This article is reproduced from the WeChat official account "TH Travel Notes," written by Tang Han. The original article can be found at: https://mp.weixin.qq.com/s/Jgok2pi6kx2T4AaqDDIPzg
"With PoW as time, UTXO/Cell as space, and energy as the driving force, we can create a world."
The Bitcoin Renaissance is a topic that everyone is talking about. Many projects place themselves under this banner to explain their current actions. Currently, this wave mainly refers to the convergence of funds, consensus, and developers towards the Bitcoin ecosystem. But perhaps we can think more deeply about this wave: what is it? What will it leave behind?
I believe that the Bitcoin Renaissance is a revival of two fundamental value propositions: PoW and UTXO. The former is in contrast to PoS, and the latter is in contrast to the account model, with Ethereum being the representative of PoS+Account model. This Bitcoin Renaissance means that after fifteen years of development in the blockchain industry, it is returning from the PoS+Account route led by Ethereum to the PoW+UTXO route led by Bitcoin.
But why is this happening? What are people tired of? When people are returning to Bitcoin, how is the world they envision different from Ethereum? (Apart from the fact that Satoshi Nakamoto's disappearance made Bitcoin a no man's land.)
Analog Tendency and Retroism#
If you carefully read the whitepapers of Bitcoin and Ethereum, you will be able to understand how these two systems are different.
Image source: Bitcoin Whitepaper
In the abstract of the Bitcoin whitepaper, Satoshi Nakamoto defines Bitcoin as "a purely peer-to-peer version of electronic cash." We can find a reference to Bitcoin in the real world: cash. The characteristics of cash are: allowing online payments to be sent directly from one party to another without going through a financial institution. This constitutes an analogy. In the Ethereum whitepaper, there is no such reference. We will discuss this later in the article.
One of the reasons Satoshi Nakamoto invented Bitcoin was because this peer-to-peer electronic cash did not exist in the digital world, but it was needed. At that time, it was the global financial crisis in 2008, with many banks collapsing and people unable to withdraw money from their bank accounts. Therefore, although bank transfers provided a way for digital payments, people realized that "this is not actually my money; I only hold a balance in the bank's ledger." Real "digital cash" did not exist, let alone the fact that I held "digital cash."
Satoshi Nakamoto did something: he successfully created a digital analogy of real cash. How was this analogy achieved? He used PoW, or proof-of-work, as the foundation to provide security for digital cash (in fact, PoW may have a much greater role than this). PoW ultimately attributes the security of the system to real-world computing power and energy. He also used UTXO as the carrier to simulate the physical form of cash, storing the user's money in UTXO. Ownership is resolved through the "lock" of the private key.
Bitcoin's analogy to digital cash is very successful. PoW unifies the security of the digital world with the security of the real world, both based on energy; while UTXO provides independent and non-interfering digital physical forms. Together, they create a strong analog tendency in the digital world that imitates the real world. If Ethereum can be called radicalism, then this digital analog in the digital world can be called a form of retroism.
Why Return to Reality?#
This retroism implies an insight: there is some deeper wisdom behind the real world that the digital world can learn from. This insight is often forgotten because people create the digital world to surpass reality. However, we can still understand this point through a few examples:
- You own an item in a game, such as a golden sword. However, due to a lack of funds, the game developers shut down the server a year later, and the golden sword disappears. Can you imagine your physical possessions suddenly disappearing in real life?
- Vitalik once loved the warlock character in a Blizzard game. One day, Blizzard suddenly decided to remove the life drain skill, and he cried and embarked on a path of resistance against centralized internet platforms. Can you imagine a group of talented people suddenly having their skills drained by another company executive in real life?
- A blog website that you love is ordered to shut down. Even the entire website can no longer be found, and two years later, there is no trace of this person on the internet. Can a book disappear just like that in real life?
- ...
We can imagine a digital world that is crazy and far from analog tendencies: news websites that can be 404 at any time. Cups that cannot be owned. Game characters whose abilities can be canceled at any time. You may feel that something is wrong, but what exactly is wrong?
Image source: "On the Existence Mode of Technical Objects"
The answer is: it makes us live in a fragile, sycophantic (a sophisticated control method), and ethically inconsistent control system. The digital objects in this system have analogs but no solid existence, or in other words, they cannot exist freely and must rely on a third-party platform. However, we project a lot of emotions, time, and trust onto these analogs. The emotions we project ultimately become chips controlled by the platform.
When people love and trust digital objects that cannot exist freely and are designed by others, love is being used and manipulated in a systematic and mass manner, and we lose the sense of reality.
Reality implies a certain solidity, which is the foundation for the birth of ethics and morality (privacy, human rights, freedom, responsibility, sublimity). This may be the reason why the digital world is returning to reality.
Representations of Bitcoin's Analog Tendency#
Image source: Adobe Stock
Let's go back to Bitcoin. In the Bitcoin ecosystem, we can see a strong analog tendency. Bitcoin simulates electronic cash, and Bitcoin developers also find inspiration from different items in the real world to simulate. Here are some examples for your reference:
- Bitcoin: electronic cash
- Lock: lock, later extended to a one-time seal by Peter Todd
- RGB Protocol: Scottish land deeds (only store Commitment on Bitcoin)
- Ordinals Protocol: dyed 聪 (serial number)
- Atomicals Protocol: digital material theory
- Runes: viewing Bitcoin as a slate
- KeyChat: stamps, envelopes
- CKB, which follows the Bitcoin design philosophy: cells (the basic unit of data existence in CKB)
- Spore DOB Protocol: DNA and interpreter embedded in cells
Each of these examples can be discussed at length, so I don't intend to expand on the details in this article. What I want to share is that although the construction of Bitcoin is very simple, different developers seem to find different perspectives in this simple construction to create their own worlds. Just like a tree, some people focus on the leaves because of their soft characteristics, so they use them to weave flower wreaths; some people focus on the branches and use them to build houses; some people focus on the bark and use it for heating. Some people are inspired by the tree and plant a forest.
Different understandings arise once something exists. Different people can create different things based on their perspectives of Bitcoin. Different Bitcoins coincide on the chain we see today, forming the largest consensus in the world.
However, it seems difficult to see this in Ethereum.
Ethereum is not Analog#
If you look through the Ethereum whitepaper, you will not find the analog tendency like Bitcoin. From the beginning, Ethereum was function-oriented. It did not aim to simulate anything in the real world but was created to facilitate the development of on-chain applications. Ethereum has always been associated with smart contracts.
Image source: Ethereum Whitepaper
But I want to say that in reality, existences are never function-oriented. Existences must exist first and then have their functions understood and explored through practice. Just like a tree. A tree does not exist to be burned as firewood; it silently exists there. As long as the energy does not run out, its life does not end, and it can continue to exist. It is only in the process of interacting with you that you discover its various functions.
PoS does not provide the energy foundation for assets on Ethereum to be isomorphic with reality. Although there have been countless debates on the question of whether PoS or PoW is more secure, and supporters of both sides have found their own perspectives to feel at ease, the analog tendency and PoW have diverged into two different worlds. The PoS world is a more human-governed world, while the PoW world attempts to achieve a unified cost structure between the digital world and the real world, that is, in order for existences to exist, energy costs must be paid.
In reality, existence is never sycophantic or easy but laborious. Existences face entropy increase at all times. Think about it, if you don't clean your house for a week, it may be covered in dust. Maybe you don't want to clean it yourself and use a robot vacuum cleaner to clean the room, but then you have to charge the robot vacuum cleaner. Another example: if you don't consume energy and don't eat, as a living being, you will die. These are basic common sense.
Energy support is needed for something to exist and counteract entropy increase. This point has been inherited in the world built by PoW. To make the on-chain world exist, PoW chains must continuously consume energy. Supporters of PoS believe that this is environmentally unfriendly and unnecessary from a security perspective. However, energy consumption simulates a cost structure similar to reality, and this cost structure constitutes the basis for extending ethics to the digital space and confirming the reality of digital objects. I will discuss this in detail in another article.
While Ethereum's account model is beneficial for more developers to develop applications, this model inherently makes it impossible for Ethereum to be analog. It is more like a relational existence, where the existence of all things is state-based and needs to find its state and position in the world state tree. It cannot achieve the solidity and stability of UTXO. It is difficult for us to imagine that an apple in the real world can be influenced by a cup thousands of miles away, but in the Ethereum world, it is possible because there are no independent apples and cups, only one state after another. However, this state is not controlled by a third party. Contract attacks and asset theft are common events on Ethereum.
Or in other words, nothing exists in Ethereum.
To some extent, the non-existence of anything makes the innovation in the Ethereum ecosystem limited by the updates of the leadership's narrative. If something exists, people can explore its functions from different perspectives based on their observations of it and create different things. For example, Peter Todd found a one-time seal on Bitcoin; Casey found a historical slate on Bitcoin. Although Satoshi Nakamoto initially only wanted to build electronic cash, you see, once something exists, different perspectives can create different things. A tree can be used to build a house, as firewood, or for woodcarving...
Because nothing exists, the Ethereum leadership must define what Ethereum is, especially in terms of its functionality. Since it is functional, it needs to continuously optimize this functionality, which leads to increasingly radical parameter improvements and feature integrations... But doing so easily loses direction.
Returning to NFTs: Can Digital Objects Replace You?#
Let's answer the initial question of the article: what changes will occur when we return from Ethereum to Bitcoin? What will the Bitcoin Renaissance leave behind?
A natural trend is to build a true all-chain digital world, or autonomous world, based on PoW and UTXO.
Although the Ethereum community also discusses all-chain games, the worlds pointed to by all-chain games are different under two completely different technical architectures. CKB's architect, Jan, once said something that impressed me the most: "With PoW as time, UTXO/Cell as space, and energy as the driving force, we can create a world." PoW+UTXO itself constitutes a simulation of the real world, with its own internal time and independent, non-interfering physical forms for digital objects in the world. People can use the "Ghost in the Shell" mode to write content into existing physical forms to create digital objects. On the other hand, PoS chains do not have their own internal time, and there is no concept of independent objects like UTXO in the chain. The "objects" inside are more like a relational existence, essentially a state recorded on a global ledger.
On PoW+UTXO chains (not just Bitcoin), we can imagine a digital object that needs energy to maintain its existence, just like physical objects in the real world, and consumes the same energy. We can also imagine a relationship between a world and objects: construct a digital object that exists in terms of its material structure when the world (i.e., the blockchain) exists. Its existence is not subject to anyone's will. No one can destroy or change it. In this sense, the existence of digital objects is equivalent to the existence of the blockchain in terms of security and effectiveness.
We cannot imagine that an NFT on Ethereum has the same solidity as Ethereum itself. In most cases, NFT images exist off-chain, and there is only a contract state on Ethereum, allowing programming and not representing the object itself. It allows developers to program as flexibly as possible, which was once a feature that Ethereum was very proud of. However, in the construction of an autonomous world, this anthropocentric tendency actually makes the relational existence in the world fragile and not solid.
NFTs were the core of the metaverse concept that exploded in the previous bull market and a key factor in the explosion of the Ethereum ecosystem. It runs through the entire bull market. Whether it is encrypted art, PFP avatars, metaverse, GameFi, or later DAO and SBT, they are all inseparable from NFTs. Unfortunately, developers on Ethereum tried to build blockchain games around NFTs but ended up converging into GameFi; idealistic developers tried to develop all-chain games, which evolved into a set of design concepts called AW but were difficult to implement.
I believe all of this will start over in the Bitcoin ecosystem, but the path to realization, people's understanding, and the final presentation will be very different. Bitcoin's analog tendency and retroism will accompany developers. Good developers should not think about how to quickly port the existing world on Ethereum but how to build new rules and a new world on this solid land. This may be the greatest innovation of this bull market.
I will discuss this part in more detail in another article.