Does PoW have a bright future?

  • Ultramining
  • 21 June, 2023 09:00
Does PoW have a bright future?

Following Ethereum’s transition to PoS in 2022, many in the industry believed that PoS would become the mainstream trend for crypto, and voices against PoW grew louder. To everyone’s surprise, however, with the boom of the Ordinals protocol and BRC-20 in 2023, the PoW ecosystem has thrived.

Ordinals Protocol: Minting Brand-new NFTs

In recent years, the NFT market has remained in the spotlight. Some developers aim to combine the iconic NFTs with Bitcoin, the securest and the most reliable crypto, but the No.1 crypto has failed to attract popular market applications over the years, as it lacked smart contracts.

Nevertheless, technologically speaking, Bitcoin hasn’t stayed stagnant in recent years. The SegWit upgrade in 2017 and the Taproot upgrade in 2021 boosted Bitcoin’s performance, laying the foundation for the subsequent prosperity of the whole ecosystem.

In January 2023, Bitcoin developer Casey Rodarmor created the Ordinals protocol, which was officially launched on the Bitcoin mainnet. With the introduction of ordinals and inscriptions, the Ordinals protocol enabled the minting of NFTs on the Bitcoin network.

The Ordinals protocol assigns a unique number to each satoshi (the smallest unit of Bitcoin, and 1 BTC consists of 100 million satoshis) based on the mining order, making every satoshi indivisible and non-fungible. Besides, the Ordinals protocol claims to be more decentralized than Ethereum’s NFTs since they often store images and other information off-chain through IPFS or other cloud services, whereas the Ordinals protocol inscribes information such as texts and images directly onto satoshis, keeping all data on-chain.

Shortly after the launch of the Ordinals protocol, Yuga Labs, the parent company of Bored Ape Yacht Club, rolled out a new NFT collection on Bitcoin based on Ordinals. The collection quickly gained popularity, and the auction fetched 735 BTC, worth about $16 million.

BRC-20, DRC-20, and LRC-20: Is It Possible to Issue Tokens on Bitcoin?

Now that NFTs can be minted on Bitcoin, many wondered whether tokens can also be issued on the network. A crypto enthusiast domo proposed an experimental token standard called BRC-20, building upon the Ordinals protocol. BRC-20 defined the Deploy, Mint, and Transfer specifications of token contracts through the ordinals and inscriptions of JSON files.

Domo called BRC-20 an interesting social experiment, which created a buzz in the industry, and BRC-20 tokens such as ORDI and PEPE attracted tons of investors upon their release. Subsequently, similar and improved protocols emerged, including ORC-20, SRC-20, and BRC-21 on Bitcoin, LRC-20 on Litecoin, and DRC-20 on Dogecoin, which quickly garnered a large number of users. For example, after the introduction of DRC-20, Dogecoin’s daily trading volume exceeded two million transactions, surpassing both BTC and ETH.

proof-of-work algorithm

PoW: A Flourishing Category with Multiple Hit Projects

In addition to the Ordinals protocol and BRC-20, the PoW category recently saw the appearance of another rising star: Kaspa, which was created by early Ethereum developer Yonatan Sompolinsky. Yonatan believes that Nakamoto Consensus is the oldest, most widely accepted, and the most secure protocol, and that decentralization is at the heart of crypto. This is why he built Kaspa and stayed committed to the PoW mechanism.

Kaspa uses Yonatan’s GhostDAG protocol (GhostDAG is an improved version of Ethereum’s PHANTOM, which was also designed by Yonatan) to produce blocks within seconds. Kaspa will soon go through the Rust rewrite, allowing it to support Layer2, smart contracts, and DeFi development. These capabilities compare favorably with those of certain PoS public chains.

Clearly, PoW didn’t fade away after the Merge as predicted by its opponents. Instead, it has demonstrated broader use cases and impressive potential through the boom of the Bitcoin ecosystem in 2023. ViaBTC, a top crypto mining pool, suggests that the future of crypto is more likely to feature a versatile selection of different projects. As PoW developers and community contributors continue to explore new possibilities for crypto assets and blockchain, PoW projects won’t always stay the same. 

As a well-known supporter of the PoW community, ViaBTC has consistently upheld PoW through real action. As one of the top five BTC mining pools and the largest LTC mining pool, ViaBTC has rendered major contributions to the maintenance of PoW projects such as Bitcoin, Litecoin, and Dogecoin. In response to Bitcoin’s network congestion, the company provides a free service to help users speed up Bitcoin transactions (100 free spots per hour) to meet their urgent needs. Recently, the pool also launched the Kaspa pool, bringing fresh dynamics to this rising star of PoW.

Both the innovative Ordinals protocol and the efficiency solution Kaspa have made new attempts on the basis of PoW, an ancient yet secure consensus. Inspired by the two, more PoW projects and protocols may emerge in the future. Moreover, with the support of strong communities and technical contributors, PoW projects may open up new possibilities in 2023, foster more applications beyond payments, and achieve technological breakthroughs to unlock value.

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