Ape on Nostr: Quick thread on the key importance of Proof-of-work, the most (wilfully) ...
Quick thread on the key importance of Proof-of-work, the most (wilfully) misunderstood aspect of Bitcoin. This came from me trying to explain the concept to my colleages.
People criticise Bitcoin for not being “real” and having no tangible, intrinsic value. This is understandable as digital things are not “things” but information, symbols. And Bitcoin is digital.
However, people also criticise Bitcoin for using a lot of energy which they consider wasteful for what they perceive as an intangible piece of digital information. Sure, use energy for washing machines and Christmas lights, because these are real and can’t operate without energy. But why use the energy of a small country just to make numbers on a screen which you can do for free?
They don’t realise that this energy usage is the key element that makes Bitcoin more than digital information, and an actual tangible entity.
Let’s step back.
You have a bar of gold. You wants another one. However, you can’t just make new matter out of nothing. This would require an enormous amount of energy (fusing atoms together). A key attribute of physical objects is that their existence is tied to the laws of physics. Only God could make more with no energy.
Digital information however has no such constraints. You have 10 bars of digital gold. You can easily make many more without energy by adding another number next to it. Like 10^9 bars of gold. Now you have 10 billion bars of gold. This is why digital items are worthless.
However, we exist more and more in the digital word, it is becoming our place of business, leisure, social interaction, yet it has no laws of physics, we are all gods in this world, making it like a Mount Olympus Lord of the Flies situation.
This is a problem.
Up until now we have solved this problem by creating demigods, who control the local laws of physics for their realm. E.g. Amazon tells you how much your purchase is (you can’t change the number), or your online bank controls the numbers showing the $s in your account.
These are still only bits of digital information, but the demigods of the internet are the only ones who make new units, like a real god for gold bars. However, these demigods aren’t gods, they are people pretending to be. They are centralised, confined to their own universes, corruptible, and liable to make mistakes.
So how do we solve the problem of adding the laws of physics to digital information, so that the digital world has continuity with the real physical world? This is where energy comes in.
By tethering energy to the production and transfer of Bitcoin, it is imbuing it with real world properties that only an entity who is able to harness a greater amount of energy could override.
This makes digital information physically bound. A seminal innovation in science and technology.
Another criticism is that the proof-of-work algorithm uses energy for pointless, random number guessing puzzles, and not something useful like folding proteins. This also misunderstands the nature of proof-of-work. It is necessary that the energy usage is random, that is, there is no way to game or cheat the finding of the random number used to verify the blockchain.
If there was some logic that could solve the puzzle more easily, it would require less energy (or even almost none at all), thus undermining the tethering between the physical world and the digital information in question. It would be information not energy that verifies the information, which is what we have now.
But it also goes deeper.
What is randomness? Randomness is data that contains no information, no pattern. You can write out a random number, but it has no meaning or utility. It is a meaningless abstraction.
Random numbers calculated with real energy is thus a “real abstraction”.
They contain elements of the physical world (energy usage) with that of the digital world (abstract symbols) and thus only they can bridge the physical and digital worlds, unlike "meaningful abstractions" which contain information and so can be derived with logic over energy which would break the tethering. Only randomn abstractions can maintain the tethering of energy to information.
People criticise Bitcoin for not being “real” and having no tangible, intrinsic value. This is understandable as digital things are not “things” but information, symbols. And Bitcoin is digital.
However, people also criticise Bitcoin for using a lot of energy which they consider wasteful for what they perceive as an intangible piece of digital information. Sure, use energy for washing machines and Christmas lights, because these are real and can’t operate without energy. But why use the energy of a small country just to make numbers on a screen which you can do for free?
They don’t realise that this energy usage is the key element that makes Bitcoin more than digital information, and an actual tangible entity.
Let’s step back.
You have a bar of gold. You wants another one. However, you can’t just make new matter out of nothing. This would require an enormous amount of energy (fusing atoms together). A key attribute of physical objects is that their existence is tied to the laws of physics. Only God could make more with no energy.
Digital information however has no such constraints. You have 10 bars of digital gold. You can easily make many more without energy by adding another number next to it. Like 10^9 bars of gold. Now you have 10 billion bars of gold. This is why digital items are worthless.
However, we exist more and more in the digital word, it is becoming our place of business, leisure, social interaction, yet it has no laws of physics, we are all gods in this world, making it like a Mount Olympus Lord of the Flies situation.
This is a problem.
Up until now we have solved this problem by creating demigods, who control the local laws of physics for their realm. E.g. Amazon tells you how much your purchase is (you can’t change the number), or your online bank controls the numbers showing the $s in your account.
These are still only bits of digital information, but the demigods of the internet are the only ones who make new units, like a real god for gold bars. However, these demigods aren’t gods, they are people pretending to be. They are centralised, confined to their own universes, corruptible, and liable to make mistakes.
So how do we solve the problem of adding the laws of physics to digital information, so that the digital world has continuity with the real physical world? This is where energy comes in.
By tethering energy to the production and transfer of Bitcoin, it is imbuing it with real world properties that only an entity who is able to harness a greater amount of energy could override.
This makes digital information physically bound. A seminal innovation in science and technology.
Another criticism is that the proof-of-work algorithm uses energy for pointless, random number guessing puzzles, and not something useful like folding proteins. This also misunderstands the nature of proof-of-work. It is necessary that the energy usage is random, that is, there is no way to game or cheat the finding of the random number used to verify the blockchain.
If there was some logic that could solve the puzzle more easily, it would require less energy (or even almost none at all), thus undermining the tethering between the physical world and the digital information in question. It would be information not energy that verifies the information, which is what we have now.
But it also goes deeper.
What is randomness? Randomness is data that contains no information, no pattern. You can write out a random number, but it has no meaning or utility. It is a meaningless abstraction.
Random numbers calculated with real energy is thus a “real abstraction”.
They contain elements of the physical world (energy usage) with that of the digital world (abstract symbols) and thus only they can bridge the physical and digital worlds, unlike "meaningful abstractions" which contain information and so can be derived with logic over energy which would break the tethering. Only randomn abstractions can maintain the tethering of energy to information.