Bitcoin Renaissance: The Material Tendencies and Retroism of the Digital World

Author: Tang Han, TH Travelogue of Nations Image source: Bitcoin Magazine
"With POW as time, UTXO/Cell as space, and energy as the driving force, we can create a world."
The Bitcoin Renaissance is a topic everyone is discussing. Many projects place themselves under this banner to explain their current actions. Currently, this wave refers more to the gathering of funds, consensus, and developers towards the Bitcoin ecosystem. But perhaps we can think more deeply about this wave: what exactly is it? What will it leave behind?

I believe the Bitcoin Renaissance is a revival of two fundamental value propositions, one is POW, and the other is UTXO. The former is in contrast to POS, while the latter contrasts with account models, with Ethereum being the representative of the POS + Account model. This Bitcoin Renaissance will mean that after fifteen years of development in the blockchain industry, it is returning from the POS + Account route led by Ethereum to the POW + UTXO route led by Bitcoin.

But why is this so? What exactly are people tired of? When people return to Bitcoin, how might a world envisioned differ from Ethereum? (Aside from the fact that Satoshi Nakamoto's disappearance has left Bitcoin as a leaderless entity.)

1. Materialism and Retroism

If you carefully read the white papers of Bitcoin and Ethereum, you will feel how different these two systems are.

Image source: Bitcoin Whitepaper
In the abstract of Bitcoin's white paper, Satoshi Nakamoto defines Bitcoin as "a purely peer-to-peer electronic cash system." We can find a reference for Bitcoin in the real world: cash. The characteristic of cash is that it allows online payments to be sent directly from one party to another without going through a financial institution. This constitutes a form of materialism. In Ethereum's white paper, however, there is no such reference. We will discuss this later in the article.
One of the reasons Satoshi invented Bitcoin was that this peer-to-peer electronic cash did not exist in the digital world but was needed. It was during the 2008 financial crisis, when many banks collapsed, and people could not withdraw their money from banks. Therefore, although bank transfers provided a means of digital payment, the reliance on third parties made everyone realize: this is not actually my money; I merely hold a balance in the bank's ledger. The true "electronic cash" did not exist, nor did the notion of me holding "electronic cash."

Satoshi did something: he successfully realized a digital materialism of real cash. How was this materialism achieved? He used POW, or proof of work, as the foundation to provide security support for electronic cash (in fact, the role of POW may go far beyond this). POW ultimately ties the system's security to the computational power and energy of the real world. He also used UTXO as a carrier to simulate the body of cash, storing the user's money in UTXO. The ownership relationship is resolved through the "lock" of the private key.

Bitcoin's materialism of electronic cash is very successful. POW unifies the security foundation of the digital world and the real world, both built on energy; while UTXO provides an independent and non-interfering digital body. The combination of the two shapes a profound tendency in the digital world to emulate reality. If Ethereum can be called radicalism, then this digital world materialism could perhaps be termed a form of retroism.

2. Why Retro to Reality?

This retroism implies an insight: there is a deeper wisdom behind the real world that is worth emulating in the digital world. This insight is often forgotten because people create the digital world to transcend reality. However, we can understand this perspective through a few examples:

• You hold an item in a game, such as a golden sword. However, due to a lack of funds, the game developers shut down the server a year later, and the golden sword disappears. Imagine in real life, could the golden sword you own suddenly vanish?

• Vitalik once loved the warlock character in Blizzard games. One day, Blizzard suddenly decided to remove the life siphon skill, and he cried, leading him to the path of resisting centralized internet platforms. Imagine in real life, could a group of talented individuals suddenly have their skills drained by another company's executives?

• A blog site you love is ordered to shut down. Even the entire site can no longer be found, and two years later, there is no trace of this person online. Can a book simply disappear as if it never existed in real life?

We can imagine a wildly digital world that strays from materialism: a news site that can 404 at any time. A cup that cannot be owned. A game character whose abilities can be revoked at any time. You might feel something is off, but what exactly is wrong?
Image source: "On the Modes of Existence of Technical Objects"
The answer is: it places us in a fragile, sycophantic (a form of advanced control) system that is highly inconsistent with real-world ethics. In this system, digital objects have simulacra but lack solid existence, or rather, they cannot exist freely and must rely on a third-party platform to exist. However, we project a great deal of emotion, time, and trust onto these simulacra. The emotions we project ultimately become chips controlled by the platform.

Humans instinctively love, including love and trust for digital objects that cannot exist freely and are designed by others. When love is utilized and manipulated en masse and systematically, we lose the sense of life.

Reality implies a certain solidity, which is the foundation for the birth of ethics and morals (privacy, human rights, freedom, responsibility, nobility). This may be the reason the digital world is retro to reality.

3. Manifestations of Bitcoin's Materialism Tendency

Image source: Adobe Stock
Let’s return to Bitcoin. In the Bitcoin ecosystem, we can see a strong tendency towards materialism. Bitcoin simulates electronic cash, and Bitcoin developers have found different real-world objects that inspire them to simulate. Here are some examples for reference:

• Bitcoin: Electronic Cash
• Lock: Lock, later extended by Peter Todd to a one-time seal
• RGB Protocol: Scottish Deed (only stores Commitment on Bitcoin)
• Ordinals Protocol: Colored Coins (serial numbers)
• Atomical Protocol: Digital Material Theory
• Runes: Treating Bitcoin as a tablet
• KeyChat: Stamps, envelopes
• CKB, which follows Bitcoin's design thinking: Cells (the basic unit where data exists in CKB)
• Spore Dob Protocol: Can embed DNA and interpreters within cells

Each of these cases could be discussed at length, so I do not intend to expand on the details of these cases in this article. What I want to share is that although Bitcoin's structure is very simple, different developers seem to find different perspectives within this simple structure to construct their worlds. Just like a tree, some people focus on the leaves because of their soft characteristics and use them to weave wreaths; others focus on the trunk to build houses; still others focus on the bark to burn for warmth. Some are inspired by the tree and plant a forest.

This is because once an object appears, understanding must be diverse. Different people view Bitcoin from different perspectives, ultimately arriving at different Bitcoins, and these different Bitcoins overlap on the chain we see today, forming the largest consensus in the world.

However, we seem to find it difficult to see this in Ethereum.

4. Ethereum is Not Materialistic

If you look through Ethereum's white paper, you will not see the materialistic tendency found in Bitcoin. From the beginning, Ethereum was function-oriented; it did not aim to simulate real-world objects but was created to facilitate developers in building on-chain applications. Ethereum has always been tied to the term smart contract.
Image source: Ethereum Whitepaper
But I want to say that in real life, existence can never be function-oriented. Existence must first exist, and then different functions can be understood and explored in practice. Just like a tree. A tree never exists to be firewood; it simply exists quietly. As long as the energy does not deplete, its life does not end, and it can continue to exist. It is only through your interaction with it that you discover it can have various functions.

POS has failed to provide Ethereum's assets with an energy foundation that is isomorphic to reality. Although countless debates have occurred regarding whether POS or POW is safer, and both sides have found angles that provide them with peace of mind, in terms of materialism, POS and POW have run towards two different worlds. The world of POS is a more human-controlled world; while the world of POW attempts to achieve a unified cost structure between the digital world and the real world, namely: to allow existents to exist, energy costs must be paid.

In reality, existence is never flattering or easy; it is laborious. Existents are constantly facing entropy increase. Think about it: if you do not clean your house for a week, it may become dusty. Perhaps you do not want to sweep the floor yourself but use a vacuum robot to clean the room; then you have to charge the vacuum robot. Another example: if you do not intake energy, do not eat, as a living being, you will die. These are basic common sense.

Making something exist requires energy support to combat entropy increase. This point is inherited in the world constructed by POW. For the on-chain world to exist, POW chains must continuously consume energy. Supporters of POS argue that this is not environmentally friendly and unnecessary from a security perspective. However, energy consumption simulates a cost structure similar to reality, which forms the basis for people extending ethics into digital space and affirming the reality of digital objects. I will elaborate on this in another article.

The account model of Ethereum does indeed facilitate more developers in building applications; however, this model inherently determines that Ethereum cannot be materialistic. It is more akin to a relational existence, where the existence of all objects is state-based, needing to find their state and position in the world state tree. It cannot achieve the solidity and stability of UTXO. It is hard to imagine that an apple in the real world could be influenced by a cup a thousand miles away, but in the world of Ethereum, that is the case, because there are no independent apples and cups; there are only one state after another, and this state is not solely controlled by a third party. Contract attacks and asset theft are common occurrences on Ethereum.

Or rather, there are no objects in Ethereum.

To some extent, the absence of objects limits the innovation of the Ethereum ecosystem to the leadership's updates of narratives. If objects existed, people could explore their functions from different perspectives based on their observations of the objects, creating different things. For example, Peter Todd found a one-time seal in Bitcoin; Casey found a historical tablet in Bitcoin. Although Satoshi initially only wanted to build electronic cash, once objects exist, different perspectives can create different things. A tree can be used to build a house, serve as firewood, or be carved into sculptures…

Because there are no objects, the leadership of Ethereum must define what Ethereum is, especially continuously providing functional directions. Since it is functional, it needs to optimize this function constantly, leading to increasingly radical parameter improvements and functional integrations… but this approach risks losing direction.

5. Back to NFTs:

Can digital objects replace you?
Let us answer the initial question of the article: what changes will occur when we return from Ethereum to Bitcoin? What will the Bitcoin Renaissance leave behind?

A very natural trend is: to build a truly full-chain digital object world based on POW and UTXO, or a self-sustaining world.

Although there are discussions in the Ethereum community about full-chain games, under two completely different technological architectures, the world pointed to by full-chain games is different. The architect of CKB, Jan, once said something that impressed me deeply: "With POW as time, UTXO/Cell as space, and energy as the driving force, we can create a world." POW + UTXO itself constitutes a simulation of the real world, a world with its own internal time, creating independent, non-interfering bodies for digital objects within that world. People can write content into existing spatial bodies in a "Ghost in the Shell" manner to construct digital objects. The POS chain, on the other hand, lacks its own internal time, and there is no independent concept of objects like UTXO; the "objects" inside are more akin to a relational existence, essentially states recorded in a global ledger.

On a POW + UTXO chain (not just Bitcoin), we can envision such a digital object: this object requires energy to maintain its existence, just like real-world objects, and consumes the same energy. We can also envision a relationship between this world and objects: constructing a digital object that exists materially when that world (the blockchain) exists. Its existence is not subject to anyone's will. No one can destroy or alter it. In this sense, the existence of digital objects is equivalent to the existence of that blockchain in terms of security and effectiveness.

We cannot imagine that the solidity of an NFT on Ethereum is equivalent to Ethereum itself. Typically, NFT images exist off-chain, and on Ethereum, there is merely a contract state that allows programming, not the object itself. Allowing developers to program as flexibly as possible was once a feature Ethereum was very proud of. However, when constructing a self-sustaining world, this anthropocentric tendency makes the relational existence within the world fragile and insubstantial.

NFTs were at the core of the last bull market's metaverse concept explosion and were key factors in the Ethereum ecosystem's explosion, permeating the entire bull market. Whether it is crypto art, PFP images, the metaverse, GameFi, or the subsequent DAOs and SBTs, they all revolve around NFTs. Unfortunately, developers on Ethereum who attempted to build chain games around NFTs ultimately converged on GameFi; idealistic developers who sought to create full-chain games ended up evolving into a design concept called AW, but struggled to implement it.

I believe all of this will start anew in the Bitcoin ecosystem, but the paths to realization, people's understanding, and the final presentation will be very different. Bitcoin's materialism tendency and retroism will accompany developers. Good developers should not think about how to quickly transport the existing world from Ethereum but should think about how to build new rules and a new world on this solid ground. This may be the greatest innovation of this bull market.

I will elaborate on this part of the vision in another article.