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Bitcoin: every point counts – CoinGeek

The smallest single unit in Bitcoin is often referred to as “Satoshi” or “Sat” for short. This is a tribute to the creator of Bitcoin: Satoshi Nakamoto. Does every satellite matter if not every satellite in the network can be used equally?

In BTC there is actually a notion that some sats are less important than others; that some deserve to be transacted in the ledger and backed up with records of work, while others should be moved outside of the ledger or rotten away forever. When one thinks of the destructive nature of small blocks and the endless malaise that exists when a log can be undermined by soft forks and tricks from development teams, this is an interesting dilemma that arises as maximalists claim they stack every sat at the same time and at the same time many must banish into different levels of purgatory. And the value of sat is measured in quantity. If you have many sats you will be valued highly, but the individual sat will be put in a lower position than those held in large quantities.

What does that mean Kurt?

First, let’s take a look at Bitcoin’s privacy model.

Satoshi Nakamoto explains how useful it is to use a different key pair for each transaction. Instead of having a billion dollars in a single address and spending a dollar the recipient knows your wealth at a glance, imagine you are storing a billion dollars in a billion public keys. That way, if you spend $ 1.00, the recipient will only see as many addresses as they need to pay the dollar.

The problem is that as the network charges increase (and with BTC they will purposely increase forever) it becomes impractical to store everything near the average charge in a single public key address. When the average fees for BTC is $ 0.10, there is no way you can have addresses that are $ 0.10 or less so that they aren’t practically censored. Over time, more and more addresses become the de facto property of whoever mines them rather than whoever keeps these coins in the ledger. The way to get around this growing problem is to consolidate the holdings in fewer and fewer addresses, thereby breaking Bitcoin’s privacy model. But those bitcoin holders who followed Satoshi’s advice have now been hurt by the changes to the bitcoin protocol that have made their sats less valuable than larger groups of sats that have been consolidated.

Split coins

Another example of second class sats would be those sitting in expenses that are managed by soft fork rules. The most obvious would be segregated witness hashes of signatures, but there are many more sats stuck in all kinds of locking scripts that undermine the Bitcoin governance model of proof of work. Instead of being validated against Bitcoin rules, their position in the ledger is replaced by code that tells old Bitcoin nodes to ignore any rules that are broken and instead simply read the soft fork rule that instructs the node Trusting the new rule doesn’t break an old rule. These sats may not even be bitcoins if we get technical and philosophical, but they cannot be validated one way or another as a legacy bitcoin node cannot see the rules of a soft forked coin.

Offchain coins

If you thought things couldn’t get worse, let me introduce you to bitcoins that are transacted without any proof of work. If the above sats were examples of second class coins, these coins could be third class as their transaction history is not in the ledger. Out-of-chain transactions are not handled with Bitcoin’s proof of work, and their existence is only validated in parentheses – if at all.

In the Lightning Network, these coins are locked in a smart contract, while they are exchanged according to a completely different set of rules and governance model. In the Liquid Network, your governance is managed by a federation of trusted exchanges – whatever that means!

So don’t make a mistake! BTC doesn’t respect the smallest unit of Bitcoin at all!

Is BSV better?

It’s hard not to be better than BTC when comparing implementations of the Bitcoin protocol, but some of the above criticisms exist in BSV as well. Although the fees for BSV are low, there are still dust limits, minimum limits on routing, and minimum handling fees that are enforced at the policy level of all nodes. We expect these prices to go down – which will unleash an increasing number of sats – but for now these issues still exist as a legacy from the previous life of BSV living in implementations of Bitcoin ABC and BTC Core.

While it is good to be better than other Bitcoin implementations, I urge honest nodes not to rest. So that BSV becomes a global data management tool. Electronic cash for the world or as file management for ever larger and more powerful databases, these limits really have to be removed. Nodes now need to communicate, cooperate, and find more ways to lure businesses onto the BSV blockchain, and liberating the single, individual satellite is one of the best ways to do it.

Unless there is any other reason, the Satoshi vision of Bitcoin should treat the network as if every Sat is important.

New to Bitcoin? Check out CoinGeek’s Bitcoin For Beginners section, the ultimate resource guide, to learn more about Bitcoin – as originally envisioned by Satoshi Nakamoto – and blockchain.

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