Welcome to the Bitcoin Infinity Academy, brought to you by the
Plan B Network and Bit Box.
This is, uh, chapter five, I believe, of, uh, Bitcoin
Sovereignty through mathematics.
My first book on Bitcoin, I'm Kwan and I'm here as always with Luke De Wolf.
How are we today, Luke?
Oh, we are fantastic.
Thank you for asking.
Good.
Good morning, and I'm excited to be here.
How are you?
All good.
Uh, it's a lovely morning here.
Oh, no, it's not a lovely morning.
It's a shitty morning, but it's lovely.
Anyway, because we're doing this.
Absolutely agree with that.
Yeah.
It's a bit cloudy outside for me also.
Alright, uh, shall we, uh, first just remind our, all of our
listeners, how you can get involved?
You can go to our Geyer page, Geyer Fund slash Project slash Infinity for
all the information about how you can join the academy and get involved.
And as a reminder, we're also releasing all of the chapters for free on Noster.
So the links will be in all of the descriptions for this
and you can read along there.
am I forgetting anything?
Knu.
I don't think so.
So we can, uh, we can just jump into this chapter called Proof of Work
Here and see, see what's in this one.
Absolutely wonderful.
All right, let's do it.
Proof of work.
Zoom out of time for a while and imagine how the antlers of a magnificent
moose buck evolved into being.
The main purpose of big antlers in nature is believed to be a way for
the buck to impress potential mates.
They're somewhat akin to the feathers of a peacock or the shroud
of any male bird, for that matter.
The animal is trying to signal that it can thrive in its environment.
Despite its enormous appendage.
It's there to tell the potential mate that this specific specimen will
bring her strong, healthy offspring.
These are all evolutionary metaphors.
Of course, the animal itself is probably unaware of signaling anything.
For such antlers to evolve into being a whole lot of moose will have to die
early, or at least not get a chance to reproduce over thousands of generations.
In other words, a lot of resources need to be wasted, all of this for the animal
to prove its value to potential spouses.
Therefore, from the surviving moose's point of view, the
aforementioned resources were sacrificed rather than wasted.
Good start.
I see where this is going.
And always love a moose metaphor.
Of course you do.
You're a cano.
Uh, so isn't it an elk metaphor?
No, it's a moose in, in Canada.
Right.
And an elk.
So where, where, where are
both.
There's both.
Okay.
It would be reindeer though.
If we were, if we were talking Scandinavian.
And is the plural of moose Meese.
It's definitely Meese.
Yes.
Alright.
And elk and many elk.
Elk and many elk.
Yes, that's that's correct.
Actually, Eskimos is the correct plural of elk.
Uh, I believe that's, uh, Inuit, isn't
That's politically correct.
Okay.
Okay then.
Alright.
Uh.
We'll have some editing to do already here, I think.
I think we can mo leave most of that in.
I'll right then.
anyway, the, this is one example of many in nature of, of proof
of work, uh, especially in birds.
I, if I'm, if I'm not mistaken, I mean, I'm not a biologist by, by any stretch of
the imagination, but from what I know of evolutionary theory, this, this is one of
the things that was hardest to explain, like, uh, traits in animals and plants
that didn't, didn't have an, an obvious.
Survival mechanism thing attached to them, but they figured out
later that it's used for the, that it's, uh, actually proof of work.
So the, the feathers of a peacock, for instance, or, or strange
mating rituals in birds, they're actually there to, to uh, um.
for the animal to signal to the other animal that they are capable
of more than meets the eye.
Uh, uh, and this is, uh, a very good me metaphor for what's,
what proof of work is in Bitcoin.
I believe like You could, from a certain perspective, you could say that it's
actually proof of results rather than proof of work because it's only the,
the actual valid block that counts.
so it's more alluding to work than proving work because you could be super
lucky with your bit X or something and just find the correct block after
having tried a handful of times.
But, uh.
Usually, uh, if the, if the, uh, difficulty is high enough, it takes,
trillions of, uh, of guesses per second for the network to find the correct block.
So, so this is, yeah, at the very core of what Bitcoin is.
The maybe also, uh, like make this point that, um, everything in Bitcoin
is probabilistic, so reason it takes 10 minutes to find the next block on
average is that it's, uh, the probability is set, uh, in such a way that, uh, it
takes on average 10 minutes and every two weeks It's, uh, recalibrated with
the difficulty adjustment algorithm, so the, the 10 minutes are dependent
on these two weeks, and the two weeks are dependent on the 10 minutes.
So it's a, a loop thingy going on there.
And it's one of, like, I've never met a person that can accurately,
accurately describe the difficulty adjustment algorithm and sometimes,
uh, and simultaneously be against Bitcoin or have good arguments
for why Bitcoin doesn't work.
Because that's when it usually, when it actually clicks, is when you get
the difficulty adjustment algorithm.
so, um, what else to say about that?
Um, no, I think, I think that's it.
That's great.
And I mean, this chapter is a great explanation of the
proof of work mechanism.
And so I think here, well, first of all, you've, you've gone and
dug into the actual Bitcoin parts.
I think we'll, we'll cover it in the upcoming I. Or paragraphs.
But yeah, it's great.
I mean, I, I think just first of all, on this evolutionary
metaphor, it's ingenious.
I hadn't ever thought of it quite this way myself, that that would be akin
to this whole proof of work thing.
That evolution over time is akin to the proof of work versus proof of results.
Thing like the, the result is that you get a better chance at reproducing something
like that, and it takes a, a long time.
It's not an exact perfect corollary, but it, it does have, elements of what
evolution actually is because there's, there's misconceptions about evolution.
It's not necessarily exactly about this.
You have a better chance of reproducing.
It's also an aggregate.
It's like you say, it's a, it's probabilistic.
Uh, something that maybe makes, one individual moose, for example,
capable of having an offspring might mean that they don't have enough food
to go around for the pack of meese.
And that that little particular subplate of meese dies out.
Uh.
Right, but, but it, so it's the things that actually work over time, not in
single generations either, which I think is another point that's along
the lines of what you were saying here.
Yeah, and I think the biggest, most common misconception about
evolution in general is the timescale, because these timescales are huge.
They're enormous.
They take like hundreds of thousands, even millions of years for, for things
to, to, to come into being, and, and there is so much trial and error.
So like it's not survival of the fittest, it's survival of whoever survives.
For whatever reason they may survive.
Like, uh, and this is true on a cellular level as well as on a, a pack level.
Uh, so, so there's a lot of things going on there, and it's, uh, widely
misunderstood, but I, I think the, uh, proof of work metaphor works really well.
Exactly, and we, we just had a question in the chat about how is it possible.
For a bid x to find a block, and I mean, the, the answer is that it's
an extremely low probability, right?
It's, it's extremely unlikely that a Bid X would find a block,
but it is possible technically.
No, e exactly.
Back to, uh, that's a good question, by the way.
And, uh, there's, uh, it's, it's all about probabilistic.
I mean, you could do the hash by hand and find the correct block if you were
really, really, really amazingly lucky.
Uh, but the probability is so low, so it's not worth the effort.
And that's at the core of what Bitcoin is.
Like.
The, the, the only reason.
You say that you own the Bitcoin is that you find it very improbable that
someone else holds the same private key, but it's not actual ownership,
it's just knowing a number I.
Yep, exactly.
Um, nothing, nothing else to add here.
Maybe let's get into the, uh, specifics that you, you wrote about previously.
All right, onto the next one.
The proof of work algorithm in Bitcoin does a similar thing.
It enables miners to sacrifice a lot of electricity, a real world resource
to find a certain number, thereby proving that they had to commit a
lot of time and effort to do this.
Time, by the way, is the scarcest of all resources.
Because of all this, a Bitcoin miner is very reluctant to
sell Bitcoin at a net loss.
The electricity has already been used when the Bitcoin pops into existence,
and the miner has no other means of getting his money back then by selling
the Bitcoin for more than the cost of the electricity it took to produce them.
This is assuming that the mining rig itself has already been paid for.
Proof of work is a way of converting computing power into money in a sense.
Yes, these rigs consume a lot of energy, but the energy consumed
correlates directly to the actual value of the created token.
Any decrease in the energy expenditure would also lead to a decrease in the
value of the token, not necessarily in the price, but the actual value.
This is the main reason mining algorithms can't be less resource
consuming or more energy efficient.
Wasting energy is the whole point.
No waste.
No proof of commitment.
Interesting.
What are your thoughts?
Yeah.
Um.
If, if you found yourself in a dark cave, uh, and you had a, a, a flashlight
and you, and you found a gold bar, and you found a piece of paper with a bunch
of zeros followed by strange letters, like what would intrigue you the most?
So this might sound like a strange question.
What, what I'm alluding to is that anyone who understands how extremely
hard it is to find the hash of a Bitcoin block and a hash beginning
without many zeros, can instantly, uh, see how much energy must have been,
uh, sacrificed to find the block.
So, so that thing in itself is like, should trigger the question
in your mind, why, why on earth was this person willing to sacrifice
so much effort to find this number?
It's weird, isn't it?
And that should trigger all the other questions and intrigue you
enough to figure out what Bitcoin is and, and come to the, holy shit,
this is super valuable Conclusion.
But, uh, yeah, there, there's a lot here.
Um, some of the terms I wouldn't have used, maybe if I wrote this now with
the value on the price in the, in the end here, I think the, the, there's
a lot of bad metaphors, uh, around for Bitcoin's scarcity or finiteness
on how to, how to like convert.
electricity into, you know, what, digital energy and all of this stuff.
I don't really like those terms because that's not actually what it is.
All it is is like one specific part of a finite pie.
Uh, and, uh, that finite pie, it's, it's valuable because
people think it's valuable.
Like everything else, it's, uh, value is subjective.
So the value part is, uh, iffy.
But, um, I'd say.
What it can do is convert energy into a very specific part of a very specific pie.
you know, I think the metaphors are still helpful.
We've, we've been over this a little bit, that it's, it's still often helpful for,
I. newer Bitcoiners or pre Bitcoiners even to understand what's going on.
But yeah, it's not.
Literally, for example, a battery, or not literally energy being converted
into money, but it, it is a way for energy that would otherwise not be used
to be consumed in a productive way.
And in, in that sense, it's as close to a battery or energy being
converted into money as possible.
Uh, and the, the uses for this are, are, they are, they're bountiful now.
Uh.
No, I, I'd say energy being converted into money is a correct metaphor, uh, uh, but
calling it digital energy is not, uh, so the, I I tweeted a thing yesterday, uh,
along these lines by the way, uh, which is how I'm thinking about this nowadays,
and that is when orange peeling avoid metaphors that attract mid widths, but
repel edges of the bell curve people.
So, so that's my advice because it's more important to get the edges of the
bell curve people into Bitcoin than it is to get the middle of the bell curve
people into Bitcoin, in my opinion.
Uh, because what you want is the rednecks with pickup trucks
and don't tread on me shotguns.
Uh, and you want the really, really clever people and everyone else will
follow eventually if you just get those.
So, so like this is what to think about when getting, when, when.
When figuring out metaphors for the different functions
of the Bitcoin network.
Uh, in my opinion.
Very good.
I think there are some people who are making the arguments for the mid
widths and are just trying to get as many people into Bitcoin as possible.
But I think we need both approaches, basically.
Yeah.
Uh, and, uh, but I prefer the other approach, like the mid
widths will eventually come anyway and, uh, that's good to remember.
I.
Point.
Let's, let's move on to the next one here.
Sorry.
If anyone go for, um, like, I, I don't really mean width.
I mean middle of the bell curve person, uh, that's much less offensive.
Somehow.
All right.
Onto the next one.
The fundamental principles of Bitcoin were set in stone in
2008 and block number zero.
The so-called Genesis block was mined in January, 2009.
In Bitcoin, a block of transactions is created every 10 minutes in
its first four years of existence.
These blocks included a 50 Bitcoin block reward given to
the miner who found the block.
four years, this reward is halved so that the maximum amount of Bitcoin
that can ever be claimed can never exceed just short of 21 million.
2016th block, or roughly every two weeks, the difficulty of finding a new block
is recalibrated so that a block will be found every 10 minutes on average.
The value of this feature and the impact it has on coin
issuance is often understated.
It is one of the features of Bitcoin that separates it from gold and
other assets in one of the most subtle, yet most powerful ways.
the price of gold or silver or oil or any other asset goes up, producing
that asset becomes more profitable and more resources are allocated
to produce more of it faster.
This in turn, evens out the price.
As the total supply of said asset increases.
Gold has been able to maintain or increase its value long-term over time
because of its high stock to flow ratio.
Stock refers to the supply of an asset currently available on the
market Flow refers to the amount added to the stock per time unit.
The bigger the stock in relation to the flow, the less of an impact
on the total supply and increase in the price of a specific asset.
Has.
In Bitcoin, a price increase has virtually no impact at all on
the coin issuance rate the flow.
since the difficulty of finding the next block in the chain is constantly being
optimized for a strict issuance schedule.
No other asset has ever behaved like this, and we are yet to find out what impact its
existence will have on the world economy.
Yeah, so a bunch of the specifics about how the proof of work algorithm
and difficulty adjustment works.
Yes, uh, this is the term stock to flow is, uh, uh, something you should
know about if you're in Bitcoin.
And, uh, because it's very important to understand the,
the value proposition here.
Uh, and this is also pointing out why Bitcoin is not digital gold, uh, and why
it's so much better than gold because.
It has a finite supply.
Gold does not.
the reason that a cow priced in gold is, uh, costs about the same now as
5,000 years ago, is that the ability for humans to find new gold, uh, increased,
uh, in parallel with the increase of productivity of everything else, uh,
meaning that Gold's, Gold's stock to flow is diminishing, but not, um.
Not at the same rate as as Bitcoin, because Bitcoin will, we will
eventually run out of bitcoins.
We won't eventually run out of gold.
Uh, so it's, so it's super different there.
And therefore also to everyone aware of this issu issue and schedule,
you could say that all the bitcoins already exist and that they've always
existed even, and that it's just that the hash rate was zero up until 2009.
And, uh, when this thing.
Materialized.
Uh, and, and this is so fascinating to me, um, like the way I see it, the, the,
the miners do not produce the Bitcoins.
They produce blocks and we, the network pay them in Bitcoins to, to secure
the network for us and produce blocks which we can fill with transactions.
the, the way they get paid is through the block subsidy,
which is block reward plus fees.
Uh, and the, the block reward part of it, the thing that Hals every four
years is how many bitcoins we allow them to, print out thin air for themselves
per 10 min, uh, every 10 minutes.
but, but it's, um.
Set in stone already, and it, it won't be ever be, there won't ever be more
than 21 million bitcoins, which is why everything divided by 21 million makes
sense, uh, from some, some angles.
so if you know about this, you've already priced that in and, and
you know that this is the most precious thing you can ever own.
Uh, I think we've already somewhat talked about these specific features.
I think the contrast to gold is one of the interesting things here, the more
interesting things to grasp, basically.
Uh.
The, the line, no other asset has ever behaved like this, and we're yet
to find out what the impact it, its existence will have on the world economy.
Yeah.
That, that's basically it.
What's what's happening, what we're seeing as miners pretty much constantly
pour more resources into Bitcoin mining.
We're at, I, I think we changed to having a, it's an XA hash now, like
there was something about that we're on another, another zero in hashes recently,
Or another three zeros, so it's another prefix.
Well, yeah, yeah.
Right, right, right.
It's another prefix.
And, and it didn't just, it didn't just like, barely hit the XA hash number.
It, it, like burst through it even.
Um, so yeah, it's, it's, um, despite that the more production
doesn't actually lead to an increase in the production of the good.
more miners or more individuals are choosing to start up miners and
attempt to, to find the bitcoin.
Basically, and I, I think that's the, that's the natural effect here,
that it's a totally scarce resource.
Therefore, if you get some of it, you have a, a fixed amount of the fixed supply.
That's it.
And that's never going to, to change, that's never going to be inflated away,
at least while those of us who understand Bitcoin have anything to say about it.
Maybe make a point here about probabilistic again, like the
probability that it ever will change.
It's, it's so low that we can, Treat it as if it will never change, but
it could theoretically change if everyone in the met, uh, in the network
agrees that that's a good decision.
Uh, so, so that's, that's the beauty of this thing.
Like, uh, it's, it's robust because it's, uh, what's the word, anti-fragile,
Because we all have to agree that, uh, to agree that it needs to
change in order for it to change.
So it's not like a democracy at all.
It's you need a, an, an absolute super majority.
And another way to look at that is that you need, you need it to be a good idea
for the good idea to be implemented.
I. Because everyone agrees it's a good idea, then it's, it is a good idea.
Objectively, everyone thinks so.
So yeah, there's, uh, that, that, that's about that.
Uh, I may, may, uh, maybe I should say a couple of more things
about the stock to flow thing.
So the, the, because it's, it's only skimmed on the surface here.
So the thing that happens when Gold's Price goes up is that
gold miners buy more, Spades.
They buy mining equipment in spades.
Uh, so, so, so that they can find more gold per time unit.
Uh, uh, but at the same time, the, the total gold supply of gold in
the Earth's crossed is running out.
So it becomes.
Like the, the bigger the stock of gold that is already there, the
less of an impact This change in price has to the flow of new gold
coming into the market because they allocate more resources to finding it.
and here, bitcoin's completely different.
Uh, the, the supply is not dependent on how much you try to find them.
That's it.
You don't get more than, uh, one block per every 10 minutes.
Like that's, that's how it works and it's beautiful.
so you're not, you're not getting more bitcoins, but you're getting more
value for your, for your hashing power.
And, and that's sort of the point.
Very good point.
It is, uh, and I think the details about this just continue on here
now in the, the following paragraph.
So I think let's continue.
So how does one mine a block in the Bitcoin blockchain?
In short, the mining process goes something like this.
Every active node in the Bitcoin network stores a copy of the MEM pool, which
contains all Bitcoin transactions that haven't been confirmed yet.
The miner puts as many transactions as the block size allows into
the block Usually selecting those with the highest fee first.
He then adds a random number called ance and produces a hash of the entire thing.
Using the SHA 2 56 hashing algorithm, a hashing algorithm
turns data into a string of numbers.
If the resulting hash begins with a specific number of zeros, decided by
the current difficulty of the network, the minor wins, the block reward,
collects all the fees, and gets to put the block on the blockchain.
I think I could continue here, but honestly, there's a couple of points to
discuss just directly from this paragraph.
I.
Yes, here.
Uh, the, the thing I'd like to point out is that there's no such thing as the Mele.
Uh, every node decides what their mele consists of.
You don't have to put transactions in your mele if you don't like the transactions.
Like we, we come to a consensus of what, what constitutes, uh, a valid
transaction, and that's what happens.
That that's what, Decides what, what transactions you put in your maple.
Of course, if you don't allow, or, or if you censor and if you, if your PLE
is very much different from everyone else's, the the chances of them actually
being okayed by all the other I. Participants in the block is, is lower.
But yeah, maybe I'm, I'm, uh, not explaining that really well
here, but, uh, point is that there's no such thing as thele.
The, there's, uh, there are plenty of differents.
And of course that's an important distinction here, the collective mepo,
such as it is, as in the, uh, average mepo based on that, those transactions
which are mostly circulating.
Okay.
That's, that's sort of a fine concept that does exist.
Again, we're in the, we're in the territory of things that
are really useful to know.
Uh, if you really want to understand everything as it.
Is down to the base of it, but not necessarily, uh, you, you can think
of the abstraction, uh, a little bit in the general sense, like, I'm
broadcasting my, I'm broadcasting my transaction to the me pool.
I think that's fine to think that, but yeah, you're, you're right.
It's, you're, you're broadcast, you're broadcasting a transaction to, uh, from
your node or from someone else's node to a bunch of other nodes, and they keep
broadcasting it, et cetera, et cetera.
And that's, that's how it actually.
Up and they can be different because you can set different policies or choose
to have only transactions you can.
You can choose not to broadcast transactions, but put them in your
mem pool and if you're a minor, that's how you could mine transactions that
are outta band and not broadcast it to the whole rest of the network.
There's a lot that goes into this.
Uh, without getting too technical, Bitcoin is dependent on, users being
active and running their nodes and, and actually taking care about like
what their node does and what kind of transactions it lets through or not.
And, uh, it's people doing that, that's what becomes the
average, uh, after a while.
Right?
That's, that's what eventually, eventually all of it is about coming to an agreement.
That's what we call consensus.
Yes.
Consensus.
That's a. Important word.
Uh, and as you say, maybe this isn't the, uh, time to go too technical or
too deep into some of these features.
I think we'll, we'll dig more deeply into concepts of the types
of transactions that are permitted and, and other mechanisms like that.
But I think maybe it's, it's perhaps, for another time or, or what do you think?
Did you want to get into the whole
Yeah.
No, no.
We, we, we, uh, we get into the weeds of this in the, um, clown World book,
and we'll see what has happened then.
And it's, it is interesting because we we're not starting that whole
serious, uh, like we're starting that like a year from now or something.
So it's gonna be very interesting to see how, how well that aged.
I, I guess, and by the way, consensus is spelled with a C and not a K.
let's, let's move on The beauty of the system is that it is trivial for the nodes
in the network to verify the block so that no double spending can occur, but it's
near impossible to forge a fake hash since the probability of finding one that begins
with as many zeros as the difficulty of the Bitcoin network demands extremely low.
To a layman's eye, a hash beginning with a bunch of zeros just looks
like a random number, but a person who understands the mathematics
behind it sees a different thing.
The zeros act as proof of an enormous commitment to trying
out different nonsense and trying to find a perfect match.
If you're able to understand these huge numbers, you quickly realize that
this number must have been created by devoting computing power to doing just
that on an absolutely massive scale.
The proof is in those zeros.
If you compare just the hash rate of the top five, so-called cryptocurrencies,
it is obvious that Bitcoin is on a different level security wise, from
a hash rate to security perspective.
The Ethereum blockchain is about five times as ineffective, and
the Litecoin blockchain about 10 times as ineffective as the Bitcoin
blockchain at the time of writing.
This in addition to the obviously more centralized nature of these alternatives.
Yeah, I think I'll pause there.
Uh, I'm not, I'm not sure exactly how much we haven't covered out of, out of these.
Of course, the little bit about the, um, shit coins is, uh, is in addition.
But, uh, I don't know how long you wanna linger on that.
No, but it's an important paragraph and, and maybe I, I, uh, uh, jumped
to conclusions too early here in this chapter because it's explained here.
but it's crucial to understand why a number beginning with zeroes is,
Hinting at something very valuable.
Uh, but the, the, the interesting thing about the, what I say about the
so-called cryptocurrencies or shit coins in the end here is that, uh,
this was written in 2019, early 2019.
I. I believe in, it must have been in February or something.
So, and since then, uh, this is, this has just been more and more true.
Like today, it's, uh, it's not even comparable anymore.
Like, Ethereum is, is such a shit show at this point.
And unlike Coin two, like it's, uh, there's not even a comparison to be made.
And Ethereum isn't even using proof of work anymore.
No.
So it has absolutely no sec security.
Like proof of stake is provably not working.
It, it is.
This, the system we're living in, like central banking is proof of stake.
So one guy gets to decide like it's, it's uh, it is by definition centralized.
If you have more resources, you win.
Like Bitcoin is.
Bitcoin is only decentralized because it needs to be like decentralization
is an unfortunate means to a greater end, and that end is an absolutely
finite, uh, supply of the monetary token or resistance to replicability,
something you cannot copy.
That is the end goal, the decentralization.
It's unfortunate that it, it's needed because we only need it because,
uh, people cannot be trusted.
If every, if every human being was trustworthy, we wouldn't need Bitcoin.
We could just decide that these are the number of coins available
and it wouldn't be inflated.
The reason we need the, the centralization is to secure the network so that we can,
everyone keeps everyone else in check.
So that it's not profitable anymore to try to break the rules.
That's the sad, the sad truth about this thing.
but it's also what makes it so beautiful because in the end that
don't trust, verify mentality.
I. Leads to a society that is more trusting, like we, we humans, uh, we
unlock something within ourselves when we become bitcoiners and it becomes
easier to trust your fellow man, not harder because you know, that fellow man
has no incentive to cheat you anymore.
So, yeah, it's, it's such a beautiful system and that, that's
why I started writing about it.
It just mind blown by, by the whole, the whole thing and what it implies.
Just great.
And honestly, these, these points about why the other so-called
cryptocurrencies just don't fit the bill.
it's important to discuss this stuff.
Absolutely.
Because otherwise people are trying to get into Bitcoin, trying to figure it out,
get led astray constantly and think that some of these things are, are legitimate
and I have a lot of empathy for.
People who have had their shit coin phase or who, who get into
crypto, uh, because many of them are not there for the gambling.
They think it's, they think it's the way out of a, of a system that is broken.
And just think crypto is the the thing.
It's the thing that's gonna go up and whatever it is, it's all ignorance.
It's all from not getting directed to the right thing, which of course is Bitcoin.
So this is why I like explaining this stuff because it, it actually is relevant.
Um, if, if you've gotten, if you're, if you're here with us, you probably
already have this figured out, but still it's, it bears repeating.
I.
I mean, still there.
Bitcoiners shouldn't like try to forbid, shift coins or forbid Bitcoin forks.
That's, that's.
Very counterproductive.
Bitcoin is what it is because we agree that it is this thing.
Uh, but that also implies that we need alternatives to, uh, to, to, to exist,
to figure out what the real thing is.
But at the end of the day, it's very, very simple.
Fiat currencies.
one guy gets to decide, uh, uh, if we're going to print more money or not.
So one guy can print money or one institution can print money.
Uh, shit coins or cryptocurrencies.
Everyone gets to print more money.
So it's, it's up to you.
Bitcoin, no one gets to print money.
That's, that's the difference between the three.
Very good point.
I, I think that's a good summary there onto the next one.
Some of the futurists and doomsday prophets mentioned in chapter four as
the people most likely to warn us about the dangers of the impending artificial
intelligence singularity, believe that we already live in a simulated reality.
The main argument for this worldview is that since simulations and
computer graphics seem to be getting better at an ever accelerating
rate, we can't really know if we already live in a simulation or not.
To put it another way, we simply have no way of knowing if we live in the matrix
or if our perceived reality is all.
There is really mind blowing counterargument to this theory is that
Bitcoin's proof of work algorithm would eventually slow down the simulation
since proof of work is verifiable and can't be simulated itself, computing
power would have to be sacrificed by some entity somewhere regardless.
One question remains though.
Can the inhabitants of a simulated reality actually feel or measure a slowdown
of the very simulation they live in?
Interesting thought experiment and the chapter.
Yes, it has nothing to do with the rest of the chapter, does it?
I discussed this with Dr. Bansal and Giamo Soko on stage, on at Bitcoin Atlantis.
I believe in Madera.
Uh, I love this thought.
Uh, it's, it's a very, like, uh, and this is one of those, it is just provoking.
Thought in every way possible.
And then, uh, I don't leave anything else.
I don't explore the ideas with the reader.
I just, uh, mention them.
Uh, so I don't know why I did that in this book, really.
But, but, uh, but the, the thought still intrigues me when, when thinking
about this, Simulation theory thing, it's important to remember that
simulation theory is not a new idea.
It's been around for like 500 years, this matrixy dream, within
a dream, within a dream concept.
Philosophers have been battling that since forever, and, uh, It, it's sort of
like the free will debate at, at the end of the day, it doesn't matter because
we're in the reality we are in and we're not in the other other realities.
Same thing with free will.
If you have it, then there's no discussion.
If you don't, you can't do anything about anything anyway, so, so you
might as well like act as if you do.
it's one of those, uh, weird, weird things.
But, but it is interesting that a. A simulation of Earth would have to include
a simulation of the proof of work in, in Bitcoin mining, which in itself is
costly in terms of computing power.
I, I just, uh, I just like that, uh, that fact, if you want, I.
it is an interesting thought experiment, definitely.
And well, so much as there are smart people who really think we are, in fact,
in a simulation and all of the computing power being used for this and that, yeah,
it's hard to square these two things.
I guess that the, the probability that we're in a simulation to some
people's estimation is extremely high.
But there's all of this computing going on.
And by the way, all of the AI stuff also is in that category, honestly, because
they're using computing power also.
Maybe that's less verifiable because it's not about mathematical cryptography.
But it's still a lot of computing power.
Maybe the AI stuff is actually more of an ev more of evidence for
the simulation because maybe that stuff can be more easily faked.
I don't know.
No, but That's where the theory comes from, like the, that AI is getting so good
and computer graphics are getting so good.
Of course, these things are run on computers, so, so if they would
require a lot of computing power, this is just saying that the computer
on top, creating that reality with that thing in it would also have to
do the proof of work algorithm, which is more computing power than anything
else in, uh, uh, on Earth right now.
It's still the, the, the biggest computer network there is, is
the, the, uh, bitcoin network.
So, no, it's, uh, it's an intriguing thought anyway, uh, by the way,
uh, I, I looked up how many comps.com and that site is still up.
Uh, what, what did I say in the last paragraph there?
That, uh, Litecoin took, like, had like a fifth of the security
of Bitcoin or something,
You said a 10th.
a 10th.
Today it's the second biggest because Ethereum isn't even there anymore
since they moved to Proof of Stake.
And Litecoin is, uh, 11 times slower today.
Like so for six confirmations in, in Bitcoin is equivalent to 268 Con, uh,
uh, confirmations in on Litecoin to get to the same level of security.
And then there's Dogecoin, and then there's Ethereum Classic.
But yeah, the point, point stance that it's, uh, it's getting worse over time
and not better for the share coins.
Yeah, very good point.
And I think the summation of this chapter, since we're done now, is
basically that, uh, proof of work is this fundamental thing at the base
of Bitcoin, proof of work algorithm, plus the difficulty adjustment.
And these things are essential and explaining why they're essential I
think is the point of this chapter.
Do you have anything else you'd like to say in summation?
No.
Uh, yeah, uh, that's a good summation and uh, proof of work.
Is very misunderstood, uh, that like.
The, um, environmentalists who misunderstand it think that it's, uh,
it is wasting energy, but that's the complete wrong way to, to look at it.
It's not wasting energy.
It's sacrificing energy for something much better.
And what they also forget about is the.
Consensus mechanism of fiat currencies, we've alluded to this before because the
consensus mechanism of fiat currencies and whoever gets to decide what money a,
a nation runs on or what gets to be the global reserve currency is world wars.
That's the consensus mechanism.
If that's not wasteful, I don't know what wasteful is.
So, so they're, they're not taking into account how costly in terms of energy.
The, the current monetary system is this.
Uh, doing proof of work, uh, I would argue is actually the most efficient
way of getting to a consensus of what, what is money and what is not.
Uh, every other way that has been tried has been more costly in terms of not
only you need world wars to come to a consensus, but of the vast number of,
uh, first and foremost, the vast number of misallocated resources in society.
It's like this, Example from, from previous chapters that you, you never
get to exponential growth if you, if you, if you shoot yourself in the foot all
the time and, and put up roadblocks to prosperity, uh, which is what monetary
interventionists do all the time.
Not only by taxing people, but by inflating the money supply,
it gets harder for people to, uh, to accumulate wealth and prosper.
And, and, and.
Progress humanity into the future.
Uh, everything gets, uh, is handicapped by interventionism, and that is what Bitcoin,
that is the problem that Bitcoin solves.
It solves the inflation problem.
It's, it solves the abundance of money and scarcity in anything, everything else.
So it's the other way around.
This is Jeff Booth point, like when you have scarcity and money, you
have abundance everywhere else.
Uh, and People need to understand that on a deep level to to, to understand Bitcoin.
Like I, I don't believe you can understand Bitcoin if you don't
first, uh, understand the problem it solves and that problem is inflation.
Absolutely love it.
Fantastic summation.
So I think with that, this has been the proof of work chapter from
sovereignty through mathematics.
And now, uh, I'll just say, hey, if you, if you've enjoyed listening to this
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Let us know what you think about the episode.
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Yes, and you can get.
Get all the books from, uh, bitcoin infinity.com, uh, our store where
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Absolutely.
And I think we'll, we'll also, um, uh, round this off with a, a big
thank you to Plan B Network for sponsoring this Academy initiative.
We're thrilled to be partnering, partnering with them.
They're a fantastic educational resource.
Plan b.network.
You can go there to check out all of the courses they have available
that are, uh, everything from.
From newbie friendly stuff to, to more deep dives into various facets of
Bitcoin, written by tons of different authors, and they're, they're translating
them into tons of different languages.
And so this, this show is really a great fit for, for them and, and we're
thrilled to be working with them.
We, we were Lisa, slightly condensed version of, of this, um.
Have this show on their channel as well, which is just a little more
directly on the educational side.
Slightly less tangents, but check out everything they're doing and,
uh, if you wanna support them, you can also come to the Plan B forum
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And, uh, uh, you also see us there generally, I think.
So that's another, yet another reason to, to check out Plan B Network.
And speaking of, uh, the, this Year's BS school is, uh, uh, uh, has started
and, and also last year's BS school, which is a, a. Full course about
Bitcoin and how you can implement it in business, in your business.
Uh.
Is, uh, the, the last year's course is now open sourced and available
for free from the Plan B website.
So either, uh, take the, this year's course or, uh, enroll for that thing
or, or take less or, or listen to the lectures from last year's course.
I highly recommended, uh, they have the, the best teacher in the world, in
my opinion, Giamo Soka is the head chef there, so he is always entertaining
and interesting to listen to.
So go ahead and do that.
Absolutely perfect.
Tradition there?
Yes.
And, and also thank you to Bit Box.
They're our favorite hardware wallet and they're a supporter of both our
regular show and of the academy.
So thank you to them for that.
And they don't compromise on security, but they are really user friendly.
So it's the, the hardware wallet that not only for you as a coiner, but your
friends, your family, all the pre coins that we definitely recommend for that.
So go check out Bit Box Swiss slash Infinity and get the bit box zero to
Bitcoin only edition for a discount.
Plus everything else on their store.
Got some other cool stuff.
And come to.
The, the Bitcoin conference in Helsinki that we're co-organizing,
uh, it's gonna be lots of fun.
We have lots of great speakers and, uh, yeah, looking forward
to seeing you all there.
Or, or at any of the other conferences.
Like if you're going to a Bitcoin conference or if you're buying
Bitcoin paraphernalia, you should try to use code Infinity everywhere
because we have that code with, uh.
Most of our friends, uh, we have a lot of friends, so, uh, yes, uh,
that's a good way to get a discount
Definitely, and you'll see us in, uh uh, you'll see Ktin Ireland, both of us in
Prague, both of us in Riga now, I think.
Uh, and then.
Of course, Helsinki.
So, uh, Calgary.
Yeah, I forgot about that.
Yeah.
Um, yeah, we'll be, we'll be in, uh, tons, tons of places this, uh, this summer.
So, so come see us somewhere.
Uh, but if you come see us anywhere and you're, you know,
traveling or whatever it is.
Come to Helsinki.
Yeah, just do that.
Yeah.
Um, we're, we're really excited about it.
We're just, uh, we're just about to open a, a physical pop-up shop
actually in, uh, in Helsinki.
So we're, we're really excited about that.
You'll be able to come, come see us there.
You'll even be able to get finished Translations of, uh, of Knut's
first two books pretty soon here.
Uh, we're working on the third and fourth one, so, uh, uh, yeah.
Exciting things happening in in Finland, in Helsinki.
Yeah.
Super cool.
I think with that, uh, thank you very much for listening.
This has been the Bitcoin Infinity Academy.
Anything else to add?
Knut.
As usual.
Yeah.
Thanks for listening.
Bye.