Why Bitcoin is unique: Highlights from Strike CEO’s stirring speech at BTC Prague 2024

Jack Mallers, founder and CEO of Bitcoin startup Strike, began his keynote at BTC Prague 2024 by emphasizing the theme of improving understanding of Bitcoin. Mallers acknowledges the common questions about the differences between Bitcoin and other cryptocurrencies such as Ethereum and Solana and the possibility of a “flippening” where another cryptocurrency could outperform Bitcoin.

Mallers gives his talk the ambitious title “There is no second best” and wants to go into detail about the differences between Bitcoin and all other cryptocurrencies.

Mallers explains that the main difference 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 that is crucial to 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 was the only solution to make peer-to-peer electronic cash work without a trusted third party.

Mallers emphasizes that understanding Proof of Work is essential to understanding Bitcoin. He then describes 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 a territory to explain that digital tools can map our world and provide new perspectives, but still remain tools and are not replacements for the world they represent.

Mallers goes on to explain that computers and digital technologies are abstractions of our minds, reflecting the meaning we attribute to circuits. He compares the execution of a computer program to an actor executing a script, emphasizing that the hardware and computations are real, but the experiences created are abstract. Mallers underlines that nothing in cyberspace exists physically; 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 does not have 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 power or physical assets like gold.

Describing the transition of the US dollar from the gold standard (a physical constraint) to the fiat standard (an abstract reality), Mallers illustrates how abstract power can be efficient and secure, but has no physical boundaries and requires trust. He points out that there have been breaches of trust in the past, making abstract power potentially exploitative.

Mallers mentions Adam Back, who created Hash Cash to solve the problem of email spam by requiring proof of work, thus putting a physical cost on virtual actions. Mallers emphasizes that proof of work connects the physical world to the virtual world, making it the only physically real object 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 comprehensive, decentralized and verifiable, providing a safe and peaceful way to protect Bitcoin. He contrasts this with Proof of Stake, which he argues is based on an abstracted reality and lacks the physical constraints that make Bitcoin secure.

Mallers played a video of Vitalik Buterin, the creator of Ethereum, describing Proof of Stake as a system that allows the creation of a simulated universe with its own physical laws. Mallers criticizes this approach, arguing that it decouples cryptocurrency from physical reality and subjects it to abstract power dynamics.

Mallers claims that Ethereum and other altcoins that don’t use proof of work aren’t tied to physical reality and are vulnerable to manipulation by companies like BlackRock. He argues that Bitcoin’s reliance on proof of work ensures it can be defended by honest actors with physical power, while proof of stake systems rely on trust in those who have the most coins.

Mallers concludes that Bitcoin is just and fair, contrasting it with Ethereum’s pre-mining and rule changes, where power is concentrated in the hands of a few. He claims that altcoins frequently change their monetary policies and even reverse transactions, which undermines their credibility.

Finally, Mallers stresses the importance of educating people about the differences between Bitcoin and other cryptocurrencies. He stresses that to understand Bitcoin, one must also understand Proof of Work, and explains that there is no second best in the world of cryptocurrencies.