Mechanisms in Nature

Nature does not provide an exact template for monetary systems, but it does reveal recurring principles. Lasting order and resilient structures usually arise where real costs, scarcity, and incentives are intertwined.

1. Proof-of-Stake (The Stakeholder Model): This mechanism is rather a special case in nature. Examples include mycorrhizal networks (the symbiosis between fungi and trees) or lichens (algae and fungi). Both sides exchange vital nutrients. This model is based on mutual investment: Whoever harms their partner jeopardizes their own survival. Each participant contributes their "stake" and thus helps maintain the system.
2. Proof-of-Authority (The Central Authority): A classic example is honeybees. The queen suppresses egg-laying by the worker bees using pheromones, thereby contributing to the hierarchical stability of the colony. This central function is essential to ensure the functioning of the state and thus the survival of the entire population.
3. Proof-of-Work Stealing (Parasitism): In nature, one can observe a parasitic mode that can be aptly called "proof-of-work stealing." This is an exploitative phenomenon. A parasite, such as the tapeworm or the liver fluke, attaches itself to a host and directly diverts its output (nutrients). It utilizes the host's "proof-of-work" without expending energy itself to obtain it.
4. Proof-of-Work (Energetic Proof): In nature, actual energy expenditure is a widespread fundamental principle of value creation and self-preservation. Whether trees laboriously convert sunlight into sugar through photosynthesis, bees fly millions of kilometers for their winter stores, or a lion hunts its prey—energy expenditure is a prerequisite for survival. To create or maintain value, the use of real energy is indispensable.

Why Money Must Be Created Through Work

When we examine these mechanisms for their suitability for a monetary system, a clear picture emerges:

1. Proof-of-Stake: While this mechanism is efficient, it achieves this efficiency by foregoing the robust safeguarding of external physical costs. The lost security must then be compensated for through new internal rule-making (governance, penalties and incentives, and social and institutional mechanisms). This new internal rule-making is based on trust in the responsible actors (individuals/institutions) as well as their knowledge, experience, and integrity. If this fails, a Proof-of-Stake monetary system allows those with high wealth to generate even more wealth with less effort over time. In the long run, it favors tendencies toward wealth concentration.
2. Proof-of-Authority: This model is highly efficient but extremely vulnerable. It creates a central authority that everyone must trust. If this leadership fails or becomes corrupt, the system's functionality is fundamentally jeopardized.
3. Proof-of-Work Stealing: Fraud and theft are not a sustainable foundation. If everyone only tries to extract value instead of creating it, the basis of value creation collapses.
4. Proof-of-Work: This mechanism requires the use of real, physical energy to anchor a value in the system. At first glance, compared to the other strategies, Proof-of-Work seems wasteful because it consumes energy. However, when considering system stability, Proof-of-Work offers a property that the other models lack: incorruptibility through physical labor. While trust (PoS) can be abused and authority (PoA) corrupted, verifiable and costly physical labor cannot be simulated at will. The "inefficiency" of the high energy consumption, due to the reliance on real, external costs rather than mere internal agreements, acts as a security barrier here. This barrier protects the system against cost-effective attacks and arbitrary expansion of the supply. For a monetary system focused on neutrality and resistance to manipulation, Proof-of-Work appears to be the most convincing architecture.

Conclusion

The choice of mechanism for a monetary system is ultimately a trade-off between efficiency and security. While Proof-of-Stake and Proof-of-Authority are appealing due to their speed and low cost, they pose systemic risks through centralization and dependence on trust.

A "hard" money intended to serve as a long-term store of value therefore consistently relies on the characteristics of Proof-of-Work. Here, the strongest objection to Proof-of-Work - its inefficiency due to high energy expenditure - is consciously accepted. However, this is not a flaw, but rather a fundamental security principle of the system. What is expensive to produce and secure cannot be arbitrarily imitated or inflated.

As with honey, the crucial point with hard money is not apparent efficiency, but the authenticity of the effort. What can only be created through real work is more easily immune to arbitrariness, deception, and indiscriminate reproduction.

Kind regards,

Your beekeeper Patrick