Next, I am going to explain why the bitcoin network can achieve this.
In the bitcoin network, miners maintain connections in a network in their own insular little world. Each miner connects to other miners. Messages can usually reach most nodes within two steps. This insular-little network will become a key infrastructure in the next Internet era. Connections between miners are influenced by the block rate and orphan block rate and driven by the motivation to gain more profits. To reduce their own loss and gain more earnings, miners will improve the connectivity with other miners as much as they can. They will want to get new blocks from other miners as fast as possible to begin working on the next block. When deploying their own blocks, they will want other miners to receive their block as fast as possible and start building on top of it.
Many people have a misconception that the procedure of mining is like refreshing hashes or tossing dice. This is not the case. The miner’s goal isn’t to produce blocks as quickly as possible but to get all the other miners to accept their work. Only if the blocks are honest, have high speed, have good connectivity, and match the current efficiency on the network will other miners accept and vote for that block.
Imagine if we removed the block limit and bitcoin SV was not at all restricted by block size. Assuming that we can’t block larger than 10GB, what would happen if a person tried to create a 50GB block? Clearly, this block is too big to verify. It will become an orphan block and no one will vote for it.
Therefore, driven by profits, miners will maintain a tight knit, fast, and efficient little network world where miners are efficient in transmitting blocks of reasonable size. The broadcasting from one miner to another should only require two hops at most.
About SPV (Simple Payment Verification)
In this case, because not all of our users and service providers are miners, they will want to operate a special kind of node called SPV(Simple Payment Verification) to keep in close contact with miners. There are hundreds of miners in the world, and through SPV, you may choose the one closest to you, and authorize them to transmit your message to the other client. This is what we miners provide the fundamental infrastructure to provide services to users.
Every connection is controlled and verified by a public key. In the new IPV6 world, each address will be powered by CGA (Cryptographically Generated Addresses) and have its own public and private key. CGA technology greatly improves network connections because each participant can authorize miners with his/her own computer and deliver his/her message to the target server within 4 hops. If you’ve ever been involved in network design, and tried to trace the route between yourself and the target server, you will know that 10 hops is already very fast. In China, if you want to visit an American server, you have to find a target address from the Border Gateway Server and then continue on to layers and layers of server hops, requiring 10 hops at a bare minimum. However, we can predict that in the near future, all browsers, all users, and all phones will maintain direct connections with miners using BSV.
This so-called “direct connection” isn’t what everyone imagines. They imagine that they can contact a miner and have the data just delivered for free. This is not the case for transaction broadcasting because it has a cost. Why should miners help others to broadcast for free? If the transaction sent by you contains handling fees, miners will accept your transaction because they want to earn the handling fee. However, there are a lot of transactions from which miners can’t earn fees. For these cases, you should adopt a technology called ’payment channels’ to pay extra fees to miners.
Mempool, one of our core products, is officially open to developers and leverages payment channel technology. It enables developers to pay a small fee to ensure their transactions are included in blocks.
It’s a common complaint that it costs too much to upload photos, videos, and all kinds of data on the bitcoin blockchain. We miners have a choice when deciding which transactions to accept into blocks and pick transactions that have a lower cost. If people are willing to give us a small fee for us to include a larger transaction into the block, we are happy to do so. It is conceivable that we can provide competitive prices in the data storage market.
In the payment channel, every message is signed with a digital signature. This is digital proof that differs from current HTTP API. Therefore we can put a price on the transmission of data. In the future, you’ll be able to pay the miner a small fee to retrieve the information you need. You’ll ask the miner to retrieve the data from a server with a certain public key. A miner can collect your service fee if he can provide data with a matching signature.
All this is what will happen on the Bitcoin and BSV networks. As developers, we can't just look at the short term development, we need to consider the long haul In the future there will be browsers that only use the Bitcoin protocol as the basic protocol instead of Http. The userclient will have a wallet and be able to issue transactions.
Only on this foundation can we make bitcoin applications in a better way.
Every time we pay, we only need to pay for one transaction. There is another development misunderstanding mentioned here. Everyone thinks it is good to put things on chain. We will solve every problem by putting everything on chain.
What is the cost of saving data on chain? It is a ledger that we call triple entry accounting, which will always store your information on the servers of dozens of miners around the world. If your requirements for data security are so high, you need to pay a high cost. If not, we don't actually need to put all the data on the chain.
Here is an example. Suppose I have a huge video that I want to upload on chain. I can find two or three cloud storage service providers. I segment my video in slices. I can upload a hash of the data on chain, then use it later to ensure the cloud storage providers maintain the integrity of the data.
In this case, the user can obtain high-availability data at a very low cost because several service providers provide him with data. Secondly, he has a unique standard to tell whether the data is right or wrong. You can prove that the data given to you by the other party is wrong, because the hash of this data can be compared with the record on the blockchain.
**In this case, you don't need to pay special attention to whether your data is actually on the chain. **We use Bitcoin's ledger space in a more efficient way, and there will always be a cost for this ledger space. We use it more efficiently to reduce the cost. The data that really fits on the chain often has these characteristics:
It has the value of transparency. Private data can be saved on chain for permanent storage, but in most cases the data on chain is used for sharing with other business partners.
The need for integrity and authenticity of the data is very high. The data is high value and you need to prove that such a piece of data existed at a certain time and place.
For example, there is an app called RateSV on Bitcoin SV. It saves the minute-by-minute transaction data of the exchange on the blockchain as a reference data for corporate settlements and tax filing. Then it uses these two operations very well. Valuable data needs to be disclosed and proof of existence is needed. Instead of using it blindly, think about these aspects to know what problems we will solve by using blockchain. Be careful, when you've got a hammer everything looks like a nail.
Why Bitcoin SV can become the only public chain
Bitcoin SV has the lowest costs of any large public blockchain. There are two dimensions in the public chain we are seeing now, one is the application dimension, and the other is the ledger dimension. The application dimension is the so-called application use-case. What can be done on the blockchain, what can be used in what ecosystem, how it can be used for payment, what can be bought, and what kind of service can be exchanged. This is the application use-case.
It does not require the underlying chain to be in any specific form to complete such an application scenario. You only need to have the function of smart contracts, and an open, auditable, and verifiable account book.
Next is the ledger dimension. All these currency transfers need to be represented, stored, and verified on the ledger. If the ledger has the lowest cost and can meet the needs of users, this ledger will eventually win. I don't think you can find another lower-cost ledger to replace the BSV ledger in this situation.
Let me give you an example. Our DotWallet crypto wallet supports receiving BTC tokens. We did it on BSV. When users transfer BTC, they can transfer to our BTC address. After that, we send users an equivalent BTC token that is a token on BSV. And we use the BSV ledger to complete the transfer of a BTC token between different addresses and different users. The transaction is completed on chain, open, and verifiable. There is no hidden funny business, and more importantly, the handling fee is extremely low.
In the next version, DotWallet will release a function using BTC to send red envelopes (there should be an applause here). You can finally transfer BTC at a cost of 1 cent again.
Ultimately, the underlying ledger is not most important; low cost is.
It’s not true that your assets and your coins must be recorded on a certain ledger. It’s worth thinking about this question for many people who do public chains. Why do I want to work in blockchain? Why do I do it? Why do I need a public chain, and why should I bring these businesses together to do this?
So why is the cost of Bitcoin SV the lowest? Because the Bitcoin ledger uses the structure of UTXO which means the money in your pocket is anonymous. You only need to verify whether the transfer process of your money from one place to another is valid.
Every time I spend some valid UTXO when transferring money, and generate a new UTXO, the transfer is completed, the verification process is over. It is very simple and efficient. It is only valid for the money itself. The user and the account behind it doesn't matter at all. It cleverly turns the balance in the user's hand into a process that is calculated by adding up the coins in your hand, which can be completed locally.
In this case, you don't need any other person to help you calculate. Each user can maintain how many coins can be used in his wallet locally, and this cost is very low.
In the ledger in the account-based system, if you want to verify that assets are transferred from one account to another, you need to perform various verifications on whether there are so many coins behind the account, and this incursa high cost. Therefore, when the transaction volume is extremely large, the verification cost of the UTXO ledger grows logarithmically with the transaction volume. People who know computers should know that the increase in the logarithmic difficulty is a very scary thing. However, it is lower than Moore’s. That is even though the verification cost is growing, because it is slower than Moore's Law, this cost will get lower and lower. Therefore, the Bitcoin ledger can handle all transactions and everything you might use it for.
What we miners do is not to say that in order to prevent everyone from committing crimes, we must hire a bodyguard and a policeman to stand behind everyone who participates and point a gun at them“If you make a mistake, I will destroy you”. This is not the case. The cost of this cost would be very high.
How does the legal system in our real life work now? It is like a ubiquitous camera. If you make a mistake, you will be caught and punished. This is what miners do now. When there are multiple forked transactions on the network and different versions of transactions, they make decisions on which transactions are valid.
Therefore, in this case, when the additional security overhead of the miners is evenly spread over the massive amount of transactions, you will find that the cost of each transaction rises only a little under massive transaction volume, but every transaction is safe. Many other consensus systems, such as PBFT, DAG, etc., actually have a much higher verification cost for each transaction than the verification cost of Bitcoin transactions. As long as the transaction volume is large, the cost will inevitably rise, and the system cannot handle a large number of transactions.
Therefore, developers should have a clearer vision on what may happen next. How to set up their own transactions and systems to maintain better contact with other developers and other applications, and should no longer rely on broadcasting, trading, and filtering to get what they need. Every developer should use the SPV model from now on.
（Official English Telegram Group: http://t.me/dotwallet）