3 bitcoins

The struggle for the true Bitcoin: BTC, BCH or BSV

In a previous article titled, Who is trying to control, manipulate or destroy Bitcoin?, Marquez Comelab discussed the different groups of people who have different incentives to influence Bitcoin, take it over, control it, or make it their own. Here, he tells the story of how varying factions struggled to control Bitcoin and, in the process, created three implementations of Bitcoin: Core (BTC), Cash (BCH), and Satoshi Vision (BSV), each one claiming to be the true Bitcoin.

Core (BTC): Small blocks vs big blocks

In 2017, it became increasingly evident that BTC was unfit to deal with the challenges of being a global currency. It could only handle a maximum of seven transactions per second. The network quickly became congested. People had to wait days or weeks for their transactions to be processed.

This performance limit results from BTC having only a 1 megabyte block size limit coded into the Bitcoin software. People who had a stake in Bitcoin’s future have been aware of this looming problem. Satoshi Nakamoto added this limit to deal with the possibility of spam transactions being sent to the network in its early years. However, he was explicitly clear that the limit should be removed before the network reached capacity. He even provided a guideline on how this could be done. As the network reached full capacity the protocol engineers that maintained the Bitcoin code refused to remove the block size limit. There was a stalemate.

Since around 2015, discussions and views began to diverge: some argued to keep the block size as is, and others claimed to enlarge it. This is called the “Scaling Debate”; the two groups were called the Big Blockers and the Small Blockers.

The Big Blockers argued that Satoshi had already provided a way to solve the issue: to enlarge the block size and enable Bitcoin to process more transactions as people adopted and used it. Prominent Big Blockers include Gavin Andresen, Mike Hearn, Roger Ver, Jihan Wu, Calvin Ayre and Dr. Craig Wright.

The Small Blockers were people who argued that the way to deal with the transaction congestion problem was to change Satoshi’s protocol design so it can include other third party scaling solutions. An example of such a third party scaling solution is called the Lightning Network. For Lightning Network to facilitate working with Bitcoin, the Small Blockers wanted to modify the Bitcoin protocol to implement a change called “Segwit.”

At the time, the Lightning Network was still very much experimental, and Segwit alone was certainly not enough to solve the congestion issue. Big Blockers, like Roger Ver, wondered why it was not considered to simply enlarge the size of the blocks until a better solution was ready. It seemed, however, that the Small Blockers were trying to solve the congestion problem more complex than it needed to be.

Many Big Blockers distrusted the true intentions and incentives of the Small Blockers. One reason was that the Small Blockers censored the discussions about how to best scale Bitcoin, which they argued stifled the right of others to hear all available information and to arrive at a consensus. For example:

  • Small Blockers were censoring discussions about the scaling issue on websites like Reddit, where people gather and discuss all things Bitcoin.
  • When Brian Armstrong, chief executive officer of Coinbase (NASDAQ: COIN), posted his support for bigger blocks in 2016, Small Blockers removed Coinbase as a recommended wallet on the Bitcoin.Org website, a site originally set up by Satoshi Nakamoto to provide information about Bitcoin.

Even more serious consideration is the connection between the most influential Small Blockers, the centralized BTC Core developers, who have the monopoly on the BTC protocol, and a company called Blockstream. In 2014, a few protocol engineers like Pieter Wuille and Gregory Maxwell formed a company called Blockstream, along with Adam Back. Blockstream created proprietary bolt on solutions that catered to the perceived inadequacies of Bitcoin. Their products are only justified if BTC had high transaction fees which small blocks insured. Major incumbent financial organizations like AXA also fund them employing many BTC developers.

Many Big Blockers suspected Bitcoin had been captured by the industry it sought to disrupt. By keeping the block size small, the BTC core developers were intentionally crippling Bitcoin’s ability to process transactions. For what possible reason? So, they could profit by providing their solutions to a problem that they allowed and continued to perpetuate for their own financial gain or for the gain of others. Whether Blockstream was set up for this purpose did not matter. As long as this conflict of interest exists, Small Blockers associated with Blockstream and those invested in Second-Layer solutions are incentivized to keep Bitcoin blocks small. When an incentive exists, it is bound to be exploited.

BTC forks away from Bitcoin protocol

In 2017, the Small Blockers were scheduled to implement a protocol change called Segwit on the Bitcoin blockchain. The Big Blockers wanted to avoid Segwit. So on August 1, 2017, the Small Blockers “forked” Bitcoin and kept the ticker BTC to represent their new blockchain protocol.

In the case of Bitcoin, the protocol and the blockchain (the record of all transactions) have been duplicated, but as they march forward in time, the two blockchains will diverge as they begin to record a different set of transactions. The Small Blockers continued to work on the BTC blockchain and implement Segwit, and the origin Bitcoin blockchain started being referred to by Big Blockers as Bitcoin Cash which used the ticker symbol BCH.

After the fork, the Big Blockers had a more significant challenge than the Small Blockers. The Small Blockers’ chain kept the original ticker (BTC). As a result, people continued treating it as though it was more Bitcoin than Bitcoin Cash. By default, all the exchanges, apps, and wallets remained connected to BTC as they always have. Bitcoin Cash had to start its application layer practically from scratch.

Setting the Bitcoin protocol in stone

A year after the BTC forked off Bitcoin, another issue began dividing the Big Blockers. BCH developers proposed changes that seemed to focus on changing how the transactions were sorted on the Bitcoin blockchain.

However, certain members of the Big Blockers, like Calvin Ayre and Dr. Craig Wright, became increasingly suspicious of the motives behind the proposed changes. They argued that Bitcoin should focus on scaling and follow a more aggressive approach towards enlarging the block size limit and eventually removing it so it can handle the transaction volumes required by the entire planet.

Unlike the BTC-BCH split, when people were divided over how big the block size should be, people in the Big Blocks camp were divided between those who wished to continue making significant changes to the Bitcoin protocol, and those who wanted to restore it to the original version that Satoshi Nakamoto released in 2009. The latter group believed and was confident that the Bitcoin Whitepaper and Satoshi Nakamoto’s protocol always had what was needed for Bitcoin to achieve its objective of becoming cash for the world.

BCH forks away from the Bitcoin protocol

Nakamoto Consensus. In Bitcoin, this is called a “hash war.” The miners headed by Calvin Ayre and Craig Wright were up against miners led by Roger Ver and Jihan Wu. The war cost millions of dollars on both sides. On November 15, 2018, Bitcoin took the new ticker BSV and Roger Ver and Jihan Wu forked off the original Bitcoin creating a brand new protocol but kept the BCH ticker symbol on exchanges.

The Vision

The Satoshi Vision implementation of the Bitcoin protocol (BSV) focused on restoring the original scripting language op codes that were removed by BTC developers. The focus was to continue developing Bitcoin as described in the Bitcoin white paper. Calvin Ayre and Craig Wright had grown restless with the tendency of developers to keep tinkering with the Bitcoin protocol. They committed to undo all the changes developers made to the Bitcoin code over the years and have it rewritten to resemble, as close as possible, the original Bitcoin protocol.

The Bitcoin protocol would then be “set in stone,” just as Nakamoto believed it should be. Before Satoshi seemingly vanished, he wrote: “The nature of Bitcoin is such that once version 0.1 was released, the core design was set in stone for the rest of its lifetime.”

In numerous presentations, BSV entrepreneur Jimmy Nguyen, who is a significant voice of those supporting Bitcoin SV, points out that it is not feasible for giant corporations, governments, and other organizations to build on Bitcoin if the protocol keeps changing. He likened the Bitcoin protocol to the Internet protocol. The Internet Protocol may not be perfect and can be improved like everything else. But because it is a fundamental foundation of the Internet on which millions of websites are built, it is most critical for it to be stable. Everyone else can develop on top of it, adjusting for whatever weaknesses it has. Let us stop tinkering with Bitcoin and let us begin professionalizing it.

Craig Wright also emphasizes that for something to become as important as a global currency, it must be decentralized.

Decentralization refers to the concept of control. If developers are allowed to keep changing the Bitcoin protocol, then they have control over it. Keeping the Bitcoin software/protocol permanent and “set-in-stone” denies anyone the opportunity to control Bitcoin. Ensuring this is done is how decentralization of control is achieved in Bitcoin.

In February 2020, in the “Genesis” upgrade, BSV developers returned the Bitcoin protocol as closely as possible to the original release in 2009 by Bitcoin’s creator, Satoshi Nakamoto.

Conclusion

In summary, the distinctions between the three projects identifying themselves as Bitcoin are the following:

  • BTC adherents are following a path where they hope to sell and profit from second-layer solutions to the world.
  • BCH adherents are still chasing ambitions of becoming an anonymous superior cash system. However, like BTC, their developers are still making changes to their protocol.
  • BSV adherents believe that Bitcoin should follow the vision and description set forth by its inventor, Satoshi Nakamoto, and have shown their commitment to this belief by restoring the Bitcoin Protocol to the original protocol 2009, and ‘set it in stone’. Their convictions are proving to be correct.

In September 2022, more than two years after BCH forked away from Bitcoin, BSV extended the recommended block size limit to four gigabytes. That is 4,000 times bigger than BTC’s block size of 1MB. It has also processed 23 times more transactions per day (6,735,600 transactions) than BTC (290,702) and 267 times more than BCH (25,150).

The superiority of Bitcoin SV’s ability to process large volumes of transactions is a testament to the guiding principles of Satoshi’s vision for Bitcoin that the BSV supporters have committed to fulfilling.

***

References:

[1] Article: “Who is trying to control, manipulate or destroy Bitcoin?” by Marquez Comelab, CoinGeek: https://coingeek.com/who-is-trying-to-control-manipulate-or-destroy-bitcoin/ (Published: March 2, 2022, Last accessed: September 14, 2022).
[2] Web: “[PATCH] increase block size limit”, https://bitcointalk.org/index.php?topic=1347.msg15366#msg15366, (Original post date: October 4, 2010, Last accessed: April 1, 2020).
[3] Web forum page: “Transactions and Scripts: DUP HASH160 … EQUALVERIFY CHECKSIG”, https://bitcointalk.org/index.php?topic=195.msg1611#msg1611 (Original date of post: June 17, 2010. Last accessed: September 10, 2022).
[4] Blog post: “On Decentralisation” by Craig Wright. https://craigwright.net/blog/law-regulation/on-decentralisation (Last accessed: September 10, 2022).
[5] https://bitinfocharts.com/comparison/transactions-btc-bch-bsv.html#3m (Last searched September 10, 2022. Data for September 9, 2022)

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.

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