The formation of Bitcoin accounts requires a difficult calculation process. From the point of view of the previous article, we can see that any attempt to double-spend or change the accounts must pay the cost of electricity plus chip input. And miners don’t need any permission to mine. Anyone who has access to electricity and a network can have money. So even Bitcoin can be regarded as a participant in the free market by handing over accounting power to the free market, whether an attacker or a miner willing to make money. If an attacker wants to modify his books, it means he needs to compete with other anonymous players in the free market as a whole. Although on the surface this may not seem like a way to wipe out bad people, Bitcoin’s 10-year history has shown that highly reliable money networking can be achieved through free market competition.
How does liberal accounting apply to POS?
POS has always been a research area of scholars, because POS recognition is fast and less power-consuming. According to literature: On Stake and Consensus, POS that meets the following criteria has the opportunity to achieve a reliable money network.
- Nodes involved in bookkeeping are randomly distributed and therefore cannot collude.
- Even if they conspire, their conspiracy will not attack the POS system, because they also need to get their locked funds back, not lose money.
- The damage caused by their conspiracy is limited.
Another key detail of the paper is whether mortgaged assets can continue to be created in the system. If assets that need collateral must be purchased from outside, the system is still sound. But if the assets that the system needs to mortgage are created within the system, then the mortgaged assets are not worth money, so the mortgage is not worth money, so it can not be realized: potential attackers spend a lot of money to attack.
Obviously, the POS accounting method that meets the above conditions is also to transfer the right of accounting to the free market, thus achieving a highly reliable transfer and storage network.
- The system nodes need and only need to pledge their own assets, which means that they only need to invest money, and there is no other threshold.
- Accounting is the only way to divide money, and there is competition in itself.
- Tampering with books requires competing with other nodes, either colluding or taking out more asset mortgages.
- Conspiracy to tamper with books can hit the entire network, with pledged assets likely to depreciate sharply or even return to zero.
- The pledged assets can not be generated in the system, which means that the early participants in accounting have no other advantages except that the late participants get more income.
Now let’s see how Mixin Network practices this principle.
- Ten thousand Xin tokens need to be pledged in the first year of the main network node. After pledge, it can become a node directly and have the right to participate in accounting. The whole process does not need to vote, money, the Internet can be. It conforms to the definition of free market.
- The main network node can get the system reserved accounting reward, which is the average score of all the main network nodes.
- A transfer is validated by 2F + 1 node. So trying to tamper with the books requires buying other nodes or more tokens to become nodes.
- XIN token itself is ERC20 token with a fixed total of 1 million. It will not be converted to the main network, nor has it designed a suspension mechanism. Therefore, it can be known that the pledged assets can not be generated in the system.
How does collectivism keep accounts?
It needs to be recognized that collectivist agency accounting is the mainstream of society, just as opening a bank is not a matter of money, but of approval first.
Now let’s see how DPOS applies collectivism to accounting:
- Nodes need to be voted to participate in bookkeeping, not pledge, which means that the right to bookkeeping is vested in the agent of collective will, not in the free market.
- The pledged assets can be generated in the system and can be issued more.
- The conspiracy to tamper with the books does not require money, but requires the consent of most agents, not all voters.
It takes only three minutes for an EOS transaction to become irreversible, much faster than Bitcoin’s one-hour standard, but the long-term reliability of its books is equivalent to SWIFT inter-bank transfers, because they can freeze anyone’s assets with the consent of their agents at a small cost. Just as the United States can freeze dollar accounts at any bank now, the European Union can freeze any euro account.
Liberalism or collectivism?
Bitcoin achieves long-term Book Security by giving the right to keep accounts to the liberal market, thus attracting more assets. More assets are stored in the Bitcoin network, which also pushes up the price of Bitcoin and makes the network stronger. This is an incredible but real positive cycle. Liberal market is the source of this positive cycle, and Mixin Network, which also uses free market accounting, will achieve this positive cycle, with higher prices and stronger networks.