2021-01-15

Using Bitcoin for Censorship Resistant Communication

Bitcoin is a powerful technology when it is not hobbled. When most people hear Bitcoin they think of BTC, the digital asset now trading at $41,000 as I type this. BTC is often called ditigal gold and that is what it is, an expensive asset that is expensive to move. While it is easier to move BTC across borders, it is limited by high transaction costs and wait times. In short, it really is like a digital form of gold because it is mainly used as a reserve, not a spendable asset.

Developers have done major forks of Bitcoin twice, effectively copying it with changes in the protocol. One is Bitcoin Cash or BCH and the other is Bitcoin Satoshi Vision or BSV, sometimes written as BCHSV. The latter is being developed as something closer to what can truly be called a digital money. China makes headlines with its digital yuan rollout, but all they're doing is making a digital version of the yuan. This will presumably allow for microtransactions, but it is still a fiat currency controlled by a central bank. The value of digital yuan will likely be highly influenced by central bank policy over the long-term.

BSV as properly understood is the medium of exchange. What gets exchanged between parties is inforation. For a simple example, I can send BSV to someone's wallet right now, and within 1 minute they will receive it. No matter how much I send, be it one cent or one million dollars, they will receive it at the same speed. In both cases, I will pay about 1 cent in mining fees to move the money.

Tokens can be built on BSV. I'm not predicting this will happen (yet?), but it would be possible for every government in the world to make tokens of their fiat currencies and issue them on the blockchain. They don't need to create their own digital networks if they don't want. Similarly, you can mint tokens too and use them for whatever you want, for instance concert tickets.

The protocol can do much more...but for this post I want to focus on censorship resistance communication. There is an app called Twetch that is an interface with the blockchain. When you spend Bitcoins, the transactions are mined into the blockchain along with whatever data you attach to it. This creates a permanent record of the data, long term storage. If for some reason the Twetch app ceased to exist in the future, you could access your information from the blockchain for as long as the blockchain survives. If at some point it ceased operation, a record of it could still be saved on storage.

Twetch is also a different way of doing social media. Instead of ads and manipulated engagement to keep you watching more ads, the developers earn money from your posts. It costs about 2 cents to post a message, 1 cent for mining fees and 1 cent to the app. Images and videos cost more. Trolls can be taxed on the app. If you put a troll tax on a user, they have to pay it to communicate with you. Users can pay other uses tips right in the app. Likes and reTwetches cost money, but the poster gets paid most of the money. If you are adept at social media, you can earn money from your posting. Spam users and trolls will be driven off the site because it will be a money sink for them.

I have looked into mining Bitcoin on and off over the years and didn't find it a compelling business model, yet, because right now it is mostly like playing the lottery. There are high capital outlays and Bitcoin are earned from mining rewards. These decline at scheduled "halvings" though and will cease in 2140. But when Bitcoin was at its lows last year, it was uneconomic to mine already unless your business plan was continually adding capital to acquire coins or you had the cheapest electricity in the world. It made more sense to buy coins with your capital and hold them.

Currently the reward for mining a block is 6.25. That's a whopping $240,000 plus in BTC, but only about $1000 in BSV. Since miners can use their machines on either coin, there's constant arbitrage of mining power. Essentially, mining BTC or BSV is about as profitable because the difficulty (competition) rises and falls with price. This changes if transactions start rising. Right now blocks are mined every 10 minutes. BTC blocks are limited in size, which is why it is expensive and slow (and why BTC is expensive and functions like a reserve asset for now). BSV blocks are unlimited. If we use the 1 cent fee as the baseline and hold the price of 1 BSV constant (such that the same amount of BSV is being paid in fees each time), BSV's profitability to miners will double when they hit about 100,000 transactions every 10 minutes, or 10,000 per minute. Credit card networks process around 5,000 transactions every minute. But how many Tweets are sent on Twitter each minute? 350,000.

If you want to see what the future is going to look like, you can try out BSV and Twetch. There are three good wallets for interfacing with Twetch. They are RelayX, Money Button and Dot Wallet. If you already have some crypto accounts and have USDC, you can buy BSV directly through the RelayX wallet. Handcash is testing Twetch right now so a fourth wallet will be available soon. If you want to try Twetch, you can use this invite code. After joining, I will get a message that you joined, and I will follow you, and you'll receive a payment from me for following you.

As you'll see when you sign up for a wallet, there are other apps available. Developers who understand the power of the Bitcoin protocol are working on BSV because it has the potential for far greater uses than being "digital gold." BTC's blockchain was crippled intentionally to function as a "digital gold" reserve asset. BSV is what Bitcoin was meant to be, a native digital money, a way of monetizing, storing and trasferring information. Computers are exchanging information all the time across the Internet. Bitcoin is a way of monetizing some of this information and signaling that it is more important. I don't want to get too deep into it because I'm still learning, but the potential here is far greater than the digital gold and speculative fever around BTC. Startup companies can displace Mastercard and Visa in a few years, or a smaller company could carve off a niche market and compete head-to-head with them because they will have the backing of the entire Bitcoin network behind them. And money is almost a trivial problem with more regulatory issues than technical ones at this point. Bitcoin will inventually disrupt advertising, cloud computing and more. Something real and world changing is being developed under the radar, and there's still plenty of time to be an early adopter.

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