Bitcoin Satoshi’s Vision (BSV) is the result of a perennial debate within certain cryptocurrency circles about what Satoshi Nakamoto’s vision for Bitcoin was and if Bitcoin is or should strictly adhere to their vision. BSV’s ethos is to “restore what was the original Bitcoin protocol.” The decision to hard fork from Bitcoin Cash was a result of a dispute over canonical transaction ordering which would enable the graphene algorithm to run more efficiently and script enhancements enabling oracle data to be imported to the blockchain. In opposition, Bitcoin SV rejected these proposals and instead planned to increase the block limit to 128MB (later increased to 512MB in a hard fork) and restore certain opcodes from the original Bitcoin 0.1.0 protocol implementation. Although increased block capacity could increase transaction throughput on-chain, it could potentially restrict the universe of participants who could be capable of running full nodes, thus making this something the community needs to address in order to be able to execute on its vision of a decentralized peer-to-peer cash system.
On November 15, 2018, Bitcoin Cash split into two with the Bitcoin ABC faction, the leading Bitcoin Cash client, ultimately winning the majority of the networks hashrate and retaining the name Bitcoin Cash. Bitcoin SV is led by nChain, a research and development technology firm building tools, protocols, and applications to support blockchain growth worldwide.
BSV is used as a native currency within the Bitcoin SV network. BSV can be used for peer-to-peer payments and value storage within the Bitcoin SV network. With its larger block sizes (relatve to Bitcoin), Bitcoin SV aims to offer high throughout and on-chain scalability through unlimited block sizes, aiming to reduce the reliance on off-chain scalability solutions for transactions.
Bitcoin SV uses Nakamoto Consensus whereby the valid chain is the longest chain with the most accumulated proof-of-work. Consensus in Bitcoin SV, and other systems using Nakamoto Conensus, is probabilistic because there is always a chance that a new, longer competing chain could emerge with more accumulated proof-of-work, that would invalidate the current chain.
Miners solve computational puzzles to generate new blocks using a SHA-256 algorithm. In this process, miners compete to generate a hash less than the target number set by Bitcoin SV’s difficulty adjustment algorithm. Notably, the target difficulty level is adjusted every block as opposed to Bitcoin’s every 2016 blocks.
Although open to anyone with a CPU, Bitcoin SV mining is now dominated by ASICs usually situated in enterprise scale data centers. Furthermore in order to smooth individual miner revenue as mining has become more competitive, mining is now done in pools where participants contribute hash power to the pool and receive a proportional share of the profits if the pool finds a valid block.
Bitcoin SV, the protocol, is a distributed, time-stamped ledger of unspent transaction output (UTXO) transfers stored in an append-only chain of 512MB data blocks. A network of mining and economic nodes maintains this blockchain by validating, propagating, and competing to include pending transactions (mempool) in new blocks. Economic nodes (aka “full nodes”) receive transactions from other network participants, validate them against network consensus rules and double-spend vectors, and propagate the transactions to other full nodes that also validate and propagate. Valid transactions are sent to the network’s mempool waiting for mining nodes to confirm them via inclusion in the next block.
Mining nodes work to empty the mempool usually in a highest-to-lowest fee order by picking transactions to include in the next block and racing against each other to generate a hash less than the target number set by Bitcoin SV’s difficulty adjustment algorithm. Bitcoin SV uses a Proof-of-Work (PoW) consensus mechanism to establish the chain of blocks with the most accumulated “work” (a.k.a., energy spent on solved hashes) as the valid chain.
Although open to the open source community, protocol development is largely controlled by nChain which maintains “Bitcoin SV,” the only node implementation. Protocol development is governed by a proposal process whereby anyone in the open source Bitcoin SV community can submit draft proposals. After debate by the community, nChain editors accept or reject the proposals. Decisions from the process are written into the Bitcoin SV specification, as well as the software that runs the network. Finally, protocol changes are “ratified” on-chain when the majority of the network adopts the upgrade and doesn’t break consensus.