The Bitcoin network is built on Proof of Work, which is based on an algorithmic assymetry: valid hashes are computationally easy to verify but difficult to create. The vast processing power devoted to mining consumes electricity and therefore the bitcoin network is resource-backed. Downsides of the proof of work model such include the cost of maintaining the network and centralization of the asymmetric processing power. However instead I would like to discuss the upside which is long term impact of blockchain technology on the economy.

The concept of resource-based economics was developed by Jacque Fresco through his Venus Project in 1995.

The Venus Project is an organization founded by Jacque Fresco that advocates for what it calls a resource-based economy. The goal is to combine Fresco’s versions of sustainable development, energy efficiency, natural resource management and advanced automation in a global socioeconomic system based on social cooperation and scientific methodology.

Jacque Fresco’s work focuses only on natural resources of the planet such as minerals, natural gas and oil. However in the internet era, the scope of resources goes beyond natural resources of the planet. In a decentralized computer network resources include processing power, storage and network bandwidth. In any given community, resources include member skills, software development, availability of tools, and content produced.

Since our current economy is based on the equilibrium between production and consumption, perpetual growth is only possible with perpetually increasing consumption. In other words, for growth to never reverse or cease, consumption must eventually become infinite. As inflation is baked into the very core of the growth pattern of this economy model, it is like a tornado that feeds itself anything on its path. Among this model's destructive consequences are peak oil, depletion of natural resources, and ever increasing pollution.

Transition from division of labor which is Proof of Work by humans to Proof of Resource has already begun. Division of labor was advocated by Adam Smith in The Wealth of Nations. Thanks to the innovation of Blockchain, the technology is moving towards transforming centralization and corruption into decentralization, transparency and accountability at all levels.

One of the main advantage of Proof of Resource model is that it is based on deflation rather than inflation. This is because the resources do not and cannot be inflated to infinity. Gold or any mineral mining are very good examples of this model. By implementing the Proof of Resource in a decentralized system we are making sure the resources are not controlled by few but managed by the people based on group consensus.The Blockchain enables the group consensus and empowers the people on a grass roots level.