Proof-of-work is better for freedom money
Bitcoin is permissionless, durable, freedom money for all humans.
Every project has its purpose and this is Bitcoin’s. Bitcoin is not trying to do this while minimizing environmental impact1. Bitcoin is not trying to help you buy your cup of coffee. Bitcoin isn’t trying to help us get rich. Bitcoin isn’t trying to help us feel better about ourselves in anyway. Bitcoin exists to protect our freedom.
And for that purpose, proof-of-work is better than proof-of-stake.
There are two primary ways to gain access to an asset:
- Labor markets (work for something, and demand the asset in return)
- Capital markets (exchange for an existing asset)
In a proof-of-work2 system, both these markets remain available. If the government in your jurisdiction eliminates access to the asset via capital markets by banning exchanges and shutting down bank accounts, you can still perform labor, gain energy, use it for proof-of-work and gain access to the asset. You can always mine Bitcoin(even if just a little bit), if your government will not let you access it. They’d have to take away the internet, electricity, fossil fuels, waterfalls, and so much more to eliminate access.
In a proof-of-stake3 system, labor markets are no longer available as an on-ramp on to a scarce asset. You can only have some of the asset if you already have access to it. And the only way to get access to it is via some permissioned initial offering or a permissioned exchange4.
In western developed countries, at this moment in time, we have relatively free capital markets. So it’s easy to shrug-off this distinction and worry about the environment instead. But Bitcoin isn’t trying to protect freedom for a subset of humans or for a specific time. Bitcoin is permissionless, durable, freedom money for all humans.
- It just so happens that minimizing environmental impact makes freedom cheaper to protect. [return]
- PoW is a consensus system where each network participant shows verifiable proof of one-way consumption of a limited resource to have a chance at being chosen to mutate the system state. The chance of being chosen is proportional to the resource used. [return]
- PoS is a consensus system where each network participant stakes the asset to have a proportional chance at being chosen to mutate the state of the system. It’s also how dividends work in a capitalist system. [return]
- Yes, decentralized exchanges like Uniswap do exist and are doing good work. But they are only useful to trade, after you have converted fiat into a stablecoin. But to invest, you have to keep converting fiat into stablecoins and that needs permission. [return]