What is Bitcoin SV?
You’ve heard about Bitcoin, but what have you heard about Bitcoin SV? If you hadn’t before, you have now. Bitcoin SV is a digital currency supported by a global industry organization called the Bitcoin Association who believe that their currency and blockchain are “the only Bitcoin protocol that follows the vision set out by Satoshi Nakamoto’s whitepaper.” In fact, “SV” stands for “Satoshi Vision.” But what about the “original” Bitcoin (BTC)? To understand that, we need to look at history and have a rudimentary understanding of the technology behind these coins.
A refresher on blockchain
“Blockchain” – the technology laid out in the whitepaper and the backbone of most cryptocurrencies – refers to the record (chain) of batches of confirmed transactions (blocks) used with a token. Because the currency is based on the confirmation of these blocks, which takes a lot of computing power, their size is a significant issue. Larger block sizes means more transactions recorded on each block. More transactions recorded on each block means a shorter average time for a transaction to be confirmed, particularly with a high volume of transactions on the network. The work of confirming blocks is done by “miners.” Miners are currently rewarded with fresh coins from Bitcoin’s fixed 21 million supply, and with transaction fees collected from other users. However, there are a limited number of coins that will ever be created. When the last coins are mined, transaction fees will be the only monetary incentive for miners.
Into the garden…
Initially, blocks were 1MB – for BTC, they still are. This wasn’t a problem when the Bitcoin community was smaller. However, as more people use Bitcoin, this has become problematic. As more people have joined the community but blocks remained the same size, more and more transactions need to be confirmed “off-chain” in order for the protocol to scale with the growth of the community without changing the block size. Not changing the block size – deliberately not scaling up with the size of the community – was a deliberate action within the BTC community. Confirming transactions off-chain makes transactions harder to trace. However, not everyone agreed with this decision. In 2017, it resulted in the first hard fork – a change in the protocol resulting in a new coin. BTC would continue to use 1MB blocks, and Bitcoin Cash (BCH) would scale the block size up to 32MB. The same issues arose again the following year as BCH forked again creating Bitcoin SV. Just as BTC refused to increase block size beyond 1MB, BCH refused to increase block size beyond 32MB while BSV is prepared to continue to scale up block size as demand increases.
BSV began with a maximum block size of 128MB. In July 2019, that was increased to 2GB and in February 2020, default block cap was entirely removed. Thus, Bitcoin SV now has unbounded scaling, meaning that the network can grow to accommodate large block sizes and high transaction volume – just as Satoshi Nakamoto always envisioned, and the BSV community advocates. With a massively scaled network, Bitcoin SV seeks to support huge volumes of transactions and enable enterprise-level applications. Bitcoin SV supporters believe larger blocks and more transactions are needed to ensure miners stay profitable in the future, as the reward continues to decrease until all fresh coins are issued from the 21 million fixed supply. Transaction fees on the BSV network are also much lower than BTC – as of September 2020, the median fee is only 1/100 of a US cent. The BSV community uses these small transaction fees to build new applications. Bitcoin SV supporters thus view Bitcoin as the fusion of data (Bit) and monetary value (coin) which can be used at massive scale for a wide range of payment and data transactions.
Bitcoin SV as a coin
Bitcoin SV remaining faithful to Satoshi’s vision is great but one cannot buy bread with principles. So, how is it performing as a coin? At the time of this writing (September 2020), BSV is ranked number eleven among cryptocurrencies by CoinMarketCap, between Litecoin and Cardano. BTC remains at number one; BCH at number six. Bitcoin SV launched at US$92. In November of 2018, the coin hit an all-time low of $36.87. On 14 January 2020, it hit an all-time high of $441.20. Since then, it’s had its ups and downs and has been floating roughly between $150 and $200 for the last few months. A growing number of institutions around the world accept the coin, particularly on the East coast of the United States, Central Europe, and Australia. Bitcoin SV has a bigger vision for Bitcoin than just using it as a digital currency. In addition to using BSV for payments, the Bitcoin SV ecosystem is even more focused on building business and consumer applications using its blockchain.
To buy or not to buy?
The point of this article isn’t to give investment advice, but to talk about a coin that a lot of readers may not be familiar with (yet). As a coin, Bitcoin SV is relatively new. As a result, it’s hard to make predictions. Are the highs and lows over the last two years the early signs of a coin that will always be volatile? Is the fairly stable price in recent months a sign that those highs and lows were just corrections to a coin finding its own space in the market? It’s hard to say. What we can say for certain is that Bitcoin SV is eyeing scaling in a way that its relatives, Bitcoin and Bitcoin Cash, simply aren’t. However, its membership in this family is enough to attract a growing number of institutions and give it a staying power beyond that of newer coins. Further, its comparatively low price makes for an attractive buy-in.
For more information about Bitcoin SV, please visit BitcoinSV.com.
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