Satoshi Nakamoto Collaborator Says His Bitcoin Fork, Zcash, Should Go Proof Of Stake

Zcash founder Zooko Wilcox might 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.

An early and active participant on Bitcoin message boards, Wilcox frequently communicated and collaborated directly with the pseudonymous founder of Bitcoin, Satoshi Nakomoto. In fact, he authored the very first blog post on bitcoin, which Satoshi linked to on the original Bitcoin.org website. That is the ultimate seal of approval when it comes to crypto. 

However, in an interview with Forbes, Wilcox made it clear that for as far as Bitcoin has come it is far from a fully-formed project in many areas. 

For starters, the pseudonymous nature of the blockchain, which hackers and criminals are slowly finding out is not nearly as private as they hoped, was not the desired end state. As Wilcox tells it, “The fact is, like, to basically 100% of all the early bitcoiners, including Satoshi and Hal (Finney) and Nick (Szabo) and Adam (Back), and everyone…Privacy was like the main value proposition.” 

If nothing else, it was clear that it deserved central billing alongside independence from central banks, the more common narrative of Bitcoin’s origin story.

The proposed solution back in 2010 was something called zk-snarks (Succinct Non-Interactive Argument of Knowledge). In short, zk-snarks can be used in a blockchain to hide not only the identities of the sender and receiver, but transaction amounts as well. Total privacy.

Back when Satoshi was actively developing bitcoin he had hoped to integrate zk-snarks into the network. However, by the time he stepped away in 2011 the technology was not advanced enough to install without slowing Bitcoin down (it is already slow even by crypto standards) or burdening it with too much data.

Wilcox was part of a team of scientists in 2012 who presented a proposal to integrate zk-snarks on top of Bitcoin at a conference in San Jose, but the core developers told them that the technology had to be proven on another blockchain before receiving serious consideration. 

So that is exactly what Wilcox did – and a couple of years later Zcash was born.

It is also clear in his writings that Satoshi knew that bitcoin, if successful, would have a very large carbon footprint, something that my colleague Chris Helman pointed out in a recent article for Forbes, “It’s the same situation as gold and gold mining. The marginal cost of gold mining tends to stay near the price of gold. Gold mining is a waste, but that waste is far less than the utility of having gold available as a medium of exchange. I think the case will be the same for bitcoin. The utility of the exchanges made possible by bitcoin will far exceed the cost of electricity used.” 

It is on this point that Wilcox wants to use Zcash to move crypto forward, starting today. In a forthcoming blog post shared exclusively with Forbes, he is advocating for Zcash to move away from the same energy-intensive ‘proof-of-work’ consensus mechanism as Bitcoin to a more eco-friendly ‘proof-of stake’ approach.

The implications of such a transition could be huge. Zcash is a close cousin of Bitcoin, its code is actually based on Bitcoin, and if successful it could open the door to Bitcoin possibly eschewing mining as well. 

So what exactly is ‘proof-of-stake’? Rather than operating millions of dollars worth of energy-consuming computing hardware racing to solve complicated math problems in exchange for freshly-minted bitcoin, nodes on the network post holdings as collateral at risk of forfeiture should they act dishonorably. Proof-of-stake is lighter, faster, and in the words…