The many faces of Bitcoin
What is Bitcoin?
The Bitcoin white paper was released by Satoshi Nakamoto in 2008, and the Bitcoin genesis block was created on January 3rd 2009. Today Bitcoin is BTC according to the markets. However, what Bitcoin is, is a much more philosophical question.
Throughout 2017 and 2018, the “Bitcoin community” splintered into three distinct groups represented by three different chains that link back to the Bitcoin genesis block.
When you look at the various crypto markets, you will see three chains: Bitcoin (BTC), BitcoinSV (BSV), and Bitcoin Cash (BCH).
How is this possible?
In July of 2017, Bitcoin Cash forked from the Bitcoin network by mining a block that was out of consensus, which was then built upon by other miners using a client with an emergency difficulty adjustment (EDA). Some miners, many of the largest, expended money to continue mining BCH and extending the chain: Bitmain, ViaBTC, BTC.TOP, Bitcoin.com, nChain, and others. The two main node softwares underpinning the BCH network were Bitcoin ABC and Bitcoin Unlimited.
In December 2018, Bitcoin Cash experienced a chain split during a planned hard-fork when two different groups of miners who disagreed on the future of the BCH chain decided to battle it out for what Bitcoin Cash should be.
A group of very large miners backed by Calvin Ayre, nChain, and others began mining with the “Satoshi’s Vision” client. This client became known as BitcoinSV. BitcoinSV pushed for 128MB blocks and sought to return the protocol closer to the original Bitcoin design by restoring four of the original Satoshi opcodes, whereas BCH developers wanted to keep the blocksize at 32MB and implement two totally new opcodes that were not part of the original bitcoin design.
The ensuing hash war did not last long. Within 24 hours of the fork and subsequent hashing battle for control of the chain, the BitcoinABC team released a hardcoded checkpointed version of the node software to prevent a blockchain re-org from occurring on BCH as a result of BitcoinSV’s willingness to continue the hashing battle indefinitely. In other words, the BitcoinSV miners were willing to continue using proof-of-work for as long as it took to win the battle and preserve one chain, but the BitcoinABC team decided that proof-of-work wasn’t necessary so they implemented a checkpoint in the node software and pushed this software out to miners and exchanges in order to maintain control of the BCH chain. This guaranteed that a third chain would form which is now called BitcoinSV.
When Bitcoin ABC implemented this checkpoint, the developers were criticized heavily — as it appeared that Bitcoin Cash was centralized under a dictator who worked for a mining cartel, and that the chain was no different than any other altcoin out there because its’ direction was effectively controlled by a small entrenched group of developers. In fact, a lead developer of BitcoinABC even prided himself on being a “benevolent dictator”.
Unsurprisingly, a cabal of very large exchanges sided with the ABC chain as being what Bitcoin Cash is.
There is now an anti-trust lawsuit by UnitedCorp against many of the participants in this event.
BitcoinSV is born
BitcoinSV backers failed to win the war for the BCH chain but nChain, CoinGeek, and other miners were successful in creating a third chain known as Bitcoin Satoshi’s Vision, or BitcoinSV (BSV), which subscribes to the original protocol vision that Satoshi Nakamoto laid out in the whitepaper and the original Bitcoin codebase.
Today we have Bitcoin, Bitcoin Cash, and BitcoinSV all utilizing Proof-of-Work with the SHA256 hashing algorithm. All three chains have a supply cap of 21 million coins each.
However, they all have completely different properties when it comes to the applications they are optimizing for, and the vision behind them:
- Bitcoin is optimized as a decentralized digital gold settlement network with off-chain layers used to gain more cash-like qualities such as instant settlement and more privacy. More akin to legacy banking systems whereby users one day will not interact with the base settlement network protocol, but will instead only interact at higher layers utilizing many different possible protocols.
- Bitcoin Cash is optimized for cheap on-chain retail payments, aka “PayPal 2.0”
- BitcoinSV is optimized as an electronic cash system for building an on-chain computing & software application stack through layered data structure protocols to create an “on-chain Internet” referred to as the MetaNet. This network targets high volume on-chain micropayments use cases for P2P users and enterprise business use cases, all built on top of one globally scalable base protocol that does not change.
In my opinion, the Bitcoin Cash narrative for cheap retail payments is not interesting or compelling. BCH is competing with every altcoin, and has no real advantage over Litecoin or other altcoins when it comes to retail payments. BCH also competes directly with the Lightning network for retail payments. Some currently available stats have shown that BCH has failed to overtake even Lightning for retail payments, let alone Litecoin and Ethereum. In fact, in the last 10 months, BCH transactions have seen zero growth.
BitcoinSV is sometimes referred by its’ community as BitCoin (with a capital C)
You will see many people in the BitcoinSV community referring to the BSV protocol as BitCoin, which was the name of the protocol in the original BitCoin v0.01 ALPHA release readme.txt file.
BitcoinSV is attempting to return the Bitcoin protocol as close to the original specification as possible that Satoshi Nakamoto released. The BSV developers are restoring most disabled op codes and encouraging software application development on-chain. The BSV chain is seeing furiously rapid user growth and development, and it has well surpassed BCH in usage already.
Bitcoin vs. BitcoinSV
Bitcoin and BitcoinSV are the two most interesting projects in the entire crypto/blockchain space. Together, they can encompass virtually every application possibility from off-chain layer 2 protocols like Lightning, to on-chain data layers in script.
For Bitcoin, digital gold means “Don’t Trust, Verify”. Bitcoin is money for an adversarial mad max world. In this world, your sovereignty and privacy are paramount.
This world is working on making the tools needed to make Bitcoin as a store of value financial asset and settlement network, while building the off-chain layers that may function as a more bank-like payment systems: Liquid, Lightning Network, and other layers providing protocols for interoperability. For example, custodial wallets can also use the Lightning network as a payments protocol. In this custodial model, businesses use the Lightning network to achieve both B2B and B2P payments.
Therefore, Bitcoin (BTC) is a store of value asset and resilient settlement network that is leveraged to provide more medium-of-exchange and financial applications off-chain through second and third layers.
BitcoinSV is a completely different vision.
In the BitcoinSV world, the transparent public ledger and blockchain is essentially a tool of everyone, including government, to have transaction traceability and data integrity while maintaining pseudonymous privacy. Its’ proponents refer to BitcoinSV as a small world network due to the formation of a giant component in the center of a network that develops as a result of hyperconnected mining nodes, and allows the formation of giant cluster of peers and super peers around this core.
In this world, peers are not nodes, but are users of p2p wallets and data services — but they can interact on one common protocol globally. Users can leverage this stable base protocol founded on proof-of-work in order to create entirely new systems and applications on a global scale because they can trust the system’s incentives are aligned with their incentives. This leads to a phenomenal level of social scalability that has previously not been possible. Daniel Krawisz expounds on the benefits of the hyper connectivity of mining nodes and the alignment of miner and user incentives as a result of the small world network in his epic Homo Bitcoinus.
BitcoinSV is a completely different vision and application of the original Bitcoin protocol. It is being designed with completely different properties, values, incentives, and expectations for application developers and software engineers.
While Bitcoin is vying to be digital gold settlement network with off-chain layers that seeks to maximize user decentralization and off-chain scaling, BitcoinSV is vying to be a distributed computing and data platform with a native fixed money supply, that operates within governmental legal frameworks where proof-of-work is the most important incentive mechanism of preserving the integrity of the network— not decentralization.
For additional details on what BitcoinSV is about, see this OKCoin primer: What is BSV? A Bitcoin Satoshi Vision Primer
A lot of Bitcoiners are probably very confused right now.
On one hand, they are being told we need “mass adoption”, and that the only way to do this is with Lightning Network.
I have bad news for people who are stuck in one mindset and think “Bitcoin” is just one thing. Soon they will discover this is not the case.
BitcoinSV is producing extremely user friendly applications that allow for non-custodial monetization of nearly every action you can imagine. Just because people are calling into question Craig Wright’s claims to be Satoshi Nakamoto and his credentials, this doesn’t actually change the fact that BitcoinSV is gaining global traction at a very rapid pace.
It turns out, most people on Earth probably don’t care so much about sound money as they do about usable money and global data integrity capabilities.
The utility of BitcoinSV applications could steamroll the entire crypto industry. Everyone building on Ethereum or any altcoin should be looking at BitcoinSV right now. Everyone. If everything goes as planned, BSV will be a powerful distributed application and data storage platform with a self contained economy that uses BSV as the native currency.
Apps like Twetch and CityOnChain basically combine the two things, there’s no such thing as tipping and yet the person who submitted the content receives income from people who choose to interact with that content whether through the Like or Reply function.
In this case, users are buying a Like and that in turn creates revenue for the content submitter.
Therefore, BSV apps are turning basic social interactions previously associated with just ‘goodwill’ into an actual content monetization business model. See this interview with Twetch co-founder Josh Petty, where this is discussed.
Is BitcoinSV an attack on Bitcoin?
Maybe, maybe not.
Bitcoin Core developers, such as Luke Dashjr, have been adamant that Bitcoin cannot scale to the entire world on-chain, and that it can actually only handle a very small amount of on-chain users. He has also posited that Bitcoin users should only need to make ~3–7 transactions per year.
This begs the question, do we want altcoins like Litecoin, Dash, and Ethereum to be where new users learn about cryptocurrencies?
I personally do not want this, and I believe that not only is BitcoinSV a wonderful experiment, it’s also a wonderful opportunity to bring newcomers into the Bitcoin brand using fun and practical applications.
Embrace both the digital gold and the MetaNet
The fact that we get to watch the most phenomenal experiment in cryptocurrency play out right in front of us, is one of the most exciting things ever in not just the blockchain industry but technology in general.
Users need to understand why both of these visions are important and get educated in this space as quickly as possible. Pay attention to both sides very carefully. We are in the very early days of the implementation of new protocols for human interaction of the same significance as the telephone and the internet.