Jack Mallers, Founder and CEO of Bitcoin startup Strike, began his keynote at BTC Prague 2024 by emphasizing the theme of leveling up the understanding of Bitcoin. Mallers acknowledges the frequent questions regarding the differences between Bitcoin and other cryptocurrencies, such as Ethereum and Solana, and the possibility of a “flippening” where another cryptocurrency might surpass Bitcoin.
Mallers ambitiously titles his talk “There Is No Second Best” and aims to deeply explore the differences between Bitcoin and all other cryptocurrencies.
Mallers explains that the primary differentiator between Bitcoin and other cryptocurrencies is the use of proof of work. According to Mallers, Bitcoin is the only major cryptocurrency that uses proof of work, a consensus mechanism critical for ensuring trust and security without relying on a trusted third party. Mallers attributes the importance of proof of work to Satoshi Nakamoto, who stated that it is the only solution to make peer-to-peer e-cash work without a trusted third party.
Mallers highlights that understanding proof of work is essential to understanding Bitcoin. He proceeds to describe the digital age we live in, where virtual representations of reality are not reality itself but abstractions. Mallers uses the analogy of a map and territory to explain that digital tools can map our world and offer new perspectives but remain tools, not substitutes for the world they represent.
Mallers further explains that computers and digital technologies are abstractions of our minds, reflecting back the significance we assign to circuits. He compares the execution of a computer program to an actor performing a script, emphasizing that the hardware and computations are real, but the experiences created are abstract. Mallers underscores that nothing in cyberspace physically exists; rather, digital objects are abstractions that can be manipulated.
Mallers uses the example of Mark Zuckerberg to illustrate the concept of abstract power in the digital age. He explains that while Zuckerberg has no physical power over individuals, he wields significant abstract power through social media, influencing thoughts, actions, and relationships. Mallers contrasts abstract power with physical power, which is tangible and bound by the laws of physics, such as military force or physical assets like gold.
Mallers describes the transition of the US dollar from the gold standard (a physical constraint) to a fiat standard (an abstracted reality), illustrating how abstract power can be efficient and safe but lacks physical boundaries and requires trust. He notes that breaches of trust have historically occurred, making abstract power potentially exploitative.
Mallers mentions Adam Back, who created hash cash to address the problem of email spam by requiring proof of work, thereby imposing physical costs on virtual actions. Mallers emphasizes that proof of work connects the physical world to the virtual realm, making it the only physically real thing on a digital screen. He explains that Satoshi Nakamoto used proof of work to create Bitcoin, ensuring that updating the Bitcoin ledger required solving a hash cost function, thus protecting digital cash with physical power.
Mallers details how proof of work is inclusive, decentralized, and verifiable, providing a safe and peaceful means of protecting Bitcoin. He contrasts this with proof of stake, which he argues is based on an abstracted reality, lacking the physical constraints that make Bitcoin secure.
Mallers played a video of Vitalik Buterin, the creator of Ethereum, who describes proof of stake as a system that allows for creating a simulated universe with its own laws of physics. Mallers criticizes this approach, arguing that it detaches the cryptocurrency from physical reality and subjects it to abstract power dynamics.
Mallers asserts that Ethereum and other altcoins, which do not use proof of work, are not bound to physical reality and are susceptible to manipulation by entities like BlackRock. He argues that Bitcoin’s reliance on proof of work ensures that it can be defended by honest actors using physical power, whereas proof of stake systems rely on trust in those with the most coins.
Mallers concludes by emphasizing that Bitcoin is equitable and fair, contrasting it with Ethereum’s pre-mining and rule changes that concentrate power among a few. He asserts that altcoins frequently alter their monetary policies and even reverse transactions, undermining their credibility.
In closing, Mallers highlights the importance of educating people about the distinctions between Bitcoin and other cryptocurrencies. He reiterates that understanding Bitcoin means understanding proof of work and declares that there is no second best in the world of cryptocurrencies.