- Jack Mallers is the CEO of Strike, a Bitcoin payment platform.
- Mallers told Insider why he thinks “Proof of Stake doesn’t solve the real problem.”
- Mallers said FTX’s Sam Bankman Fried was “maliciously misleading” about rejecting Bitcoin payments.
A password war is underway.
On one side is a community of people who see bitcoins mined through a process known as: proof of work, the only physical form of blockchain that can create the currency of the Internet. On the other hand, it is a thinking community.
28-year-old founder Jack Mallers strike The Lightning Network payment platform, which has been supporting the use of Bitcoin in El Salvador, is an ardent proponent of proof-of-work. He spoke to Insider shortly after cryptocurrency billionaire Sam Bankman-Fried criticized Bitcoin as a payment system.
These competing ideas have a significant impact on the world of digital assets. As the environmental concerns of cryptocurrencies have grown too large to ignore, people like the Commodity Futures Trading Commission Chairman Rostin Benam And Crypto Billionaires Chris Larson As the industry abandons the financially and environmentally expensive proof-of-work model,
But Mallers vehemently disagree. He told Insider three reasons why only Bitcoin’s proof-of-work could create “an innovative, inclusive and iterative way to digitally transfer value.”
At the heart of the proof-of-work and proof-of-stake drama is how to validate new blocks on the blockchain. For proof of work, a computer solves a complex mathematical problem to create new blocks. Through proof of stake, new blocks are added to the blockchain through specific miners known as validators. In a proof-of-stake network, validators are cryptocurrency owners who have: pile A large amount of cryptographic tokens in the system – in the case of Ethereum 32 ETH must be staked.Or roughly $64,000 – so you can validate new blocks and receive newly mined cryptocurrencies in return.
A key motivation behind Proof of Stake technology is that it is far more environmentally friendly than Proof of Work. The decentralized and anyone-competitive nature of proof-of-work means that much more computing energy is used to mine new bitcoins. Even the most ardent crypto proponents, such as the Tesla CEO, are considered wasteful. Elon Musk.
FTX billionaire CEO Sam Bankman-Fried said: that bitcoin It is not a payment network due to its “expensive and environmentally expensive” use of proof-of-work.
Bankman-Fried told the Financial Times: “Performing millions of transactions per second should be very efficient, lightweight and have low energy costs. A proof-of-stake network is exactly that.”
Mallus vehemently agreed with what he said about Bankman-Fried’s statement about Bitcoin’s viability as a payment platform was “seriously incompetent or maliciously misleading.”
This is not at all surprising. Mallers’ company, Strike, is one of the world’s leading Bitcoin payment processors. Boasting partnerships with companies like Shopify and countries like El Salvador, Strike is the lightning network Positively.
Mallus highlighted three direct reasons to Insider that he believes Bitcoin’s proof-of-work network is “the only true blockchain technology”.
Mallers’ key reason for why proof-of-work is superior is that, unlike alternatives, it is truly decentralized.
“The problem with proof-of-stake is that BlackRock can buy a certain stake within the network and then have tremendous control over the order of transactions or which transactions are allowed,” he said. He contrasts this with Bitcoin, in which the newest participant and someone who joined the network shortly after its elusive founder, Satoshi Nakamoto, has the same rights to verify transactions.
Mallus added that proof-of-stake verification is so far away from the spirit of decentralized blockchain technology that it “should be regulated as a security similar to Tesla or Apple stock.” Mallers even went so far as to say that proof-of-stake doesn’t solve the same “real problem” that, due to its inherent centralization, decentralizes the wealth creation Satoshi is trying to solve.
Lightning Network Speed
Mallers agreed with Bankman-Fried’s argument that Bitcoin’s underlying tier is not a means of fast payment. He said that Bitcoin’s Layer 1 blockchain is not “optimized for speed or payment” but rather a decentralized digital tool that the world can access like gold.
However, one area where the two disagree is that it limits Bitcoin’s ability to be used as a payment platform. Mallers believes that a protocol that operates on top of the original Bitcoin codebase, known as a “Layer 2 solution,” can make Bitcoin a viable digital transfer of value.
He specifically pointed out. lightning networkLayer 2 protocol used by Strike as proof that Bitcoin can transfer value in milliseconds.
Malus’ final defense of proof-of-work lies in his belief that the high economic and environmental costs of creating Bitcoin are part of the reason why Bitcoin gains value.
“For something to have value, it needs a cost of creation. If creating money was free, money would be a lot. It would be over-inflated, and it would change politically and derive value from scarcity and predictability and its value. You won’t be able to pay. Hardness.” he said
He also said that Bitcoin’s high environmental cost needs to be tailored to the situation. He noted that Bitcoin miners intentionally move to “cheap energy-rich” places, and that Bitcoin’s theoretical value far outweighs its current environmental costs.
Certainly Bitcoin Mining is 150 terawatt hour Annual electricity consumption – more than the total population of Argentina of 45 million.