Thursday, August 1, 2019

Bitcoin BSV articles (BSV Bitcoin Satoshi Vision)

Bitcoin BSV articles (BSV Bitcoin Satoshi Vision)

It’s been over 10 years since Bitcoin was introduced to the world with the Satoshi Nakamoto white paper describing “a peer-to-peer electronic cash system.”  But in the decade since, Bitcoin has not yet become an electronic cash system with fast transactions, low fees, and reduced intermediaries.  What people think is Bitcoin – the Bitcoin Core (BTC) network – had its scaling capacity crippled with a tiny block size, became congested, and spiked high transaction fees.  Merchants and consumers will not use a payment system that is slow and costly.  Luckily, Bitcoin SV (BSV) emerged in November 2018 to fix that.  BSV will ensure Bitcoin’s “Satoshi Vision” succeeds by massively scaling with big blocks to support a big global payment system.

Bitcoin Core (BTC) did not fulfil Bitcoin’s original vision
Bitcoin’s transformative concept was enabling people to instantly send cash directly to anyone globally, without intermediary banks or service providers. Transactions are recorded on a distributed ledger known as the blockchain, with blocks of transactions added on average every 10 minutes.

Bitcoin’s blockchain actually began with no limit on the block size. Back in April 2009, Satoshi Nakamoto (my colleague, nChain Chief Scientist Dr. Craig Wright) wrote this:

“The existing Visa credit card network processes about 15 million Internet purchases per day worldwide. Bitcoin can already scale much larger than that with existing hardware for a fraction of the cost. It never really hits a scale ceiling.”

However, early in Bitcoin’s life, a 1MB block cap was installed as a temporary measure to protect the network from attack in its early days.  But for their own ulterior purposes, the Bitcoin Core development group (which now controls the BTC protocol) kept the 1MB block cap as permanent, rather than temporary.

1MB blocks are tiny; they only allow an average of 3 transactions per second.   Compare that to Visa’s global network which averages 2000 transaction per second, and hits 56,000 transactions per second at peak.  With 1MB blocks, Bitcoin can never rival payment card networks for daily usage.

That’s why BTC often runs into congestion, with transactions sometimes waiting hours to be confirmed.  This causes transaction fees to skyrocket; in January 2018, it cost $20-40 to send a single BTC transaction. (Fees are paid to “miners”, who devote computing power to maintain the network).  As recently as late May 2019, BTC transaction fees were approximately $4 – still far too high to act as a daily payments system.   Not surprisingly, merchants stopped viewing BTC as a viable payment option, and consumers rarely use BTC to buy things.

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