BLOG

Using blockchain as an example, it has already been established that this technology alone can never serve as a verifiable source of truth. It is therefore, in principle, an insignificant technology—with the exception of Bitcoin.

How can we define truth? Truth is, first and foremost, a philosophical concept that cannot be easily defined. However, we can scientifically determine criteria that may lead to it.

1. The correspondence theory. Do we find correspondences with reality? If a statement is made—such as “It’s raining”—it can be verified in reality, at the latest when we get wet. This is, for example, a theory proposed by Aristotle.

2. The coherence theory. Are there contradictions within the system? This is a matter of pure logic. Mathematics is based on it. However, it is not always easy to verify it in reality.

3. Pragmatic theory. Is the statement useful, or does it lead to success? It is about practical consequences that prove their worth in dynamic action and lead to successful outcomes.

In this context, there are objective and subjective truths. So, does truth depend on the observer or not? While the correspondence theory generally strives for an objective truth, more recent approaches such as consensus theory (e.g., Jürgen Habermas) emphasize that truth can also be the result of rational discourse and an ideal consensus. One could think of the principle of exclusion in this regard.

So, as we can see, the concept of truth is not always easy to derive. But how can the Bitcoin network claim to imply absolute, digital truth?

Bitcoin is a decentralized protocol. The concept of decentralization is essential for understanding the concept of truth in this context. However, decentralization alone is not always sufficient to produce genuine truth.

It is also necessary to understand the concept of open-source computer systems—developments that can be viewed, verified, and even modified and reused by anyone at any time in their entirety. Bitcoin fulfills these so-called free and open-source characteristics. Anyone can and is permitted to use the program code freely.

This absolute transparency is necessary to prevent abuse and to gain a precise understanding of how the system works. Part of this functionality is Proof of Work (objective reality)—proof of the work performed.

This is because mining Bitcoin requires more than just solving a complex mathematical puzzle. Anyone worldwide can participate in finding valid blocks. These blocks cannot be calculated and must be discovered randomly through an astronomical number of attempts per second. The more computing power, the faster the results. However, to reliably synchronize this block generation into fixed time intervals, highly sophisticated mechanisms were designed.

The protocol specifies a 10-minute interval during which, regardless of the total combined computing power, a valid and verified block may be added to Bitcoin’s blockchain. Once added to the blockchain and confirmed, it becomes an irrevocable part of Bitcoin’s entire history.

A block is comparable to a page in a ledger. It contains, for example, a block reward for the first person to solve the puzzle. In addition, several thousand transactions are recorded in the block, verified for authenticity, and validated or accepted by the entire network.

Another indispensable and automatic adjustment mechanism is the difficulty level. It regulates the complexity of the computational problem to be solved and automatically adapts to the amount of computing power pooled worldwide to compete for finding blocks.

For example, when the network first started, a single PC was sufficient to find a block in 10 minutes, so the difficulty could still be set to 1. If a second PC with the same processing power was added, a block was found after just 5 minutes. At that point, the difficulty had to be increased to resynchronize the time chain back to 10 minutes per block found.

The Bitcoin protocol aggregates the total computing power worldwide in real time. As a result of this decentralization, there are now a vast number of mining chips distributed across the globe that participate in this process.

The total computing power in the network is referred to as the hashrate. Today, it is an exorbitant number. It describes the cumulative number of computational attempts per second made by all mining devices worldwide that are necessary to find a single valid block, in accordance with the set difficulty. It serves as the network’s safeguard. If the number of miners decreases, the hashrate also decreases, and with it, the difficulty. If the difficulty decreases, mining becomes more cost-effective due to lower electricity consumption and once again offers economic incentives. This ingenious balance can certainly be regarded as a masterpiece of modern economics.

Since Bitcoin is mined using a specialized ASIC chip, the hashrate alone makes it possible to determine with relative accuracy how many devices worldwide are involved in mining. It also reveals how much electricity is consumed by the global network. This provides clear, mathematical proof of the absolute authenticity of the decentralization of the monetary data on the Bitcoin blockchain.

The current decentralized computing power is thus verifiably so vast on a global scale that it could not be manipulated even by an entire country, such as the U.S.

Since every node verifiably (open source) synchronizes with the entire network—and does so only with valid versions—anyone can verify the network’s authenticity for themselves. All it takes is a small PC and the simple installation of a node (independent verification). The so-called “node” downloads the entire Bitcoin blockchain history and verifies the validity of every single block from the very beginning.

To ensure that the correct chain is synchronized, the node, using its base protocol, accepts only the longest chain. It therefore recognizes the chain with the greatest cumulative computing power as the true history. It cannot be falsified, as evidenced by its consistent and enormous energy consumption. From the inception of the core network to the present day, the large and ever-growing Bitcoin community—with an estimated 300 million participants by 2026 (based on the number of known wallets according to several analytics firms)—has consistently opted for the same consensus.

However, the exact number of nodes cannot be determined, as many node devices (presumably most of them) connect to one another via the TOR network. This is an important feature for privacy, but it is not critical to the network.

The price resulting from miners selling Bitcoin to exchanges, together with the hashrate and the difficulty, thus constitutes a unique truth that, in digital form, can arise exclusively through Bitcoin’s decentralization and open-source protocol. No other digital system can even begin to offer this level of verifiability, and in all likelihood, Bitcoin will remain the only network in human history that has been able to develop this unique capability.

Another aspect of this truth is the absolutely limited amount of Bitcoin that can ever be mined. This means there are two things in our world that are absolutely limited: Bitcoin and our lifetimes.