Over the last two days, we have seen the emergence of the new transaction-based economic model envisioned by Satoshi Nakamoto starting to take shape as official announcements about Bitcoin Variable Rate Mining begin to roll out. This innovation is the first of many new specialized business models within the mining space that are sure to taking hold on BSV now that the massive scaling abilities are starting to be unlocked.
In late November 2019, nChain CTO and Bitcoin SV Node Project Technical Director Steve Shadders wrote about the new transaction fee toolsets that would be coming to the BSV blockchain. The recognition of the need for these new toolsets was triggered after a BSV price surge in fiat terms, which took place shortly after WeatherSV announced a reduced transaction fee deal with Mempool.
The concern of the ecosystem expressed to/by Shadders at the time included:
1. There was a lack of fee discovery
2. The current transaction fees inherited were too high
3. Price stability in Fiat terms is required
4. The pricing floor was unknown still
5. Disparities in the data value
There had been a strong desire to cut transaction fees significantly in the near term by several actors within the BSV ecosystem, including from the miners themselves. There was an additional desire to stabilize the operational cost of businesses generating large transaction volumes on Bitcoin SV. Both are viewed as critical to spur the mass adoption of BSV as the global public data ledger.
Shadders stated: “I think it’s reasonably safe to say these changes are imminent, it’s only a question of when and by how much. But what is probably important to note is that Bitcoin SV is already cheapest of all major blockchains to transact upon for real utility, both in satoshis and in fiat terms, any cut will send a clear signal to the market the cost of using Bitcoin SV is going in only one direction, down. This is only economically possible because the future of Bitcoin SV is to scale massively. We’re just now experiencing how Bitcoin’s economic system should have played out for many years before. It will take the BSV ecosystem some time to adjust to this new reality, but we will do so by developing flexible new transaction fee toolsets and constructive business approaches. These steps will ensure a healthy and long-lasting transaction fee market that is flexible and meets the economics needs of both application builders and miners.”
Fast forward to the first few days of 2020, industry-leading global blockchain mining operation TAAL announced that they would be reducing their transaction acceptance fee from 1 satoshi/byte to 0.5 satoshi/byte and reducing the relay fee from 1 satoshi/byte to 0.25 satoshi/byte.
“TAAL is reducing these transaction fees as a short-term policy in order to support the long-term growth of applications which generate high-volume transactions on the Bitcoin SV blockchain,” stated TAAL Chief Mining Officer & Corporate Secretary Joseph Chin. “This is another step in TAAL’s leadership role to support use of the Bitcoin SV blockchain for large-scale enterprise applications. We believe that this step is needed to generate high volume transactions and more overall transaction fees in order to sustain blockchain cloud computing operations profitability in the years to come.”
Early today, which also happens to be Bitcoin’s 11th Birthday, CoinGeek Mining officially announced they would also reduce their fees in line with the same rates as Canadian listed TAAL rolled out on Wednesday.
“We are following TAAL in reducing these transaction fees in order to support the long-term growth of applications which generate high volume transactions on the BSV blockchain,” stated CoinGeek Mining Founder & Owner Calvin Ayre. “We are doing this in order to generate and highlight the ability of BSV to accommodate a huge volume of transactions to sustain blockchain profitability – for both miners and enterprise applications – in the years to come.”
Even without the transaction fee reductions, daily transaction volume on BSV has been surging. This uptick of daily transactions on BSV has been happening since the summer of 2019, just after the Quasar protocol update rolled out. BSV has surged past BTC in daily transaction volume and is consistently at levels equal to or higher than ETH. These two large bitcoin mining groups reducing their transaction fees will be welcome news to high transaction generating application developers and enterprises alike. The increased development activity expected over the next few months will help bitcoin miners generate additional revenue as we head into the upcoming Bitcoin halving in late Spring 2020.
Ayre has already gone on record to say that the Bitcoin mining space will start to specialize and that 2020 will be the Year of Enterprise Adoption on BSV. With the advent of Bitcoin Variable Rate Mining, the Genesis Hard Fork stabilizing the protocol and the Teranode Project on the horizon to ensure BSV will scale to massive use as global adoption increases, it looks like we are well on the way to seeing his prediction become a reality.
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