There Is No Second Best: Understanding Bitcoin\'s Proof of Work

Jack Mallers, Founder and CEO of Bitcoin startup Strike, began his keynote at BTC Prague 2024 by emphasizing the theme of leveling up the understanding of Bitcoin.

At BTC Prague 2024, Jack Mallers, Founder and CEO of Bitcoin startup Strike, opened his keynote with a strong emphasis on the need to elevate the understanding of Bitcoin.

Mallers acknowledged the common questions about the differences between Bitcoin and other cryptocurrencies, such as Ethereum and Solana, and the possibility of a “flippening” where another cryptocurrency might surpass Bitcoin. Countering this narrative, Mallers titled his talk “There Is No Second Best,” aiming to deeply explore the stark disparities between Bitcoin and all other cryptocurrencies.

Throughout his talk, Mallers highlighted the primary differentiator between Bitcoin and other cryptocurrencies: the use of proof of work. According to Mallers, Bitcoin is the only major cryptocurrency that utilizes proof of work, a consensus mechanism critical for ensuring trust and security without relying on a trusted third party. Mallers attributed the importance of proof of work to Satoshi Nakamoto, who stated that it is the only solution to making peer-to-peer e-cash work without a trusted third party.

To understand Bitcoin, Mallers emphasized the need to understand proof of work. He proceeded to describe the digital age we live in, where virtual representations of reality are not reality itself but abstractions. Mallers used the analogy of a map and territory to explain that digital tools can map our world and offer new perspectives but ultimately remain tools, not substitutes for the world they represent.

Delving deeper into the concept of abstraction, Mallers explained that computers and digital technologies are essentially abstractions of our minds, reflecting back the significance we assign to circuits. He compared the execution of a computer program to an actor performing a script, underscoring that the hardware and computations are real, but the experiences created are abstract. Mallers went on to highlight that nothing in cyberspace physically exists; instead, digital objects are abstractions that can be manipulated.

To further illustrate the concept of abstract power in the digital age, Mallers used the example of Mark Zuckerberg. He explained that while Zuckerberg has no physical power over individuals, he wields significant abstract power through social media, influencing thoughts, actions, and relationships. Mallers contrasted abstract power with physical power, which is tangible and bound by the laws of physics, such as military force or physical assets like gold.

Shifting his focus to monetary systems, Mallers described the transition of the US dollar from the gold standard (a physical constraint) to a fiat standard (an abstracted reality). He highlighted how abstract power can be efficient and safe but lacks physical boundaries and ultimately requires trust. However, Mallers noted that breaches of trust have occurred throughout history, making abstract power potentially exploitative.

In his talk, Mallers also mentioned Adam Back, who notably created hash cash to address the problem of email spam by requiring proof of work, thereby imposing physical costs on virtual actions. Mallers emphasized that proof of work is what connects the physical world to the virtual realm, making it the only physically real thing on a digital screen. He explained that Satoshi Nakamoto used proof of work to create Bitcoin, ensuring that updating the Bitcoin ledger would require solving a hash cost function, thus protecting digital cash with physical power.

Mallers concluded his talk by detailing how proof of work is inclusive, decentralized, and verifiable, providing a safe and peaceful means of protecting Bitcoin. He contrasted this with proof of stake, which he argued is based on an abstracted reality, lacking the physical constraints that make Bitcoin secure.

In a compelling move, Mallers played a video of Vitalik Buterin, the creator of Ethereum, describing proof of stake as a system that allows for creating a simulated universe with its own laws of physics. Mallers used this statement to highlight his critique of proof of stake, arguing that it detaches the cryptocurrency from physical reality and subjects it to abstract power dynamics.

Countering the narrative of altcoins being superior to Bitcoin, Mallers argued that Ethereum and other altcoins, which do not use proof of work, are not bound to physical reality and are therefore susceptible to manipulation by entities like BlackRock. He asserted that Bitcoin’s proof of work ensures that it can be defended by honest actors using physical power, whereas proof of stake systems rely on trusting those with the most coins.

To further drive home his point, Mallers highlighted the pre-mining of Ethereum and the rule changes that concentrated power among a select few, contrasting it with Bitcoin’s equitable and fair nature. He argued that altcoins often alter their monetary policies and even have the capability to reverse transactions, ultimately undermining their credibility.

In closing, Mallers emphasized the importance of educating people about the distinctions between Bitcoin and other cryptocurrencies. He reiterated that understanding Bitcoin means understanding proof of work and declared that there is no second best in the world of cryptocurrencies.

News source：https://www.kdj.com/cryptocurrencies-news/articles/understanding-bitcoin-proof.html

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