Bitcoin coin with money — Stock Editorial Photography

Settlements with Bitcoin as complex cash

In the digitized world, we have unlearnt what cash is and rely on electronic account-based systems. The difference between cash and non-cash is staggering, though.

Bitcoin SV dedicated author ZeMing M. Gao has published a remarkable article titled “More proof that UTXO is superior to account-based systems.” In the article, Gao compares Bitcoin and Ethereum concerning their cash and account-based capabilities. Gao’s piece helps in understanding what we do when using our BSV satoshis: 

“UTXO is like cash, In that every bill or coin is independent from each other. As long as a dollar bill itself is authentic, the validity of a transfer is absolute and not contingent upon a separate accounting. In contrast, an account-based system is like bank credit money. Parties recognize the nominal validity of the credit, but a transaction is not settled until all accounts in the system have been reconciled,” he explained.

If we take this short part of Gao’s article and really understand what it says, we learn why using Bitcoin as cash—and not as so-called digital gold—makes sense. Furthermore, Bitcoin is not simply cash since it serves other purposes too.

Settlements with and without Bitcoin

There is a settlement of account-based systems and settlement with cash. In an account-based system, the settlement is a calculation done within the account-based system. With cash, settlement is by exchange of the cash itself.

For example: If I send a bank transfer to you, I am sending it from an account-based system (my bank) to an account-based system (your bank). The banks “settle” among themselves, but it is still all in an account-based bubble, so to say, and the banks do not exchange cash with each other for that cause.

Now, look at what happens when you want to withdraw the money I sent you via my bank transfer. You withdraw cash from your bank, as you have a claim to withdraw—the claim to withdraw is from the contract between you and your bank. The settlement of your claim against your bank is done when you successfully have received the cash notes from your bank.

I have never sent any cash to you, though. If you want to send me cash now, you would have to deposit your cash at your bank, and then we both have to enter the account-based bubble again.

Comparison to Bitcoin: If I send you some BSV satoshis from my wallet to your wallet, no account-based system is involved. The settlement is done with the transaction. Furthermore, there is no withdrawal of satoshis, as you literally have the satoshis in your wallet already. That is cash.

Blockchain settlement without having to wait for any blocks

Another BSV-friendly source has already commented on the above topics: Unbounded Capital’s Jack Laskey published an article titled Only Cash Scales. In it, Laskey states: 

“(…) the issue is settlement – making sure that one account has the dollar they are trying to send to the other account. Settlement is not a challenge when passing the dollar back and forth. It is clear that the other party has the dollar to send you because they just handed you the dollar. The order is clear because only one person holds the dollar at once.


Further, account-based systems cannot accommodate “zero-confirmation” the way a cash-based system can. In Bitcoin SV, transactions settle instantly without having to wait for any blocks containing that transaction to be added to the blockchain. This is because the order is explicit and miners follow the first-seen rule, meaning that the first transaction to spend certain coins is the one that will be used. “

So, Bitcoin is about settlement. Hence the title of the Bitcoin white paper: peer-to-peer electronic cash system. We are not sending claims to withdrawals onto the blockchain, but the cash itself is moved when satoshis are spent.

Banking system and traceability issues

Interestingly, the recent source of funds regulations can be seen as an attempt by the states to implement traceability to cash, but also to bank transfers. Wait, what? We thought bank transfers were already traceable, yet the source of funds is also being asked for concerning bank transfers. That basically shows that the current bank transfer system has no sufficient traceability.

Bitcoin, as in the BSV blockchain, helps solve two problems at the same time: the settlement is the transfer of the single satoshis, exactly as in exchanging a physical cash note. Yet, at the same time, traceability is given, as each single satoshi is publicly traceable on the blockchain.

Furthermore, whenever BSV scales, it automatically adds more privacy to the end user. This is something the current bank transfer system cannot compete with. 

Dr. Craig Wright on electronic cash and settlements

Let us take all this a little further. Bitcoin inventor Dr. Craig Wright has been preaching about the cash side of things in Bitcoin since Bitcoin’s inception. I could dig out uncountable quotes from Dr. Wright concerning Bitcoin as cash. 

Among his more recent pieces, Dr. Wright says in Directly from One Party to Another…:

“The nature of a Bitcoin transaction is similar to the nature of a negotiable instrument such as a cheque (Aigler, 1924). It forms a type of money, but is more than money when it can be settled as quickly as on the Bitcoin network. As such, it can be cash.


Cash is ready money. Grant (2019) notes that “a negotiable instrument is equivalent to cash.” It is something that is quickly exchanged and settled.”

That is a very short quote, but there is much to it: “Cash is ready money.” Are your BSV satoshis ready money? Yes, they are, as they are ready to be spent at any time you like. 

And is Bitcoin “more than money“? Dr. Wright is referring to the fact that BSV satoshis are not just a type of money, but more than that—as they can be used as cash with their instant settlement capability. 

However, there is even more to the “more than money” than that—as explained by John Pitts, Bitcoin is a computational commodity. In Pitts’ article Zen Yotta Mond Data, we find this statement:

“The Bitcoin network provides a commodity marketplace for computation.”

The current cash we use is just cash, though, paper cash, bank notes cash, with nothing more to it. Ethereum tried to be about computation and did let the cash aspect go. BTC abandoned the computational properties of Bitcoin and the cash dimension at the same time (“digital gold”-narrative). 

The true Bitcoin, as in the BSV blockchain, can be money, can be cash, and is more than money and cash at the same time. Maybe it is time to talk of that kind of cash as a complex cash. I would even go as far as saying that describing Bitcoin as solely cash is wrong. 

I see no competition for Bitcoin as complex cash: neither from the current banking system nor from state-issued currencies, and for sure not from other digital assets. With the original Bitcoin (BSV), we can pay, settle, trace and compute—plus have privacy at scale. 

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