Mr. Pratik chadhokar is an Indian Forex, Cryptocurrencies and Financial Market Advisor and analyst with a background in IT and Financial market Strategist. He specialises in market strategies and technical analysis and has spent over a year as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the Financial markets.
Bitcoin SV, expanded as Bitcoin Satoshi’s Vision, is a cryptocurrency based on the Bitcoin blockchain’s original design but came out as a hard fork on the original Bitcoin protocol. The aim was to preserve the building and executing principles of Satoshi Nakamoto, with the effort to overcome the neutral beginners’ problems in BTC. Its ticker is BSV.
What is Bitcoin SV?
Bitcoin SV is a cryptocurrency whose origins can be traced back to the Bitcoin blockchain but is governed by its own blockchain. Basically a hard fork on the BTC blockchain, it developed out as a hard fork on the BCH blockchain, which itself was a hard fork on the BTC protocol. It took a turn out of BCH because of the belief that BCH had diverted from the original principles of BTC, and its aim to restore the vision of the original Bitcoin whitepaper.
With the vision to stand upright with the original objectives of Satoshi Nakamoto and his attempt at what he wanted to achieve with Bitcoin, the coin is aptly named Bitcoin Satoshi Vision. It was launched in 2018, with a hard fork on the BCH blockchain, by Dr. Craig S. Wright, an Australian computer scientist. He claims that the BSV protocol strictly adheres to the guidelines provided by Nakamoto in his original Bitcoin whitepaper. According to Craig, “BSV is the true Bitcoin.”
How Does Bitcoin SV Work? The Technical Structure of the BSV Protocol
BSV works just like its predecessors BTC and BCH; it has a similar structure and foundational algorithmic equations of the Proof-of-Work blockchain. It uses the same PoW consensus mechanism to verify transactions, with a mining reward given to the first one to determine the correct hash. Its maximum supply is hard capped at 21 million BSV, with the event of halving every four years based on exactly the same equation. Hence, the mining reward is halved at the same rates as BTC and BCH.
The difference is created by its block size, hash rate, and throughput. The reason it diverged from the original BTC blockchain was to address several crucial problems faced by the latter. BSV successfully achieves these improvements, with the block size at 128 MB. In comparison, BTC’s original block size was 1 MB. The increased block size allows for the processing of more transactions in a single block.
With the Quasar Protocol Upgrade in 2019, BSV further increased its block size to a whopping 2GB. It is actually an adjustable size as per the protocol design, which can be done with the network’s consensus mechanism. Notably, larger blocks also mean more transaction fees granted to the miners. It is a very attractive feature for the miners, as it furthers the incentivization of mining even when the block rewards decline.
Its transaction time is less than 2 seconds, with a transaction fee of $0.000003 per transaction. Currently, it reports 50,000 transactions per second, and over 125 billion transactions in 24 hours. This is a drastic increase in throughput as well as scalability from the capabilities of both BTC and BCH. In contrast, the BTC network processes 7 transactions per second, while the BCH network processes 116 tps.
Developments Leading Up to the BSV Hard Fork
On 8th January 2009, the Bitcoin whitepaper was released, 4 months after which Bitcoin’s open-source client software was launched. With time, its popularity increased leading to increased transaction times and gas fees. This led to scalability concerns as it was reported that the network could not handle traffic of millions. Researchers, programmers, and crypto enthusiasts started looking for solutions.
To respond to these concerns, the developers of Bitcoin, came up with many solutions, such as SegWits and the Lightning network. These were major changes made with the original BTC protocol that involved off-chain exchange solutions while promoting some degree of opaqueness in the verification systems. Many from the Bitcoin community were not in complete agreement with these solutions.
They developed certain structural changes to the original protocol, rather than introducing off-chain transactions and verifications, to come up with Bitcoin Cash. The BCH coin was the first hard fork created on the BTC blockchain. BCH developed a protocol that could process more transactions per second. It increased the block size from 1 MB to 32 MB and developed protocols that drastically reduced the amount of data requiring verification in each transaction.
As things moved ahead, more changes were introduced in Bitcoin Cash, serving against the original purpose of sticking to the authentic Satoshi whitepaper. It introduced several non-Bitcoin-compliant features that increased the anonymity and transparency of the system, promoting illicit activities on the network. The further drifting away from the original Bitcoin whitepaper caused the introduction of BSV.
BSV, as a new ticker symbol, forks out from BCH to retain the original BTC whitepaper’s protocol while drastically increasing scalability. It vastly increased the block size, and restored certain opcodes, with enhancements in the script and algorithm. This modification in its protocol reduces the requirement of verification for all of the involved data. This empties a lot of the block space that can be used to encompass more transactions and, thus, increase throughput, thereby scalability.
Smart Contract Functionality of Bitcoin SV
Bitcoin Satoshi Vision network supports the smart contract functionality, even though the original Bitcoin doesn’t. Bitcoin SV’s smart contracts are basically self-executing digital agreements encoded in a special programming language sCrypt. It’s a Stack-based programming language like Forth.
Hence, BSV can function beyond just a cryptocurrency or a payment system. It allows for various programs and decentralized applications to be built on the network. It also accommodates NFTs with various collections issued on the network. Besides, many projects related to gaming, analytics, and other AI and VR, are currently being built on the network, possibly due to the smart contract capability.
Besides these basic functions, smart contracts also help in aiding the interoperability of the blockchain. It enables seamless integration and communication between various systems and platforms. This increases the adoption and utility of the BSV blockchain across multiple industries.
Energy Consumption of the BSV Blockchain
Another great aspect of the hard-forked BTC blockchain is its energy consumption. Reducing the heavy energy load of the BTC blockchain, was also among the main goals the new protocol set out to establish. It turns out that the power needed to process a single MB of data on the blockchain is much lower than both BTC and BCH. Despite being a Proof-of-Work blockchain, BSV and, to some extent BCH as well, were able to achieve the feat of such really low energy consumption levels.
BTC’s power consumption has once peaked at 991 MWh/MB, averaging around 757 MWh/MB. BCH on the other hand, consumes around 194 MWh/MB, at peak, which, even though is less than what BTC does, still is way more than BSV. BSV, being the most energy-efficient of them all, is ahead of both by leaps and bounds. It was 12.63 MWh/MB in Q3 2020, and astonishingly reduced to 0.9 MWh/MB in Q2 2021. As such, BSV is quite revolutionizing because it proves, pretty clearly, that PoW blockchains are capable of running energy-efficient networks.
Advantages and Disadvantages of Bitcoin SV; Current State and the Future
By developing the protocol to efficiently increase block size while retaining security, BSV opened doors to too many solutions to the scalability issues. It drastically increased throughput and, thus, scalability. The transaction fee is greatly reduced. Enabling smart contracts is a huge benefit to improve the widespread adoption of the blockchain as a whole. It makes the chain more interoperable and enables it to be used for the development of other DApps and protocols.
Among the disadvantages, the only problem is that it could be a gem yet hidden. It is not yet listed on most exchanges. That is the reason it’s too low in terms of transaction volumes. There is scope for growth, but there are also defined solutions by BSV in place to address these efficiently. Hence, it’s a blockchain that stands to be a competitor to Bitcoin itself.
Source: https://www.thecoinrepublic.com/2023/10/18/bitcoin-sv-retaining-the-original-btc-protocol-with-scalability/