"Blockchain Society": Alternative Profit Methods of Open Source Software and Fuel Currency Theory

Crazy Commentary : This article is excerpted from "Blockchain Society: Decoding Blockchain's Global Applications and Investment Cases". Through the outline and detailed description of the blockchain society blueprint, it analyzes the most realistic blockchain global applications and investment cases, and conducts in-depth explanations of blockchain's investment and financing data, legal supervision, and its impact on the future. It is currently sold on major e-commerce platforms.

Author: Prince Gong

How to make money from blockchain projects

Since one of the great characteristics of blockchain is decentralization, no centralized individual or organization can fully control the blockchain project, so many people cannot understand how the blockchain project itself can make a profit. Usually, a blockchain project is often a program, and it is an open source program, which means that anyone can copy and modify it. Among all the blockchain projects, the founder of Bitcoin, the most famous one, has never appeared in public despite his huge wealth, and has not gained any benefits from it.

Many people think that the development of blockchain projects is all for interest and ideals, and is completely selfless. For those who have never participated in blockchain projects, especially those who have not participated in projects other than Bitcoin, it is difficult to understand why someone would develop blockchain technology.

If these people participate for ideals, it is quite worrying, because an industry needs to get the widest support, and it must be for commercial interests. Without commercial interests, it is difficult to support the development of a huge industry just by relying on so-called ideals or interests.

This is indeed the case. Satoshi Nakamoto, the founder of Bitcoin, is just an exception. Although the founders of many other blockchain projects are also full of ideals and passion, they have never denied their business intentions, and many people work hard for this intention.

But how open source software makes money is really a puzzling question. Open source software is software with open source code, and anyone can download and view its entire source code. And it can be modified and recompiled unconditionally or conditionally. Since the day when the program was created, there should be open source software, which is often considered a symbol of freedom and a symbol of the spirit of sharing. However, in general, this also means that it is not commercial software, considering that the goal of commercial software is to make a profit and charge fees, and since anyone can download and study open source software for free, naturally not many people will pay for it. Therefore, as long as it is open source software, it is generally non-profit software by default.

Blockchain projects are often open source software. Bitcoin is a typical example of open source software. Many people can download it for free, and many people have modified and recompiled it to become some new digital currency software. Most other pure blockchain projects are also open source. Since open source software is inherently associated with non-commercial software, it is inevitable that many people will question how blockchain projects like DAO can make a profit.

However, it is the emergence of blockchain technology that has given open source software a way to make money for the first time. This way is the fuel currency method, which has created a new profit model for software and may even change the way companies make profits.

Fuel Currency Theory

The so-called fuel currency theory is that in a pure blockchain project, that is, a blockchain project in the form of DAO and DAC, there is a token. Anyone who uses the services provided by the project will be required to use these tokens to pay a certain fee (usually a very small amount). As more people use it, there will be more demand for these tokens.

Because at a certain moment, the number of tokens must be limited (in DAO. No one can modify the number of tokens at will), which causes the appreciation of the token price. These tokens are often in the hands of project developers and early investors. In order to increase the value of the tokens they hold, those developers naturally have the motivation to develop the project more perfect to attract more people to use it. And those early investors, in order to increase the value of the tokens they hold, are also motivated to voluntarily promote these projects and let more people use the blockchain project. Because as long as more people use the project, there will be more demand for tokens, so that developers and early investors can profit. In this way, every time you pay a certain fee to let the system provide a certain service, it is a bit like refueling a car. The car needs to keep running and needs to keep adding fuel like gasoline. Therefore, this method is generally called the fuel currency method.

It is precisely because of the emergence of the fuel currency method that open source software based on blockchain technology can also make developers and investors profitable. However, unlike the traditional way of selling software or licenses, it must be based on allowing more people to use it, so that the initial developers have the motivation to continuously improve the quality of the entire system, and investors also have the motivation to become a voluntary seller and work hard to promote the scope of use of the system. From this point of view, this completely constitutes a positive cycle.

Ethereum is a typical example of the fuel currency method. We can think of Ethereum as a low-level operating system similar to Windows and Android in the blockchain world. In Ethereum, many computers make up the nodes responsible for the calculation of various smart contracts. On top of Ethereum, various applications will be built, and these applications need to call the underlying computing resources of Ethereum to execute smart contracts when performing various tasks and providing various services. Those nodes that provide computing services are not provided for free, they charge fees, and the fees are Ethereum's tokens - Ethereum (Ether), so those who use the resource application need to pay Ether. In Ethereum, many Ethers are in the hands of Ethereum developers and early investors (Ethereum obtained early funds through crowdfunding, and they sent a certain amount of Ethers in proportion to the funds investors participated in the crowdfunding). In Ethereum, this token used to pay for services is called Gas.

As more applications are built on Ethereum, the more resources those applications will call, and the more ether they will need to pay for. This will inevitably lead to a greater demand for ether, making the price of ether circulating in the market higher and higher. From the first day of Ethereum's release to the end of this book, although the price of ether has been fluctuating, it can be found that as Ethereum is increasingly recognized, the price of ether is also gradually rising.