A Future with BTC and BSV

Bitcoin Core (BTC) insists on small blocks in order to “be separate from the government.”

To their credit, separation from the mainstream may just be its fate. BTC may not totally disappear, but instead may end up a niche.

Imagine:

Today:

The global black money market is at $0.8 trillion; gold $8 trillion; global GDP $80 trillion; global wealth $800 trillion. These are the general dimensions and proportions of the current economic system of the world.

Future:

The future will continue to have a similar structure and proportions to the present (above), but with updated players in each dimension.

BTC: After being defeated by Bitcoin Satoshi Vision (BSV) on a broader competition, BTC captured a portion of the black money market, and its market cap has settled down around a hundred billion dollars (a few thousand dollars per BTC coin), while its ecosystem operates in constant conflicts with the law.

BSV: Winning both the protocol war and the application war, BSV became not only the global value exchange/settlement medium serving as the common liquidity provider, but also the global “digital land” on which a new economy is being built. Many use BSV as a store of value too, but it is a secondary function.

Thanks to its unbounded scalability, unsurpassed security and reliability, and extremely low cost and high efficiency transaction processing power, BSV provides liquidity to the global markets (one of the new digital gold’s functions that the old gold did not have), sharing the role with multiple Central-Bank Digital Currencies (CBDC’s) and bridging among them.

Meanwhile, BSV Bitcoin Blockchain became the backbone of tokenization of all global assets, and plays a key role in the new global Internet Web3 by serving not only as an economic layer called Internet of Value (IOV) but also as a shared global data layer called Metanet.

BSV supports the global tokenized economy that has a total GDP over a hundred trillion dollars, while the global wealth is being built and deposited on the “land of satoshis” to reach quadrillion dollars.

BSV coin itself attains a market cap of multiple trillion dollars (price beyond $100 K per BSV coin, $0.001 per satoshi token).

But it isn’t that conspicuous. People no longer talk about BSV daily. It exists behind the scene supporting the global economy of hundreds of trillion dollars and the global wealth in quadrillion dollars.

Michael Saylor’s Thermodynamic Bitcoin

Michael Saylor, the CEO of MicroStrategy, has made interesting points in making the case of Bitcoin.

Except that, he is misled by his own ideas (which are really good in abstract, but lacking in specific substance — see below) and also by a deceptive public narrative created by stakeholders behind Bitcoin Core (BTC).

BTC is not even the real Bitcoin, and even if it were, it would still be too early to declare the winner of the crypto war at this point of time.

If the timeframe is 30 years, we are talking about a $100 trillion transformation. Before any technology/system reaches a valuation of at least $10 trillion (10% of the total), declaring a definite winner is premature.

Michael Saylor’s macroscopic views are insightful, and also powerful because of his ability of abstraction. The power of abstraction is that when it is true, it can be absolutely true because abstraction goes beyond the specific conditions and boundaries and can reveal the underlying law at work. Saylor especially has excellent perspectives of long-term economics of the Tech.

However, based on how he describes Bitcoin, he does not seem to truly understand the history, technology, economics and law of bitcoin in their particulars beyond an abstract and a macro view. If someone like him has actually studied all these matters much more deeply, especially into Bitcoin Satoshi Vision (BSV), and reaches a conclusion, one way or the other, there would be a reason to take what he is saying seriously. Unfortunately, he hasn’t.

Which bitcoin?

The fatal problem with his view on bitcoin is his lack of granularity, which is likely a result of being unaware of the nuance of bitcoin history and its technological arguments and forks.

What I mean by lack of granularity is that, he talks about “bitcoin”, but when you apply what he’s saying, you will find that the points he is making are not unique to BTC, but are equally true, if not more so, to BSV.

All the major points, except the one about the current scale (see below), are not only true to BTC but to BSV as well. Whether it is the point he makes on thermodynamics, energy leakage, indestructibility, or smart weapons, it would be the same if he was talking about BSV instead of BTC.

Then he never talks about what BTC can’t do but BSV can. To him, bitcoin = BTC, and it is BTC versus everything else, but everything else is dumb. What an assumption.

He is like a man who is in love of a woman of his ideal, but has mistakenly projected his idealistic love onto a wrong person.

The current scale as an argument

Michael Saylor does make a great argument against BSV in favor of BTC. His argument is based on the difference between the current scales of BSV and BTC.

First, BTC is more than 200 times larger than BSV at the present time. So the question must be: If BSV is so great, why isn’t it nearly as successful as BTC?

To answer the question, one would need to visit the history of Bitcoin. Bitcoin has multiple versions (forks). BTC is one of them. BSV is the only version that is faithful to the original vision of Satoshi Nakamoto presented in the white paper “Bitcoin: A Peer-to-Peer Electronic Cash System”. But the true Bitcoin (BSV) has had at least 7 years (out of a total of 12 years) stolen by BTC, which operated under a hijacked brand and a false narrative completely contradicting the original Bitcoin vision. BTC played with the stolen opportunity to pump up the value using dubious schemes, but almost ruined the actual Bitcoin vision.

BSV is the belated rescue mission. Despite the fact that BSV was deprived of most of the critical time and opportunities, and the fact that prior BTC development had created an incredibly difficult challenge to restore the original vision by Satoshi, the BSV ecosystem has since 2019 been undergoing a remarkable build-out with extremely talented and dedicated teams working on both infrastructure and use cases.

The redemption is working.

Second, Michael Saylor again makes a highly abstract and effective argument for BTC. He says that because BTC has already got so large, any other duplicates of the bitcoin system may appear to be “parallel universes,” but in reality would all be pulled toward BTC and be assimilated due to the overwhelmingly dominating gravitation of BTC.

But the weakness of his argument again lies in that it is just abstract, and disregards the actual physical reality. The Bitcoin universe is vast (already perceivably vast, but is even way beyond what we can perceive today), in which BTC itself is still extremely small in terms of adoption. Don’t be fooled by BTC’s shocking valuation. The adoption rate of BTC is still less than 1% of the world population, and even among the 1% that is engaging with BTC, they have only committed a small portion of their wealth and almost zero economic activities to BTC.

And more important, the real Bitcoin is for more than just coins or tokens, but more fundamentally a system for the next generation Internet, which BTC has intentionally sacrificed in order to promote the short-term narrative of “digital gold” (see below for more detail). This is a far larger universe than coin and payments, and BTC simply does not even touch it even if it had won the coin war (which of course it hasn’t).

In other words, the bitcoin universe is so large that the current size of the BTC has not remotely got to point where its “gravity” would be large enough to pull everything toward itself and make it impossible for the other bitcoin systems to exist.

In addition, in the universe where BTC and BSV coexists, BSV has distanced itself from BTC so far away that whatever comes near BSV is not going to be irresistibly pulled away to BTC, but instead pulled into BSV. That distance is measured by the distinctiveness and also effectiveness of BSV’s utility solutions, which are not offered by BTC.

The end result is likely that the Bitcoin Blockchain that is based on the correct economic network and technological development pathway is going to start to attract more and more users due to its high level utility, and will eventually pass a critical mass to become the gravitational center of the Bitcoin universe. In that event, it is a question whether BTC may survive or not.

The price discovery paths of BTC and BSV

Unlike BTC that is being constantly pumped, BSV’s default state is a quiet one and only moves with actual development news, characteristic of a very young asset doing price discovery. During price discovery, faith is tested, but the real faith is based on one’s understanding of the substance, which for BSV is its real utility, not “faith upon faith itself” as in the case of BTC.

As to BTC’s “faith upon faith itself” dynamics, a single major event or revelation could bring the entire thing down, because the entire system does not have a ground state. (See Is Bitcoin a Ponzi Scheme?)

For example, what if Tether is declared to be an illegal operation and brought down?

Or, what if the news and reality start to flood in revealing that BSV’s ecosystem and applications are spreading exponentially and BSV is clearly taking over? (For BTC, there can be no news of actual applications as it is designed to be a store of value only and no other applications, so your only hope is that the price is perpetually going up.)

BSV has been proven to work, you just don’t know about it now

“The best time to invest into a technology is when you know it works but 99% of the people don’t,” according to Saylor.

But the statement is true to a much greater extent with BSV than BTC. If it is 99% in the case of BTC, it is 99.999% in the case of BSV.

And BSV has been proven to work, you just don’t know about it now.

While BTC continues to try to prove it to be the only thing it wants to be, namely a “store of value”, BSV is quickly becoming the true infrastructure that channels the “monetary energy” (borrowing Saylor’s phraseology). Just think about it, which one is more like an “monetary energy”, an effective engine that can power the Internet of Value (IoV) with extremely low transaction cost, or “a store of value” that competes with gold?

As an engine of “monetary energy”, BSV wins without competition, as BTC does not even purport to function like one. Even as “a store of value”, it is too early to call the winner. We might have one in about 3 to 5 years.

Following another great Saylor analogy, gold is like a rock (as a weapon), BTC a machine gun. But one day the world may see a precision-guided smart weapon system, and that will not be BTC (and cannot be, as BTC has already autocastrated itself not to be).

But BSV is far more than monetary energy. The BSV engine also powers the next generation Internet.

The real Bitcoin Blockchain Technology, when done properly according to the original whitepaper written by Satoshi, is powering five great transformations simultaneously:

(1) decentralization of money;
(2) decentralization of assets through tokenization;
(3) decentralization of data; and
(4) decentralization of computation (different from distributed computation)
(5) decentralization of AI (a combination of the above #3 and #4).

All these great transformations are enabled by Bitcoin Satoshi Vision (BSV) based on the bitcoin whitepaper and rapidly growing further developments in the BSV ecosystem.

Meanwhile, BTC has gone astray and become a niche antigovernment money. Some BTC believers like to protest that BTC is not antigovernment but “government independent”. People fell in love with the “government independent” narrative, but did not know it was a carefully schemed lure.

The psychology behind different bitcoins

Semantics aside, one should study the history of bitcoin featuring a division between “anticorruption” (of Satoshi) and “illicit freedom” (of the Core developers). The result is deep ongoing hatred of Satoshi by the Core, who still controls the narrative. The media and the mass have been fooled because they don’t understand what bitcoin really is (yet everyone pretends to without understanding even the TITLE of the bitcoin white paper).

With the exception of just a few true insiders in the Bitcoin Core who had much more corrupt motivations due to real economic and reputational self-interests, most people, including the widely recognized Bitcoin experts, have simply fallen into a psychological trap. They imagined a personality of Satoshi Nakamoto, all based on the Core narrative and their own imagination, making it almost impossible to accept the real Satoshi on an amicable basis.

It is especially hard when the real Satoshi has a personality that doesn’t go easy with others (he is actually an Asperger’s patient), PLUS a strong conservative and capitalism worldview that invokes objection, even detestation, among the leftists and socialism-leaning people in the Bitcoin Core and its sphere.

Then there are some people who are somewhere in between. Vitalik Buterin is an example. These individuals do have a strong economic incentive to reject the real Satoshi, but at the same time, they are also acting on their ideology, making them at least half-sincere (although totally wrong).

BTC and BSV, what is the real difference?

On the surface, the most prominent difference between BTC (Bitcoin Core) and BSV (Bitcoin Satoshi Vision) is the choice of block size. While BTC insists on small blocks (one megabytes per block), BSV has opted for big blocks, ultimately with unlimited block sizes.

What is behind this, however, is the fundamental difference in economics and philosophy.

BTC’s choice is not due to any technical limitation, but deliberate in order to maximize decentralization, believing that only when the blocks are in many people’s hands can the level of decentralization necessary to reduce reliance on human trust be possible.

BSV’s choice is to maximize the system’s transaction capacity, believing that professionalization of nodes based on optimized incentives is the best way to achieve the necessary level of decentralization.

BTC’s choice is shortsighted.

Bitcoin network is sustained by nodes. In the beginning, nodes make money by mining bitcoins allocated to each block. It is designed as a subsidy. The subsidy mechanism in mining is a bootstrapping strategy that has an inherent time limit. The system must achieve utility-based external success by the time limit, or it will collapse. How far (or how generous) the time limit can go is determined by the investor psychology, but is without doubt not unlimited.

The current market does not understand this most fundamental point about bitcoin, and as a result individuals with the ranks of Elon Musk and Michael Saylor are deceived by their own grand imaginations..

Compare:

BSV:

— A small-world-network of professional nodes with their economic interests tied to maximized transaction processing and optimized to thrive (not to commit suicide), competitively scrutinized and checked by each other, working under instant monitoring by millions of merchants, who in turn are monitored by billions of users at any given second;

— Having already reached on-chain transaction capacity of 9,000 transactions per second (TPS) as a result, and theoretically unlimited TPS (all transactions on-chain, by which I mean the Bitcoin Blockchain, not any other cheaply built chains pretending to be blockchain);

— Allowing Turing complete computation and smart contracts;

with

BTC:

— A similar small number of professional nodes but with their economic interests gutted and restricted to only a temporary bootstrapping mining interest by design, unable to ultimately free themselves because the Core requires the system to allow millions of amateurs to pretend to be equal “nodes” as well (all in the name of forming a “democratic society” with an illusionary decentralization eliminating the need of any human trust);

— Perpetually limited to 5–7 on-chain transactions per second;

— Having excluded by design the possibility of smart contracts.

Those are the choices.

At this point of time, it is admittedly still quite philosophical. At least on a theoretical basis, anything is possible from this point. One can be right, the other wrong, or both can be right in its own limited sphere, but both can be wrong too.

But eventually the reality will play out to force itself upon the debating minds.

I am convinced that BSV is the right choice. I started with BTC, loved every aspect of it from a technological point of view, but was deeply skeptical of its antigovernment philosophy (or independence from government, not antigovernment, as many BTC supporters like to emphasize). I did not believe Craig Wright was Satoshi. In fact I had a negative impression of him, a very superficial impression I should admit because I did not listen to what he was saying. I did not want to. But once I came to study the philosophy and the economics of BSV, I quickly realized that all my earlier skepticism of Bitcoin should not have existed according to the original bitcoin design.

BTC’s small blockers’ fundamental objection to BSV’s design is based on their belief that a Small World Network (SWN) of professional nodes cannot be trusted.

But they will soon find that the reality will be the opposite. Putting nodes in many amateurs’ hands to achieve decentralization is an illusion. The fact: not only has BTC network already ended up being concentrated on just a small number of professionalized miners anyway, but also that the miners have a highly problematic type of concentration in that they are geographically concentrated on areas where the electricity is either cheap or can be stolen. Presently, that location is China.

Such geographic concentration is unavoidable on BTC because there’s only one factor that measures the success of a miner: the cost of block hashing. It is a single gravity.

The situation is different with BSV, and is becoming more and more different.

With BSV, increasingly greater percentage of nodes’ computational power will be focused on transaction processing, and smaller and smaller percentage of that may remain for block hashing.

Unlike block hashing, the transaction processing has to be geographically optimized. For example, businesses in North America are likely to prefer their business transactions to be first processed by a node located in that region (and of course eventually communicated to and accepted by the other nodes), both because of legal/regulatory reasons, but also because of high-speed transaction competition requirements.

As a result, it is expected that BSV will end up having a network of professional nodes that are properly distributed over the world on different continents and different economies according to the global economic reality. That is far healthier picture than the current BTC distribution in which nodes are not only concentrated anyway but also geographically concentrated.

Still can’t trust the nodes? The human reality is that you should not trust others to act on your interest, but can and must rely upon the notion that they will act on their own interest. Without that is total insanity. Human society cannot continue to survive on total insanity. Imagining a technology that could somehow manage such an imaginary insane society is delusional.

Misaligned economic incentives, not something intrinsically evil as imagined by its opponents, is why socialism fails.

And that’s also why BTC is a wrong choice made based on a wrong philosophy and wrong economics.

In contrast, BSV is a technology-enabled economic system that INTRINSICALLY promotes collaboration/competition, but EXTRINSICALLY gravitates to domination, and will be proven to be the greatest marvel of human economic/technological achievement.

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