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The Best Smart Contract Platforms Will Be Proof of Work

Bitcoin’s scalability problems are well known. If it could scale, the entire blockchain industry would be building the dapps known as web3 on the Bitcoin blockchain, and not the many others, such as Ethereum. 

Scaling Bitcoin is a topic that goes back to the earliest days of Bitcoin, with well-known developers debating the topic on BitcoinTalk. We also saw many attempts at what today is known as smart contracting on Bitcoin, such as Namecoin and various colored coins. 

Namecoin wanted to assign DNS via the Bitcoin blockchain, while colored coins included projects like Colu, which attempted to use NFT-esque technologies for the purposes of fiat-based stablecoins. The ultimate vision was to use the Bitcoin blockchain for the purposes of a general timestamp. We see today projects such as Lightning, RSK, and Stacks attempting to recreate the same. 

Proof of Work has demonstrated itself to be the most secure consensus method produced by blockchain. Had Satoshi designed Bitcoin with a turing complete programming language, not Script, and with a higher level of throughput, the first blockchain might be used today in a very much different manner.

According to some greater blockchain enthusiasts, the world would be getting more out of Bitcoin if it was scalable. We see the repercussions today. Bitcoin, although first marketed as a digital cash, is now used de facto as digital gold. 

Seeing this and Ethereum’s scaling issues, the blockchain industry chose to build instead on Proof of Stake consensus methods. This has led to more centralization in the blockchain industry than was intended. 

The centralization takes place at the level of so-called validators, who stake coins for influence. Because it is simply so difficult to implement a secure Proof of Stake system, we see all different types of implementations. 

Proof of Works simplicity is partially why there are so few implementations on blockchains other than Bitcoin. PoW chains also provide potential for similar security as Bitcoin. Without the network effect though, this is not likely to be achieved. 

Bitcoin remains secure but inefficient, and the same is true of Ethereum, which was built on Proof of Work and is currently attempting to migrate to Ethereum. Bitcoin miners try to solve one block at a time, leading to scalability issues. The miners cannot process too many transactions per second. 

Proof of Work, nonetheless, remains the consensus method which has succeeded in production for the longest amount of time. Proof of Work’s security is generally not disputed at this point. For this reason, it is reasonable to assume that Proof of Work might remain the best option for smart contracting blockchains to build. 

A novel Proof of Work system would mine in an insecure, centralized state, just like Bitcoin did at one time. Nonetheless, Proof of Work remains a more decentralized distribution paradigm than PoS, and it can scale. 

Scalable approaches to Proof of Stake involve technology such as subnets and parachains. In these models, trust is moved out of the core network, and they no longer remain trustless. Through different technologies, such as Graph Theory, it might be possible for trust to remain within the core of the network.