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Bitcoin versus Bitcoin SV: Which is the Real Bitcoin? – Differences Explained and the Truth Revealed
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Bitcoin versus Bitcoin SV: Which is the Real Bitcoin? – Differences Explained and the Truth Revealed

3 June 2019

Bitcoin fractured in 2017 leading to the creation of Bitcoin Cash (BCH) and split the community into two camps. This is confusing for anyone who has joined cryptocurrency during or after 2017, especially with regards to which is the “real” bitcoin. This confusion was further compounded by Bitcoin SV’s split from Bitcoin Cash in August 2018.

 

There are currently three cryptocurrencies containing the word ‘bitcoin’ in their name in the top ten by market capitalization! 

 

In this article, we will explain the differences between bitcoin (BTC) and bitcoin SV (BSV) and try to provide an answer on which is the “real” bitcoin.

 

First, we’ll explain how it came to be that there could be many or more than one ‘bitcoin’ in the first place. Then we’ll explain the history of bitcoin, going from the white paper to its current state – as well as the beginnings of bitcoin SV – and compare the differences between the two cryptocurrencies. Finally, we will move onto assessing how to determine which is the real bitcoin.

 

Bitcoin: How can there be more than one?

 

There are two ways to create a bitcoin spin-off; a code fork or a hard fork. For example, litecoin is an example of a code fork, while BCH is an example of a hard fork. Litecoin took the code of bitcoin, changed it slightly so transactions were faster and cheaper, and created a new genesis block from scratch. Bitcoin cash, on the other hand, used a Miner Activated Hard Fork to remove SegWit from bitcoin’s code and distribute BCH to every Bitcoin holder at a ratio of 1:1. Bitcoin holders had to make a decision whether to claim their BCH and what to do with it. The genesis block of BTC and BCH are the same, and hopefully that makes it clearer what a hard fork is.

 

The so-called hard forks of bitcoin are displayed below. It is like the process of mitosis, a copy of the bitcoin network and history to a certain point is made, and maybe a few parameters or the environment is changed to create something slightly different.

 

History of Bitcoin

 

Bitcoin was born in January 9, 2009 with the genesis block and the white paper was released shortly before the launch by someone, or a group of people, who used the name Satoshi Nakamoto.

 

Still not much is known about Nakamoto, but he led the implementation of Bitcoin until June 2011 shortly before Gavin Andresen went to the CIA to explain what Bitcoin was and shortly before Wikileaks began to accept bitcoin for donations after being forced out of the traditional financial system.

 

It is Nakamoto’s juncture from the Bitcoin project that eventually led to a lot of disagreements in the technical path going forward for the cryptocurrency. Following Nakamoto’s departure, a group of developers were handed stewardship of the project, which included Gavin Andresen, and others – and eventually became known as Bitcoin Core.

 

As stewards of this new, digital sound money, there were conservative views and that experimentation should be kept to a minimum in the interests of protecting this new, unique, and important project.

 

The reluctance to scale on chain and lift the block size cap from 1MB, known as the block size debate, as well as issues of censorship on Bitcoin’s main Reddit channel – r/Bitcoin – started to drive a wedge between ‘small blockers’ and ‘big blockers’. Also, the Bitcoin Core team seemed to actively impede alternative implementations of Bitcoin – such as btcsuite – which was rejected and forced a group of developers to create a new cryptocurrency, Decred. Similarly, Bitcoin Core were very uneasy with Counterparty building on top of the Bitcoin blockchain, restricted Counterparty from building on Bitcoin in 2014 and indirectly lead to the creation of Ethereum.

 

All of these events made people feel as if the development of Bitcoin was very centralized, as a group of people could determine what should and should not be added or worked on. This sentiment was galvanised once SegWit, short for Segregated Witness, was activated via a soft fork on bitcoin during 2017.

 

The issue of SegWit was very contentious for the Bitcoin community, as it removed signatures from the bitcoin transaction data and was originally going to be included as a compromise to big blockers along with an increase to a 2MB block size. However, only SegWit went ahead and the big blockers in the community felt the need to break away from BTC and start bitcoin cash.

 

History of BSV

 

Bitcoin Satoshi’s Vision (BSV) split from Bitcoin Cash and was led by Craig Wright, Jimmy Nguyen, and Calvin Ayre, from nChain and CoinGeek respectively. The rift was caused by two major disagreements.

 

Firstly, bitcoin SV sought to appeal to those who wanted a larger block size of 128MB and more radical on-chain scaling, while  the remainder of the Bitcoin Cash movement led by Roger Ver and Jihan Wu – known as Bitcoin ABC (Adjustable Block Size Cap) – preferred block sizes of 32MB.

 

Secondly, changes to the bitcoin script – which code bitcoin transactions – forced the BCH movement to splinter. During August 2018, Bitcoin ABC introduced two new opcodes to the bitcoin cash scripts, known as op_checkdatasig and op_checkdataverify, with a hard fork. What these opcodes did in effect was to introduce a functionality similar to smart contracts, Permitting transactions to check and validate the signature on an external message, coming from a trusted data source or oracle.

 

However, to some bitcoin cash supporters, this change was not part of Satoshi Nakamoto’s original vision and they wanted a bitcoin that served the original vision. As a result, bitcoin SV forked away from bitcoin cash to remove these opcodes and scale on-chain in a more aggressively. Bitcoin SV also reactivated two opcodes which were originally added by Satoshi himself, known as OP_LSHIFT and OP_RSHIFT.

 

The split was the eventual result of a series of “hash wars” where BSV and BCH vied for the name Bitcoin Cash and ticker BCH on exchanges, and used their resources to commit hashpower to their respective chains. BCH eventually won by the end of November 2018, getting the keep the bitcoin cash name and ticker on exchanges, while the other chain was called Bitcoin SV.

 

Craig Wright’s Claim to the Satoshi Nakamoto Moniker

 

Since we’re talking about BTC versus BSV, we need to mention Craig Wright’s claim to be Satoshi Nakamoto – which is not yet proven conclusively. If Craig Wright is the real Satoshi Nakamoto, then surely, BSV is the real bitcoin? Perhaps, but no so fast, there is no definitive proof of this statement yet.

 

Wright had supposedly proven he was the creator of bitcoin with a signature of a private key of an address associated with the ninth block in Bitcoin’s history. However, Dan Kaminsky later debunks his claim.

 

The only way for Wright to prove he is Satoshi is to sign something new, in the present, to prove he owns those keys, which is yet to be done.

 

The Differences between BTC and BSV:

 

Scaling

 

The major difference between bitcoin and bitcoin SV is the block size and approach to scaling. While bitcoin focuses on a combination of careful on-chain scaling, and experimental off-chain scaling, such as the Lightning Network, bitcoin SV focuses its efforts on on-chain scaling.

 

Bitcoin SV does not have SegWit and has a much higher block size of 128MB compared to Bitcoin’s effectual block size of roughly 4MB. However, the actual average block size is higher for bitcoin, as it has more users and more transactions. It would be interesting to see what would happen if there were much more usage on the bitcoin SV chain to see if their scaling claims are validated.

 

Circulating Supply

 

While you might expect the circulating supply of bitcoin and bitcoin sv to be the same, they actually differ, with bitcoin at 17,734,262 and bitcoin SV at 17,811,452 at the time of writing. The faster rate of emission of coins for Bitcoin SV was inherited from Bitcoin Cash.

 

However, data services are quite misleading, as they do not account for the coin that were not claimed during the fork. It is estimated that around 4.5 million BSV coins were claimed out of a possible 17.5 million, but the market cap is calculated as if 17.5 million are actually circulating. This means liquidity will be much lower for BSV compared to BTC and that means more knee-jerk movements for BSV in the markets. Also, BSV is scarcer than BTC if we account for unclaimed coins, so if demand ever does rise, the valuation of BSV may increase significantly.

 

Bitcoin Cash had a higher issuance rate due to an Emergency Difficulty Adjustment in its algorithm, making BCH more profitable to mine than BTC early on. Since Bitcoin SV was forked from Bitcoin Cash rather and coins were distributed according to how much BCH you held, Bitcoin SV has a higher issuance rate than bitcoin.

 

Although both coins will experience halvings, the dates will differ slightly due to differences in the rate that blocks are mined. As explained above, the issuance of BCH and therefore BSV is faster than bitcoin’s. Bitcoin’s next halving is due to occur May 22, 2020, whereas BSV’s will be slightly earlier, around April 6, 2020.

OpCodes

 

A further difference relates to op codes.

 

Craig Wright and Calvin Ayre created BSV with the goal of returning to the original bitcoin 0.1 protocol and maintaining a stable protocol. That means Bitcoin SV reenabled opcodes, as mentioned already. But why were the opcodes disabled in Bitcoin? As a blog post by nChain explains, out of caution opcodes were disabled when two bugs found in the Bitcoin network in June 2010.

 

BSV wants to re-introduce these opcodes to explore them further and whether they really need to remain disabled.

 

Maturity

 

BTC is over a decade old while BSV is still very young, which have consequences for their respective communities and ecosystems.

 

Bitcoin is far more widely known, has more merchant adoption, and has a greater audience on social media. Contrast that to bitcoin SV, which is a relatively new project with it all to gain, with more merchants and users to win over.

 

Decentralization/Usability

 

It should be mentioned that there exists some trade-off between decentralization/security and fast/low fees & usability for a cryptocurrency network.

 

These trade offs have to be made, and it may be useful to conceptualise the different bitcoin variants in this way. It could be said that Bitcoin takes decentralization/security more seriously, sacrificing some aspects of usability and efficient transaction, while BSV can be argued to take fast transactions, low fees and usability more seriously, perhaps neglecting some aspects of decentralization.

 

Roger Ver, a leading figure in Bitcoin Cash/ABC, has stated previously that Bitcoin Core is akin to science experiments playing with Raspberry nodes and that bitcoin has not progressed in achieving its original goals such as banking the unbanked and bringing a stable and secure money to developing countries.

 

The two sides also accuse each other of incompetence in one of the fields critical to understanding bitcoin, with Bitcoin figureheads pointing to the BCH/BSV team’s lack of knowledge about computer science. Bitcoin SV promote 0-confirmation transactions and have removed replace-by-fee, whereas Bitcoin does not promote 0-confirmation transactions. Bitcoin SV claims that they help merchant adoption, whereas Bitcoin Core see it as a security risk.

 

How Do We Determine Which is the Real Bitcoin?

 

Satoshi was a great thinker and economist, but it has been said he/she/they wasn’t as good at programming. As his ideas were tested, bitcoin changed according to empirics instead of theory. For example, one CPU one vote.

 

Some would say the real bitcoin is the one closest to the white paper, but the fact is that many ideas were untested then, and now that they are, we have learned new things, so the real bitcoin may not be the one closest to the white paper. What is probably meant when people say that is that the real bitcoin is the one closest to the ideals and vision set out in the white paper, such as the real bitcoin should be peer-to-peer electronic cash.

 

We could look at the different players in the ecosystem and see what they think is the real bitcoin. First off, let’s look at the miners. Where is most of the hash rate? Is it with BTC or BSV? Well, BTC wins hands down. The chart below shows the hashrate of each network.

 

The hashrate of BTC dwarfs that of BSV. 

 

Next, we look at traders and investors. The volume traded and liquidity for bitcoin is much higher than BSV’s. According to OnChainFX.com, the reported 24 hour volume is 24.2 billion for BTC whereas for BSV it is around $612 million.Also, the price of bitcoin is near $9000 while BSV is currently just under $200, suggesting the market is telling us BTC is the real bitcoin.  However, the market price does not always equal the benefit to society or world at large due to externalities, imperfect and asymmetric information, etc., so using the simple market price to determine which is bitcoin is flawed.

 

In terms of development, bitcoin is way ahead, with 581 contributors while bitcoin SV has 0, according to CoinGecko. There have been 46 commits in the last four weeks for BSV, whereas for BTC that figure is 154, giving a sense of the development activity in recent weeks. So it is clear that developers are choosing to work on Bitcoin rather than Bitcoin SV.

 

Finally, we can look at merchants and usage. Currently, bitcoin SV processes about one tenth or thereabouts of the number of transactions bitcoin processes per day, indicating much smaller usage for BSV. While bitcoin is processing around 370,000 transaction per day, BSV processes about 40,000. Interestingly, the average dollar value of a transaction on both networks are very similar at this point in time. In terms of price stability, bitcoin is less volatile than compared to bitcoin sv over the latter’s short history.

 

But the crowd is not always necessarily right. A deep understanding of the fields of cryptography, computer programming, software development, sociology, psychology, and economics are required to assess the claims of different cryptocurrencies.

 

The Beauty of Bitcoin: No-one Can Tell You What the Real Bitcoin is, You Have to Decide for Yourself

 

Pick your poison – both bitcoin and bitcoin SV are flawed in different ways. But the beauty of Bitcoin is that it is permissionless – no one can tell you not to work on bitcoin or tell you what the goal of bitcoin is. It is subjective, depending on who you ask, you will get different answers to the question “what bitcoin is the real one?”.

 

Similar to any public good, such as a park, no one can tell you you shouldn’t play football there or have a BBQ with your friends there, because it is for everyone to enjoy and use. The fact that Bitcoin is open source means that if an entity manages to force a change that is not what some people believe represents what bitcoin is, then they can restore the blockchain to how it was prior to the change, and create a new version without the change – which is essentially what happened with SegWit, as mentioned before. The market and the people can eventually decide for themselves what the real bitcoin is.

 

It seems that, for now, BTC is the genuine bitcoin – although its lead relies on the successful execution and adoption of second layer solutions like the Lightning Network. [First mover advantage – bitcoin. Examples of where first mover advantage worked and failed]. However, the debate on what is the real bitcoin is unlikely to cease and the eventual victor of this battle may not be the coin that is currently in the lead at the moment.

 

As it stands, bitcoin has proven to be an interesting experiment over the past decade or so, but it could take another decade, two decades, perhaps another century for bitcoin – or a competitor – to really achieve the original aim of peer-to-peer, electronic cash.

 

While cryptocurrency folks might be debating which is the real bitcoin, it may be that the best answer to the question is that we’ll only know once the block subsidy is gone from bitcoin – which is estimated to be around 2140. Then, the real bitcoin is the one that most miners are continuing to mine without the block subsidy and for the transaction fees only, that is, the only blockchain where transactions are plentiful such that mining is profitable for miners.

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