Satoshi Nakamoto’s collaborator says his bitcoin fork, Zcash, should provide evidence of involvement and reduce its carbon footprint
Zcash founder Zooko Wilcox
Zcash founder Zooko Wilcox may seem like an unlikely source to challenge Bitcoin’s “third rail,” its controversial, expensive, yet effective method of processing transactions, but in many ways he is the perfect candidate to offer an alternative.
After all, few know Bitcoin better than him.
Wilcox was an early and active participant on Bitcoin message boards and has often communicated and collaborated directly with Bitcoin’s pseudonymous founder, Satoshi Nakomoto. In fact, he wrote the very first blog post about Bitcoin that Satoshi linked on the original Bitcoin.org website. This is the ultimate seal of approval when it comes to crypto.
However, in an interview with Forbes, Wilcox made it clear that Bitcoin is far from a completed project in many areas.
For starters, the pseudonymous nature of the blockchain, which hackers and criminals are slowly figuring out, wasn’t nearly as private as they’d hoped, wasn’t the final state they wanted. As Wilcox says, “The fact is, basically 100% of all early bitcoiners, including Satoshi and Hal (Finney) and Nick (Szabo) and Adam (Back), and all … value propositions.”
Last but not least, it was clear that in addition to independence from central banks, the more frequent narrative of the history of Bitcoin, it deserved central accounting.
The solution proposed in 2010 was called zk-snarks (Succinct Non-Interactive Argument of Knowledge). In short, zk-snarks can be used in a blockchain to hide not only the identity of the sender and recipient, but also transaction amounts. Total privacy.
When Satoshi was actively developing Bitcoin, he had hoped to integrate zk-snarks into the network. However, when he stepped down in 2011, the technology wasn’t advanced enough to install Bitcoin without slowing Bitcoin (it’s already slow, even by crypto standards) or loading it with too much data.
Bitcoin founder Satoshi Nakomoto discusses the compatibility of zk-snarks with Bitcoin
Wilcox was part of a team of scientists in 2012 that came up with a proposal to integrate zk-snarks on Bitcoin at a conference in San Jose, but the core developers told them the technology needed to be proven on another blockchain before seriously considering it being pulled.
That is exactly what Wilcox did – and a few years later, Zcash was born.
It is also clear in his writings that Satoshi knew that if successful, Bitcoin would have a very large carbon footprint, as my colleague Chris Helman recently pointed out in an article for Forbes: “It’s the same situation as gold and gold mining . The marginal cost of gold mining tends to stay close to the gold price. Gold mining is a waste, but that waste is far less than the benefit of having gold available as a medium of exchange. I think that will be the case with Bitcoin. The benefits of the exchanges made possible by Bitcoin will far exceed the cost of electricity. ”
At this point, starting today, Wilcox wants to use Zcash to advance crypto. In an upcoming blog post shared exclusively with Forbes, he advocates Zcash moving from the same energy-intensive “proof-of-work” consensus mechanism as Bitcoin to a more environmentally friendly “proof-of-stake” approach.
The impact of such a transition could be enormous. Zcash is a close cousin of Bitcoin, his code is actually based on Bitcoin, and if successful he could open the door to Bitcoin, possibly avoiding mining as well.
So what exactly is a “proof of stake”? Instead of running millions of dollars’ worth of energy-stealing computer hardware to solve complicated math problems in exchange for freshly minted bitcoins, nodes on the network post assets as collateral that could expire if dishonorable. The proof-of-stake is lighter, faster and, in the words of Wilcox, even more secure than the proof-of-work.
“I think the proof-of-work has some security flaws, as shown by the 51% of attacks that have occurred (when a miner controls a large part of the computing power in the network and can steal tokens). And I think the proof-of-stake can provide a much more powerful type of security and at a lower cost. ”
He also pointed out that with proof-of-work setups, users have little recourse in the event of an attack on the network. In a proof-of-stake network, however, the malicious actors can be identified and their tokens revoked so that the rest of the network can continue to operate as usual. In fact, this is similar to an argument by Ethereum inventor Vitalik Buterin, who is also going through a tedious transition from proof-of-work to proof-of-stake to justify the switch.
When asked why he is now advocating the transition, Wilcox cites a few important reasons, most notably that the proof-of-stake is “proven” and no longer experimental. As proof, he refers to the successful start of networks such as Algorand, Cardano, Cosmos and Tezos.
In fact, environmental concerns don’t seem to be a leading justification for the shift, but rather his belief that the proof-of-stake is the better all-round approach going forward. He also recognizes that right or wrong, people are increasingly concerned about the carbon footprint of crypto. Switching to the proof-of-stake in your head is then a win for everyone.
Although Zcash is based on Bitcoin and shares many of the same characteristics, up to its hard limit of 21 million units, the two networks are in different universes in terms of adoption and scaling. ZEC (Zcash’s native token) is currently priced at $ 111.55 while Bitcoin is almost 350 times higher at $ 38,709. Bitcoin processes around 250,000 transactions per day while Zcash is hovering around 4,000. Additionally, the Bitcoin network’s hashrate of 102,631,000,000,000,000,000 hashes per second is orders of magnitude higher than that of Zcash’s 4,992,000,000.
However, Zcash has tripled Bitcoin’s returns for investors since the start of the year.
Zcash beats Bitcoin YTD
Even if Zcash makes a successful transition, that doesn’t mean Bitcoin could just go down the same path. Plus, the Bitcoin community has historically been resistant to major change, which is understandable given its focus on security, and the need for a proof of work has become an entrenched part of its ideology.
One final reason things are moving forward now is that, as Wilcox says, we are reaching a tipping point when it comes to protecting our privacy from governments and corporations: “We are both seeing mega-corporations and governments attacking increasingly control over everyone, both in the East and in the West … And at the same time we see that people around the world are becoming more aware and appreciate their privacy, their autonomy, their human relationships more. “
He also believes the stakes will increase when it comes to central bank digital currencies (CBDCs) and the fear of surveillance capitalism. However, Wilcox wouldn’t be against working with banks around the world if they wanted to integrate Zcash and zk-snarks. But we would only do this if they fed these into the ZEC that is the engine of our mission. Our mission is to empower and liberate everyone in the world. “