To date I’ve generally avoided outright spruiking BSV, because although I am a huge fan of the technology, there has been a long and frustrating disconnect between what it delivers and the price performance that is occurring in this highly corrupt and manipulated crypto market. I don’t want people to be trading on my advice, because in this market – at least until it is regulated, you will be likely to be as disappointed price wise as I have been.
That said, while I’ve found the price performance of BSV to be frustrating, the technological developments that continue to occur in the BSV space continue to provide me with reassurance that my interest in the technology is not misplaced. So with these parameters of expectations established I think I’ll take the opportunity to specifically write an article on BSV.
So as most will know I’m a fan of BSV and the idea that there is only really a need for one public blockchain, and possibly a couple use cases for private chains too. As I’ve mentioned before, this line of thought is referred to as a ‘BitCoin Maximalist’ or the inevitability of ‘one blockchain’ to rule them all. Basically the blockchain that is the most economically efficient and that can gobble up the most use cases that distributed ledger technology can deliver, will be the one that eventually wins.
In this regard Coingeek has done an article that does a nice job of encapsulating this line of thinking as “blockchain as a service”:
“The term “as a service” is meant to recognize the range of products and tools which are delivered to users via the internet, rather than, for example, using on-premise hardware or locally stored software. “
The idea being that in a Maximalist scenario the succeeding chain will effectively become a protocol for internet data/payments to occur, in much the same way as HTTP became the main application protocol for distributed, collaborative, hypermedia information systems that allows users to communicate data on the web.
Essentially the winner aims to become the integrated digital payment protocol for distributed internet payments. Currently this is a list of services and apps that are already available at BSV app meta store:
There is quite a bit of vaporware in that list, but a lot of gems too. The other thing to note is that there are products listed there, like TDXP (Truly Distributed Exchange Protocol), BitcoinFiles, CryptoFights, that completely fulfill the use cases for what entire stand alone blockchains have been created for e.g. Filecoin.
Note: One of the reasons it took me so long to complete this post was that CryptoFights came out and it suddenly expanded into two articles now, this one and a seperate case study post on ‘CryptoFights’ that I’ll post later this week.
As to whether this model can succeed or not is a point of much discussion, and it will ultimately succeed or fail on the economics of it versus competing systems (including existing systems), and the ultimate technical limitations of the technology in storage and processing abilities.
These ‘products and tools as a service’ will be apps like digital wallets that will host your CBDC or like stable coins, your coffee tokens from your local barista and his coffee shop, including his loyalty points every time you buy a coffee. It will give you instant access to your credit card award points, or your QANTAS points, all carried as tokens which you’ll be able to spend directly. Then there will be the entire range of existing products * 10 that are known as DeFi – they will pose a huge threat to traditional bankings range of consumer products and the fat margins they earn.
But all those services are likely to come later, if they even come at all. What you will likely see before then are a whole range of micro-services, for things that you won’t even be aware that are taking place. When you open articles small micro-payments will be triggered in the background, this will extend across to other adds that people click on (making “click” farms in China suddenly more expensive). This direct marketing and payments cycle is being pioneered by Tonic Pow. While the technology is currently hamstrung by a lack of stable coins or CBDCs to pay for these advertisements, the technology bugs are currently being ironed out in the native currency, and so will be ready when they do come. In time I expect these direct marketing payments to become almost ubiquitous.
Even those enterprise services like Tonic Pow, that require human interaction, will be in the minority. A great many services will simply be the IoT in operation, as computers talk and interact with each other, and things as simple as log files, get permanently and indelibly written to the blockchain… RouterSV is already working on providing such a service.
That is the real issue here, the vast majority and by vast I mean probably 99% of traffic on this system will be machine data generated through the IoT – the median transaction value of each transaction event on the blockchain will be incredibly low*.
*provided expectations on economics and storage costs are met.
This is flood of microtransactions in effects is something that will also add security to the network. Here is a short 8 minute video of Steve Shadders demonstrating a boot up of transaction processing hitting 50,000 tps:
Steve is an Australian blockchain engineer who works at nChain, being one of the main developers and intellectual property holders working with BSV. He actually sounds nervous as fuck giving this presentation – you can hear his voice wobble throughout. Every time he talks of facts or explains something, confident, every time he refers the demo his voice starts wobbling. Apparently he admitted later he was nervous as fuck that his live demo was going to crash out.
Within the ‘White Paper’ miners are envisaged as neutral players – uninterested in what they are processing other than the technical specifications, transaction fee and databyte/sat and simply processing it according to the protocol rules.
The vast majority of transactions over which they process will have virtually no economic worth, yet collectively they will provide the miners with the vast majority of their income. So the motivation to ‘cheat’ on a micro-transaction is next to non-existent, because of the next to non-existent value of the majority of the transactions, yet despite that these microtransactions will provide miners with the vast bulk of their income incentivising them to maintain the system integrity.
Comparatively for transactions of high value miners might have a higher motivation to ‘cheat’, but if they do they are also likely to have more owners keeping eyes on their coins and the relevant transactions, which in a regulated system would expose them to regulator prosecution while simultaneously threatening to undermine their far greater source of revenue in terms of the rivers of gold flowing to them from billions or even trillions of microtransactions.
The opportunity to cheat outside of these two areas, especially when the protocol is locked down, is effectively limited. Miners can’t change the code to give them more BTC without it being made public and without all miners agreeing on it. If only one miner continued to hold out and side with public outrage, that would be the chain that would be most likely to persist.
Currently this is the high level structural differences between BTC and BSV. BTC has around 300 times more hash devoted to it than BSV, and consequently its price is around 300 times higher. If you added up all the Hash devoted to all the Bitcoin forks, BTC soaks up 98% of all the hash…. yet if you examine the block sizes and the transactions being processed, BSV is carrying 98% of the data. Data is where the long term value is, that is where work other than passing magic beans to each other is carried out, that is why long term I believe (and I will write some more on that later this week) that eventually the Hash Rate and the transaction rate will converge on both systems:
As I have said many times before, BitCoin is a Gordian knot of competing economic, legal and cryptographic principals. There is the “Red Queen’s Game” in terms of the manner in which miners are motivated to eternally compete with each other to become more and more efficient at processing transactions, which means they have to continuously run simply in order to stay still.
Then there are the Money transmitting laws that it was designed to operate within in order to satisfy existing regulatory laws. There is the “Byzantine generals problem” and the “Streisand Effect” both of which are useful in solving the problem of bad actors in distributed processing systems, particularly during bootstrapping phases.
Finally there is standard “Game Theory” in behaviors governing miners actions as the system and networks become more mature, malfeasance, chance of being caught and risk of cost in punishment of being caught.
These are a Gordian knot – pull on anyone of them and remove that aspect of their contribution to the problem solving that Bitcoin attempts to achieve, and you do not have Bitcoin according to the original white paper.