Is the POS mortgage model really progress?

Author: currency ring moth

The original title:Is the POS model really progress?

The PoS mode has been a hot topic on the blockchain, from ethereum's planned shift from POW mode to PoS, to the recent launch of Cosmos's main network, where Atom tokens are traded online. Even new information about the poka project keeps coming out. We all see that POS seems to be an inevitable choice, but today Blockbeats sees different voices in the market. Is this consensus mechanism of POS really a kind of progress?

Blockbeats sorted out the author's discussion on POS mode as follows. Listening to different voices from the market enables us to better maintain neutrality and think.

The author puts forward six ideas and then reads them:

1. & have spent & have spent POS does reduce system maintenance costs, but this reduction is not revolutionary. The pot calls the kettle black.

2. POS abducts holders of COINS by mining. If you do not mine, your assets will be reduced.

3. In POS, since mining has fixed sunk cost and marginal cost, the more COINS held, the greater the marginal revenue. Large and small household yields are not equal.

4. POS COINS have an opportunity cost because they need to be saved for days, during which they cannot be used for investment in other projects. If the opportunity cost is greater than the incentive to mine, people will not mine.

5. The self-increment property included in POS makes its actual value not equal to its par value, making it unable to perform monetary duties as an equivalent.

6. There is no force barrier of POS, so there is nothing we can do about the shanzhai currency, and the value will eventually be diluted. The POW - POS debate is certainly the hottest topic at the moment.

1. Does POS really reduce the use cost

This is the same idea as "electricity bills support bitcoin prices". The price of bitcoin is not proportional to the calculation force, and the price affects the calculation force, not the calculation force affects the price. Mine machine and electricity costs not nor can pass on to the currency of the user, if the currency is not enough to support mining electricity, miners can only from recognize unlucky bankruptcy liquidation, this is how natural selection, do the miners can also block the user said, my income is not enough to support electricity, in order to maintain the normal operation of my, you need to give me allowance? This is typical of planned economy thinking. The reality must be that some poorly equipped miners are forced to shut down first because they can't make ends meet, and then the rest reach a new equilibrium, a process that has nothing to do with the users -- in the bitcoin white paper, the fees are calculated without the "power" factor. The generation and development of POS cannot be separated from the concept of "cost reduction". POS supporters argue that POW miners are idling, wasting a lot of equipment and power on "meaningless" calculations. Long clip sums up this kind of concern for the country and people as "environmental protection". However, if the cost of production is not reflected in the price, then the cost is transparent to the user. For example, to produce two cars with the same price and similar quality, car A consumes 20KW of electricity, while car B consumes 15KW of electricity. Will this factor affect your choice? POW miners dig for money, driven only by profits. It has nothing to do with the environmental protection of the earth or human development. It has nothing to do with catching the four winds to fight waste. Miners are profit-seeking. Please do not place the burden of morality on them. POW takes advantage of this.

2. The more "cost-effective" security of POS has a price

"The essence of the workload verification mechanism is one CPU, one vote," nakamoto said in the white paper, referring to the force, not the terminal. I have 100 CPU calculation force, I have 100 tickets, you only have 1 CPU calculation force is only 1 ticket, obviously the number of tickets and mining machine performance is directly linked. While POS is a terminal one vote, regardless of the calculating power of the terminal, an old android phone and a super computer are equal before POS, which is the "IP vote" that satoshi nakamoto fears most. The difference between POS and POW seems to be the mechanism to maintain network security, but in fact, this mechanism is affected. For example, if two people compete to climb a mountain, their weight and physical strength are the same, can one person chop off a piece of his own flesh to climb faster? (sorry, that's a bad analogy) -- because he weighs less.POS ostensibly reduces the cost of system maintenance, but in reality it comes at the expense of system stability, just like cutting meat for a light mountain ride.

One of the new problems with POS, for example,This mining model kidnaps holders of money. It's not just "you can mine with your computer on and generate revenue," but "if you don't, you lose." If everyone turned on their computers, everyone would get 1% a year -- that is, everyone would get no benefit, just a 1% increase in prices. There's no doubt that most people will keep their phones on, so if you don't, you'll lose out -- prices will go up, but your wealth won't. So in order to maintain your wealth, you must always keep the boot on.

If one day 1% of the world's population used POS COINS, how many computers would be forced to stay on? Is it a waste to keep the computer on whether the owner is working or sleeping? And the waste isn't much less than the POW.

Do a simple analysis. Assuming that the initial total number of COINS in the system is M, the average rate of return of the system is X, and the people with M % start up mining, the system is set as mining income of 1%, and the system destruction commission is Y, then the average rate of return of the system is only related to the number of people starting up and the commission of system destruction. Because Y> 0, so the X< 1%.

(1) when X=0; At this point, the miner's profit is exactly offset by the cost of destroying the system. The non-miner is not affected and the system remains in balance. But it is clear that this balance is fragile, that it is almost non-existent, and that it must be reversed to or.

At that time, X< 0; As more and more users, system destroyed fee may cause gains more than mining, lead to more and more small X (note X value is negative) at this time, system to the total number of coin shrinking currency will rise faster and faster, a direct result of people want to dig, m %, at the same time, the development team will also modify the rules to reduce the handling fee, Y smaller, so this kind of situation can't last for a long time, must eventually be converted into (1) or (3); & have spent

At that time, 0< X< 1%; That is to say, no matter which situation starts, will eventually stabilize for the situation. At this point, if you start mining, you can get 1% return, greater than X; If you don't mine, the yield is 0, less than X. So what does X mean?

The so-called system average rate of return is actually the growth rate of the total number of COINS in the whole system. In the case of constant purchasing power (that is, regardless of currency price fluctuations), it is also the inflation rate of the system. Third, if you start mining, you can beat inflation and make a profit. If you do not start mining, you will be overtaken by inflation and real purchasing power will suffer. Anyone, then, must start mining, unless you are willing to pay the price of inflation.

In this case, there is no such thing as a POW. If A holds 10,000 yuan, it is obviously not worthwhile to open the computer for several months in order to earn 100 yuan. However, if he does not open the computer, his assets will decrease, so he has to leave the POS system. If some B holds a million COINS, even if it is worthwhile to keep a computer running 24 hours a day, and he beats inflation, then his currency's share of the total goes up automatically. Therefore, A is more inclined to leave the system, that is, to sell COINS, while B is more inclined to expand production, that is, to buy COINS, resulting in the situation of Evergrande. From this point of view, diandian currency aspired to the asset value storage function is premise-if you do not want your assets to shrink, you have to keep the computer open. In addition, the above 1% of mining revenue parameter comes from diandian COINS,In fact, the larger this value is set in the POS model, the more centralized it becomes

3. Marginal revenue and marginal cost

Tickets for a $100 concert can be bought for $10 before the start of the concert, not only because of the marginal benefit, but more importantly because the value of the tickets has changed -- the tickets you buy before the start of the concert will only get you the worst seats! On the other hand, if it costs 100 yuan to watch a concert on TV at home, but only 10 yuan to buy the program on the last day before the concert, what will people choose? In fact, the later a flight is booked, the more expensive it is, which is the best counter example. Although the flight is fixed, the earlier a customer orders, the lower the airline's scheduling cost (marginal cost). In the same way, if you buy a mining machine for 100,000 yuan and the mining machine has become a sunk cost, but you get the equipment and find that it costs 150 yuan for electricity to dig 100 yuan a day, would you still dig? If dig, can get 100 yuan of marginal profit every day really, but calculate electric bill this marginal cost, every day invert compensate 50 yuan, compensate more and more; If not, even if the previous 100,000 yuan lost, this is the best choice. It may be said that POS does not have a mining machine, so it will not lose if you do not dig, but as mentioned above, if you do not dig, you cannot beat the inflation of the whole system, which is also a loss. In addition, the number of days is an opportunity cost! If you save money for a certain period of time, it is equivalent to saving assets for a certain period of time, at which time the market interest rate is the smallest opportunity cost, which is also the sunk cost of POS mining. Already paid sunk cost, not dig mine affirmation is compensate, but small household dig mine also may run not to win marginal cost, left and right are loss, small household do not play ok? POS the last remaining miners can only be large, small can not survive.

4. Moral of the wise pig game

As long clip puts it, the relationship between large and small households is "a variant of the smart pig game". Size in essence is a kind of Nash equilibrium between families, such as in this article, the second, because of the small problems at a loss and income is not high, so when the small small enough, will tend to not dig, take over all the responsibilities of the maintenance system, over time, through the only large mining maintenance system. The reason for the variation is that in the intelligent pig game, the piglet chooses to wait, and the loser is the big pig; In POS, the small player chooses not to act, which is more beneficial to the large player, but suffers from the whole system --POS will become more and more centralized

5. What is decentralization

Obviously, it is not rigorous to prove the decentralization of POS by using diandian COINS with central inspection points. (many POS supporters believe that diandian COINS are the real POS model. Have you really studied POS and diandian COINS?) . Maybe one day diancoin.com will remove the POW and the central inspection point, regardless of whether it can be as stable as the past two years, or at least use the POW/POS+ central inspection point of the past two years to prove that POS is inappropriate -- since POS is right, what else should POW and the central inspection point do? This is clearly not an appropriate argument. Moreover, the account diversification of diandian COINS is exactly completed by POW. Once the POW is cancelled, it is hard to say what will happen. What is centralization? Centralization depends not only on the degree of dispersion, but also on the degree of independence, that is, how much each voting member interferes with each other.

POW mines do tend to cluster, but each miner in the mine is independent, and each mine is independent of the other, and no one can control the other. This is not centralization. On the contrary, in POS, the large family can eat the small family, the large family tends to buy money to expand production, the small family tends to sell money to stop loss and leave the scene, the final POS must be an oligarch scene. The so-called mining monopoly concerns, Intel will produce mining machine mining? Faced with the high computing power of bitcoin, attempts to monopolize mining will only fail. As no matter how much you rich, you can buy all the silver in the world (hunt brothers manipulation of the silver case), mill (calculate) is a kind of scarce goods, no matter how rich you how technology, you can't possess all the new output of mill, just attempt to monopolize the calculate force behavior will make mine machine goods, lead to calculate cost to fly to heaven. On the surface, the global mining machine is now worth 1 billion, but you really take 1 billion is absolutely not able to buy all the mining machine, 10 billion can not buy! At the very least, even if it did, the threat of a 51% attack would turn the miner into an instant wreck, a logical paradox that would guarantee that no one would do it -- and no one who wanted to.

6. Fairness of income under POS

POS supporters think basically, income is as follows: gain = cash amount x dig reward ratio (like bank interest), but actually benefit is this: income = cash amount x dig reward ratio - fixed costs a lot of people think that the so-called fixed costs is a computer or electricity cost, not a few money, so to ignore it. And this humble fixed cost is the death of POS. POS mining is not open the machine can be dug, and then shut down offline, may need to boot for a month, may also need to open for several months. Of course you can turn off your phone to save money, but the maximum number of days online can vary, and can even vary widely, and you're likely to lose a mining opportunity when you turn off your phone -- obviously the loss could be even greater.

If you hold 10,000 yuan and open a computer for a few days just to earn 100 yuan, can a 1% return really support your electricity bill? Therefore, the rate of return of large household in POS is absolutely different! For example, if you have a financial product with an annual interest rate of 10%, but no matter how much you deposit, you need to pay an annual management fee of 10,000 yuan, would you deposit it? If you have less than $100,000, you're not going to save it -- it's less than the management fee. If you have $200,000, you can get $10,000 in return, which is equal to 5%; If you have $1 million, you're going to get $90,000, which is the same thing as 9%; If you have $10 million to put in, you're going to get $990,000, which is equal to 9.9%. Obviously, people less than 100,000 won't participate in this financial product, and those less than 200,000 won't necessarily come because the interest rate is not high, so the remaining customers are all rich people. This is the case with the so-called large families of POS and the elimination of small families. The return on POW is equal to the holding power/difficulty, which is linear, and this is the same return for the big miners and the small miners. As for the so-called "exploitation of ordinary users by high-tech talents", isn't it natural? Is it normal to have a meal in a cauldron with ordinary people after more than ten years of struggle? This is the collective mentality. Through their own knowledge and ability to obtain wealth, no matter how profiteers are reasonable, not because ordinary people will not develop mining machine, do not allow others to develop mining machine to earn high profits. Not to mention that the microelectronics industry is a technology intensive profiteers industry, in fact, mining machine profiteers can not last long, from the original six months of futures to now a large number of spot, mining machine is walking down the altar. But POS cash was a monopoly, it is a system monopoly, even Einstein near-re-embodiment also can only to buy the last coin, of course he can also create a POS COINS, when the original shareholders, it must develop faster - if POS so easy to be copied and beyond and eliminated, and the POS digital assets, what value?

7. POS is more like equity than equityCurrency & have spent

As its name suggests, POS essentially simulates the structure of a joint-stock company: each holder, the corresponding shareholder, votes on the currency (or shares) held to determine the operation of the company and receives dividends for participating in the operation (no dividends for not participating). POS believes that those who hold more shares in the company for longer tend to protect the company, so they constantly choose the person with the largest stock accumulation (holding time x number of shares) to take turns as the company's CEO. It's a very clever solution to the problem of operating costs and security -- we just count our stocks and let the person with the most stake run it -- but it creates another problem: the inevitable centralization.

In the shareholding structure, equity is not only the storage of assets, but also the tool of asset appreciation, which is permanent. You can't use stocks as currency because you're spending not just the face value, but the intrinsic value added. In POS, the higher the currency price is, the higher the absolute value of the 1% dividend is, and the higher the value-added property is. The model of the POW is close to gold. When gold is used as a currency, it only has the function of storage and does not have the property of appreciation. In fact, no currency has the property of self-appreciation. In this point, POW is closer to currency. The price fluctuation and appreciation expectation of bitcoin at the present stage are only due to the fact that bitcoin is still in its infancy. When the market value of bitcoin is sufficient, the investment property of bitcoin will become small, just like gold and foreign exchange investment, which requires leverage. POW holders' reluctance to sell is also due to the expectation that the currency price will rise, but without the support of dividends, as the currency price rises, the expectation will decrease continuously and eventually fall below the market interest rate, people will tend to use and sell the currency, and the reluctance to sell will end. That is to say, in the state of POW, the higher the price, the lower people's reluctance to sell.

8. Another damus sword on the head in POS mode & & NBSP;

To say the least, if POS is viable, then POS has one more problem than POW, namely the dilution of value from competition from other POS. Unlike POW, which has a power barrier and bitcoin alone, POS offers no resistance to other competing currencies. Diandian coin was the first to use POS, but it was unable to fight back against the latest BTS. If one day Google were to issue a Google coin using POS, the BTS of Google's appeal would be equally powerless. If one day the fed says it's going to issue an American currency that USES POS, the fed's pull might knock Google to pieces. As long as the appeal is enough, anyone can establish POS COINS. The final result is that there is no upper limit for currency quantity and no lower limit for currency price, which will never get rid of the situation of ups and downs of banker's operating prices, and stable applications will not be generated.

Conclusion: progress is not equal to progress, innovation is not equal to development, they have never been necessary and sufficient conditions

Innovation is to be encouraged, but not for the sake of innovation, for the sake of difference. If you're going in the wrong direction, then every step forward is a step away from the goal. Many opponents of POS are not ignorant of POS. On the contrary, they think of something deeper. POS is not just a new distribution mechanism, nor is it simply more "green", "safe" and "fair". In fact, POS has completely repudiated satoshi nakamoto's decentralised architecture, the only form of digital currency that has come close to success. POS is not reform, it is subversion, from an open architecture to a closed structure. Let's think about it. Remember the title of satoshi nakamoto's paper? A point-to-point electronic cash system, we just need an electronic currency that can't be overissued, can't be double-crossed, can't be easily destroyed, that's all. Are those so-called "innovations" really worth knocking down the multi-billion bitcoin system and doing it again?

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