Proof-of-Work Is Not Just Useful, It's Essential

Good Morning Everyone,There has been a congressional hearing in the US overnight under the heading “Cleaning Up Cryptocurrency: The Energy Impacts of Blockchains”.Straight out of the gate i simply reject the premise of the title, at least how it relates to Bitcoin, suggesting there is something to be “cleaned up” or as if it is dirty.From what i have listened to so far, many of the critiques made, are items that have been proven false already. There are a couple of fundamental and foundational points that stand out to me, and I think in order to have any meaningful, productive and valuable discourse on a topic like this (which is riddled with misleading terms like blockchains), these items need to be properly addressed and fleshed out by experts that actually understand the technology to avoid the broken record-like behavior of politicians and anti-bitcoin activists that continue to espouse the same false narratives from years gone by. The first is the use of the term cryptocurrency, and the grouping of these as if they were a single entity. As if any of the some 16,000 shitcoins, most of which are out right scams, have anything to do with Bitcoin (Spoiler alert: they don’t). Secondly, and perhaps most importantly is the on-going comparisons between PoW and PoS “blockchains” and the repetitive arguments made against Proof-of-work, specific to the networks energy usage, which ignore the absolute fundamental nature of this consensus mechanism to enabling what Bitcoin is.In an effort to avoid re-hashing many items already discussed specific to energy, let me simply refer you to a couple of earlier letters on the topic.By far the most succinct explanation I have read about Proof-Of-Work comes from Gigi, who has written extensively on the topic.As Gigi accurately states: “a failure to understand proof of work is a failure to understand Bitcoin.”The thing with proof-of-work, is that it’s complex, so it’s not surprising most do not understand it. If i was to try and simplify it I’d simply tell you that to have a truly decentralized system like bitcoin, there is currently no alternative technical solution in existence that actually achieves this outcome. That is the bottom line.However to simplify it misses the beauty of this innovation and fails to capture how incredible PoW actually is. To better explain the complexities let me simply read through Gigi’s thread.Hopefully you found this useful.I hope you have a great day and i’ll chat to you next week.AK This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit unlocked.substack.com