A proven commitment to ultra-low transaction fees even when transaction volume massively spikes makes Bitcoin SV (BSV) the only option for enterprises looking for affordable payment channels and governments looking to launch central bank digital currencies (CBDC). As demand increase and the network scales, the transaction fees on the BSV Blockchain actually go down while all other blockchains have the opposite reaction, their fees go dramatically up if they get any increased transaction volume.
The cost of transacting on the BTC blockchain was recently reported to be over 118,000 times more expensive in U.S. dollars than if one made the same transaction on the BSV blockchain. In terms of satoshis per byte—a satoshi being the smallest denomination of a Bitcoin, representing 1/100 millionth of a single token—and a median transaction size of around 190 bytes, it costs around 20.4 satoshis per byte to transact on BTC versus just 0.1 satoshis on BSV.
Just a reminder pic.twitter.com/260EIDQXYJ
— Dr Craig S Wright (@Dr_CSWright) February 15, 2023
While the BTC transaction cost in fiat currency equaled only around 88¢, conducting the same transaction on BSV cost only 0.0007¢. Both figures may appear relatively puny, and if you multiply that BSV figure by 1,000, you get only 70¢. But multiply that BTC figure by 1,000, and you get $880.
Say you’re a business that conducts tens of thousands of transactions per day, most of them small-scale. Transacting on BTC doesn’t appear to offer much incentive to switch from using Visa (NASDAQ: V) or Mastercard (NASDAQ: MA) payments, particularly given your customers’ established familiarity with those credit cards and their possible lack of faith in this newfangled blockchain technology.
It’s even worse if you’re a startup with a great idea for a business based on extremely small transactions because the BTC fee schedule effectively torpedoes your project before it leaves the dry dock. How many great ideas have been left to languish on their whiteboards when their creators crunched the BTC numbers and realized this just wasn’t going to work?
Simply put, BSV is the only blockchain on which enterprises can realistically rely for a cost-effective data storage solution and payment rail that will grow along with them as their needs expand. This is even more true for Web3 companies, whose entire business model requires transaction fees measured in fractions of a cent (nanopayment), a feature unattainable outside BSV.
Eyes off the prize
It seems utterly hypocritical that BTC maximalists continue to venerate Bitcoin creator Satoshi Nakamoto, given that these same maxis have drifted so far from Satoshi’s original vision. It’s right there in the title of the 2008 white paper: a peer-to-peer electronic cash system and the paper’s introduction laments the fiat system’s requirements for “limiting the minimum practical transaction size and cutting off the possibility for small casual transactions.”
And yet the Bitcoin Core group of developers who usurped control of the original Bitcoin’s source code saw more value in imposing artificial constraints on the technology. Ignoring Satoshi’s blueprint, they limited the number of transactions that could fit into any individual block, resulting in a bidding war model that forces users to constantly increase their fee offers to ensure their transaction makes it into the next block.
Lacking the capacity to realize Satoshi’s vision of a cost-effective payment system, the BTC Core camp began promoting their token as a ‘store of value.’ That slogan was soon replaced by the more enticing ‘digital gold,’ alongside whispers of untold riches for those willing to speculate on just how far ‘number (might) go up.’
But the majority of BTC transactions happen on exchanges, not on the blockchain. This periodically causes consternation in the BTC camp, generally around the ‘halvening’ of block rewards paid to BTC miners. Every four years or so, these rewards are cut in two, and without an ever-increasing fiat value of BTC tokens, the incentives for miners to continue verifying transactions become less enticing as Satoshi’s subsidy diminishes.
Satoshi himself said that miner incentives should ultimately transition solely to transaction fees. But with BTC’s cap on the number of transactions, fees would have to remain sky-high to make up for the periodic reduction in miners’ block rewards. That model would preclude any possibility of BTC serving as an actual digital cash system, leaving this ‘digital gold’ forever mired in its speculative boom-and-bust cycles.
Meanwhile, assuming Moore’s Law holds for microprocessor growth and hardware storage capacity, BSV envisions no upper limit to block size. Already, BSV stuffs more low-cost transactions into a single block than many other chains—including BTC—handle in a whole day. This is a foundation on which enterprises can reliably construct their futures.
CBDC what we did there?
BSV’s boundless capacity will also be of interest to governments looking to launch their own regulatory compliant CBDCs. Unlike BTC maximalists’ embrace of stealth and secrecy, BSV has always sought to work within the law, recognizing this path as the only long-term prospect for success.
BSV permits the embedding of additional data into transactions, something CBDC issuers could use to glean greater insights into market activity. More data would also offer more tools to implement precisely targeted fiscal policies that limit the potential for wild price swings that can occur from less focused policy initiatives.
BSV is also unique among blockchains in its eagerness to work within the legal system to ensure customers who are the victims of fraud or theft to retrieve their stolen assets. BSV also offers hope for technical neophytes who might accidentally fat-finger their way into the poorhouse.
BSV’s embrace of simplified payment verification (SPV) means that merchants and individuals can accept payments even in the absence of internet connectivity. A lower barrier to entry means greater payment diversity, including the ability for individuals who lack mainstream financial accounts to transact with ease and confidence.
From all the publicly verifiable evidence, it’s clear that BSV is honoring the vision of a P2P electronic cash system described in Satoshi’s white paper. It’s equally clear that BTC is a function-free speculative commodity and appears content to remain so. BSV is a superhighway with unlimited on-ramps, while BTC is a dusty trail allegedly leading to an undiscovered gold mine. If you were an enterprise or nation-state considering integrating blockchain technology, which of these paths would you take?
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
Watch: CBDCs and BSV
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.