The Power of Accounting-On the Mathematical Consensus of Blockchain and the Construction of Human Society

Harvard University Visiting Scholar Blockchain BTC Series Research Report No. 8:

Part 1: Currency is bookkeeping


In October 1996, Kocherlakota, the former president of the US Federal Reserve Bank Minneapolis branch, published a paper called “Money is Memory” in the bank’s internal report.

Two years later, the paper was officially published in the ” Journal of Economic Theory”, an authoritative journal of economics .

In addition to being a Fed, the author is also a natural scholar. He went to Princeton University at the age of 15 and graduated from the University of Chicago with master Hayek and Friedman. Dean of the college.

In his article, he put forward such a point of view: to understand currency as a primitive form of memory of past transactions (a primitive form of memory of past transactions).

Then, he used 36 pages of nearly 20,000 words of long-term exposition to prove from an academic theory that all functions of money and memory can be completed. Sometimes, memory can replace currency to fulfill some functions that currency should achieve but cannot achieve. Furthermore, he believes that the essence of money is memory.


Coincidentally, has taught at Yale University, the London School of Economics anthropologist David · Graber ( David Graeber) in his book “Debt: the first 5,000 years” (CITIC Publishing House 2012.11) “Debt: The First 5,000 Years) In the article, it challenges traditional economic theories, thinking that currency does not appear as a substitute for bartering. It was originally in the form of a metric, an abstract, and it also serves as a relationship between human beings. (Debt and obligation) appeared. Before 5,000 years, humans were already using a complex credit system rather than just bartering for commodity transactions. The credit system existed long before the emergence of coins and currencies.

He pointed out in the book that in an era when there is no money, people are not “bartering”, they give each other gifts, sometimes in the form of tributes, sometimes get rebates later, and sometimes they are pure gifts. Currency did not appear to facilitate transactions, but was created by clergy of ancient countries such as Egypt or Sumer to collect taxes or calculate wealth more efficiently.

David · Graber anthropologist, not only from the monetary and economic point of view to study the relationship between debt more related to the different religious and ethical relationship subvert had a lot of classical theory is one currency and debt history alternative interpretation.

“Debt the first 5,000 years” from 3500 BC talk recalled the human society debt history of 5,000 years Graber whole in 5000 is divided into five stages early agricultural empire BC 3500 – BC 800 years ) ,  Axial age BC 800 – AD 600) ) , the Middle Ages AD 600 AD 1450  the last of the big capitalist Empire AD 1450-1971 years and the modern financial world ( 1971 So far . In these different times Graber analyzed these different periods the characteristics of debt relationships between people.

In his view credit and debt has become way wealthy profit and religious institutions dominate power carried out under the required credit in the country the currency as a tool to maintain a military and political force was born in the past 5,000 years virtual currency and real money era were A great alternation. At different times the role of currency is also different .

The previous 4,000 years money is the product of state or government to control the market economy, people’s livelihood, such as war , the main role of money is used to measure debt use the money it like a huge mind account system For example, in the Mesopotamian plain in 3000 BC , the Sumerians used mud blocks to count and develop various forms. When the debt crisis and lead the war the rulers will destroy these books and the land returned to its owner in order to relieve the crisis.


Greber’s statement that money originates from debt and from bookkeeping is supported by Professor Yu Zhonghua of Liaoning University’s “Loan and Influence of Ancient Two Rivers” (Northeast Normal University Journal, 2009, Issue 6) .

Yu Zhonghua clarified the following issues and their interrelationships through the examination of currency lending during the period of the second dynasty of Ur in 2111 BC to 2003 and the borrowing of temples in the Babylonian period from 1894 to 1595 BC. ① The main body of the loan: merchants, temples, palaces; ② the form and purpose of the loan, including interest and interest-free conditions; ③ the use of the loan, including productive, consumer, and special uses: such as redemption of hostages.

He found that during the period of the Third Ur Dynasty, social and economic progress has been made … The main financial development of this period was the emergence of professional organizations. “We know that in the Lianghe River Economic Archives, the Sumerian name of a professional who trades commodities and lends money and barley is dam-gar, which we usually translate as a businessman…. During the civilization of the Lianghe River, trade merchants and loan sharks The division of labor of the merchants has not been established. In the archives of the third dynasty of Ur in the religious and economic centers of Sumer and in other cities, we have found the archives of high-profit loans and barley of dam-gars But they have not yet found their overseas trade files. In order to facilitate the understanding of the financial lending and profit-making functions of these lenders (dam-gar), we call them loan sharks in this article. Dam-gar is first a businessman and an intermediary for lending. These money merchants should be the earliest bankers.”

In the early stages of human development, temples often had the function of borrowing and lending. This phenomenon existed in many early civilizations. The situation in the ancient Lianghe River basin is also an obvious example. As one of the earliest financial activities in human history, the ancient two river basins have reached a very high level of borrowing, which has a relatively complete form, a wide range of types, clear and flexible interest rates, and there are legal restrictions and government management , A professional system has been initially formed. It had a huge impact on the social life of the ancient two river cities and was the source of the development of currency and finance in the Western world.

Professor Wu Yuhong of the Northeast Normal University also mentioned the account data and analysis of the relevant loans in the “Research on the Archives of the Bankers of the Ninpur Banking Industry in the Third Ur Dynasty” (“Ancient Civilization”, 2008, Issue 2).

Combined with Wikipedia and other relevant materials, we found that the “gate of God” Babylon City rose in 2000, and the oldest and complete Code of Hammurabi was born. The priests of the Babylonian temple set up lending institutions to repay in kind and gold and silver. It is paid monthly in installments and the interest is 20% and 33% respectively, and the accounts are engraved on the tablet.


From the above research, we can draw a new point of view: the currency confirmed by the traditional economic theory in the past is a special commodity, because people have complex needs for the exchange of goods, in order to make transactions more convenient and faster, thus The theory of the intermediary currency that created the transaction is not correct.

Textual research shows that there is no hypothetical barter period in ancient or primitive society, but that acquaintances borrowed from each other, and a credit society existed by way of bookkeeping.

The beginning of money is not the exchange of things, but the accounting of the temples in the two rivers in order to calculate wealth and tax more effectively.

In the era of no money, people are not “bartering”, but “reciprocating gifts” in the form of tributes, sometimes get rewards over time, and sometimes they are pure gifts. It seems that this can also be verified from the tributary king city of my country and neighboring countries.

In fact, before the emergence of coins, currencies, precious metals, shell coins, etc., people had long begun to tie ropes to keep accounts and compile mutual accounts.

In 2004, when I was the Deputy Minister of the Propaganda Department of Ningxia, I also saw with my own eyes some of the carved stone accounts in the more than 5,000 rock paintings of the Hebi Mountain, more than 3,000 years ago. All these show that the credit system, the relationship between debt and obligations of people predates the emergence of currency.

So we can conclude that the essential attribute of currency is bookkeeping. I think it is more accurate and appropriate to translate ” Money is Memory” as “Money is Bookkeeping”.

Aside from the previous tedious theoretical proofs and empirical investigations, we can also simply infer.

At the beginning of creation, no currency has been generated , and the initial value of all accounts is 0. When people want to start a commodity transaction they are recorded in the accounts of both the buyer and the seller . The seller writes down the asset +1 on the ledger then the buyer writes down the debt +1 When the seller needs to buy something next time he writes down the debt +1 write down the asset +1 in the other party . In simple terms it can even be understood as balance sheet + cash flow statement.

Historically, the trade of Venice in the water city was relatively developed, and the manufacturing, shipbuilding, and money industries were also prosperous. Even the taxes of the Holy See and various tributes were stored in private banks in Venice and Florence. There is an urgent need to create better bookkeeping methods to record and create credit. Therefore, the double-entry bookkeeping method came into being, and in 1211 Florence used it to make accounts on parchment.

In 1494, Italian scholar Pacioli published in Venice the originator of accounting, A Summary of Arithmetic, Geometry, Ratio, and Proportion, which systematically introduced double-entry bookkeeping. And put forward the main points of bookkeeping: “Business is responsible behavior, not just making money. Accounts must be fair and reliable.”


“Money is bookkeeping, and banks produce credit for the market economy.” This is also the reality today.

Zhou Xiaochuan , the former governor of the People’s Bank of China , pointed out in a speech at the “Caixin Summit” in 2020: “Taking China as an example, cash notes account for only 5% to 6% of the entire currency, and others are shown in Bookkeeping.”

Because of the need to handle various complex accounts, financial institutions are almost the largest buyers of IT technology, that is, users. It can be viewed from four aspects: first, computing power. From the early computers to the current cloud computing. Second, storage capacity. The financial industry used to be the largest purchaser of storage equipment. Now because of audio, video, voice, etc., this information occupies much more storage than structured numbers and text. The financial industry is no longer the largest user of storage devices, but it is still an important user. The third is the network. The financial industry is highly dependent on the Internet. In the early days, it was communication and remote communication. Actually everyone knew that it was also a network, but the age was different. The fourth is the database. The financial industry is also almost the largest database user. Of course, there is no longer any mention of database users, and big data.

In fact, even if Governor Zhou Xiaochuan mentioned the 5% to 6% cash in addition to the accounting symbol , although it can be seen and felt, it is equivalent to accounting in the background of the Central Bank.

Columbia University visiting scholar Han Feng shared the theme of “Blockchain Wealth of Nations” that he was about to publish by the Machinery Industry Press. “Wealth is not an object, but a global credit consensus.” “Accounting” made a comprehensive and detailed elaboration.

Han Feng believes that modern banks reproduce credit resources for the global free market. The bank’s credit guarantee mainly relies on the construction of luxury buildings in expensive areas. Banks do not pay attention to individuals and mainly provide services for enterprises. The credit of the US dollar stems from the US economy, and the strength of the US economy is Wall Street’s complete financial and legal framework, as well as institutional factors such as freedom of speech and gun possession.

I agree with Han Feng’s statement and add two points:

1. Bank access licenses are strict around the world, because they must be held accountable to the public and must bear social responsibilities, which also makes the government afraid of his running risk. Therefore, the bank’s capital is often 10 billion or 100 billion to maintain its solvency, liquidity and reserve to the central bank.

2. The bank must have a strong risk control system, including talents and technology. My personal experience is that although it has always been a very luxurious building, due to factors such as the will of the chief executive, the level of supervisors, the buying of people, and other factors, the bad debt ratio of CITIC Bank in the past was also very high. When I was assistant to the president of the CITIC Head Office in 1998, the head office resolved to spend 28 million yuan to ask McKinsey to conduct a detailed investigation of the whole bank, and then formulated a new risk control process. When I was the president of the Chongqing branch in 1999, the new The specification is officially implemented. Immediately, the bad debt rate fell.

Zhou Ziheng, a researcher at the Chinese Academy of Social Sciences, in his book “Accounts -The Road to New Economy and New Finance” (Social Science Literature Publishing House 2017) believes that from the “big explosion” in the industrial era to the “big deal” in the Crypto network era explosion”. It has become a local fact that transaction efficiency exceeds production efficiency, and it will grow into an irreversible trend: it will be a fundamental change in the overall process of social history.

This change was led by the revolution in the smallest and most basic unit of the social economic system, the account.

In the future, the account will become the source and storm eye of the entire economic and social transformation.

After combing and analyzing accounts, account relationships and account systems, he pointed out that the huge changes in the account system are the actual support points of the Crypto network economy and observation points for future development.


 In summary, from the theoretical research of these scholars at home and abroad, and the actual operation of currency, we can further confirm that currency is a bookkeeping symbol, pure credit, and not a conclusion of a special commodity.

It may be more intuitive if you keep the bookkeeping in a relatively closed system. For example, the points awarded by airlines to members can be redeemed for services or goods on the account. Such points can also be regarded as a special currency between airlines and customers. There are also commercial papers issued by “internal banks” and financial companies of large enterprises , which can also be regarded as an internal currency issued within the enterprise group or between upstream and downstream industry chains.

In addition to cash ( 5% to 6% of all currencies ), RMB is reflected in the deposit as a bookkeeping symbol. Cash can also be understood as a chip for national exchange, a voucher or a fixed-value bookkeeping symbol.

The central bank obtains a mint tax by creating base currency, which is equivalent to occupying long-term unpaid funds or resources nationwide. This is the basic credit that the central bank produces with state power.

The basic currency, also known as the monetary base (Monetary Base), strong currency, initial currency because of its ability to multiply or shrink the total money supply also known as high -powered money (High-powered Money) refers to circulation The sum of cash held by the public outside the banking system and deposit reserves held by the commercial banking system (including legal deposit reserves and excess reserves). It is a debt certificate issued by the central bank , which is represented by the deposit reserve of commercial banks (R) and the currency held by the public (C). In the report of the International Monetary Fund , the base currency is called Reserve Money including the central bank’s currency issuance (M) and the central bank’s guaranteed bank debt (deposit reserve , R). The base currency is the basis by which the entire commercial banking system creates deposit currency and the source of the multiple expansion of deposits in the entire commercial banking system.

In terms of usage , the base currency is expressed as cash in circulation and reserves for commercial banks. In terms of quantity , the base currency is composed of four parts: the legal reserve of the banking system, excess reserves, cash in stock, and cash held by the public outside the banking system. The formula is:

Base currency = legal reserve + excess reserve + cash in bank system + cash held by the public

Commercial banks rely on their own strong capital, licenses, risk control talents and technology, and show off their magnificent buildings. They rely on currency multipliers to reproduce the credits required by the entire social exchange, that is, M1 and M2 except for cash . It is also reflected in the balance sheet as a bookkeeping symbol for bank liabilities.

M0: cash in circulation, ie cash circulated outside the banking system;

M1: Narrow money supply, that is, M0+ demand deposits of enterprises and institutions;

M2: Broad money supply, that is, M1 + fixed deposits of enterprises and institutions + resident savings deposits.

Currency is a bookkeeping symbol and a letter of credit, not a special commodity that we were instilled or misled in the past.

This bookkeeping symbol is actually a human nature consensus reached by the people across the country. Its validity or legal compensation is defended by the state. This mechanism includes the People’s Republic, the Constitution, the government, the military, the judicial system, and the financial system.

Cash is nothing more than a fixed denomination chip that can be exchanged for goods and services at any time in this region or country.

The second part, the construction of human society is also accounting


Whether we can generalize. Pushing the concept of currency as a bookkeeping symbol to the political, national, military, historical, legal, cultural, ideological and other aspects of human society? Can human society be built with accounting and human consensus?


The famous historian Huang Renyu had an extremely legendary experience. He serialized celebrity biographies and hand-painted portraits in the “Hunan Daily” at the age of 14 and transferred to the Central Military Academy from Nankai University. medal.

After leaving the army, the major went to the United States to study for a doctorate. After graduation, he taught at the State University of New York. In 1979, his “Great History View” masterpiece “15 Years of Wanli” was published at Yale University Press.

The unique feature of “Fifteen Years of Wanli” is that it jumps out of the general scholar’s rules and regulations, and from the perspective of social finance and tax account management, it points out the original workshop management like backward running accounts. It has completely failed to adapt to the reality of a vast range, a population of about 150 million, and a relatively developed production and trade. He pointed out: “China has a large territory and complicated circumstances. The Ming Dynasty adopted strict centralization, and the policy policy was not focused on advocating and supporting advanced economies to increase national wealth, but protecting backward economies and maintaining the security of the dynasty in a balanced manner. Zhu Yuanzhang personally instructed that the people should not pay tax in kind to the warehouse, and directly supply it to the sergeant’s family, and the sergeant would no longer pay the military pay. Advancement, then the banking and insurance industries will be created in response to objective needs, and business organizations and laws will also develop. Each region can communicate with each other, and in the future, it can divide and cooperate according to its local special circumstances. And to develop its production technology. Western European countries have moved in this direction in the 14th century, Japan has also been in the end of the Tokugawa Shogunate. The Ming Dynasty’s fiscal and taxation system was out of touch with the development of the private economy. Twenty years in Wanli ( 1592), Shen Bang of Zhixian County, Wanping County, Beijing claimed that he would pay 27 different institutions every year, but the total amount would not be two-for-two in silver. Similarly, the whole country was covered with this short-distance supply line. In the past, the statistics were received side by side, and there was no framework. The statistics presented were often written in paper, so that the above-mentioned tax rates varied. This practice of maintaining a backward agricultural economy and unwilling to develop business and finance This is the main reason why China has evolved from the advanced Han and Tang Dynasties to the backward Ming and Qing Dynasties worldwide.”

Huang Renyu actually put forward the “Crypto account management concept”. A stable and mature business society needs to have the ability to calculate and record the entire social resources. Any assets should be inherited, transferred and delivered to the trust. Can be updated in time. Only in this way, all levels of social material life, whether private or public, can be handled numerically. The exchangeability of wealth is conducive to the accumulation of wealth and creates a dynamic environment. (“Account, Digital Management and Data Meaning”, Zhu Jiaming, 2017)

Huang Renyu went to Cambridge University in 1972 to participate in the “History of Science and Technology in China” chaired by Needham and said: “… There are roughly three types of articles writing capitalism. One type focuses on the evolution of production relations (such as Marx) … One type focuses on the spirit of capitalism…. There is also a type that focuses on the transformation of the natural economy into a financial economy.”

Huang Renyu believes that capitalist main production needs three points: ( 1) the expansion of the relationship between credit accounts; (2) the role of professional managers; (3) social sharing of various management technologies. The first point contains the free flow of market economy, financial market and capital. The second point is actually the separation of shareholders and professional managers, professional managers are free to choose. The third point is the so-called “capability of capitalism”, which is the free flow of information.


If we further understand the first point as: “Form a wide range of trust and cooperation”, then the last two points, mutual trust between shareholders and professional agents, as well as technology sharing, law, contract, accounting, accountability, etc. can be Included in “Widely Forming Credit Cooperation”.

How to form this kind of extensive credit cooperative relationship?

The foundation is of course “Crypto management”, a modern accounting system based on double-entry bookkeeping.

For social micro-cell companies, the balance sheet invented and evolved by Venetian merchants is extremely important. It shows the economic resources and distribution controlled by the enterprise on a specific date, the existing obligations undertaken and the owner’s requirements for net assets. It can explain, evaluate and predict the long-term solvency and capital structure, financial flexibility, short-term repayment ability, corporate performance, etc. of an enterprise.

Similarly, from a macro perspective, the country also needs a balance sheet to record the accumulation of assets and liabilities in all accounts, mainly companies, including government, residents, etc., showing the country’s bottom line at a certain point in time, and using this to predict the current economic activity against The impact of future economic results. It can also long-term costs of short-term economic policies and structural factors were personalized , but also help central planning local finance, and to help determine the national currency internationalization and the impact of opening up the capital account of the balance of payments .

The balance of payments is a systematic record of every international economic transaction in accordance with the principle of double-entry bookkeeping, where there is a loan and a loan. This bookkeeping principle requires that debit and credit records should be recorded simultaneously for each transaction. The lender records the decrease in assets and increase in liabilities; the debit records the increase in assets and decreases in liabilities.

The standard composition of the balance of payments includes two parts: current account, capital and financial account.

It is an important tool for balance of payments accounting. Through the balance of payments, it can comprehensively reflect a country’s balance of payments situation, balance of payments structure, and changes in reserve assets. In order to formulate foreign economic policies, analyze the basic economic factors that affect the balance of payments, and take corresponding measures Provide the basis for the regulatory measures and provide basic information for the relevant foreign parts of other accounting statements.

The combination of the national balance sheet and the balance of payments has laid the foundation for “national Crypto management and account management.”


From a broad understanding, the author thinks that other constructions of our human society besides the most important economic foundation, such as religion, ideology, state, constitution, military, history, law, culture, etc., can be considered as a kind of bookkeeping.

This kind of bookkeeping is based on the consensus of a country or an ethnic group. This consensus may be made by the military, or it may be implied by religious preaching and lineage inheritance.

The change of dynasty in ancient China can be described as tearing the account book. Many of the previous consensus, contracts, official positions, and ideologies may be completely torn and changed, even cities and palaces may be burned, the capital may be moved, and the borders will be changed.

There are too many examples. For example, the emperor Burning of the Books, a change in Spring and Autumn contending ideas, our innovation environment, and the central centralized feudal feudal system change, and unified weights and measures, and so on; and Liu Bang entered the Xianyang pledge to scrap the Qin Dynasty complicated tyranny; Liu Che Then “dethroning a hundred schools and respecting Confucianism alone”; the Tang Dynasty also advocated Buddhism… the previous dynasty was not easy. You hanged the thorns and spurned a single official, and the new dynasty immediately returned to zero, even causing death. The court gave you a state governor from Limin in a state. Even if he had no virtues, you could only bow your head and admit it.

The same is true abroad. Washington led the militia to defeat the independence of its home country, which is a bit like economic disintegration leading to a big division; the British referendum to leave the European Union is also to split up the days of the split, not to be dragged down by the big family of different people.

Professor Liu Ruihua, director of the Department of Economics at Tsinghua University in Taiwan, once told a fable-style story: It is said that before Socrates was about to die, the disciples went to ask the teacher what he had to explain. 

The third part, the authenticity and consequences of accounting 


These accounting and these consensuses have built up our present colorful human society.

We are also proud to find that apart from pride, the consensus of human nature based on carbon-based life has limited credibility, often ass commanding his head and being kidnapped by interests.


Microcosms like corporate books are often falsified.

Not to mention ordinary companies, even publicly-listed and strictly-regulated listed companies are often fake. Zhangzidao scallops collective run last year, and this year may be full of sea cucumber will be the night away, an investigation report, had also joined the year before abalone foot; Fortunately, the recent exposure of Swiss coffee, 2.2 billion yuan false trading case, his boss Lu Zhengyao to cook the books It is also a batch copy. From the car rental in Shenzhou to the excellent car in China, three consecutive listed companies have made their own money.

In early 1996, when I exchanged views with Mr. Dai Lining, the executive vice minister of the Ministry of Finance and director of the Securities Regulatory Commission of Taiwan who came to Beijing to participate in the “Securities Market Seminar”, he also heard interesting facts about bookkeeping circulating in Taiwan: “1 +1 is equal to how much, if you ask a philosopher, he will close his eyes and meditate for a while, and then tell you, it may be 0, or infinity; if you ask an engineer? They took out the calculator and pressed a few keys , Read to the screen, the number equal to 2.000000, depends on the number of calculators; if you ask an accountant, he will lift his head from the account book, his eyes glance at you from the frame of the glasses, and then ask back :”How much do you want? “(“Disciplined Liberalization-Interview with Professor Dai Lining of Soochow University in Taiwan” Hu Dinghe, “Reform”, No. 2, 1996).

Enron was an energy company based in Houston, Texas, USA. Before its bankruptcy was declared in 2001, Enron had approximately 21,000 employees and was one of the world’s largest power, natural gas, and telecommunications companies. In 2000, it disclosed a turnover of US$101 billion. The company has been selected as the “Most Innovative Company in the United States” by Fortune Magazine for six consecutive years. However, what made Enron famous all over the world is that this company with hundreds of billions of assets went bankrupt in 2002 Financial fraud scandal.

Before Enron announced its second-quarter financial report on October 16, 2001, Enron’s financial report was welcomed by all investors. Look at Enron’s past financial reports: In the fourth quarter of 2000, “the company’s natural gas business tripled in growth, and the company’s energy service company’s retail increased fivefold”; It’s 21 consecutive quarters of earnings growth”… At Enron, the unit of measure for business growth is not a percentage, but a multiple, which makes all investors smile. In the second quarter of 2001, the company suddenly lost money, and the loss was as high as $618 million!

Then the cooperative company, which had been hiding behind Enron, began to surface. After investigations, most of these partnerships were controlled by Enron’s senior officials, and Enron’s huge loans to foreign companies were often included in these companies and did not appear on Enron’s balance sheet. In this way, Enron ‘s huge debt of up to $ 13 billion will not be known to investors.

Over the decades of reform and opening up, even the oil we ate has been falsified. Ditch oil and other parts of the country are everywhere. The vendors are well aware of it, and they are constantly prohibited.

From March 2010 to July 2011, Henan Wellcome Oil Co., Ltd. purchased “Gutter Oil” from Shandong Jinan Green Biological Co., Ltd. and sold it after blending with genuine edible vegetable oil in a certain proportion. The case produced and sold nearly 8,000 tons of “ditch oil”, with a case value of more than 64 million yuan.

There are also food frauds in Japan. In 2017, a restaurant selling “eel rice” stated that the eel was produced in Mikawa and Shizuoka, Japan, but it was actually detected from China.

Corporate fraud is the same for individuals, mainly due to tax evasion and tax evasion and underpayment of personal income tax. The acting celebrity circle has Liu Xiaoqing in the front and Fan Bingbing in the rear.

Fan Bingbing in the film ” bombing ” film crew during the actual take paycheck 3,000 million, of which 1000 Wanyuan tax has been declared, and the remaining 20 million yuan to split points contractually evasion of personal income tax 6.18 million yuan, pay less business tax and surcharges 112 million, co- gauge 7.3 million yuan. In addition, Fan Bingbing also identified and it served as the legal representative of the company less taxes paid 248 million yuan, of which tax evasion 1.34 million.

Foreign countries are no exception. In 2014, South Korean media broke out Song Huiqiao’s tax evasion. According to the data of the Prosecutor’s Office and the Seoul National Taxation Office, Song Hye Kyo has paid 2.557 billion won (approximately 15.41 million yuan) in taxes that have not been paid normally after the reduction of declared income for three years from 2009.

If micro-level and grass-roots enterprises and individuals may be fraudulent, what about the “national balance sheet” as their cumulative sum ?


In June 2016, the National Bureau of Statistics had exposed on its official website that Henglan Town, Zhongshan City, Guangdong Province was statistically fraudulent. The statistical data of most industrial enterprises in the town are fabricated by the local government staff in the office, and then the false data is filled into the enterprise questionnaire and reported in the name of the enterprise by telephone dial-up Internet access. This has resulted in at least 6.3 billion yuan of moisture in local industry statistics. Relevant local leaders did not stop it when they knew the data was falsified.

Time goes back to the 1950s and 1960s, and the large amount of fake water is even more dazzling.

In 1958, the country decided to “catch up with Britain and the United States,” and steel output must be more than doubled from 1957. It also proposed “steel as the platform”, men and women, old and young, regardless of industry, joined together. Ten million increased to 60 million. Every household must turn in iron pots, iron locks and other iron tools to make steel in the homemade blast furnace in the countryside, and millions of blast furnaces have been built. Without fuel, cut the forest. My hometown is high in forest and dense, and Huaying Mountain, where the two-gun old lady guerrilla was chopped off, now only bushes remain. Jinyun Mountain, the first batch of national-level scenic spots and protected areas, was protected by He Long’s speech.

At that time, the grain yield per mu was only a few hundred catties, but everyone was earning their performance and put “satellite”. “Tianjin Daily” Dengshuanglin Farm produced more than 100,000 rice per mu, reaching 126,339 kg, and Xushui County, Hebei reported that wheat per mu exceeded 120,000. The yield of yam per mu exceeds 1.2 million jin. Qian Xuesen also in the paper “Mechanical Problems in Agriculture” scientifically demonstrated that the yield per mu can reach 58,500 kg.

Economic fraud, what about other aspects?

The oil painting “Founding Ceremony” created by oil painter Dong Xiwen suffered from various political reasons. The first change of the Founding Ceremony was after the “Gao Rao Incident”. At that time, someone informed Dong Xiwen to remove the portrait of Gao Gang in the picture. After the “Cultural Revolution” broke out, Dong Xiwen was also notified to remove Liu Shaoqi from the Founding Ceremony and replaced him with a full-length portrait of Dong Biwu.

During the Cultural Revolution, Lin Biao became the successor, so he modified the history of Mao Zedong and Zhu De’s armed training in Jinggangshan, Jiangxi: Mao Zedong and Lin Biao. He also specially created an oil painting titled “Jinggang Society”, under the banner of Mao Zedong, walking under the banner of Mao Zedong, followed by Lin Biao, who is beautiful and beautiful. It is said that the old Mr. Zhu, who was very old at the time, was dizzy. When he saw this oil painting of “Jinggang Master” in the Great Hall of the People, he did not know that he had been replaced by others, and he thought that the painter did not take a portrait of himself. The officer said: “This oil painting is not good, it is not like me at all-I was not that young at that time.”

Nazi Hitler and Goebbels repeated a lie to brainwash the German people; the Soviet Union killed 22,000 Polish elites and planted Germany in the Katyn Forest in 1940 ; in 2003, US Secretary of State Powell took a small bottle of white powder to the United Nations to inform the representatives of Iraq that they had hidden Chemical weapons of mass destruction, but no evidence has been found after the war and even the occupation of the entire territory of Iraq.


What are the consequences of fraud?

On July 9, 2019, the China Securities Regulatory Commission issued (Punishment Word [2019] No. 95), “China Securities Regulatory Commission Administrative Penalty and Market Prohibition Prior Notice”. The scallop sea cucumbers who fled repeatedly have been blamed, but the sound of thunder and rain is small, and Zhangzidao has been fined only 600,000 yuan for several times of face-to-face financial fraud, and no one is in jail.

Ruixing Coffee’s troubles may be greater. After its fraud was punctured, Vice Premier Liu He chaired the meeting and focused on financial fraud. After all, the crisis of confidence in the US stock market caused by Ruixing has affected the top management.

Here is a popular paragraph on WeChat recently:

Ruixing Coffee: My fraud was discovered. Kangmei Pharmaceutical: Me too. Ruixing Coffee: I faked 2.2 billion. Kangmei Pharmaceutical: Ha ha, my total cost is 88.7 billion, and even the cash on the account is fake. Ruixing Coffee: I was fined 1.2 billion US dollars. Kangmei Pharmaceutical: Ha ha, I was fined 600,000. Coffee: Hey, I was ordered to be delisted. Kangmei Pharmaceutical: Ha ha, good to leave, I was fined the next day the stock price limit! …Don’t ask me why the performance gap between US and A-shares is so large?

The trouble with Enron’s counterfeiting is that he was fined 500 million US dollars, delisted and bankrupt. The CEO was sentenced to 24 years and fined 45 million US dollars.

Anderson, the top five accounting firm in the world, was convicted and declared bankrupt. The three major investment banks, Citigroup, JPMorgan Chase and Bank of America, were convicted of financial fraud and fined a total of US$4.269 billion.

Japan’s punishment is also very strict. Fukui “eel rice” restaurant quickly confessed to the public and closed, the two responsible persons and the president of the eel company sold to the restaurant were all arrested.

The result of the Great Leap Forward was a national collapse.   

Tens of millions of Chinese people die from starvation. Starvation before death is more terrifying than death: wild vegetables are eaten up, bark is eaten up, bird droppings, rats, cotton wool, and mud are used to fill the stomach. The dead bodies, foreign hungry people, and even their own loved ones have become hungry food.

There are many ways to die, starvation is the most painful way to die. In ancient China, there was a brutal “Ling Chi’s execution”, which cut people to death one by one, that is, “a thousand knives”. This is cutting from the outside of the human body, starving to death is “a thousand knives” on the inside of the human body.

When the body’s energy is not enough, it first uses the “glycogen” stored in the body . The calories generated by the total oxidation of “hepatic glycogen” and “muscle glycogen” stored in the body are not enough for the energy requirements of daily basic metabolism (that is, the metabolism that maintains the lowest life).

Then it consumes body fat. Fat consumption will produce a large amount of keto acids, and metabolic acidosis may occur. People who have not died of acidosis will decompose the protein in various organs and muscles after the fat is consumed, so that the body is thin and the organs shrink. All kinds of enzyme hormones and antibodies in the human body are proteins or synthesized from protein as raw materials. Without enzymes, hormones and antibodies, the human body is in a very dangerous state. The time from self-consumption and self-decomposition to death varies from person to person, and it takes about a month or so. This process is very cruel and very painful, which is equivalent to “deadly executed” from the inside of the human body.

In the “History of the Communist Party of China” edited by Professor Yang Fengcheng of Renmin University of China, “the number of abnormal deaths in China is between 17 million and 40 million in three years of economic difficulties.”

Xinhua News Agency reporter Yang Jisheng in his book “Tombstone”, after a detailed investigation and statistics, the number of people starved to death is about 36 million.

As far as my family is concerned, the grandmother’s young widowed father brought up the father, and the mother and child depended on each other for the filial piety. However, in 1960, when the hungry non-meal, oil, sugar and other non-staple foods provided 18 kg of rice per person per month , the family of two also did not trust each other. Get up and cook your own food. My grandfather is less than sixty years old and suffers from malnutrition.

Nazi World War II dragged the world into disaster and pushed Germany into desperation. The US war against Iraq killed 4,500 US troops , costing $767 billion, and killed more than 100,000 Iraqis.

Therefore, due to the limitations of human beings, the fallacy of human nature consensus or bookkeeping, and the occurrence of large and small disasters, is indeed a heavy burden that our lives cannot bear.

Part IV. Corrective efforts and limitations


Real bookkeeping and a good society have always been the direction of human efforts.

The aforementioned Zhangzidao, Ruixing, Anran, Liu Xiaoqing, Fan Bingbing, Fan Bingbing, etc. were all punished accordingly. War criminals were also tried.

Even further, in 1215 more than 800 years ago in Britain , nobles, priests, and citizens jointly put pressure on the king and signed the “Free Charter” to restrict the kingship. Since then, it has continuously evolved and formed today’s structure of separation of powers and mutual restriction.

After World War II, the United States, Britain, Russia, China and France jointly launched the United Nations to negotiate international affairs. Although Western countries often clashed with each other, fortunately they did not kill each other like World War I and World War II.

After the Cultural Revolution, China also summed up its experiences and lessons in a timely manner. The Third Plenary Session of the Eleventh Central Committee determined the direction of economic construction. In 1992, Xiaoping’s southern tour also established a socialist market economy. After joining the WTO in 2001, development has changed rapidly. The per capita GDP was from 384 USD in 1978 to over 10,000 USD in 2019.

Since the new Central Committee of the 18th National Congress took office in 2012, it has focused on fighting corruption and advocating clean government. Over the past few years, it has captured 195 corrupt officials at the provincial and ministerial level and above, such as Zhou Yongkang, Ling Jihua, Xu Caihou, Guo Boxiong, Sun Zhengcai, etc. “It is fully covered in 31 provinces and municipalities across the country. (According to “Economic Daily” 2020.04.29)

The 19th National Congress decided to “deepen the reform of the national supervisory system, push the pilot work nationwide, set up national, provincial, municipal, and county supervisory committees, co-operate with the party’s disciplinary inspection organs, and implement supervision of all public officials who exercise public power. Coverage of power.” The newly formed supervisory committee does not have a party group, co-locates with the Commission for Discipline Inspection, performs two functions of disciplinary inspection and supervision, and implements a set of working institutions and two agency names. This is an important institutional arrangement for deepening the reform of the national supervision system.


Anti-corruption is very effective, and the number of cadres who accept gifts and bribes in high-end consumer places has decreased significantly. But ” don’t take responsibility , do nothing ” has become a common phenomenon in the officialdom. At the same time , there are also many people who don’t converge after the 19th National Congress . 2020 May 12 , according to Tianjin in a hospital news, former Shaanxi Provincial Party Secretary Zhao positive permanent money-making 717 million yuan.


With the development of high technology, some entrepreneurs are also full of confidence, thinking that AI, big data, etc. can make up for the defects of people’s consensus, make bookkeeping more real, and make the planned economy land again .

In 2016, Jack Ma, the founder of Alibaba , an e-commerce company with about 500 million users, said that new technologies provide a means to collect and process data on an almost unimaginable scale. Applying artificial intelligence to these data sets is deepening our real-time knowledge of the world. Ma Yun said at an economic conference: Therefore, big data will make the market more intelligent, make it possible to plan and predict market forces, and allow us to finally achieve a planned economy.

Ma Yun said: “In the past 100 years, I have always felt that the market economy is very good. My personal opinion is that great changes will take place in the next 30 years, and the planned economy will become bigger and bigger. Why? Because of the data , The invisible hand of a national market may be discovered by us… believe that in the era of data, we will have a clearer grasp of the economy and data of the country and the world, just like we will have an X-ray machine and CT machine, so a new theory will come out in 30 years.”

Liu Qiangdong also said when he was a guest of CCTV’s “Change the World” program in early 2017-“Communism can be realized in our generation.” He said that with the maturity and popularization of new technologies such as artificial intelligence and cloud computing, human labor can be completely liberated, which is the prerequisite for the realization of communism…

” Because the robot put all your work done, have created enormous wealth, human beings can enjoy, or you can do point artistic , philosophical stuff on State may be the distribution of wealth to everyone, no rich and poor of the points . “


The views of Ma Yun and Liu Qiangdong also reminded me of Xue Xiao, director of the commentary department of Economic Daily when I was a doctor in 1993.

And telling a short story, her father Xue Muqiao was a famous economist, who was the deputy director of the State Planning Commission and the director of the State Price Bureau. More than a dozen talents want to calculate the “reasonable” prices of various products across the country , so that production operations, deployment, and product pricing are based.

The result, of course, is nothing.

Jack Ma thought that he had mastered the big data of many consumers through Alibaba Cloud, etc., and thought that he could plan everything like a god and predict the future, which is unrealistic.

First of all, the ownership of the data belongs to us personally, not to Ali or by analyzing our travel data, to accurately pinpoint Ctrip, which pushes us to higher-priced airfare hotels.

Secondly, the data only shows the past and history. There is a lot of uncertainty in people’s needs. Just like Jobs, the Apple mobile smartphone he first introduced created new needs.

The innovation and adventure of entrepreneurs can only be stimulated and emerged by the colorful market economy.

Liu Qiangdong’s statement is even more unreliable. If there is no distinction between the rich and the poor, does society still have the motivation to move forward? The blood and tears lessons of our decades of planned economy and the big pot of rice are still intact.

Diversified societies must have differences before they can have vitality and vitality. The key is to enable the rich to create wealth in accordance with the law, help the poor, and give all classes the opportunity to freely move upward through their efforts.

The well-known economist Zhang Weiying pointed out in The Principles of Economics: The market is a process of free flow and innovation.

Even if we use cloud computing, big data, A the I mastered the endless data, it is impossible to implement the ideal of the economy. Because the situation is changing, things are developing. Maybe five million days ago, a million people asked for sneakers. We made a plan and ordered the factory to produce them, but after the product came out, we found that the number of people in need, style, color, and price have changed.

Moreover, from the perspective of law, ethics and human rights, do we really have the right to plan the work and life of others? Who gave us the right to order Xiaohu to grow rice, Lao Li to sell apples, Wang Wuxiu’s house, and Yang San Shang Tmall?

The economics master Mises also proved that ( 1) comprehensive and accurate calculations are never possible (2) profits and prices cannot be effective incentives for producers under public property rights.

Hayek believes that the innovation of entrepreneurs and human thought cannot be planned. ……If you have to plan, it will lead to the exhaustion of human creativity.


Also as an entrepreneur, he has confidence in Ma Yun and Liu Qiangdong, and manages the world’s largest $163.8 billion hedge fund. Dalio, the founder of Bridgewater Fund, clearly has a different view.

In an interview with Nikkei News on May 6, 2020, Dalio said that the central bank and the government are printing money to expand their balance sheets, and individuals, companies and countries with insufficient deposits are going bankrupt. All of this will exacerbate the conflict between wealth and power. He said: “When the Fed and other major central banks quickly print money to save the global economy, holding government bonds is meaningless. He thinks that at this stage it is like 1930 The year is the same as in 1945. We are entering a great depression close to the 1930s, and history repeats itself again. He described the economic recession from 1929 to 1932, the double-digit unemployment rate, etc. Situation, the government printed a lot of money.

Dalio believes that “under the current mechanism, when the economy is good, everyone is actively expanding, and when the bubble bursts, the government will be too busy printing money, and eventually it will inevitably go to collapse, and even bring politically unstable wars. This This kind of zeroing and restarting cycle has to come once in a few decades and cannot be avoided.”

“No one will complain about the creation of money and credit. In fact, it is more of an accusation that the government has failed to provide more (money and credit). No one realizes and admits that the government does not have this money, the government is only our collective , Rather than a rich entity, someone must pay for it. Imagine if government officials cut spending to balance the budget and ask people to do the same, allowing large amounts of defaults and debt restructuring, or they try to tax and redistribute Funds, how to redistribute wealth from people with more wealth to those with less wealth.

Obviously, currency printing and currency depreciation are more acceptable to people. It’s like playing “Monopoly”, where bankers can make more money and redistribute to everyone when too many players go bankrupt.

Most people do not pay enough attention to currency risk. They are only worried about whether the value of the asset is rising or falling, but they are not worried about whether their currency will appreciate or depreciate. 

On April 24, 2020, he published the second chapter “Money, Credit, and Debt” of the new book “The Changing World Order” and “Chanqing World Order” (Chapter 2: Money, Credit, and Debt): “In the past Of the approximately 750 currencies that have existed since 1700, only 20% of them still exist, and these currencies still depreciate.

He also drew a picture to illustrate the ups and downs of this cycle.


Figure 1. New World Order and National Rise and Fall Cycle Diagram 

In short, when the world establishes new orders and rules, there will usually be a period of peace and prosperity. When people get used to economic growth, they begin to bet that prosperity will continue, and even increase leverage. As the degree of prosperity increases, the degree of rich and poor continues to expand, the bubble expands, and the economy moves toward the road of printing money and expanding credit. But at the same time, internal conflicts have intensified, and people are demanding redistribution of wealth in some peaceful or violent way.

Marx and Engels also recognized the periodicity of capitalist reproduction. They believe that the economic crisis erupts every few years and is an economic phenomenon that repeats itself cyclically. From the beginning of one economic crisis to the beginning of another economic crisis, it constitutes a cycle of capitalist reproduction. The continuous movement of capitalist reproduction following the crises —depression—recovery—and upswing is called the periodicity of capitalist reproduction.

Engels vividly described the preparation phase of the new crisis in the reproduction cycle: “Sports gradually accelerated, slow to fast, industrial fast to running, and running became a real obstacle race for industry, commerce, credit, and speculation. Running in the end. Finally, after a few desperate jumps back into the abyss of collapse” (“Marx and Engels Anthology”, Volume 3, page 316).

In the actual operation of human society , only 20% of the 750 currencies listed by Dalio for three hundred years still exist, which also proves the existence of cyclicity.


In 1992, after the disintegration of the Soviet Union, scholar Fukuyama published a new book “The End of History and the Last Man”. He elaborated his geopolitical views in detail, mainly explaining the end of the Cold War, which means the end of human history, historical Evolution has come to an end. Democracy and freedom are the best choice for human politics, and will eventually become the system of all mankind.

In fact, Fukuyama ‘s idea is just the book beautiful dream of life, to say the least, since that even in the most democratic, American freedom, everyone understanding of democracy, freedom, good and bad are also differences very large consensus difficult to reach.

In the spring of 2019, at Harvard University, I asked Zhou Xiaochuan, Guo Shuqing and others to help her buy Chinese books to Harvard’s Fei Zhengqing Center Library Professor Nancy for dinner. I mentioned the democratically elected president. Trump, she was immediately furious, and I felt that if my point of view was contrary to her, she might even turn my face immediately.

Harvard graduate student Li Shiyue also told me that he heard the news of Trump’s election during the class. The lecturer came from it sadly, crying on the spot.

Therefore, although we strive to overcome the weaknesses of human nature and make the consensus of human nature more reliable, the actual results are always unsatisfactory.

Part V. Blockchain Distributed Accounting: Mathematical Consensus


How to get rid of the deviation of the human nature consensus of the traditional central bookkeeping method and create unsurpassed, undoubted true and completely trustworthy bookkeeping?

Wharton professor Kevin Werbach described four “universal trust architectures”:

Point-to-point trust: that is, trust between people;

Leviathan trust: a large number of contracts /contract systems appear, because mutual trust between the government and the state will help resolve disputes, and parties that do not trust each other can agree on the contract;

Intermediary trust: This kind of trust is like a credit card system. Even if there is no trust relationship, buyers and sellers can still use the third-party credit system to conduct business transactions;

Distributed trust: Emerging Crypto trust in specific security systems such as blockchain that attempts to de-intermediate.


The fourth kind of trust “Crypto trust” he mentioned inherits the traditional definition and expression of trust in trust. It converts the traditional trust in legal form, ethical and moral experience in the form of words, and the state machine into a mathematical consensus based on the trust of programs composed of code encryption and algorithms.

In March 2019, as a visiting scholar at Harvard University during a comparative study of Chinese and American blockchains, I was invited to MIT to give a lecture on “Blockchain: The Key to the Digital Era of the Internet of Everything” Professor Yong also visited Dr. David Spivak and Dr. Brendan Fong of the Category Theory research team of the MIT Mathematics Department . Our discussion subvert mathematics is only just a measurement and analysis tool in the world of this conventional wisdom.

Our new conclusion is that “pure mathematics itself can be used to compose completely new systems.”

Max Tegmark, a physicist and cosmologist at MIT, said in the book “Our Mathematical Universe”: Our physical world is not only described by mathematics, it is mathematics itself, and humans are There is a part of self-awareness in this huge mathematical system.

In his book, he pursued the question of “how big is everything”, exploring an unprecedented magnificent scale: our earth is located in a galaxy, this galaxy is in a universe, and this universe is in a first multiverse universe full of avatar In this, the first layer of multiverse is located in a more diversified second layer of multiverse, which is located in the third layer of multi-mathematical properties of the next quantum mechanics. Although we still do not know these particles whether it can be broken down into smaller structures, however, string theory and competition theory are imply, any more based on the composition of the Ministry of points are also purely mathematical nature.

Whether great or very small, but they eventually came or came to the same place – the mathematical structure of the country.

The connection between the material world and the mathematical world is getting tighter, and even the two may mirror each other in the future! Can we make bold, eye-catching predictions: the world is mathematics.

Such as Satoshi Nakamoto’s blockchain, such as Einstein’s theory of relativity more than a hundred years ago. Einstein predicted the conservation of mass-energy interchange, space-time backflow, gravitational field, black hole, etc. through pure mathematics more than 100 years ago, and waited for the empirical evidence.


On March 16, 2018, at Stanford University (Suite 305, 435 Tasso st, Palo Alto) , I and Mu Yingjiang, students from Tsinghua University, and Ding Ruoyu from Danhua Capital, together with the academician of the American Academy of Sciences and the foreign academician of the Chinese Academy of Sciences The professor had more than three hours of discussion and exchange.

We all agree that blockchain is starting a great Crypto age. Blockchain has transformed the two-dimensional information interconnection into three- and four-dimensional value interconnection. In the blockchain era, every individual has the right to securely retain his own data and privacy, and can also trade his own data through the blockchain to generate new value.

Academician Zhang further put forward his point of view: “In Math We Trust.”

He believes that among all human knowledge, the easiest way to reach consensus is mathematics.

“It is the most natural way to use mathematics as a trust mechanism. The era of real blockchain is to make our mutual trust built on the basis of mathematics.

If I make a cube by myself, it is definitely not perfect. But as a mathematical form, the cube is completely symmetrical, each vertex angle is exactly the same, every edge is exactly the same, and every face is exactly the same. The form of mathematics is the most accurate, and in the sense of precision, it is also the easiest to reach consensus.

If you look at the deepest mysteries of the entire universe, the most core formulas and standard models of the entire universe in physics are also described by very elaborate mathematics, most of which are also created by Mr. Yang Zhenning . 


Blockchain technology is opening a new era. The revolutionary intensity of this era may be ten times to one hundred times that of the Internet revolution. It allows us to own our own information. The Internet is just information exchange, and there is value exchange in the blockchain era. We can generate a market for data. Everyone has their own data, and then generates new value in the exchange process. It completely transforms the production relationship so that distant strangers (or machines) can trust and cooperate with each other.

The algorithm produced by the distributed accounting technology is a powerful and subversive innovation. A distributed ledger is essentially an asset database that can be shared in a network of multiple sites, different geographic locations, or multiple organizations. Participants in a network can obtain a unique, true copy of the ledger.

Any tampering of the blocks in the ledger, as soon as the whole body is triggered, will be reflected in all copies, and the reaction time will be within minutes or even seconds. The assets stored in this ledger can be financial, legally defined, physical or electronic assets.

The security and accuracy of the assets stored in this ledger is through the use of public and private keys and signatures to control the access rights of the ledger, thereby achieving maintenance on the basis of cryptography. According to the consensus rules in the network, the records in the ledger can be updated by one, some or all participants.

The ledger records transactions between network participants, such as the exchange of assets or data. This shared ledger eliminates the time and expense of mediating different ledgers. Each record in the distributed ledger has a timestamp and unique password signature, which makes the ledger an auditable historical record of all transactions on the network.


The foundation of the blockchain is mathematics, which is the consensus of mathematics, including cryptography and the mathematics behind it, big data and the mathematics behind it, network communication, computer science, programming language, etc., as well as mathematical logic, linear algebra, Mathematical statistics, probability distribution, parameter estimation, group theory, integral change, differential equation topology, etc.


As far as cryptography is concerned, the first is the hash function and hash function-an encoding method in cryptography.


Enter a character X of any length and output a character H (x) of a fixed length.

Bitcoin uses SHA256 and outputs 64-bit characters, consisting of 10 Arabic numerals and 6 English letters (abcdef). The total amount is 16*64,=2*256

Enter the same character, the output hash value must be the same.

There is also an asymmetric encryption technology that guarantees the security of the blockchain. This technology contains two keys: a public key and a private key. First, according to a key generation algorithm, the system passes the input to the computer to obtain the private key. Then, Another algorithm is used to generate the public key based on the private key, and the generation process of the public key is irreversible. Since it is difficult to exhaust the private key through the public key (that is, computationally infeasible) under the existing computing power, it can be considered that the data is safe, which can ensure the data security of the blockchain.


Commonly used asymmetric encryption algorithms are: RSA, Elgamal, backpack algorithm, Rabin, DH, ECC (elliptic curve encryption algorithm).

name Shorthand Remarks
Elliptic curve encryption algorithm ECC In the process of generating a Bitcoin key
Elliptic curve Crypto signature algorithm ECDSA Bitcoin’s signature algorithm
RSA public key encryption algorithm RSA The most widely used public key encryption algorithm
Elgamal algorithm Elgamal Based on public key cryptosystem and elliptic curve encryption system
Diffie-Hellman algorithm DH It only generates secret values ​​that can be used as symmetric keys, not encryption algorithms in the general sense.

There are also zero-knowledge proof, homomorphic encryption, blind signature, group signature, ring signature, multi-signature, and linked list structure, transaction structure, directed acyclic graph ( DAG), scalability (UTXO), simplicity, consensus mechanism , Computing Power Mining Consensus Mechanism (POW), Proof of Stake (POS), Proof of Stake Authorization (DPOS), General Byzantine Problem, Practical Byzantine Fault Tolerance, Authorized Byzantine Fault Tolerance, P2P Network, Chain Network Structure Chain technology (including atomic swap, witness mechanism, side chain, side chain protocol, relay technology, hash time lock, etc., Polkadot may make breakthroughs in cross-chain and parallel chain), expansion technology (including sharding, isolation Witness, Lightning Network, Lightning Network), smart contracts, formal verification of smart contracts, etc. involve game theory, cryptography, distributed storage and other mathematical knowledge.

The following figure is a comparative analysis of various consensus mechanisms of blockchain.

Figure 2. Comparison of typical consensus mechanisms and main existing problems

Energy consumption Huge computing power consumption Low resource consumption Low resource consumption Low energy consumption Low energy consumption Low energy consumption Low energy consumption
 Block time The block generation time is long, which cannot meet the high-frequency trading needs in actual application scenarios Block time is shorter Consensus verification that can reach the second level Block generation speed is slow, not suitable for large-scale node consensus Block generation speed is fast, can adapt to high-frequency trading Fast block generation speed, supporting transaction throughput of more than 10,000 transactions per second Block generation speed is fast, can adapt to high-frequency trading
 safety Easy to face 51% attack on computing power Solved 51% of the computing power attacks; there are many intermediate steps, which are prone to security vulnerabilities Solved 51% of the computing power attacks; there are many intermediate steps, which are prone to security vulnerabilities Low security, can only tolerate less than 1/3 of malicious nodes Low security, can only tolerate less than 1/3 of malicious nodes Low security, can only tolerate less than 1/3 of malicious nodes Progressive security, parameters can be adjusted according to the actual situation to resist opponents with powerful computing power
consistency Easy to fork, no finality Easy to fork, no finality No finality It is final and will not fork It is final and will not fork It is final and will not fork It is final and will not fork
Token no Yes Yes no no no no
Professional bookkeeper no no Yes Yes Yes Yes Yes


From the author’s point of view, the most reliable is the POW computing power mining mechanism that completely eliminates the pure mathematical consensus of human nature . Other mechanisms have a central human arrangement. Although the energy consumption has been reduced, the safety and authenticity are insufficient.

POW was also accompanied by BTC when the blockchain was born, and its computing power has grown extremely fast in the past 11 years, having exceeded 1.1678 trillion trillion hash collisions per second. I don’t think it’s a pure waste of energy. Its massive increase in computing power, like thousands of waves of waves, may now be solved by the power of the United States and China.

If BTC digs for another ten or twenty years, the barriers to its computing power are so powerful that all humans may be powerless. Basically, it is just a ride to space.

The design of POW takes into account the technicality of mathematical mining and mining, and also has a series of complex economic arrangements and mutual restraint and balance of humanity games.

For example , after the halving on May 12, 2020, some old miners with lower output and higher energy consumption will be forced to pay BTC at a price of 9,000 US dollars. Shut down. After the shutdown, the computing power declines, which makes the difficulty of continuing to adhere to the miner relatively decrease, and the number of BTC obtained relatively increases, so that even if the price of BTC plummets, it will not cause a full-scale shutdown.

In the next 50 years and 100 years, after the BTC mining income becomes increasingly scarce, the price of BTC will be high, and the miners will be able to support the normal operation of the entire network by packaging the Block to obtain a commission.

All the historical computing power accumulated in the BTC blockchain can effectively prevent the theft of historical results, the theft of BTC assets that have been dug out, and tampering with the BTC issuance volume, issuance curve, and issuance mechanism.

The POW of BTC will be reinforced again every ten minutes, and many new technologies do not need to spend a lot of energy, and find a few super nodes to sign. This multi-signature method proves that the blockchain has no historical accumulation of more than zero. Why? Because on any day in the future, if the nodes colluded, all historical blockchains can be tampered with and signed again in a flash, at a minimal cost and a very short time. Its reliability is fundamentally different from Bitcoin’s technology.

The author has discussed this issue with Exoplanet Capital CEO Kevin and the Beihang Software College Distinguished Professor Liu Qingyan seriously. We unanimously believe that the computing power of BTC is not only a waste of energy, but a “consensus anchor and data shield” for the future world of silicon-based mathematical consensus.

That is to say, we can link the consensus in the real world that is the most difficult, most divergent, and has deepest interests to the anchor of BTC, such as the country, the military, elections, nuclear arsenals, and so on.

In the real world, the anchors of 200,000 tankers are mostly around 10 tons. At that time, the largest tanker in the world, the Nok Nevis, had a full-load displacement of 82 tons and anchors of 36 tons. In the case of warships, this ratio is even stricter. The US Nimitz-class aircraft carrier has a displacement of 90,000 tons, but the anchor is 27 tons.


Yao Qian, director of the Digital Currency Research Institute of the People’s Bank of China, pointed out: The emergence of distributed ledger technology ( DLT) may be another major leap in ledger technology after digitization. In the proof-of-work mechanism, miners complete the accounting process of transaction records through “mining”, providing a publicly visible decentralized shared ledger (DSL) for each node on the network. Each blockchain is a ledger, which has no essential difference from the traditional ledger in the accounting sense, but from a technical point of view, the DLT ledger not only inherits the traditional accounting philosophy, but also has some traditional ledger with its unique innovation The incomparable advantages can not only play a role in the compilation of company books, but also in the preparation of national books and industry books to solve the pain points. He believes that the traditional bookkeeping model is based on accounts. In accounting, the account ( Account) is a carrier set up to reflect the increase and decrease of accounting elements and their results set up according to the account title; in the realization of the system, the account is the carrier of a series of service contracts (Agreement), an account There may be multiple products or services in the collection. The change in the account balance is the result of the original transaction data generated by the product or service recorded, summarized, classified, and sorted by the institution and reflected in the account. The traditional electronic payment is realized through the change of the balance of the account opened in the centralized institution, which completely depends on the behavior of the central institution. In contrast, the Bitcoin system adopts another new model in account processing: UTXO (Unspent Transaction Output) mode. From an economic point of view, UTXO is essentially the right to claim future value after the consensus of the public. (WeChat public account “Tsinghua Financial Review”, “Yao Qian: Similarities and Differences of Distributed Ledger and Traditional Ledger and Its Practical Significance l Central Bank and Currency”).

Bitcoin’s blockchain system describes and completes the transfer of future value claims due to transactions by constructing transaction inputs and transaction outputs that include unlocking scripts and locking scripts.

The blockchain does not require an account, but has completed the transfer of “value” through UTXO. UTXO plays the role of “currency”.

In a sense, we can understand the blockchain as a transaction “flow account”, which records all transaction information in a tamper-proof manner through coding. In reality, the account information that we are accustomed to is also the secondary processing of the transaction “flow account” information. It is just that through the design of unlocking scripts and locking scripts, UTXO connects a future value claim transfer and circulation channel between different time series transactions.

Through analysis, he concluded: 1. Compared with the Account mode, the advantage of the UTXO mode is that it is easy to process in parallel and improve efficiency. However, the UTXO mode needs to store all flow information, and the data storage pressure is greater. The Account mode only requests the current inventory information and ignores all flow information, but the premise is that the current inventory information is credible. From a regulatory perspective, the UTXO model stores all traffic information, which is more conducive to regulation and auditing. 2. As with traditional account processing, UTXO’s processing also includes the bookkeeping philosophy of “when there is a loan, there must be a loan, and the loan must be equal.” The performance is as follows: UTXO has a transaction output and must have a transaction input, and there is a transaction input and there must be a transaction output. The amount of the transaction input must be equal to the amount of the transaction output, which is consistent with the connotation of “borrowing must have loans, credit must be equal. 3. DLT firstly guarantees the conformity of accounts through transaction signatures. The account is the certificate, and the certificate is the account. The two are consistent and difficult to tamper with. Secondly, DLT achieves the conformity of accounts of various subjects through a consensus mechanism. Transaction information will only be written into the general ledger after gaining consensus; the information written on the account must have reached the consensus of all subjects, and the account automatically matches. In addition, DLT uses cross-chain agreements to carry out payment redemption and coupon redemption, so as to automatically complete the account matching. The cross-chain technology not only guarantees the atomicity of payment and bond payment in transactions, but also ensures the consistency between the accounts of different entities in the cross-chain in accounting.

Before Yao also believes points distributed remember account can raise high financial statements timeliness relevance and full innings of more role to play, so that the preparation of the State books become truly viable. For example, on-chain natural resources, intangible assets, financial assets, and physical assets, and build a global data exchange and sharing platform that breaks various information barriers, unify information entry, avoid a lot of repetitive work, and reduce the error rate of data destruction verification. Make data sharing, verification and statistics between various institutions, departments, industries and regions more efficient. In terms of technical characteristics, each participant in the blockchain system is a multi-lived node in a different place, which is a natural multi-lived system, and can achieve the consistency of information between different books through cross-chain technology. Involving the extremely diverse national books of subjects to obtain global information.

For Yao before Speaking of avoiding free a lot of duplication of work deeply have body experience Far financial terms such as a large company may be ten Jia open bank households have deposit, lending but because of the credibility of the books lack . So every family bank the enterprise loans before money all will each be independent of financial service audit risk survey , spend a lot of talent, time and companies are required to be prepared to re- house a large number of reiterations of owned material, tired to response.

have days often life also often spend a lot of time fine power, to complete no more heavy sense of re- filling, ” prove that my mother is my mother ,” the class of strange turns.

Pushed by extension , sub- distributed record accounts is actually data management, mathematics consensus can be applied to human society in addition to the economic structure built by the collared city, including elections , a referendum, the people tune, the country’s political, military, education, Section technology and all other leading domain . And enormous regulatory mold effect should and co same effect.


Akerlof, the Nobel laureate who studies the asymmetric information market, pointed out that there is no mutual trust between people. High-quality products need to be manifested and distinguished from low-quality products. At a high cost, if this problem is not solved, there will be a phenomenon of bad money expelling good money. When consumers cannot distinguish between high-quality goods and low-quality goods, they will leave the market, sellers will also leave the market, transactions will disappear, and the market will collapse.

In the past, we completely relied on authoritative third-party intermediaries, such as banks, notaries, and government agencies, to establish mutual trust to reduce information asymmetry.

But the problem is like our previous research. First, the cost is too high, and second, the credibility of the third party itself is also in doubt.

The distributed bookkeeping of the blockchain can solve these problems better. It uses mathematical consensus to allow strangers to trust each other completely, and makes all transactions traceable and traceable without fraud.

It gives the people the right to keep accounts:

1. Everyone has the right to keep accounts. This guarantees an irrefutable consensus from the mechanism.

2. No one can tamper with the ledger. Because all records have been subjected to reliable hash encryption and password signing.

3. Everyone has a copy of the account page. Distributed bookkeeping ensures that the rights of the participants are not infringed, and reflects the true people’s democracy.

The Political Bureau of the CPC Central Committee held on October 25, 2019: “The application of blockchain technology has extended to Crypto finance, Internet of Things, intelligent manufacturing, supply chain management, Crypto asset trading and other fields.

At present, major countries around the world are accelerating the development of blockchain technology. my country has a good foundation in the field of blockchain. It is necessary to accelerate the development of blockchain technology and industrial innovation, and actively promote the integration of blockchain and economic and social development. It is necessary to strengthen basic research, enhance the original innovation ability, and strive to make my country take the forefront of theory in the emerging field of blockchain, occupy the commanding heights of innovation, and obtain new industrial advantages. It is necessary to promote collaborative research, accelerate the breakthrough of core technology, and provide safe and controllable technical support for the development of blockchain applications. It is necessary to strengthen the research on blockchain standardization and enhance the right of international discourse and rule-making. It is necessary to accelerate industrial development , give full play to market advantages, and further open up the innovation chain, application chain, and value chain. To build a blockchain industry ecology, accelerate the deep integration of blockchain and artificial intelligence, big data, Internet of Things and other cutting-edge information technologies, and promote integrated innovation and integrated applications.

Theoretically speaking, the development of blockchain is the beginning of human sublimation from human-based carbon-based consensus to mathematical silicon-based consensus. It is a disruptive transition, and its self-organizing and self-incentive to mediate is changing all aspects of our lives.

What happened again?

More than eleven years ago, the distributed bookkeeping of blockchain created by Satoshi Nakamoto started at the end of Qingping.

As Zeng Guofan, who claims to be a virtue and a trio of immortals, has described the “wind as a thing”, when trying to grasp it, it seems to be empty; when trying to suppress it, it seems to be very weak.

But “It’s a matter of fact, it’s a big tree, a big house, and it can be moved in a thousand miles.

At this point, I suddenly remembered the movie “Red Lingyan” I saw, and a novel by Haruki Murakami: “Dance!” dance! dance! “. I think that it is in this never-ending dance that our lives can be continued and always have youthful vitality.

I like Nietzsche’s words better: “Every day I have never danced, I have failed my life.”

Oh yes.


The wind finally blew up.

Let’s dance to the wind!

 Early morning on June 3, 2020

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