The future of Bitcoin Data: BSV, BCH, and BTC

There has been some concern recently that there is no guarantee that miners will store the data uploaded to the BSV blockchain despite the large fees paid to miners. nChain have made it clear that the ‘market’ will solve the problem. This effectively moves the solution for data storage off chain and could lead to not requiring large data to be stored on the chain at all. In this article I explore the implications of a ‘market’-based approach for the three Bitcoins.

1. BSV

BSV is well known for its large data storage and it’s the primary use-case of BSV at the moment. However, there is the issue that even though miners are paid large fees for the data, they provide relatively little value for those fees, because there is no guarantee they will store it. nChain don’t seem to think this is a priority and will be solved by the ‘market’. I’m devising an off chain data storage solution, but one potential implication of such a solution is that there is no requirement to store the data on the chain at all apart from metadata such as a hash.

2. BCH

As far as I can tell, BCH is not interested in storing large data on chain. They are interested in big blocks, but those blocks are for storing large numbers of transactions not large data.

Data vs Transactions

BCH, which is more established than BSV, has demonstrated that transactions alone are not enough to generate interest in large block sizes.

BCH vs BSV number of transaction per day (BitcoinInfoCharts.com)

3. BTC

BSV and BCH have the issue of potentially not being sustainable from mining fees alone. BTC on the other hand, with all of its limitations, has no issues with mining sustainability. The limited block size ensures a mining fee market. As long as BTC is used and blocks are full, miners will be paid (there’s some counterarguments to this which I won’t go into).

Three pathways

Here are three ways this could evolve:

  1. Bitcoin is forked to incorporate the above change — Forks are expensive, require miner support, as well as a team to market the new cryptocurrency, etc. I think this is quite unlikely. However, BSV is demonstrating a market for data and while there is a market opportunity, participants are increasingly likely to fill it.
  2. An off chain data solution is provided which causes little data to be stored on BSV and BCH and could work with BTC — This is somewhat of a likely solution, in fact nChain are pushing for it. However, for the data storage solution to work effectively, it may require certain transaction functionality that is available in BSV but not in BTC. It could also work on other blockchains as long as they provide the correct transaction functionality, e.g. Ethereum (which incidentally is looking for a data storage solution). The data storage solution could be somewhat blockchain ambivalent and work with multiple chains as longs as they provide a sufficient transaction mechanism.

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