During a recent panel discussion on the future of Bitcoin at the Bitcoin Investor Conference in Las Vegas, Stash Founder and Open Transactions Creator Chris Odom shared his view on where Bitcoin, as a technology, could end up over the next ten years. While most people were expecting an answer related to bitcoin’s future value or the proliferation of bitcoin wallets, Odom decided to focus on Bitcoin’s use of proof-of-work. In his eyes, this is an innovation that will not be defeated by any other method for gaining consensus in a decentralized system.
Proof-of-Work as a Physical Hard Limit
During his remarks on proof-of-work, Chris Odom indicated that this function for deterring denial of service and other spam attacks may be a hard limit for consensus systems. The Stash founder discussed how other methods for coming to consensus in a decentralized manner always seem to come with problems:
“It seems to me that proof-of-work is actually a hard limit — like a physical hard limit, like the speed of light or the uncertainty principle or something like that because when you look at other consensus systems, they [only] look great in theory. I’ve actually built one myself before, just on my own time. They look great in theory, and they basically work properly, but then there’s always these niggling little attacks. And whenever you work through the effort of solving those attacks, you always arrive back at proof-of-work.”
Proof-of-stake is often viewed as a possible alternative to proof-of-work, but the vast majority of Bitcoin developers do not think such a system could ever work as well as what Bitcoin uses right now. Multiple papers have been written on the problems associated with proof-of-stake, although Ethereum plans to eventually implement their own proposal for a workable proof-of-stake system.
Proof-of-Work is Expensive to Fake
The key point on proof-of-work made by Odom during the panel discussion on Bitcoin’s future is that the system’s spam-prevention measures are expensive to fake. In other words, the reason that Bitcoin miners can be generally trusted to properly secure the blockchain is that they’re putting up a decent amount of capital in the hopes of receiving a block reward and transaction fees.
Odom noted that we also see this sort of phenomenon in nature:
“You see this in evolution — like the peacock’s tail. There are many examples of this where this truth finding was evolved to occur. And the reason you have something like a peacock’s tail is it’s a cue or an indicator of a certain accuracy of something that the other gender could pick up on accurately that is expensive to fake — the handicapping principle. And you see a lot of this in nature.”
Odom also pointed to the engagement ring as an example of something that is too expensive to fake:
“Another example is a wedding ring, an engagement ring. An engagement ring is expensive, so it’s expensive to lie with an engagement ring. It’s cheap to say whatever you want, but it’s expensive to lie. And the same is true in Bitcoin; it’s expensive to lie.”
In other words, a man may be less-likely to lie about their true intentions when marrying someone if he purchases an expensive ring for his new fiance.
Bitcoin’s Proof-of-Work Cannot Be Topped
Chris Odom’s philosophy on Bitcoin’s proof-of-work is at the core of why he does not believe another cryptocurrency will be able to take its place. He explained:
“Because of that impression I have of [proof-of-work] as a sort of pivotal innovation in history — sort of like the printing press or the Internet — it makes me realize that it will win over all other consensus-based systems and any other altcoin, especially one that’s not based on proof-of-work.”
Cryptographers, computer scientists, researchers, and others from around the world will undoubtedly continue to create new systems for decentralized consensus, but it appears that Chris Odom believes the best option has already been invented. Many people like to think that Bitcoin can be optimized and become faster and cheaper over time, but the reality is decentralization comes with costs.
Featured image via Bitcoin Investor Conference.
Kyle Torpey is a freelance journalist who has been following Bitcoin since 2011. His work has been featured on VICE Motherboard, Business Insider, RT’s Keiser Report, and many other media outlets. You can follow @kyletorpey on Twitter.