PoWx: The New Effort to Change Bitcoin (And Who's Backing It)

A long-controversial bid to change bitcoin just got a big boost.

Boasting the support of tenured developers, a non-profit foundation called PoWx launched this week with the goal of putting a more sophisticated wrapper on the idea that the proof-of-work (PoW), the way the network comes to agreement on which transactions are valid, could be replaced with a newer, supposedly better, algorithm

In short, PoWx advocates bitcoin adopt a new technology it calls "optical" proof-of-work, which uses a more energy-efficient laser technology as the cornerstone of mining.

The hope is to "fix" mining by making it easy for people to participate in the process, in part, because the barriers to entry have become so prohibitive. (At the beginning in 2009, users just need a simple laptop to run the code to mine bitcoins. Now, they need special computers costing thousands of dollars and who they do not do anything else.)

Not to mention, the developers behind PoWx are the latest to point to a mining firm, Bitmain, and its influence on the network as a major issue. Although accurate numbers are cloudy, estimates say the company is manufacturing between 50 and 80 percent of bitcoin's mining hardware.

Against the backdrop, the idea of ​​swapping bitcoin's mining algorithm has been known for some time, mostly flaring up in times of perceived crisis. It's been seen almost as a last resort to the case of miners doing something really bad, such as colluding to attack the network.

But PoWx founder Michael Dubrovsky sees the change as an inevitability.

He calls mining centralization bitcoin's "Seldon Crisis," a specific type of earth-shattering issue found in the famous sci-fi series "Foundation" and which denotes a point of no return.

Dubrovsky told CoinDesk:

"I think PoW is the most important innovation in bitcoin, and bitcoin is an incredibly important innovation in personal freedom and property rights."

To this end, he argues changing the underlying technology will help to "ensure the mining ecosystem is healthy enough and scalable enough to support crypto's growth over the next decade."

A better way?
More broadly, developers have long worried about bitcoin's level of "centralization," or the measure of how much control single stakeholders have over the technology. (Decentralization is seen as a key differentiator, one that makes bitcoin more unprecedented in the history of money.)

To that end, they've argued that if this problem goes unaddressed, mining centralization might lead bitcoin to turn into something resembling the financial system it's supposed to replace.

So, to try to solve this problem, developers have put a variety of potential technical fixes.

Dubrovsky was interested in changing proof-of-work as a solution, deciding to work on the idea about a year ago as he became convinced optical.

According to the PoWx team, this new algorithm, if implemented, will be in two big improvements to bitcoin One, the required computing device is expensive, thus increasing decentralization of the network Two, it reduces power consumption (estimates suggest bitcoin now makes up 0.15 percent of world's electricity costs).

One hurdle is

But their goals are nonetheless ambient, vowing in the short-term to develop open-source hardware put optical PoW in practice and to release a test network by Q1 of 2019 by their open-source design.

Longer-term, they hope to launch a for-profit company called Arrakis Photonics to put this cutting-edge optical mining hardware in practice. (Their presentation outlines more specific details, including the technical makeup of the hardware they want to create.)

Popularity TBD
Though they're putting plenty of thought into this idea, swapping bitcoin's proof-of-work is not all a easy task.

It's a pretty drastic change, which will require every user to update their software if it is coded in a formal proposal. If a large number of users were able to disagree on the proposal, bitcoin could also split into two different cryptocurrencies, similar how bitcoin cash broke off due to disagreement about the project's technical direction.

Still, it's probably too early to say what users want - though the general idea is outpourings of controversy, including lawsuit threats, in the past And as bitcoin is a decentralized system, the opinion of users can make all the difference.

But Dubrovsky argues there is no choice - the community needs to make the change

"I think it will be difficult, but what we are offering is not just a improvement," he said CoinDesk. "Something like this is a necessity if cryptocurrency is going to be decentralized and used to securely store and move trillions of dollars of value."

As such, one of PoWx's main goals is to work with the bitcoin community to make the switch So far, the effort has been the support of Bitcoin Core contributor Luke Dashjr and pseudonymous bitcoin.org maintainer Cobra, two influential figures in the space which are also known for both espousing controversial points of view. (Most Bitcoin developers have not yet made a public statement about their views.) Finally, there is always the question of whether mining will just centralize again, even after PoW is changed. However, Dubrovsky argues it's unlikely "It is not clear that OPoW will ever lead to the same level of centralization we see today," he said. Still, he's trying his best to look at the problem realistically, it's unclear how PoWx will work yet. And, even if it does, he admits bitcoin could still have future problems