First in the “BSV as a…” series, this article addresses BSV as a data standard for general data storage, transfer, and trade.
We often talk about Bitcoin being a commodity money, but rarely do we actually describe what kind of commodity it really is. Commodities come in all sorts of forms, energy, foodstuffs, raw materials, etc. But the common thing among commodities is that they have utility. Meaning they are used or consumed for a productive purpose. This is important because if BSV is going to be something other than just another Ponzi scheme, then the blockchain must be used for something other than just a store of value. Fortunately, Craig Wright, the architect of Bitcoin set out from the beginning the ability for Bitcoin to be ‘everything’ in his 2014 interview.
Trying to be everything is quite an undertaking. For practical matters, what specifically could it be used for? To answer that question, let’s remember the 2 component parts of Bitcoin:
Bitcoin is an amalgamation between data and money. Or perhaps it is a way to monetize data. When I first used the term back at the 2019 CoinGeek Presentation the idea was to list out the possible use cases that emerge if there was an integral connection between data and money. We would certainly have a very different internet than the one we have today, where data and clicks are routinely ‘farmed’ from unwitting users as the only form of monetization.
One of the best ways of thinking of this is the advent of the shipping industry. Few really appreciate how much of the modern economy is made possible with the advent of the humble shipping container. Best described in this recent article, the shipping container is probably something that everyone sees several times a day, without paying any thought to its importance to the global economy and modern society as a whole. You know them as the trailer behind every standard truck, the cargo boxcars on trains, and the numerous “Lego bricks” stacked on giant container ships which deliver cargo around the globe. The standardization of the shipping container made the conversion from ships to trucks much more efficient as we didn’t have to deal with the incompatibles between different hardware, truck sizes, rail gauges and such. Additionally, the standardization allowed for shipping containers to be able to be uniformly stacked on container ships, creating huge gains in economies of scale when it comes to moving cargo around the world.
So how does this relate to Bitcoin? Well, simply put, we have current networking standards of sending data across the internet. Standards such as HTTP for the web, TCP/IP for the packet driven internet, and JSON for textual data. Given these existing standards, do we really need another? Well for one, something that has always been notably missing from the internet is a monetization layer. In fact, the designers of HTTP even included some codes (rarely used today) that hint at a primitive payment protocol between webservers and clients. The problem which prevented the adoption of such a monetization protocol of the internet was in part due to the lack of a way of guaranteeing the security of payment information between the client and servers. This is due to the nature of most payment systems relying on a trusted payment intermediary to manage the information and payment authorization. Whether that intermediary is a bank or a credit card company, the fact that payments needed to be ‘authorized’ by the intermediary meant that this presented an issue for payments made between parties directly with each other. We had to trust the other party with our private payment information in order to enable them to authorize payments on our behalf, much like how credit cards are used in a physical checkout process. The problem with this is that unlike a physical location where you can keep an eye on the cashier to ensure that they weren’t doing anything unbecoming with your credit card, or making copies of your ID without your permission, and with internet merchants this is impossible. What we needed was a form of digital cash which could facilitate peer to peer payments without the need for either side having to trust the other with any information, or the need for a payment intermediary to be trusted with the same.
What was missing was Bitcoin. Bitcoin, as specified in its own Whitepaper, is first and foremost an attempt at serving the need for a peer to peer form of electronic cash. This is achieved by creating a system by which payments can be authorized without a static payment intermediary and instead a network of payment settlement servers which compete with each other to validate transactions and record them to the blockchain, and earn transaction fees which are paid by everyone using the network to create transactions.
As a happy consequence, this use case also meant that this public immutable ledger could also be used to act as a permanent proof of existence record for digital data as well. And as it turns out, this is where the role as a data standard becomes apparent.
What could we do with a data standard?
Well, we currently have standards which can send data back and forth between hosts on the internet, but the data is ephemeral. We are only paying for the bandwidth of the transfer. With Bitcoin, and the development of a data STORAGE standard, we not only leverage the standard method of data TRANSPORT, but we can start to develop applications which are agnostic to the location and method in which data is stored. What do I mean by this? Today, we have plenty of standard ways to send data, but how many ways to store it? When I mean storage, I don’t mean the physical means by which it is stored physically on filesystems, such as FAT, HPFS, NTFS, ext3, ext4, etc. I mean how data can be stored from a network perspective, on the internet, yet still maintain and honor data ownership, usage rights, and moreover how data can be monetized on public networks. With a data standard using BSV blockchain, storage services can be provided for in a decentralized fashion, meaning the end of reliance on cloud storage and dependance on data service providers (such as Dropbox, Amazon S3, iCloud, Google Drive, or OneDrive). Imagine that such a standard would allow data to be stored publicly, yet portably, with whatever resiliency guarantees that the owner is willing to pay for, in a way which allows for anyone to act as a server, and be paid for their services through unilateral contracts. This would be the decentralized competitor to traditional cloud storage. And due to the nature of the fact that the data lives in publicly accessible networks, this also opens up a potential new market for data sales, without the need to rely on traditional software anti-piracy and copyright infringement techniques.
Bitcoin transactions as a ‘payment enabled wrapper’ for data
With Bitcoin transactions being used as a data ‘envelope’ and data being put on chain in a provable format amenable for public attestation, data can be recorded and validated on chain, such that any third party could audit the ownership information and data for its validity. Data recorded on chain as a public record may contain extra immutable metadata, for instance, who recorded it, who the owner is, and any disputes of such claims could all be on chain for any to scrutinize. In the end, data thieves and plagiarists will be provably exposed, and over time data rights can be exercised using the public blockchain as proof of ownership or licensing rights. The cost of ‘attesting’ data on chain will be the same as the cost of the creation of the bitcoin transactions that recorded it. Those who wish to physically store copies of the data to profit from the demand for serving of the data on an ongoing basis can also leverage the blockchain to prove (through the use of a digital fingerprint of the data) that they actually have a copy of it. Finally, thanks to the built-in monetary token of BSV blockchain, such data retrieval services can be paid for publishing data back to the blockchain through smart contract transactions which pay anyone who can produce the actual data that can hash back to the digital fingerprint. This allows for a decentralized data market, while promoting the most efficient means of storing data on the internet, given that a single file need only be stored as much as the market is willing to pay for its retrieval guarantees, avoiding duplication.
Just like the standardized dimensions of cargo containers which later on influenced the design of trucks and ships in order to carry them more efficiently, the standard of putting attestable data on blockchain will eventually create a new model of network storage and computation. With most data being recorded on chain, public algorithms run on the blockchain will be more powerful and will be available for hire, being able to take advantage of having data that it could pay for (think IoT devices) in order to complete its computations. This will also lead to huge increases in computation resiliency as computations can be farmed out to the blockchain in what will eventually start the move to edge computing. Payment for computational tasks can be placed into smart contracts to ensure that somebody out there will be able to complete the computation regardless of where the computational resources or data may actually physically reside.
This is just the beginning of the BSV blockchain reforming what we think of and know of as the internet.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.