CRYPTO SPECIAL REPORT: Bitcoin SV – Metanet: Beyond digital money, towards an on-chain internet
Bitcoin SV (BSV) completed its “Genesis” protocol update on February 4th, 2020. According to BSV’s team, the successful hard fork implements changes that are primarily designed to 1) enable key technical capabilities that existed in the original Bitcoin protocol (client software version 0.1) and 2) expand the blockchain’s scaling potential. The BSV community believes these changes will restore its protocol implementation back to the original Bitcoin design. BSV stakeholders believe the software modifications will further enable its vision of a “Metanet”, which is a world where transactions, data and digital activity of all types can be on a single blockchain, just like the world operates online on a single internet. We view the Genesis protocol changes as positive steps towards building a Metanet that may position BSV for greater adoption, while also noting that it may take time before the design’s ultimate viability is fully proven out.
- Bitcoin Core focused on financial transactions, Ethereum built a world computer, Bitcoin SV envisions a Metanet for both. The Metanet seeks to expand Bitcoin SV’s use cases beyond payments to advance an improved internet where value and data interact seamlessly. Genesis further enables nChain’s vision by enhancing BSV’s technical capabilities to allow for more complex smart contracting applications. The update restored programming language functions that were enabled in Bitcoin’s earlier design, but were later removed in the Bitcoin Core protocol, which drove developers to build Ethereum.
- Blockchain scaling takes different strokes for different folks and BSV’s unlimited block cap may allow the most. The BSV community believes their blockchain must offer unbounded scalability in order to achieve the Metanet vision. Genesis eliminates the 2GB software mandated default block cap and lets miners individually set any block size to achieve this goal. This allows for theoretically unbounded BSV scaling, while competitors like BTC, BCH and ETH are currently capped at around 7, 115 and 15 TPS, respectively. However, we believe miners will likely continue to impose caps which may limit scaling in practice. Nevertheless, the approach gives the network added flexibility, which may offer a valuable competitive advantage in the long run.
- Maxthon blockchain internet browser development and ecosystem growth offer encouraging signs. The global software company, Maxthon will be building the first BSV-powered blockchain internet browser that aims to provide fast and easy ways to search and view on-chain data and content. Additionally, ~400 projects are building applications for consumer reviews, social media, online games, identity monetization and consumer data on the BSV blockchain according to Bitcoin Association data.
- Network data suggests the BSV blockchain is already being used for data storage. BSV’s larger block size has enabled large and increasing daily transaction counts while maintaining relatively low fees compared to BTC and BCH. The data indicates BSV is already being used for data storage. We view this as an early indicator that BSV’s blockchain may be capable of acting as a universal server for hosting large amounts of website, user and other data on-chain.
- What could go wrong? More complex functionality may increase code vulnerability risks. Alternatively, developers may prefer building on a non-script code base that they feel allows for even more complex, Turing complete applications. Hardware requirements for scaling via bigger blocks may alienate non-enterprise users, which may hurt decentralization and reduce censorship resistance (tradeoffs BSV is intentionally accepting). High transaction counts may not materialize into high transaction value or economic value to the network or its miners.
Bottom line: It’s still early days for cryptocurrency technology and there is little certainty around what the winning implementation will be. The BSV community is taking steps to position BSV as a scalable and robust platform with a focus on growing network adoption.
Metanet: Beyond digital money, towards an on-chain internet (Slide 1)