Do you want to learn more about the foundational concepts of Bitcoin and how the technology can be used in your development toolkit or to boost your business?
BSV Academy’s new introductory course on Bitcoin Enterprise is specifically aimed at C-Level executives who are seeking to build next-generation platforms using Bitcoin as a technology substrate, with a focus on making the topics more digestible and understandable to people who are relatively new to the BSV ecosystem.
All modules of the course are available from the start and users are free to jump between topics and videos as they wish.
To give you an idea of what to expect from this free, below is a course preview covering the basics of the technology and the difference between BSV and cryptocurrency.
Introduction to Bitcoin for Enterprises
As we look back at the rapid change that has taken place across the fields of information technology, payment services and finance over the last few decades, it's easy to identify a pattern of increasing digitisation of systems formerly dominated by paper.
From letters to email, cheques to EFTPOS, wet ink to digital signatures and printed paper to digital files, digital technology has seeped into every tool we use to manage the course of our personal and business relationships.
As Bitcoin has emerged over the last decade, much hype has been made about the prospect of it acting as a technology layer to facilitate the further disintermediation of our digital financial and data activities.
The network's success heralds a move from a system where ledgers held by each business or institution are kept as separate records reconciled periodically at great effort and expense, to a new paradigm where a global network of third-party nodes manages a single ledger of all business activities.
The ledger's scale and efficiency mean transaction costs can be reduced to previously unseen levels providing ways to take separate payments at the micro-amounts for fully individualised services. Correct use of the ledger can facilitate triple-entry accounting, leaving a single record that all parties to a transaction can reference and allowing for rapid single-click audit systems synchronised to the second.
When examining alternatives to Bitcoin in the blockchain landscape, it can be difficult to differentiate the wide variety of systems that have been developed to manage public ledgers and challenging to discern whether a project can manage the levels of activity that could be generated by its open and unbounded use by enterprise and government.
At the same time, it can be quite easy to see where projects are nothing more than well-branded schemes for groups of early insiders to get rich hyping vapourware to naive investors in an unregulated market.
Bitcoin was designed from first principles to act as a high-performance, reliable and low-cost public network and ledger. The protocol is unbounded and provides us with an opportunity to provide high-speed, low-cost financial, communication, data and technology services on a global scale.
Bitcoin is not an exclusive system that only the wealthy or the early can use, but a general-purpose network and ledger usable by all people as a backbone for communication, education and commerce.
BitcoinSV, as the network that manages the Bitcoin ledger, eschews the 'blockchain' industry narrative of investment for gain, focusing solely on building for performance. Bitcoin is a privately owned infrastructure, available to the public 24/7/365, and works much faster and for a tiny fraction of the cost of the multitude of legacy systems needed to replicate just a small part of its native functionality.
Safe, instant transactions at a predictably low cost
From the outset, Bitcoin was designed with scalability in mind. To scale to a system capable of managing global demand, some less intuitive design choices were made. These choices determine how we manage the accounting of tokens on the network, how the tokens operate when they are exchanged and much more.
Elements such as the low-level scripting language, which resembles an early assembly-like language called Forth, counterintuitive data formats and innovative economic assumptions have made becoming an expert in the technology difficult and demanding.
As a result, Bitcoin's idiosyncratic design choices have not been well understood leading to erroneous beliefs such as that it can't scale without additional layers or is not flexible enough to provide features like smart contracts.
These naive assumptions have resulted in years of debate and eventually led to developers changing the base protocol, permanently altering its incentive structure and preventing it from scaling.
In response to the self-imposed scaling and functionality limitations, a plethora of attempts to solve them have sprung up, collectively known as 'cryptocurrency'. Unlike Bitcoin, which was borne out of decades of research, cryptocurrencies have little to no research or academic basis.
The idea that 'crypto' can solve blockchain scaling by creating a multitude of blockchains for every conceivable use-case has ultimately led to it not being able to provide any use-case beyond market speculation.
The Bitcoin protocol was designed to support all kinds of transactions. From secure time-locked trusts, hierarchical accounts, streaming or conditional payments, complex transactions can be defined in a scripting language and wholly managed by the network, radically reducing the cost of business management and customer interaction.
Thanks to tremendous contributions from professional research and development teams the changes made to the underlying Bitcoin protocol under erroneous assumptions have been almost entirely reverted, and the protocol in use on the BitcoinSV network has been returned to as close to the original Bitcoin protocol as possible.
Development of the node client software has leveraged Satoshi's seemingly unconventional design choices leading to massive breakthroughs in network throughput, capacity and capability.
The development of infrastructure and software continues with the upcoming release of Teranode, a completely reworked node client particularly suited to cloud micro-service architectures.
Reliably low fees
The Bitcoin network is built to accommodate at least an order of magnitude more transactions than the typical demand generates so that there is no market-based fee pressure as seen on other blockchain networks. This allows miners to set low, stable transaction prices for users. Bitcoin was always meant to scale without limits, and it’s this scaling that drives a positive user experience and a sustainable block reward.
As more transaction volume is processed by the network, fee revenue increases for the miners and competitive forces imply that transaction processing will be offered by more capable nodes at the best possible rate. This competition ensures that as the network accommodates more and more volume, and fees come down, more use cases will become economically viable at a cheaper fee rate, and volume will increase rewarding the more capable nodes who broker deals to process the cheaper transactions.
This combination of supply and demand and economies of scale means that as the network throughput increases, it will create more use cases, and society will reap the many benefits of this increased efficiency in interoperability, accountability and value capture.
Comparison to legacy transaction systems
It is also important to understand that valid transactions which are submitted to the network can be considered cleared and settled within just a few seconds of their submission to network nodes. Checking the status of a transaction is also quick and easy and can be automated within wallet software.
Typically, simple transactions via the BitcoinSV network cost approximately 0.01c USD, allowing for 1,000,000 transactions to be processed for just $100. These transactions are similarly capable of transferring value in sub-cent denominations.
When compared to a typical credit card transaction that might cost 25c USD, this is a 2,500x reduction in cost. In addition, transactions are processed in a way that eliminates chargebacks and other business risks that often require vendors to increase their margins, affecting consumer prices.
These unique characteristics allow developers to leverage Bitcoin as the substrate technology for their platforms and to implement business models that have been heretofore impossible using legacy digital payment systems.
Another feature of Bitcoin SV is the ability for users to leverage payment channels. A payment channel is a transaction that is valid but will not be accepted into a block until some future time and date. In the intervening period, the parties to the transaction have the freedom to publish new updates which change aspects of its contents such as data packets being shared, amounts being paid and much more, enabling innovative and highly compelling digital services to be managed within the transactions themselves. Payment channels are a ground-breaking new technology, only supported by the BitcoinSV network.
By leveraging the capabilities of payments channels on BitcoinSV, enterprises will be able to offer much more responsive arrangements to customers.
For example, pay-per-second streaming content and VoIP communications can be built right into the payment system, allowing revenue to be captured during service provision without zero reliance on third parties.
Scalability to accommodate global demand
One of the most important aspects of the Bitcoin system is its ability to scale without bounds, giving it the potential to manage hundreds of millions or even billions of transactions every second. In 2009, Bitcoin was released with no limits on block size, transaction size, script complexity or use of opcodes.
Between 2010 and 2017, numerous changes were made to the base protocol that restricted its ability to scale. However, since 2018, teams developing the BitcoinSV node client software have worked to restore Bitcoin to its original unbounded protocol design.
In addition to its unbounded incentive structure, Bitcoin script also comes with op_codes future-proofing it to work well with IPV6, and extra op_codes to add additional hashing functions if needed. Furthermore, as IPV6 subsumes IPV4, Bitcoin will become instrumental in supporting the anticipated billions of IoT devices expected to come online.
By way of micro-transactions, Bitcoin will be the global validation and timestamping service providing an effective way to clean data and communications, maintaining the integrity and supercharging AI & Machine Learning.
As the ideas of the Metaverse and Web3 are turned into real products and services, a dedicated technological substrate capable of processing hundreds of transactions per user each hour will be critical. Realising these products and services will be otherwise impractical or maybe impossible due to the inefficiency of legacy data and payment networks which aren't designed from the ground up with these usage conditions in mind.
Big blocks show big potential
As of 2021, BitcoinSV nodes are already regularly processing blocks containing over one million transactions and over 2GB in size.
To ensure the network scales smoothly the BitcoinSV node software team's focus is on optimizing software performance - and keeping the underlying base protocol consistent helps them do this.
In addition to helping nodes scale, the continuous efficiency improvements, and unchanging base protocol of the BitcoinSV node software help ensure the network is robust in the event it loses significant processing power. Scaling the node client and the systems that run it is a key pillar of the network's robust architecture and capability.
Importantly, because nodes must win blocks to get paid, and the probability of getting paid goes up significantly when nodes who have significant capacity and processing power are well-connected to each other, the network will always be able to accommodate demand, no matter how much it grows.
Bitcoin's sophisticated economic incentives also encourage nodes to be assertive in their strategies to increase their throughput capabilities to attract more fee revenue. Yet, at the same time, the incentive structure is designed to ensure that they cannot do this in a fashion that outpaces the rest of the nodes on the network.
Bitcoin is a cooperative meritocratic system. The more ambitious and competitive a node is, the greater the reward it can win, with the caveat that nodes must also be completely open and honest with each other to maximize their efficiency. The rules of this economic game grow rewards and ensure mutually beneficial behaviour for all network participants.
These behaviours can all be described from the perspective of the individual node operators on the network acting in self-interest. There is no place for altruism in the function of the network ensuring that an open competition exists at all times to deliver the best possible service to all users of the system.
For students who want to learn more about the operation of the Bitcoin network, we strongly encourage you to take the Introduction to Bitcoin Infrastructure course.
A plan for regulatory acceptance
In so much of the cryptocurrency and blockchain landscape, there is evidence of scant regard for legal processes and regulations, the argument being that the technology is so new that law and regulations cannot be applied.
This is no truer than the laws covering media ownership being applied to a new medium of service and it can be shown that not only can Bitcoin work within the frameworks of current laws and regulations but that it was designed in such a way as to make adherence to legal requirements both simple and affordable.
Bitcoin was never created to subvert the legal system or destroy central banks, but rather as a tool to be used to build new platforms and services in ways that are far more efficient, scalable and profitable. Micropayment-based business models are only possible with efficient, ultra-low-cost, payments.
Each Satoshi issued on the ledger can be used to carry data or items of far higher value than just themselves, providing an effective substrate system for all manner of products and services to operate in ways that are compliant with any legal requirement.
Ready-made compliance tools
An important part of the work being done by the Technical Standards Committee (TSC) is implementing and servicing a set of ready-made tools that help enterprises building platforms remain compliant with stringent regulations easily and cheaply, including internationally applied, Know Your Customer (KYC) and Anti Money Laundering (AML) rules. Every Virtual Asset Service Provider (VASP) must comply when dealing with high-value transfers.
In addition, systems such as Paymail/BSVAlias are available to assist businesses in simply and easily managing customer identity in ways that minimize liability without impacting customer privacy.
The TSC is constantly developing new standards to deliver fast, low-cost digital services that exceed the functionality of their legacy counterparts to ensure every platform built on Bitcoin is ready for the regulations of today and the future.
The Open BSV License
The Open BSV License (https://bitcoinassociation.net/open-bitcoinsv-license) has been created for use by developers, projects or companies who wish to make their software or applications available for open (free) usage only on the Bitcoin SV blockchain.
It is a modified version of the MIT license that allows free usage and modification of open-source software only on the BitcoinSV blockchain and its related testnets.
Since its creation, there have been numerous protocols, toolkits and software elements released under the Open BSV Licence including:
- Many more.
The Bitcoin white paper
In 2020, Dr Craig Wright (AKA Satoshi Nakamoto) was awarded copyright over the Bitcoin white paper (www.bitcoinsv.io/bitcoin.pdf) he published in 2008 by the United States copyright office. This copyright is essential to the protection of Bitcoin against other projects who lay claim to being the original Bitcoin and protects the white paper as a foundational document outlining the functionality of Bitcoin as a system, a network and a ledger of exchange.
The following video is a reading of the Bitcoin white paper, with animations to assist with comprehension. For students who want to gain a deeper and more comprehensive understanding of this document, we recommend enrolling in Introduction to Bitcoin Theory.
One of the most important aspects that will contribute to the uptake, longevity and reliability of Bitcoin is its stability as a protocol. In the period from 2010 to 2018, the Bitcoin protocol was changed in several fundamental ways by node client developers seeking to 'fix' what they erroneously perceived to be 'problems' with the system.
The fixing created further downstream problems in many areas and generated significant angst for developers building applications and businesses on Bitcoin at the time.
This lack of certainty meant they could never be sure that what they were building would continue to work or would be rendered inoperable by unsolicited, and unnecessary, changes to the base Bitcoin protocol.
With the release of the BitcoinSV node client, node operators, the arbiters of the network, have committed to a policy of making no further changes to the protocol save those which undo changes already made such as the removal of transaction and block size limits and the re-enabling of disabled functionality in the scripting language.
Just like how the granite bedrock in Manhattan provides the necessary base for one of the highest concentrations of skyscrapers in the world, having a stable, unchanging, base protocol gives entrepreneurs and investors the confidence to put the necessary time and money it takes to build applications and businesses on BitcoinSV.
When businesses depend on technology and that technology is continuously changing, it creates situations where their applications and processes become inoperable.
When it comes to Bitcoin, this can mean the network becomes inaccessible for applications or services that depend on it, or worse, pre-signed transactions scheduled to take place in the future can no longer be processed.
This can be likened to building a castle on a foundation of sand, where the shifting media under the foundations of its wall might cause it to eventually collapse.
Since the stewards and arbiters of the BitcoinSV network have committed to an unchanging base protocol, builders can trust that the applications and businesses they put their time, effort, and money into will not be disrupted or rendered inoperable based on the unfettered whims of a small developer group who in most cases have no experience building businesses.
Building foundations on a bedrock of stone
If you’re interested in learning more about Bitcoin Enterprise, you’re sure to benefit from the BSV Academy’s free Enterprise Blockchain course. To sign up for this free course, head over here.