Goodbye Proof-of-Work, Hello Proof-of-Work!

Almost anticlimactically, the much-anticipated (and even more delayed) Ethereum Merge took place this past week.i With this triumph of vision and persistence complete, a technological Everest was climbed; the magnitude and significance of which are equalled only by the “impossibility” of the task.ii

Much of the skepticism was based in the fact that the Merge was an evolution almost eight(!) years in the making and that it was basically akin to mid-air-refueling of a $200 billion rocket ship with the intention of transitioning the world’s largest decentralised smart-contract platform from Proof-of-Work (PoW) to Proof-of-Stake (PoS) security model. Alien Founder of Ethereum Surgetalik goes into more depth in his November 2020 article “Why Proof of Stake” iii as to not just the “environmental” but also the security benefits of the new model; and while it’s over my pay grade to disagree or even dispute his reasoning, what we can say is that with PoS, objectivity has left the building.iv But even for the new-and-improved Ethereum network, is Proof-of-Work really so easy to discard? Perhaps not!

Given that digital art and collectibles (“NFTs” as we currently know them) are the core value proposition of the Ethereum networkv – being as they are the vanguard of digital culture and crypto-values – it’s worth considering what “security model” underpins these sacred values and critical culture. So… what is it?

To quote, Breitling historian Fred Mandelbaum from his recent interview on the Significant Watches podcast:vi

Being a collector is not just about owning watches. You start being a real collector when you start to understand how little you know and how much you have to learn. It’s scholarship, it’s research, it’s very often friendship and understanding who to trust. A true collector needs to have an urge to pass it on — to pass on that scholarship and knowledge. The most important thing is that people can say they trust in your word, and to me that is the definition of a true collector.vii

Maybe it’s just my own bias as a former aspiring watch “collector” turned aspiring digital art “collector”, but I can’t help but agree with Mr. Mandelbaum: it’s all about what’s between your ears!

And while we all have varying aptitudes and abilities as learners, what’s true for all of us is that knowledge acquisition doesn’t strictly correlate with a bigger budget. You might have more time for learning if you’re wealthier, but there’s really no guarantee of this, and in fact we all-too-often see the inverse correlation between wealth and free time in our over-stimulated modern environment. Really, you can buy all the books you want, but if you don’t have time to read them then they’re just for show. Having a “smart” book strategically placed in your Zoom call background might make you look smart, but knowing which page to open in the book to find a particular passage or image makes you actually smart.

All of which brings us neatly to THIN desires and THICK desires,viii wherein we’ll use the following functional definitions for this episode: THIN desires are those based on envyix and THICK desires are those based on acculturation.x

Now, it’s entirely obvious to even the most elementary of observers that we live in a world dominated by algorithmically-supercharged THIN desires,xi but is that really what culture is fundamentally about? Ummm no? To put this in Mandelbaumian terms, THIN desires are modern Richard Milles and modern Rolexes, but even steel 1518s, and Dufour Simplicities. THICK desires are tiny Blancpain Minute Repeaters from the JC Biver years, Urwerk AMCs, and Longines pocket watches.xii But even these lists are misleading! For the simple reason that THIN desires can be enumerated and THICK desires cannot. THIN desires are the check-boxes of the simulation. THICK desires are the serendipity of free will.

This comes back to, of course, the kitsch vs. culture debate we had on these pages recently, wherein culture is knowledge, research, scholarship, and erudition, ie. that which is hard to obtain because a larger stackxiii doesn’t mean more time or passion. Contrariwise, kitsch is the johnny-come-lately dumbed-down mass-market viral version; that which is easy to obtain because a larger stack does mean more. More chips = more kitsch!

Of course, aspiration still matters.xiv So this isn’t to denigrate those who get their feet wet with the “easy” stuff, but if you’re still stuck in “easy” mode after 5-10 years in any collector-driven space, you quite simply suck and need to do better. Proof-of-Work is what separates mice from men.

For Post-Merge Ethereum, therefore, PoW hasn’t actually gone anywhere. It’s just moved from Watts to words, from mines to minds. There’s really no killing it.
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  1. The artwork at the top of this article is called “The New Octahedron” and it was created in 2019 by THE LOL INK DAO, “an accidental group of artists: ilan katin, Oficinas TK, XCOPY, Mattia Cuttin & Lililashka, the artwork was featured on and was seen by 130 million visitors worldwide during the time it was being displayed.”
  2. There were a lot of doubters that the Merge would ever happen! *cough*bitcoinmaxis*cough* … Speaking of which:

    If you only ever act adversarially against barbarians whose humanity you never see, and whose recognition is irrelevant, your freedom is in some sense incomplete. It may be superior to the sovereignty of individuals, but it is not all it can be. If you can exercise your potential for action to the fullest degree within the public that underwrites your freedom, but without destroying it, you are maximally free.

    via Venkatesh Rao on Mutualism (archived). An inconvenient truth for the self-styled-sovereignistas to be sure!

  3. Archived.
  4. Not unlike the Queen! But what do we mean by “objectivity”? Quite simply that PoW networks – of which Bitcoin is now the last man standing – are connected to “da erf,” which is to say that objective energy plus objective compute go in and crypto-coins come out. PoS is comparatively subjective because “the community” can diddle the inputs to suit whatever feelings it has that day/week/month/year with no far, far fewer physical constraints on their actions.

    Of course, this isn’t to say that Bitcoin could never change its block reward schedule or even SHRINK its block size in the distant future, but the soundness of bitcoin as as currency is enshrined in its connection to the physical world, just as it is for physical gold. Bitcoin will therefore continue to be the beating heart of the crypto universe, being as it now is the only umbilical cord remaining to terra firma.

  5. DeFi kinda sorta counts, but the lion’s share is still NFTs.
  6. Apple Podcast link. Spotify link. Look at me being such an equal opportunity kinda guy!
  7. Let’s put aside the “no true scotsman” temptation for a moment, shall we?
  8. Per Luke Burgis, whose book Wanting is a fairly decent quick-read on Rene Girard’s memetic theories, which have recently gained more attention from the likes of Peter Thiel and his acolytes.
  9. Archived.
  10. The ancient advice to “buy what you love” is well-intended but misplaced. It should really be re-framed as “LEARN what you love THEN buy it”. While it’s undeniably true that the deepest research comes after buying a new artwork or collectible, at least a chunk of the learning has to come beforehand. Or else you’re just the dumb money, y’know?
  11. This is the world/market, recall, where Patek Nautilus 5711s sell for upwards of USD $200,000 (at the peak market mania in early 2022). Indeed, if crotchety old NN Taleb thinks that Bitcoin is a cancer that’s only inflated because of irresponsible monetary policy, what does he think of the cancer that is the Nautilus market?
  12. To bring it back to digital art, since regular readers of these pages will probably be more fluent in that language, THIN desires are Bored Apes or Azuki bought by fuerdai, THICK desires are Toadz* or Art Blocks, that which is appreciated by curious connoisseurs.

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    *That Toadz Sommelier exists is all the reason I need to believe in the future of the project. Obsessiveness, passion, and humour will prevail!

    Toadz Sommelier

  13. Stack like poker chips not stack like computer software stack!
  14. Per Agnes Callard.

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