There are 4 layers in a blockchain. Let's break them down.

Blockchain Layer 1: State of Account

The first layer is called "State of Account" or Value Registry. In accounting terms, this is a general ledger. Records made in a general ledger are not made by a single user, but simultaneously by many users. This is the State of Account in layer 1.

Blockchain Layer 2: Programmable Money

In layer 2, Blockchain has its own native assets or native coins, such as Ethereum Blockchain. Ethereum Blockchain is a State of Account or Value Registry or Programmable Money. Money has become a computer programme.

Blockchain Layer 3: Protocol Layer

The third layer of blockchain is called Protocol Layer or Smart Contract Layer. Smart Contract is in Ethereum Blockchain. As money is a computer programme, we can programme it to provide financial services. It is a computer programme, not a note.

What it means is we can provide loans and borrow through the Computer Programme. Code is King.

Transactions With No Intermediaries

Without intermediaries, we can fundraise through a Computer Programme.

Initial Coin Offering (ICO) is done without an intermediary. We can exchange currencies from digital Yuan to digital Baht without a medium or a central body. This is instead done through Decentralized Exchange Protocol.

Decentralized Exchange Protocol

These are all Computer Programmes that are written on the Smart Contract. This has given birth to DeFi, or Decentralized Finance; financial services with no intermediary.

In the third layer or Smart Contract, we can programme anything, limited only to our imagination. This presents opportunities for financial innovation. It is an open system within which people can write Smart Contract codes which run by themselves, thereby creating more efficient financial services, with huge potential for innovation.

We can now transact in many new dimensions, not previously possible because layer 2 is a unit of account. It has become a Computer Programme.

Blockchain Layer 4: Application Layer

The fourth layer is the Application Layer. It's like Bitkub or Coinbase. It's the application that is accessed by users.

Previously, our financial systems were decided in closed door meetings. Only a few would decide what types of financial services the majority of people will have access to. There were very few decision-makers. It was a closed system.

Now we are entering the Open Financial System where innovation comes from everywhere. Think of it like an Application Store. Steve Jobs did not have to say iPhones can call taxis, order food, and transfer cash globally. People can launch applications to download from the Application Store.

The Open Financial System is the future. Anyone who wants to innovate can offer financial services to the public. Anyone can write code now and the person who owns the application can decide which codes to deploy and offer as global financial services, without the need for any closed door meetings.

Everything can be run with code, with a computer programme, without the need for any intermediary, because money is a computer program.

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