On January the 3rd, the Bitcoin blockchain celebrated the 10th anniversary of its Genesis Block, the first block mined on the network. And despite a short history compared to the likes of gold or even the British Pound, a number of dramatic plot twists have taken place along the way. While the original Bitcoin operated under the BTC ticker, there’s a growing number in the community that believe Bitcoin SV (Bitcoin Satoshi Vision) to be the true, original version of Bitcoin. Confused? Here’s a summary of some of the key events and unexpected developments that have spurred on the Bitcoin movement and have lead many of us to the conclusion that BSV is the original Bitcoin.
31 August 2008: Satoshi Nakamoto published a research paper entitled, Bitcoin: A Peer-to-Peer Electronic Cash System to a cryptography mailing list. The paper outlines the intended functionality and purpose of Bitcoin. Nakamoto’s paper proposed a viable solution to the issue that has hindered cryptocurrency development to this point, being the potential double-spending, by recommending that the concept of proof-of-work be used to ensure verified transactions.
22 May 2010: Laszlo Hanyecz, a programmer based in Florida, paid 10,000BTC for home delivery of 2 large pizzas. This is the first retail transaction recorded on the blockchain in so far as it reflects an actual product purchased using bitcoin. The exchange rate at the time put the price for the pizzas at $25.
While its impact may seem a bit trivial now, it certainly deserves a mention in Bitcoin’s milestone moments as the first public display of bitcoin’s utility for a material purchase.
25 March 2013: In the hope of addressing a dwindling economy, Cyprus President Nicos Anastasiades, accepted austere conditions from the Eurogroup, the European Commission, the European Central Bank and the International Monetary Fund for a €10 billion bailout. One such condition entailed a haircut of bank accounts holding more than €100,000, an understandable worry for wealthy locals and internationals using Cyprus as a tax haven at the time. These account holders turned to Bitcoin in droves in an attempt to protect their holdings before conditions came into force, resulting in a surge in price from around $80 to over $260 through the early weeks of April, before settling at the $130 mark.
This event can be considered as the first grand show of faith in Bitcoin as a viable store of value during political and economic instability. Since then, we have seen numerous occasions where citizens lose trust in their governments to deliver favourable monetary policies and seek financial refuge in bitcoin.
2 October 2013 - 29 November 2013: A series of events led to a mainstream media frenzy around Bitcoin, with a major impact on awareness and price.
Firstly, the FBI shut down The Silk Road, a now-notorious online marketplace on the dark web for dealing in drugs and other contraband products and services, with bitcoin as accepted as payment method. The Silk Road’s alleged founder, Ross Ulbricht, with an online alias of Dread Pirate Roberts, is arrested and faces numerous criminal charges. The FBI seized 30,000 BTC from The Silk Road's bitcoin holdings and an additional 144,000 BTC from Ulbricht’s private holdings three weeks later. He has subsequently been sentenced to life imprisonment without parole.
After that, the US Senate hosted a panel discussion named Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies. The outcomes and response surprised the Bitcoin community as many of the Senators and panellists concurred that Bitcoin holds great promise, and they theoretically gave the innovation a ‘stamp of approval’.
Fuelled by widespread coverage of The Silk Road’s demise, the US Senate’s hearing and newfound curiosity in Bitcoin, the price climbed rapidly to break through the $1,000 mark to reach an all time high of $1,242, eclipsing the spot gold price for the first time.
7 - 24 February 2014: 3 key bitcoin exchanges, namely Bitstamp, Mt. Gox and BTC-e, all experienced trading outages as their systems came under DDoS attacks from hackers looking to take advantage of transaction malleability issues in the exchanges’ software. This translated into a sharp drop in price.
Mt.Gox, arguably the largest bitcoin exchange at the time, failed to get the website back online and the trading platform disappearing without comment. With market tension brewing, several Bitcoin-based businesses and other exchanges issued a joint statement condemning the executives of Mt.Gox for severe mismanagement, deception and eventual collapse, after a leaked internal document indicated that the company lost more than 744,000 BTC.
These events highlighted a number of core issues around the security and regulation of virtual currency. Firstly, while the Bitcoin network itself is secure, holdings on exchanges or with 3rd parties is an investment risk.
Secondly, because there is little in the way of regulation of these businesses, and depending on their location, they may claim absolution to any claims from clients regarding lost holdings. It is for this reason that we, as Bitstocks, ensure our clients’ holdings are not stored online, but rather in offline terminals (deep cold storage) as well as advocating regulation of Bitcoin-backed businesses.
31 October 2015: The popular liberal economic publication, The Economist, featured Bitcoin as The Trust Machine. The accompanying article detailed Bitcoin and the utility of blockchain technology, with a particular focus on its potential role in banks and government institutions.
While the Bitcoin community at large is not all that concerned with mainstream media, its coverage undoubtedly plays a role in driving awareness, broader adoption, and therefore the ultimate success of Bitcoin. The Economist shone a light on the fundamental and inherent benefits to Bitcoin and as such, brought interest from a new, mostly untapped, demographic at the time.
3 January 2017: After a steady climb through the latter of 2016, the bitcoin price broke through the psychologically significant $1,000 mark a few days into 2017. At this point, $1,000 per BTC had not been seen in 3 years. A wave of media coverage once again followed this and infused a fresh rush of positive sentiment into the market.
1 April 2017: Japan took the lead in embracing Bitcoin by becoming the first nation to formally recognise bitcoin as legal tender. This opened the door for retailers to adopt bitcoin as a payment method, as accounting systems and financial software were updated to cater for cryptocurrency transactions.
This move also paved the way for other forward-thinking countries to reexamine their own rulings on cryptocurrency as legal tender, as they looked to Japan as a blueprint for adoption and regulatory practices. Following the announcement, the bitcoin price rallied as demand and volumes from Japanese exchanges rose sharply.
1 August 2017: Following a heated, long-standing debate around the pressing need for a viable solution to Bitcoin’s scalability woes, a group of Bitcoin developers, in favour of a hard fork from the main blockchain, created a Bitcoin derivative called Bitcoin Cash.
A primary differentiator is the fact that Bitcoin Cash didn’t agree with the use of Segregated Witness (SegWit) as a scalability solution. The Bitcoin Core group insisted on implementing SegWit on the Bitcoin (BTC) network, where Bitcoin Cash implemented a different scaling solution: an immediate increase in the block size, allowing for more transactions to be processed at once.
Despite initial fears and hype, the hard fork went ahead smoothly with little to no disruption to the Bitcoin network. Those holding Bitcoin (BTC) at the time of the chain split were awarded an equal number of Bitcoin Cash (BCH). A large number of Bitcoin developers and early adopters declared their conviction that Bitcoin (BTC) had strayed from Satoshi Nakamoto’s vision and they now considered Bitcoin Cash (BCH) the original Bitcoin.
The SegWit upgrade of the BTC network concluded one aspect of an agreement reached in May 2017, dubbed the New York Agreement. As part of the second aspect of the agreement, key Bitcoin businesses and miners committed to SegWit 2x, which would mean an increase in block size (from 1MB to 2MB, therefore the name 2x). The update was cancelled at the last minute, and the Bitcoin (BTC) block size remained small, the network congested, and transaction fees high. At the time of publishing, the BTC block size remains limited to 1MB, with a pending proposal to reduce it to 300KB.
Not clear on what all the block size fuss is about? Read our blog on the topic to get an understanding of the significance of the big blocks made available on the Bitcoin Cash network.
I wish I could report that “Bitcoin Cash was born and we all Bitcoined happily-ever-after.”
As it turned out, it didn’t take long for players in the Bitcoin Cash community to develop incompatible visions.
In July 2018, Bitcoin Cash developer Amaury Séchet published a proposal to include a software alteration to an upgrade planned for 15 November 2018. Séchet's post outlined a new transaction ordering protocol and other changes that would be included in the upgrade, and tensions started to rise.
Craig S. Wright (the key figure behind Satoshi Nakamoto, the creator of Bitcoin) expressed strong disagreement with the proposed update and released his own proposal in a paper called Satoshi Vision. The protocol, as its name suggests, involves using the original specifications outlined by Nakamoto in his Bitcoin whitepaper. The only difference to these specifications would be a much larger block size. Published by nChain, the Satoshi Vision proposal suggested a 128MB block size for the network.
Some predicted that November 15th (2018) would be the first implementation of the Nakamoto consensus mechanism as described in the Bitcoin Whitepaper. In order to decide on the way forward, miner’s embarked on a hashing war. The understanding was that the chain with the most support would be crowned the victor while the other chain would cease to exist and their supporters would rejoin the victorious chain. (Read our blog on the Nakamoto Consensus Mechanism)
What was seen instead was an unannounced addition to the Bitcoin ABC upgrade as developers included a checkpoint to the latest release. This upgrade was slyly distributed several hours after the start of the fork. The effect of this checkpoint was that adversarial miners were unable to override (“re-org”) the entire Bitcoin Cash ABC chain — which should have been the deciding factor between factions.
An artificial burst also gained Bitcoin ABC's early lead from temporary, rented hash power.
For days before the hard fork, Bitcoin SV had support from over 75% of the network hash. Knowing they didn’t have enough support to win, Bitcoin ABC’s backers had to rent and subsidise BTC hash to move onto BCH to use as voting power.
In a statement to the Bitcoin Cash community, Bitcoin SV proponent, Jimmy Nguyen warned about “Truth and Consequences” of the willingness to accept a burst of rented hash to force the outcome of the hash war in a direction.
The foul play led to the SV camp’s decision to split from the Bitcoin Cash chain with a new ticker, BCH SV for Bitcoin Cash Satoshi Vision. On the 23rd of November, Bitcoin Cash SV proponent Calvin Ayre announced that the group no longer wanted the Bitcoin Cash name, declaring “Bitcoin SV is the original Bitcoin”. Since then, most exchanges have moved to list the ABC version as Bitcoin Cash (BCH) and the SV version as Bitcoin SV (BSV).
And with that folks, it’s a wrap! Be assured that we’ll keep updating this blog article as new developments occur.
As a final note, let it be known that Bitstocks supports Bitcoin SV as the true version of Bitcoin, as intended and outlined in the 2008 Satoshi Nakamoto Whitepaper. To learn more about what lies ahead for the Bitcoin SV project, watch our podcasts with Bitcoin SV evangelist Jimmy Nguyen and Bitcoin SV developer Steve Shadders.