantum mechanics as the quantum world is a deeply holistic entangled one. More than 100 years before the emergence of the Internet, quantum mechanics was already describing reality using big data sets. The square of the wave function that describes the existence of quantum reality is directly proportional to the statistical probability of big data. This is fundamentally different from the small data descriptions based on Newtonian mechanics, in which only the initial position and velocity are required to determine the orbit of an atom through dynamic equations. In my conversation with Mr. Gao, one remark struck me deeply: ‘The (current) credit system of banks marked by mansions made of concrete and steel is being replaced by a blockchain-based credit system rooted in data’. I realized then that the era of a new data based wealth consensus is emerging, the quantum realism of big data will surpass the Newtonian mechanics of small data and become the foundation for the future credit system. This can be considered the compass that guided the formation of this book.
In mid-2016, it was my honor to give a series of lectures in Singapore with Zhou Ziheng, a member of the Expert Committee of the Alibaba Research Institute as well as a researcher from the Institute of Finance of the Chinese Academy of Social Sciences. During this trip, Mr. Zhou systematically described his theory of the digital economy. His core view is as follows: Three hundred years ago, the industrial revolution occurred in the UK and brought about a production explosion. Today, the Internet economy has blossomed and brought with it a transactional explosion. Currently, few people are aware of and studying the logical inheritance of these two events. A fundamental consequence of this historic evolution from a production to a transaction explosion is the transition of the social economy from the corporate account-centered banking system to a distributed personal account-centered system on the internet. My already deep understanding of blockchain technology made me quickly realize the significance of this transition. The era of personal data ownership and turning that data into personal credit and wealth is close at hand. Bitcoin is simply an evolutionary data wealth consensus, realized for the first time using private key signature technology. After the series of lectures concluded, Zhou Ziheng systematically wrote his thoughts into Account, selected as one of Asia Weekly’s top ten books of 2017. I later read an article by Zou Pingzuo, chief economist of the Central Bank’s Financial Research Institute. This article discussed the central bank’s issuance of digital RMB and took the aforementioned viewpoints about digital wealth consensus and data based credit to a higher level. All these experts and their work have greatly helped the creation of the book (See Chapter 4).
Since 2014, at the invitation of Professor Gu Xueyong of Tsinghua University, I’ve been a regular guest lecturer for a course at Tsinghua titled “Cognition beyond Disciplines’’. My focus has been ‘the cognition of quantum mechanics realism and blockchain’. During that period, Professor Gu and I repeatedly explored the significance of quantum realism and Maxwell’s demon element calculation, which has steadily deepened my understanding of computational thinking. In 2016, Professor Gu invited Professor Zhongkang Peng from Harvard Medical School to an exchange where Professor Peng introduced their team’s latest research results-the entropy of the ECG signal can converge under different scale transformations. (Costa, M., Goldberger A.L. and Peng, C. K., Multiscale Entropy Analysis (MSE). Beth Israel Deaconess Medical Center, Boston, USA). I studied every word in the paper, and was profoundly excited to find the experimental phenomenon and results to be completely in alignment with the invariance of the renormalization group scale in quantum field theory, which seeks to describe the changes of a physical system when viewed at larger and smaller scales. This inspired Professor Gu and I to use Maxwell’s distributed computing to study complex systems, especially financial markets (The latest results are introduced in Chapter 7).
In 2017, at the invitation of Professor Xu Ke from the Department of Computer Science at Tsinghua University, I lectured the postgraduate course ‘Cyber Intelligent Economy and Blockchain’. This gave me the opportunity to systematically sort out the relationship between quantum realism and blockchain-based data wealth, as well as the significance of using computational thinking to study smart contracts in the digital economy. The lecture notes I prepared for this course became the earliest prototype of this book.
In 2018, under the introduction of Ms. Feng Yuqing, General Manager of CBN (China Business Network), I had the opportunity to exchange ideas several times with such prominent Wall Street figures as Jim Glassman, chief economist at JPMorgan Chase and Alan Greenspan, former chairman of the Federal Reserve. Through these precious opportunities, I’ve deepened my understanding of the Wall Street financial market. Since the founding of the United States and the establishment of personal property protection amendments, the US has established relatively complete legal as well as independent public opinion supervision systems. With an enthusiasm for extremely high financial speculation inherited from the Netherlands, the presence of a mature bank credit system and, perhaps most notably, the large-scale innovative industries represented by Silicon Valley, the US has formed a major wealth consensus in the global market and has become a true financial empire. This is where the USA’s strength lies.
This picture was taken at Mr.Greenspan’s office in Washington D.C. in May of 2018
I carefully read Yuval Harari’s famous book Sapiens: A Brief History of Humankind in New York. This book was revelatory. Prior to the agricultural and scientific revolutions, human beings experienced a ‘cognitive revolution’, one of the major reasons why Homo sapiens unified the world. The so-called “cognitive revolution” refers to H. sapiens abstracting surreal concepts into tangible, concrete things, such as sphinx totems, mythological idols, culture, religion, consensus, etc. As a result of the cognitive revolution, Homo sapiens’ group collaboration exceeded Dunbar’s limit of 150 people. H. sapiens would go on to outcompete other contemporary hominids, deeply affecting the modern human’s genetic inheritance. After reading this book, I finally realized the concept of ‘wealth’ is just part of the cognitive revolution, abstracting credit consensus beyond the use value of specific commodities. This credit consensus is precisely what a global free market urgently needs. From shell coins unearthed in ancient China, then copper coins, to the era of global precious metal standards, and now the lending business of modern banks and the issuance of paper money; these are all forms of credit consensus but with different free market algorithms. These connections are systematically analyzed in Professor Zhu Jiaming’s book The Monetary Economy of China: Past and Present. I’ve personally benefited a great deal from his work, as exhibited in the first and third chapters of this book.
Whether an individual’s understanding of wealth advances with the times may greatly affect his/her living conditions and social status, and may even affect the future trajectory of an entire country. The book Rich Dad, Poor Dad by Japanese-American Robert Kiyosaki explains this profound truth in a simple and easy-to-understand way. Kiyosaki tells the fundamental secret as to why the US controls a major part of the world’s wealth.
China’s ‘Reform and Opening-up’ started from the very real and extreme scarcity of commodities on the market. When I was a college student, I often heard words like this from the loud speakers on the streets: ‘The main contradiction in China now is the contradiction between the demands of the people and the lack of market supply’. In response, Chinese people naturally developed a deep-rooted perspective that only tangible resources like commodities are wealth. Even some professionals/experts in financial or academic institutions believed the securities capital market to be purely a game of ‘drumming and spreading flowers’ which should be strictly supervised because it only produces bubbles destined to burst. Fortunately, over the 40 years of reform and opening up, China’s biggest wealth consensus has emerged in the real estate market (valued at approximately $65 trillion USD). Insightful people such as Professor Chen Zhiwu from Yale University, Professor Zhao Yanjing from Xiamen University, Professor Xiang Shuai from Peking University, all point out that China’s real estate market is not a bubble, but rather has been underpinning the development of China’s market economy. It is a transition in wealth consensus from the prosperity of the Internet economy. This is still in line with Kiyosaki’s ideas in Rich Dad, Poor Dad. The domestic real estate market alone, however, will never allow China to occupy a dominant position in the global wealth consensus, as the historical development of Japan and Hong Kong proves.
China is now not only able to produce sufficient goods for itself, but has become the world’s leading producer. However, we, the Chinese people have found that sufficient production capacity does not bring real wealth for us, just excess production capacity. If there were still big speakers on the street, what we would hear now is: “The main contradiction in China now is the contradiction between the excess commodities in the market and the relative lack of wealth in the hands of the common people.” Premier Li Keqiang pointed out: “China has 600 million people with a monthly income of 1,000 yuan ( $160 USD) or below.” [Xinhua News Agency, 2020/5/29]. Clearly, there is a large gap when compared to the average income of Americans. Is this because the Chinese are lazier than Americans? Or that the Chinese are less skilled than Americans? Obviously not. What we do know, for certain, though, is that the Chinese are better at math ;-). I believe the true reason for this wealth disparity is that China is still far from the center stage of global market wealth consensus.
In 1848, large gold mines discovered in California propelled the rapid economic rise of the United States, which eventually led the US to surpass the British Empire. In the era of digital economy and blockchain, can China find its own “big gold mine”? This is what “The Wealth of the Quantum Era” explores.
Finally, I would like to thank Cheng Hao, Wang Li, and Zhang Tianyi for their efforts in proofreading this book.
Written by Sunny Feng Han on Jan 3rd (Lunar Calendar)