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Recently, a “next-generation” blockchain called Red Belly hit a mean 30,000 transactions-per-second (TPS). Bitcoin can manage seven. Is it game over?
Not according to Nick Szabo, a blockchain pioneer who invented smart contracts and Bit Gold, a precursor to Bitcoin, and, some believe, Bitcoin, too. Either way, he has a bone to pick with the Young Turks of the industry who believe they can offer faster, more scalable blockchains. “Foolish” he calls them, in an address which claims that the real value of bitcoin lies not in its speed but in something he calls: social scalability.
Speaking at this year’s Blockchain Live, in London, Szabo defended the proof-of-work consensus mechanism that bitcoin uses, which has been criticized for having a penchant for vast amounts of energy. He acknowledged that other cryptocurrencies have created faster, more scalable systems but said that this did not account for human nature.
Szabo said: “We’ve had some people saying we can improve the TPS or we’re going to be inspired by blockchain but not use a true blockchain. If you need trust, and global seamlessness, that’s a very penny wise and foolish approach.”
He began his speech like any self-respecting cypherpunk would: by talking about Communism. In this particular ditty, he explored the equal distribution of resources, and proclaimed communism works when there’s just a few people, but fails because “trust scales poorly.” In essence, a large-scale system in any human environment needs to work without relying on trust.
“If you look at the way attacks have happened in bitcoin, trusted strangers are security holes. Bitcoin is decentralized, almost hack proof. The vast majority of hacks have been on centralized exchanges that people use to trade.”
He described the inefficiency of bitcoin as a sacrifice in order to work in a trustless, global environment. “Secure, permissionless blockchains need armour not fins,” said Szabo, arguing that proof-of-work helps to secure the network making it more secure against human nature and that this is more important than speed.
He previously blogged on this subject back in 2017 on his site called Unenumerated. Just as you might expect, instead of articles you can breeze through in a cinch, Szabo’s site is full of long, dense meditations on all things blockchain that take hours to wade through. At least he’s a man of his word.