How TAAL sees the Bitcoin long game: CEO Jerry Chan

How TAAL sees the Bitcoin long game: CEO Jerry Chan

“2020 is the crossover year” for Bitcoin, says new TAAL CEO Jerry Chan. In an interview with CoinGeek, he described how comparing coin prices versus hashing power around halving times is short-term thinking. But Bitcoin is a long-term game, and a game only BSV is playing properly. Its transactional use and a stable price that will see the network succeed in the future—at the end of the day, BSV is valuable because it is useful.

‘If you don’t wake up to this, you’re not going to be able to compete’

Bitcoin SV (BSV) and BCH have already undergone their four-yearly block subsidy “halving” events. BTC will have its turn around May 10th, 2020. With the BSV and BCH subsidies now 6.25 coins instead of the pre-halving 12.5 it is currently more profitable to process BTC transactions. BTC (at the time of writing) has a 98.5% share of the hashing power, while BCH has 0.8% and BSV 0.7%. (For the record, BSV has 56.7% of actual transactions.)

Chan took aim at those who criticize “loyalist” transaction processors who continue to support less profitable networks with hashing power. It’s not just politics—those processors, he said, have just as rational an economic incentive to make a long-term play for profits, than take what’s there in the short term.

“In the long run, our view is that we are the ones who are making the economically rational decision here. In the short run we could make more money mining BTC and banking it in U.S. dollars. But in the long run, hash owners are willing to hold BSV because they see the long-term value of BSV will be supported by transactional use.”

This is because the BTC industry is not paying any attention to actual usage or utility. Indeed, several market analyses we’ve seen don’t mention BTC usage at all, looking only at price trends and operating costs. Starting next month and moving into the future, how does BTC actually expect its transaction processors to keep making money?

“The mining regime that has been in place for more than the last 10 years is going to change in one month’s time,” Chan said. “And if you don’t wake up to this, you’re going to be buried… this is the last chance before the curtain falls.”

Bitcoin BSV’s model is based on utility, scalability and microtransactions (sub cent payments), and the capacity to handle theoretically unlimited numbers of transactions. These transactions are all paying fees, however small. BTC, on the other hand, has no model for future profits other than a rising coin price and high fees per transaction. Data per BTC transaction block is limited to 1-4 MB and any attempt to increase this in the past has been shouted down.

Coming to terms with harsh BTC reality

Chan said it appeared from articles he’d read that BTC supporters had come to terms with the fact that the BTC price would not instantly double to make up for its subsidy halving. However some were now compensating by suggesting “weak” or “inefficient” processors would fall away from the network, leading to larger profits for the “strong” processors who remained.

Therefore, that theory goes, those remaining would receive more BTC for less hashing power, and would in turn need to sell fewer coins to pay operating costs. A more detailed description of this theory is available here.

“If they don’t sell it, they can HODL it,” Chan said. Everyone holding BTC would cause the price to go up, increasing the value of the coins—according to their theory. “This is not logical,” he added, likening it to perpetual motion machines or trying to move a sailboat with fans on the deck.

Chan estimated that the “weak” ones leaving the network would have to number 90% or more for the few “strong” remainers to continue making any profit on BTC after the halving. This scenario, Chan said, is unlikely—meaning it would be difficult for hash power owners to profit from BTC with the subsidy at 6.25 coins.

“The BTC economy is a speculative bubble—people need to listen. A massive correction will likely happen.”

 Only a network with income from a source other than basic block reward mining could be profitable from mid-2020 and into the future. Here’s where BSV’s 50%+ share of actual transactions starts to look more important.

Projects sending massive amounts of data to the BSV network on a regular basis—such as current examples EHR Data Inc. or WeatherSV—are the ones who will provide the profit. That’s a much better business model than relying on a magical assumption that coin value will rise… somehow.

In any case, Chan said, it’s not in Bitcoin BSV’s interests to have sudden price spikes, as exciting as that would be for those holding it. Short-term price speculators are of little value to BSV over real business users.

“If BSV jumped up to a thousand dollars in one day, then obviously it’s not going to stay there. It’d only be showing that it’s just as volatile as BTC, and that hurts the real businesses we need to bring on board.”

“That’s a huge business risk to them. And those are the real guys you care about. Because those are the guys doing real stuff on BSV and are willing to pay to use BSV for the next ten years.”

Data and reputation

Chan also mentioned the Merchant API and Miner ID projects as evidence BSV is serious about attracting businesses.

Miner ID allows transaction processors to verify which blocks they have processed. This is a more formalized version of the (voluntary) signals processors currently provide—paving the way for them to build corporate reputations by signing their name to every block and verifying the work they’ve performed on its data.

Processors would not (and should not) have plausible deniability for any bad action they’ve undertaken, Chan said. “It should be on the record what they processed, and when.” Analysts could compare processing data on a dimension they haven’t ever before, and processors could be judged by how much they’ve committed to the network, how much risk they’ve taken, and how much they’ve spent.

Media misinformation

As the economic situation facing BTC became more apparent, Chan said, business owners curious about BSV and those making BSV’s case would need to be wary of deliberate misinformation campaigns. We’ve already seen plenty of evidence for this in the news and on social media.

“That’s the unfortunate world we live in at the moment. We live in a world where anonymous hackers and information warriors own the internet. Unless you side with them, you’re always going to have to fight through misinformation.”

“But people aren’t stupid. They will see the truth if the evidence is around them,” he added, noting that BSV would prove its worth easily as an increasing number of real businesses come on board and used it.

“We just have to keep doing our business. If some lose faith, or fall off the bandwagon, that’s OK. You can jump off the ark.”

Learn more about TAAL’s vision and strategy as Bitcoin enters the Transaction Processing era here.

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