Bitcoin was the first blockchain. It was revolutionary. It was groundbreaking. Now, it’s obsolete. That’s the problem with being first. You can’t learn from anybody else’s mistakes. Bitcoin is the bedrock of crypto, and of our portfolio, but now is not the time to buy more. Whether or not a good time for us to buy more will ever arrive will depend in part on whether the original crypto can learn one key lesson.
The lesson is this; Bitcoin uses an obsolete validation system to update its blockchain. This “proof of work” system is the notorious method by which computers solve complicated math problems to mine bitcoin. It’s notorious because it demands huge amounts of energy and therefore generates huge amounts of carbon pollution. I’m sure you’ve heard plenty of people mention the need to control carbon emissions to stave off worse and worse environmental disasters.
Those are the normal people that we want to become crypto users. Right now, they see Bitcoin as a threat.
the proof of work validation method needs to change if it wants to fit in with the modern era. That’s because crypto, as it exists today, is just a small fraction of what it could and needs to become. It’s a tiny asset class worth only about $1 trillion.
If it ever wants to be anything more, it needs to reach a larger and larger public…
Get a Job, Bitcoin!
If Bitcoin wants to stay relevant in the long term, it will need to see its proof-of-work system evolve into proof-of-useful-work. In other words, the hashing calculations used to mine Bitcoin need to serve some other purpose.
Right now, proof-of-work calculations are complete and total busywork. The challenge of these equations is generated artificially by the bitcoin blockchain in order to manage the competition between miners and the difficulty of mining. This is done to make sure that Bitcoin is not mined too quickly, and also that increasingly large collections of computing hardware are forced to compete with each other for the rewards paid out to miners.
That means that strictly speaking, none of it is actually necessary. It’s like taking a truckload of wooden boards and using them to build a giant maze instead of a house. If anybody around is seriously in need of a house, that’s a serious problem.
Every year, Bitcoin seems to pass by another country in terms of energy consumption. Back in 2017, it was nearly double the power usage of Jamaica. In 2018, it multiplied almost six times over and passed Nigeria. In 2019, It shot ahead of New Zealand. Now, it has surpassed Argentina.
In 2021, it consumed more than 0.5% of all the electricity in the world. That may not seem like much but think of it like this; imagine if, out of every $200 you had, one dollar went to Bitcoin. That’s the place Bitcoin has held in the modern energy market. That’s why so many people, average people who aren’t crypto savvy, see Bitcoin as an irresponsible blight on the modern world.
Reaching The Public
That’s what Bitcoin maximalists just don’t get. A lot of them got rich off of Bitcoin by being lucky enough to stumble on it way before it got even as popular as it is now. Before 2017 when it reached $19,000 for the first time. They invested chump change and came out multi-millionaires and young retirees. Dumb blind luck put them right on easy street, and that means that, firstly, they don’t actually have any particular insight as to what makes a good asset overall. Secondly, it means that they have no idea what to do going forward beyond clinging to the one asset that paid off so overwhelmingly for them.
These people are not usable sources of crypto or financial expertise. Their perspective is out of touch with the average person. And that average person is exactly who crypto needs to win over. The average person believes that Bitcoin is going to melt the polar ice caps and kill everyone. That’s where we need to meet them.
The answer is proof of useful work. If, instead of busywork, the calculations being solved to mine bitcoin had their own purpose. Maybe they could be simulating molecules for pharmaceutical development. Maybe they could be calculating the trajectories of satellite launches. Maybe they could be tracking butterfly migrations. Just so long as it’s helpful, and takes the weight off of other computer systems somewhere else.
As long as the work done mining avoids the need for work somewhere else, the power consumption will all even out. We’d have a more efficient, more productive world with more efficient and productive crypto. We’d have more valuable portfolios too.