BTC is Not Bitcoin

‘BTC is not Bitcoin’ and the reasons for this are pretty simple

“BTC is not Bitcoin. They question if I’m trolling or something by saying I’m using Bitcoin even though I’m saying that I don’t like Bitcoin. I like Bitcoin, I just don’t like BTC.” Many followers of BSV face similar situations, and developer and entrepreneur Ryan X. Charles spells out the details in his latest short video.

Charles has been involved with Bitcoin since 2011, working for Reddit before founding, Money Button and more recently Coasian. Even before BSV existed as a separate entity to BTC, he described how BTC’s deliberately limited “small block” dogma was destroying business models based on Bitcoin’s ability to process tiny payment transactions at large volumes.

BTC uses the name “Bitcoin” but that’s the only thing it has in common with the idea of Bitcoin, Charles says.

The biggest change that diverged BTC from Bitcoin was the 2017 addition of segregated witness (aka “SegWit”). This takes the digital signatures from Bitcoin transactions and puts them in a separate data structure. The move was ostensibly to allow more transactions in a BTC block, but to date it has done little to solve BTC’s problems of congestion and high fees.

The 2008 Bitcoin white paper describes a “digital coin” as a hashed chain of digital signatures. If you remove the signature data, it’s not a coin anymore—at least, not as Bitcoin describes it.

BTC cannot compete against other blockchain networks

BTC’s limited transaction block sizes (capped at 1-4MB) mean the network has a theoretical maximum of about 10-14 transactions per second, though in reality it’s more like four. That’s the maximum for the entire network, too, not just one user—believe it or not.

BTC is simply unfeasible as an alternative payment network for the world’s economy, if all transactions are on-chain (like BSV). The disadvantages aren’t just there for ordinary users—BTC’s “model” means an ever-increasing number of transactions competing for 1-4MB of space, pushing fees ever-higher.

That puts miners and processors at a disadvantage too: BTC competes with every other blockchain network, meaning that if its usage costs are prohibitively high, users and miners alike will simply switch to other networks as real adoption (not speculation) grows. There is plenty of evidence of this actually happening over the past five years, too. Many business that tried accepting BTC out of curiosity or because it was convenient for small, fast payments found it no longer worked as promised.

BTC’s “solution” to this has been to move small transactions to off-chain networks, using the BTC blockchain as a “settlement layer” only. It was never sold to the public this way, and makes BTC more like existing credit cards and banking systems—that is, inefficient, insecure, and costly to use.

BTC’s fundamentally broken economics

There’s also a hidden danger that doesn’t get discussed much. If there’s a sudden and drastic price decline in BTC (and there’s every possibility this could happen, given its volatility) the blockchain could simply stop dead. Miners would leave the network as the price drop destroys their profitability. The mining difficulty level, which readjusts only once every two weeks according to the number of miners) would remain impossibly high, leaving those left on BTC unable to confirm the next block. This phenomenon is known as “chain death” and Charles calls it a “massive economic security vulnerability.”

BSV’s block sizes are unlimited. Should a similar event occur on BSV, transactions would actually get cheaper for users. There’s no competition for block space on BSV, and even though it has processed a larger amount of data than BTC for most of 2021, its fees per transaction remain at a fraction of a cent.

“They (BTC) fundamentally altered, and broke, the economics,” Charles says. SegWit “breaks the definition of Bitcoin” according to the white paper and makes no sense. It can only succeed as long as the price is going up, and the price only goes up due to artificial pumps on speculative markets.

The bubble will burst, Charles says. It’s hard to predict exactly when, but BTC’s ever-increasing price based on non-existent economic fundamentals means it relies on new investors to pay out earlier holders.

In other words, BTC has become a pyramid scheme, and these always fail eventually.

Charles has railed against block size limits since long before the 2017 fork. His business allowed microtransaction payments to read news articles, similar to a paid version of Medium. BTC broke that business model, along with countless others at the time. Many of those businesses, and the people who founded them, have since moved to BSV.

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