The Quantum Era and Digital Economy 2.0

Below is the preface for the Chinese edition of ‘The Wealth of Quantum Era’ written by Jiaming Zhu. I learned a lot from Professor Jiaming Zhu in the process of writing this book.

Professor Jiaming Zhu received his master’s and doctoral degrees in Economics from the Chinese Academy of Social Sciences (CASS) in the 1980s, and a Master of Business Administration from the Massachusetts Institute of Technology (MIT) in 1995. Zhu served at the Institute of Industrial Economy in CASS, the Development Research Center of the State Council, the China International Trust Corporation (CITIC), the Western Research Center of China, the Beijing Youth Economics Association, and the China Reform and Open Foundation with George Soros. As recognition for his contribution to China’s early stage of Reform and Opening-Up in the 1980s, together with Qishan Wang, the current Vice President of the People’s Republic of China, Zhu was acknowledged as one of the “Quad of Reform”, a symbol of China’s reform during this period. After 2000, Zhu served on the United Nations Industrial Development Organization (UNIDO) as an economist, and subsequently taught at the University of Vienna and the National University of Taiwan. Since 2010, Zhu has conducted in-depth research on the development of cryptocurrency and blockchain, and he is currently an academic advisor to the Chinese Institute of Digital Assets (CIDA). In December 2019, Zhu founded the Blockchain Academy with the end goal of furthering global and interdisciplinary collaboration on blockchain-related research and leading the world to move onwards with the rise of the digital economy. By now, Zhu is certainly a thought leader in China’s blockchain industry and a go-to advisor on China’s digital economy strategy. Zhu’s representative publication is From Laissez-Faire to Monopoly: The Monetary Economy of China, Past and Present.

Jiaming Zhu:

Sunny Feng Han’s new book ‘区块链国富论’, Chinese edition of ‘The Wealth of Quantum Era’, will be published soon. Moreover, the English edition titled “The Wealth of Quantum Era” will be published afterwards. As the name suggests, the focus of the book is on wealth in the quantum age. I am happy to pen a preface for the Chinese edition. .

The book’s title is ‘Blockchain and Wealth of Nations’ which weaves blockchain and Distributed Ledger Technology with national wealth. The book proposes a quite challenging topic, as it seeks to address how blockchain can cause or create new national wealth. However, it does provide an answer: The new era of interaction between the digital economy and the quantum era is the era of new wealth consensus on data; ‘Quantum Realism of big data will replace Newtonian Mechanics Realism of small data’; Wealth is not a thing, at least, not just a thing; Wealth became a form that represents the evolution of credit resources, and blockchain is precisely the technology that supports and implements the global credit consensus. Therefore, this work invites us to update our current concept of wealth. Whether the understanding of wealth advances with the times may greatly affect a person’s living conditions and social status, and may even affect the future destiny of an entire country.

The author quotes Adam Smith, Hayek and the founder of complex economics, Brian Arthur. The three share a similar thought process and approach. Looking at the history of human economy , wealth consensus has generally been reached in a decentralized free market. However, Brian Arthur is the only one who conceives the essence of the market economy as the continuous extension and expansion of the division of labor, as well as innumerable, decentralized and random transactions. The market can and will eventually become the object of calculation, a computational body, and a decentralized computing system. ‘From this perspective, the economy is algorithm-driven and has become a procedurally developed system in a series of events’. While Brian Arthur did not directly mention blockchain, blockchain is indeed a procedural algorithm structure that can provide a technical credit basis for highly complex economic activities.

Before 2008, it was difficult for people to acknowledge that wealth is a decentralized “credit consensus’’ although there is significant evidence for it in human economic history. The first generation of Internet TCP/IP protocol established an infrastructure for large-scale, barrier-free data circulation. More importantly, blockchain’s private key signature technology has laid the foundation for implementing personal data ownership. The advent of Bitcoin in 2008 proved that the blockchain-based credit consensus can become the foundation of wealth, and even directly become wealth. The historical position of Satoshi Nakamoto lies in his invention of a true decentralized model to issue currency, namely Bitcoin, which uses distributed computing to reach a wealth consensus. Bitcoin became a new milestone in the history of human consensus on wealth. Furthermore, Bitcoin is a form of wealth based on blockchain, which meets the six basic conditions of the wealth consensus proposed in this book: (1) authentication of the assets ownership; (2) Disclosure of accounting information on the entire network; (3) Large-scale transactions; (4) Comply with global value; (5) Anchor limited supply/ scarcity and the computing power of the entire network; (6) Decentralized and distributed computing.

‘Blockchain and Wealth of Nations’ encourages readers to pay attention to the reality that ‘decentralized financial (DeFi) has reached a consensus on wealth’. DeFi relies on distributed computing to realize the financial services provided by the current banking system, especially in the DeFi ecosystem on Ethereum. The rise of the DeFi wave has made people see that, in the blockchain world of decentralized computing, various functional applications of banking services have sprung up. Similar to the emergence of the banking industry after the British Industrial Revolution, there are signs that a new type of wealth consensus has emerged, but this time the stage is the global digital economy. The book also attempts to explain the Filecoin phenomenon and suggests that Filecoin may become ‘the benchmark for decentralized storage’ in the process of building a new Internet Web3.0 in the future.

In any case, both the author’s concept of data capitalization and his analysis of ‘the bear and bull market cycle of global blockchain-based wealth consensus’ are forward-looking. In the author’s perspective, the rise in the price of Bitcoin from a few cents to tens of thousands of dollars is a process of forming a consensus on wealth. People will eventually become accustomed to its periodic fluctuations between bear and bull markets. In human history, it took nearly one thousand years to reach a wealth consensus on gold. But for Bitcoin, it has taken only ten years to establish a new era of wealth consensus.

Chapter 6 of ‘Blockchain and the Wealth of Nations’ focuses on Newtonian Mechanics Realism and Quantum Mechanics Realism. From the author’s perspective, the limitations of Newtonian Mechanics are as follows: ‘Newtonian mechanics believes that the universe is composed of isolated atoms; Atoms have no other internal connections other than interactions; The atoms are located at a specific space-time position, and its motion follows a deterministic orbit, which is determined by Newton’s three laws of motion.’ Newtonian mechanics laid the foundation for the industrial revolution. A century later, the French mathematician Laplace elevated Newtonian mechanics to a premier position. The concept of Laplace’s Demon provides a theoretical basis for centralized thinking, that is, ‘belief in the existence of the supreme brain’. Today, the industrial revolution is over. After the post-industrial society, mankind quickly entered the information society, and the digital economy has become the main economic form. Therefore, the world requires quantum mechanics realism just as it needs Newtonian mechanics. Quantum mechanics realism is not only a theory describing the microworld but should be the foundation for our understanding of the entire universe in the future. In addition, ‘quantum mechanics realism and big data discovers that the part of the world that traditional Newtonian mechanics cannot explain is invisibly linked with the entire world. It has explored a vast space for a new form of global wealth consensus.’ Then what is quantum mechanics realism? The author states the following: The core of quantum mechanics is non-local correlation, which represents the existence of quantum entanglement.

Chapter 7 of the book is titled ‘Analysis of the Development and Computation of Wealth Consensus from the Perspective of Distributed Computation.’ The first section discusses ‘Maxwell’s demon element calculation can suppress the increase of entropy in complex systems.’ The author’s question is particularly profound and creative. In 1871, the British physicist Maxwell speculated the physics demon (Maxwell’s demon) was responsible for detecting and controlling the movement of individual molecules in accordance with the second theorem of thermodynamics. It is generally believed that the hypothetical experiment of the ‘Maxwell’s Demon’ is a direct challenge to the Increase of Entropy Principle. Maxwell’s Demon cannot physically exist in the real world. However, if Maxwell’s Demon is understood as a typical “computation” process, entropy decrease can be achieved. The author introduced a paper written by academician Sun Changpu, titled ‘Several Issues in Quantum Statistics and Thermodynamics Inspired by Quantum Information,’ and proposes that the mechanism of ‘Maxwell’s Demon and Randall’s principle are a universal element calculation mechanism, and that the sun drives dissipation as an external source, which can overcome the uncertainty of quantum non-localization and achieve entropy reduction. In other words, assuming that the entire universe is a quantum computer that is driven with a certain energy source such as the sun and dissipates heat at the same time, a locally ordered low-entropy world can be constructed through computations. The most fundamental computation mechanism is from ‘Maxwell’s Demon.’

Therefore, the author reasons as follows: ‘The mining system of the Bitcoin blockchain is a distributed Maxwell’s Demon computing system. Each mining machine is a Maxwell’s Demon, which finds the correct solution among incredibly large random numbers (two to the hundreds) while keeping record of the accounting for the whole network. Although this process dissipates a lot of energy, the computed consensus can support the global market value of Bitcoin, in contrast to banks which are centralized institutions making it difficult to come up with a global consensus.

The author reinterprets ‘Maxwell’s Demon’ from the perspective of quantum mechanics, and provides a thought framework from quantum science to blockchain, and then to “credit consensus.” Based on this framework, it is natural to recontextualize Shannon’s concept of information entropy and why signal code sets with higher uncertainties contain more information. This interpretation states Professor Wiener’s point of view that the Increase of Entropy Principle is actually a process of decreasing the level of energy information sequence.

Humans desire a low-entropy world. However, for all our human economic activities so far, all technological progress has been a continuous process of increasing entropy. This is a situation that needs to cease or at the minimum eased. In the new quantum era, whether Maxwell’s demon element calculation on the blockchain can be a possible and promising solution to this requires more theoretical and empirical proofs. If blockchain technology can decrease entropy rather than increase entropy, it would be revolutionary in blockchain related technologies.

I once said at the South China University of Technology on Nov 30, 2019: ‘The quantum age means that quantum science and quantum technology have influenced and changed other science and technology disciplines.’ Feng Han later said that his concept of quantum age was inspired by me. In fact, in the field of blockchain and digital currency, it is difficult to find someone like Feng Han with a background in quantum physics at Tsinghua University. He has been deeply focused on quantum science for many years, which will undoubtedly help him to merge quantum science with the digital economy. Feng Han states the characteristics of quantum age in this book as follows: the basic feature of the quantum age is that big data is utilized to describe this world based on quantum realism; Besides, big data discovers the parts of our economy and society that were initially ignored by atomic value, such as intangible connections, creativity and visions, community missions, future value, etc.; these parts are turned into wealth in the future quantum age by using blockchain and encrypted ownership authentication technologies. With the development of blockchain and quantum technology, digital economy 1.0, with its ambiguous data ownership, will be rapidly upgraded into digital economy 2.0 with clear data ownership. This is the trend. Obviously, whether it is 1.0 or 2.0, big data is always the major player. The description of big data with quantum realism will far exceed that of small data with Newtonian realism. In the postscript, Feng Han introduces his participation in the credit oracle project with the Fuzhou government and I hope they turn a new page for digital economy 2.0.

There is still a philosophical question behind the evolution of quantum science and quantum technology: is it ‘determinism’ or ‘indeterminism’? Feng Han believes that the debate between Einstein and Bohr about ‘whether God plays dice’ actually ended on the same point despite different routes. In 1933, Einstein clearly pointed out in his speech at Oxford University that the essence of quantum’s existence is “nonlocality.” In fact, the wholeness of nonlocal existence is ‘deterministic,’ just like the description of the wave function as quantum is ‘determined’ by the Schrodinger equation (similar to the Newtonian mechanics equation that can determine the orbit of the atom), but when we measure the wave function, it is localized, and the result of the statistical distribution of big data is random and ‘non-deterministic.’

What I want to say is: no one predicted that in the first two decades of the 21st century, the development curve of quantum science and technology will overlap with the blockchain, encrypted digital currency, and DeFi. However, this has happened, and it is indeed changing people’s traditional concept of wealth, transforming the structure of and reshaping forms of wealth.

If I were to suggest improvements to the book, the narratives in some chapters are too colloquial and the text looks overly complicated. Therefore, in future revisions, the author should consciously pursue simplicity and refinement of expression. Writing is truly an art.

Completed in Hengqin, Zhuhai on January 5th of 2021 (Lunar Calendar)

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