If you’ve been following our blog, podcasts and social media posts over the past couple of years, you’ll have noticed the big fuss we’ve been making about the scaling of the Bitcoin network. If you’ve been alert since the November 2018 Bitcoin Cash fork, you’ll also have come across Bitstocks’ declaration that the original Bitcoin has been reborn with the creation of the Bitcoin SV project.
For us, these two concepts are closely related.
Bitcoin SV’s primary focus on scaling is one of the main reasons we’ve thrown our full support behind the project and a significant factor behind our decision to build our Gravity Ecosystem exclusively on the foundation of the Bitcoin SV protocol.
While Bitcoin SV’s big blocks have us in a flurry of excitement, not everyone in the community is on board. We’ve heard developers defend their objection on the grounds of ‘principle’, while others are content with Bitcoin’s small block use cases, and then there are those who prefer off-chain scaling.
Instead of responding to every objection, I’d like to give you an overview of the benefits and potential that Bitcoin SV’s big blocks can unleash — for you, for Bitstocks, and society.
Bitcoin’s most well-known, and first groundbreaking application is difficult to ignore as it’s clearly described in the title and introduction of Satoshi Nakamoto’s Bitcoin Whitepaper. Called “A Peer-to-Peer Electronic Cash System” the paper defines bitcoin as “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”
You may ask, “What makes such a peer-to-peer money groundbreaking and why should I care?” I’m happy to explain.
While we’ve had access to various forms of money throughout modern history — from cash to cheques, and credit cards — a stockpile of serious problems have arisen.
On an individual level, the reliance on fiat currency and traditional banks means costly account and transaction fees that are prone to censorship through seizure. For migrant workers, the result is often a large cut out of their hard-won wages. For 2,5 billion adults who live in areas where proof of address, identity or business registration is difficult to come by, it means they are refused a bank account which hems in a great deal of entrepreneurial potential.
On a national level, monetary systems are non-transparent and almost impossible to audit. In practice, it means that those holding the leash have plenty of opportunity to abuse their power to enrich themselves at the cost of the taxpayers funding the system.
Some say that the creation of Bitcoin itself was a response to the 2008 financial crisis. The crash, in summary, was caused by major investment and commercial banks across the world who employed predatory lending methods before glamming up these junk bonds to sell them on as low-risk securities. The derivatives trading scheme they concocted was so intricate that it bamboozled all but a few. The insiders, on the other hand, those financial institutions who participated in the scheme were fully aware of their actions. And yet, when the roof came tumbling down, the US government bailed out the banks and let the economy take the fall instead.
At the end of the same year, Satoshi published the Bitcoin Whitepaper, and in January of 2009, Bitcoin’s Genesis block included this line of text along with the transaction data: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
As long as banks get bailed out of the consequences of their shady practices, there’s just no incentive for the financial industry to clean up their act.
Where the traditional financial system has proven itself incapable of keeping its hands out of the cookie jar, Bitcoin offers a digital monetary system that provides complete transparency and invites accountability.
"Bitcoin is sunshine. It is the cure for the festering wound that is corruption, be that from government or from criminal groups." Dr Craig S Wright on Medium
Where traditional financial corporations generally exclude the neediest and often extort the vulnerable, Bitcoin offers permissionless and borderless micro-transactions at low to no fee.
In 2018 there was a lot of talk of blockchain’s potential to challenge and transform the traditional financial system. To challenge mainstream financial service providers like PayPal, MasterCard and Visa, however, Bitcoin needs to be able to process thousands of transactions per second.
Meanwhile, Bitcoin (BTC) has been struggling with scaling issues since December 2017, with the developers making no secret of the fact that they will not be increasing the block size beyond the current 1MB limit. In fact, the BTC community is currently discussing a proposal to reduce the block size to 300KB.
With Bitcoin SV, on the other hand, on-chain scaling is a priority. This places Bitcoin SV in the best position to compete as digital cash and monetary system.
While the bitcoin network’s cash utility has the potential to transform financial accounting on all levels, it is but the tip of the iceberg. As an immutable and fully-transparent data communications network, Bitcoin can serve as infrastructure for an unimaginable number and variety of applications. The high volume of transactions that will be generated by such a great number of blockchain use cases will, in turn, stabilise the Bitcoin price to secure its cash utility.
And yet, when the block size issue comes up, a lot of developers are satisfied with existing, already discovered use cases for blockchain. With this narrow view, they don’t see the need for scaling. What these people are not considering, is the potential use cases that business, individual or collectives could yet discover, if only their creativity weren’t being hemmed in by the artificially imposed limitation.
Jimmy Nguyen (nChain, Founding President of the Bitcoin Association and Bitcoin SV advocate) illustrates the point by using a recent example:
“The great thing that the recent lifting of the op_return data size limit has revealed is the explosion of creativity that even we could not have predicted. If you had kept that data size limit small, no one would be thinking about putting Instagram on chain on Bitcoin and how it could be monetised, or that it could lead to fascinating new use cases (like this Bitcoin-based browser). The Bitcoin SV mission and Craig Wright's mission, in particular, is to create the infrastructure (the base layer, the protocol, the plumbing) to enable a whole new world of uses.
The opportunities that have been discovered since the removal of the Op-return data limit is just a tiny tip of the iceberg. The Bitcoin protocol (currently operating as Bitcoin SV) is capable of so much more, and our goal is to remove all the constraints.”
If you look at the journey of Bitcoin, its capabilities have been artificially restricted for much of its first ten years in existence. This is why we have joined forces with Bitcoin SV project — to take a stand to preserve the original Bitcoin protocol and design. The ticker symbol or brand name means very little, but we need the capability of the original Bitcoin design to unleash its potential and restore Bitcoin to a state where it really has no limits.