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Poll Review – Building on PoW (Proof of Work) Blockchains

Poll Review – Building on PoW (Proof of Work) Blockchains

There have been three years of pump and dumps, shilling and hacks of every species.

While there are signs of a revival, January 2024 has actually been the worst single month in blockchain/web 3 related lay-offs since the decline began around the end of the first quarter of 2022.

Generative AI has been gathering pace, and Bitcoin as a store of value has recovered.  El Salvador and the Central African Republic formally use it as legal tender. It is an individual retailers decision to accept it in payment among many countries without restrictions on how it can be traded.

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The Proof of Work (PoW) blockchains are the core anchor for any fully decentralized system. I recently saw Sergey Nazrov, CEO of Chainlink being interviewed.

He said ‘Blockchains, and Cryptographic Systems are the next generation of how trust is going to be generated between counterparties’.

Though, what he fails to include, is that ‘Cryptographic Systems’ have existed for a really long time, in modern traditional finance, and before it. There are many different ‘Cryptographic System’ solutions, from PoS – (Proof of Stake) blockchains to ‘Off-chain’ Networks, which some people include (in somewhat cavalier fashion) when discussing ‘Web3’.

It’s a spectrum, with Proof of Work (PoW) blockchains as the most decentralized, and moving out gradually to continuously more centralized structures, using modern cryptographic techniques as a tool to increase speed and reduce costs, but not necessarily achieve any better security or personal autonomy than the supposed ‘centralized’ traditional systems they are aiming to replace.

More regularly now, posts are appearing on online platforms which are somewhat rhetorically querying the ‘so called’ Web3 solutions we have, and especially lamenting the level of centralization that is at the UI (User Interface).

Many people want to see a real bull run that extends beyond just Bitcoin, but there is also concerns for maintaining product quality, improving personal autonomy/privacy, and keeping identities and assets secure.

Many of the security problems and exploits experienced over the last few years have happened on off-chain centralized networks and on network bridges.

Features they have commonly shared include:

  • Smart Contracts written with Solidity.
  • Deployment of tokens with ERC 20 protocol
  • Centralized key custody (in whole or part)
  • Nominal transaction fees (makes phishing attacks on wallets viable).
  • Increased numbers of commercially owned networks involved due to layering and/or bridging scales risk to ‘last mile’ customers.

PoW (Proof of Work) Blockchains offer potential for full decentralization when built upon, and either have no exposure to the problems listed, reduce risk significantly, or eliminate it altogether.

LinkedIn Poll Analysis

The Candidates: Bitcoin, Handshake, Monero, Dogecoin.

Winner – Bitcoin   12/30 votes; 40% of vote.

PoW (Proof of Work) Blockchain with Nakamoto Consensus – 21m maximum coin supply. Halving about every 4 years. Development Features – Ordinal Protocol, Taproot Upgrade (made other protocols possible – BRC 20; BRC 721; BRC 69).

Pros – Notoriety of the Blockchain as the first ‘crypto-money’ attracts curiosity around any new development. The most easily recognisable brand. – Even folk that never heard of the term ‘Web3’ have heard of ‘Bitcoin’ Deemed the most secure blockchain in existence. Never hacked.

Cons: High Fees. High Market Cap due to transactions from BTC movements aren’t helpful to non-coin related activities. Future build fees uncertain due to ‘institutional’ creation of BTC based investment products (ETFs). ‘Coin Maxi’ community is much bigger than the ‘Building’ community. Many of the ‘Coin Maxi’ community are (at best) disinterested in builders succeeding.

Runner Up – Handshake   11/30 votes; 37% of vote.

PoW (Proof of Work) Blockchain with Nakamoto Consensus – 2.04 bn maximum coin supply. Halving about every 3.25 years. Development Features – Fork with PoB (Proof of Burn) permitted the naming protocol, – tokens as ‘Web3’ rootnames with editable DNS function and embedded editable TXT record. Soft fork released 70k high value ‘Alexa’ names. Esher Upgrade in development but not finished.

Pros: Low Fees. Low Market Cap compared to Bitcoin means a minute low visibility ‘Coin Maxi’ community of no threat to the building community. Of no current interest to institutions. Builder community contains many people with altruistic aims and a vocational disposition and are extremely helpful to each other. Coding is ‘exotic’ and beyond lowest common denominator hacking skills in the wider cryptocommunity. Equally secure with Bitcoin, and never been hacked. Being Bitcoins ‘closest relative’, attention to Handshake may rise if ETFs have some unforeseen undesirable outcomes for Bitcoin builders. The PoB protocol causes coins to be ‘burnt’ as part of the auction process, providing an extra pressure on coin supply.

Cons: Low level of awareness of the blockchain in the wider cryptocommunity.  ‘Coin Maxi’ community of Bitcoin is replaced by a name HODLing community on Handshake. Not unhelpful, but just passively hoarding name assets (Web 3 TLDs) hoping for prices to rise, but not involved with building. They account for at least 80% of the 12 million TLDs registered. The combo of low notoriety and market cap with no ownership, means core functionality is slow to improve and it’s difficult to render development investment proprietary.

3rd – Monero   4/30 votes; 13% of vote.

Monero is a PoW blockchain set up to offer an alternative to Bitcoin as a currency and transaction medium. It’s main goal has been to focus on privacy features. It is based on CryptoNote, a concept described in a 2013 white paper authored by Nicolas van Saberhagen.

It’s rumoured that it attracts illicit interest like money laundering and ransomware payments due to its strong privacy features. It’s a common medium of exchange on darknet markets.

It’s got arguably the 4th highest development community in the crypto-spectrum, but they are solely focused on strengthening and upgrading its privacy features, and are not open builders. It has an unlimited coin supply.

The blockchain is otherwise locked to building (not programable).

Pros/Cons – As the blockchain is locked to building (not programable), it is out of article scope to do Pros/Cons analysis. It is not clear why it got 4 votes. Some people like to participate in polls, even if they don’t understand. Some in a rush may have clicked the wrong option in error. Some may know Monero isn’t an eligible candidate, but it may be a ‘protest’ vote because they didn’t approve of the poll narrative, or because they felt a choice should have been available, which was absent.

4th – Dogecoin   3/30 votes; 10% of vote.

Dogecoin (PoW Blockchain) was created by Billy Markus and Jackson Palmer, making fun of the explosion in ‘meme’ cryptocurrencies at the time. They didn’t expect anyone to take it seriously, but people started buying it.  Dogecoin itself was to later become parodied by tokens such as Shiba Inu and Shiba Saga (ERC 20 tokens) and DogWifHat (a token off Solana).

Dogecoin has an unlimited supply with a fixed rise in the currency of 5 million units a year.

The blockchain is otherwise locked to building (not programable).

For reasons similar to those given about Monero, we will not be adding a Pros/Cons section. We can speculate on why it got 3 votes for the same reasons we also gave for Monero.

Nobody was tagged in the LinkedIn poll, nor was anybody given a LinkedIn Direct Message (DM) to encourage their participation in the poll.

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