Why BTC is a value absorbing system, while the real Bitcoin BSV is a value creating system

Even before you get into deeper technical inquiries, it is rather evident in their distinct and conspicuous outward manners that Bitcoin Core (BTC) is a value absorbing system, while Bitcoin Satoshi Vision (BSV) a value creating system. Perhaps just a few minutes of experience in the atmosphere of the two recent conferences held by BTC (in Miami) and BSV (in Zürich) would give you a clear idea what the difference is: one is all about laser-eyed HODLing shrieking excitements while the other mostly calm and professional business presentations.

On a more substantive note, whether a system is a value creating system or a value absorbing one has to do with its economic value structure. For a more detailed and theoretical discussion, see: BTC and BSV, what is the real difference?)

BSV is a contribution economy, while BTC is an extraction economy. Contribution economy incentivizes people to participate in the production economy and create new value that is real in its own right other than pure speculation by others, while extraction economy lures people to jack into it for an easy extraction of the existing value. Contribution economy increases a common good to benefit both the contributors themselves and others who come after them, but extraction economy rewards the few who take advantage of the others by artificially creating opportunistic timing difference.

By analogy, BSV is designed to be “land” on which economies can be built, while BTC “gold” which people can hold. The land creates value, while gold absorbs value.

In addition, if BTC really becomes the digital gold with valuations of multiple trillion dollars, this unique history of HODLing would have created an extremely uneven wealth distribution among people concentrated on small group of people who did not contribute to productivity nor make other people’s lives better. Therefore, it is not just value absorption, but also extremely inequitable value absorption. In contrast, the same problem would not occur if BSV succeeds at a similar level as the digital land.

Consider the entire economy of a country like US. Today, pure land trading and land value constitute a small part of the US economy. But everything is built upon this land. The total real estate market value is about $50 trillion (including both commercial and residential homes), and the land value is only a small fraction of that, roughly about $10 trillion. At the same time, US annual GDP is about $20 trillion, while the total US wealth is well over $100 trillion.

With the above numbers, ask this question: do people today complain that the earliest settlers in this land got unfairly rich, or too rich, simply because they came early and got the land? There has been clearly an advantage to the early landowners. But it does not pose an unbearable burden to the economy, neither psychologically nor economically.

There are two reasons for this.

First, even with today’s land value which is much higher than just 50 years ago and much more so than the earlier years, it is only a small fraction of the total economy.

Second, perhaps more important, a few hundred years of US economic development has been a fairly healthy mix of speculation and building, with an overall heavy emphasis on the latter, the actual building. It is the building part that has deepened and accelerated the land value exchange.

That is, the early landowners generally did not become land squatters. They sold the land. And the buyers, although there are a fair number of speculators, most bought the land for development.

The result is an economy that produces over $20 trillion of value every year and over $100 trillion wealth saved, all built upon the land that’s priced for less than $10 trillion, of which most in the hands of the fairly recent buyers who paid the current market price.

In short, we can say the US economy was overall characterized as a value creation system, not a value absorbing system. Most of the US wealth comes from people’s labor and creativity, not from the land ownership.

That is the kind of economy that a healthy crypto ecosystem should be building.

And that is what the Bitcoin according to the original Satoshi vision (BSV) is doing.

Dozens of application/solution companies are already being built in the BSV space, and hundreds more are arising. Already there are over 1000 developers in the space, despite the overwhelmingly demoralizing disinformation campaign organized by BTC Core clandestinely driven by MasterCard and certain powers at Silicon Valley.

If BTC had the same proportion, it would now have over 200,000 developers in its own space (because its market valuation is over 200 times that of BSV as of today).

But the reality is the opposite. With very few exceptions such as Lightning Network (which does not work due to fundamental flaws), there is little development activity happening on BTC. There are altogether less than eight core developers in the BTC team. This is not only because the dynamics of BTC speculative market has a ruinous effect on the psychology of the developers (who wants to build products when the coins are making one rich without requiring building actual products?), but also because BTC is designed to be a HODLING (holding) system to cultivate a HODLING culture instead of a work culture to produce value.

What irony is it for a system that is supposed to be based on the Proof-of-Work principle!

The “digital gold” narrative says it all. Unlike productive technology, gold does not create or produce things. Warren Buffett had it right when he said, “Gold is a pet rock.” If this is unfair to say for gold, it is a lot more accurate for BTC.

The speculative coin value is the entire economy of BTC. It does not have a design, a plan, or even a vague hope to create a multilayered and multifaceted economy based on human creativity.

There are some people who think that they might get rich by holding BSV coins too, but this speculative part is far smaller than that with the BTC, and a moderate level of speculation is probably a good ingredient in the mix of an economy anyway.

And the BSV price is further severely suppressed by the market, which is a good thing for the “digital land” investors given the long term prospect, because it means that the land is on sale.

The fact that BSV price does not skyrocket is a healthy thing for the development as well. It flushes out excessive speculation, and has a hardening effect on the remaining community, especially developers and investors. This is a necessary type of mentality that is toughened onto real development based on human creativity instead of pure speculation.

The ratio between traditional economy and physical land is around 10:1. If comparable to the physical land, BSV would become a “land” to support a $100 trillion economy with the coin (“land”) valuation lower than $10 trillion, or a $10 trillion economy with coin valuation lower than $1 trillion, should it be at a smaller scale. With the digital efficiency, however, the digital “land” is going to be even more efficient than the physical land, so the digital version will have an even better ratio.

Note that the above better ratio in the case of “digital land” disfavors holding the “digital land” and favors using or developing it. For those who intend to hold BSV, this might feel like an unfavorable factor, but in reality, it will be the opposite. This is because the actual economic value is not a subjective idea in one’s mind, but a result of economic activities. Faster development may seem to be pushing the land out of the landowners’ hands at any given moment, but if you look back retrospectively, you will see it is always the development that has pushed up the land price.

In comparison, BTC has already come close to coin valuation of $1 trillion but supports essentially zero productivity-creating economy. What a glaring anomaly.

BSV is designed to attract people to create new values, rather than to attract hodlers hoping to get rich on the coins themselves. People who own BSV coins may still be rewarded just like the land owners were, but that is not the main feature of the BSV economy.

On BSV, everyone has an opportunity to create values by adding utilities to the ecosystem. And thank God, human creativity isn’t an artificial asset that can be distributed using an unfair man-made system.

In fact, BSV ecosystem is poised to have an explosion of creativity now and perhaps will continue for the next few decades at least.

More specifically, Bitcoin according to the original Satoshi vision (BSV) is designed to power five great transformations simultaneously:

(1) decentralization of money (via the coin itself);

(2) decentralization of assets (via tokenization, scripting and smart contracts);

(3) decentralization of data (via Metanet and Teranode, see nChain);

(4) decentralization of computation (via on-chain virtual state machines; different from distributed computation); and

(5) decentralization of AI (a combination of the above #3 and #4)

All of the above both require and promise value creation.

Bitcoin SV is “land”​ on which economies are being built

Bitcoin SV is not merely an economy, it is a vast piece of “land” that has been pre-plotted into 2.1 quadrillion “lots” (each represented by a satoshi token). On each lot (a satoshi token), a piece of economy (a value) can be created.

This is done through extensible tokenization protocols, which enable a “retokenization” process to create a different token on top of one or more bitcoin tokens (satoshis). A variety of new tokens, legally compliant tokens, SPV-compatible tokens, multiple user tokens, fungible tokens, non-fungible tokens, issuer permissioned tokens, etc., can be created. Combined with smart contracts, these tokens will enable innovative business models or even support new economies. Imagination is the only limit.

Note that we are not talking about the value of the satoshi itself, but rather a new value created on top of the satoshi.

Once this value creation is done, the underlying “lot” (satoshi token) acts as a carrier of the value, and as a result, all the transporting features such as security, double-spend prevention, immutability, transparency, non-repudiability, pseudonymity, etc. enjoyed by bitcoin (and every satoshi token) are also enjoyed by the associated value token.

Also important, the value token itself can have an independent economic value determined by its own economic factors and the market and is essentially unrelated to the value of underlying satoshi token. It is akin to saying that one can build a building on a lot, and the building can have its own value which does not have to be derived from the underlying land, except that, in the case of bitcoin, this dissociation between the value of the “land” and that of the “building” is much more complete than the real land and building.

This has enormous implications. If you think bitcoins are expensive, wait until you see the much more valuable economies that are built on the bitcoin land. And remember when you buy one bitcoin, you are buying 100 million “lots” in the bitcoin land.

It is abundantly clear that the BSV Bitcoin blockchain is the “land” in the new world of the digital value network.

In contrast, BTC wants to be the digital gold. Even if it does become the digital gold, it can never serve as the “land” of the new digital world. It is readily appreciable that the land is worth much more than gold, not to even mention the entire “real estate” economy that is going to be built on the new “land”.

In a way, BSV is more like Ethereum in contrast to BTC, only that on Ethereum the cost of economic activities is more than 1000 times higher than that on BSV and the scalability 1000 times inferior.

But the fact that Ethereum is bursting with creativity despite its ridiculously high system fees and painfully low scalability is something to behold. It achieved that by just permitting people to do things that BTC intentionally cut away from the original Bitcoin functionality! It tells you how much energy there is in the new technology. The whole scene would erupt once a much more suitable platform has emerged to a broader view.

Gold vs. Land

Some might say, if BTC is like “digital gold” and BSV like “digital land”, then I’d rather buy gold than buy land.

But the “digital gold” is not a fact but only a narrative carefully fabricated to allure people. If you believe in the narrative, and it fits your personal investment style, no one can stop you.

Nevertheless, one must understand the essential differences between the physical and the digital:

(1) The so-called “digital gold” can be quite readily replaced by another digital gold that happens to have acquired superior attributes. The same cannot be said of physical gold, not only because empirically it has thousands of years of history to prove that there has not been another precious metal that can compete with gold, but more fundamentally, as a matter of principle, it is a certainty that nature offers only a limited number of choices, and a new stable and beautiful metal is not going to somehow just come into existence. The situation is entirely different in the digital world.

(2) In contrast, land cannot be easily replaced once buildings have already been built upon it. It is not a matter of technology, but a matter of economics.

(3) BSV can also be “digital gold” in fact even though it is not part of its narrative. In the physical, gold is gold and land is land, and land cannot also be gold or become gold. But in the digital, “land” may also serve as gold, and vice versa. The truth of the matter is that although BSV is designed for transaction capabilities of “digital cash” as well as the development functionalities of “digital land”, it also has attributes of “digital gold” as claimed by BTC. In contrast, in order to sell the intentionally narrow narrative of “digital gold”, BTC has explicitly shut out any possibility of becoming “digital cash” or “digital land” as a matter of principle. For BTC, if it is not gold, it is rubbish, and the end of the story.

See more: The Idea of “Digital Gold”.



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