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BTC transaction fees hit $1,000

On May 14th several BTC users paid transactions fees over $1,000. Let’s dig in on how this is happening.

Here’s a random screenshot taken at 1215PM EST on 05/15/2020 from this website: https://blockchair.com/bitcoin/transactions

click for bigger version

Notice the columns in red. Inputs and fees are correlated. BTC users are paying ~$2 per input used in a BTC transaction.

BTC is a shared ledger. Every BTC transaction has a number of inputs and a number of outputs. If you want to spend BTC your inputs are sent as outputs and the fees (currently) are ~$2 per input spent. The more inputs used to spend your BTC the more space your transaction takes on the BTC blockchain and the higher the fee.

Think about it as you have a wallet with three $20 bills. Each $20 bill is an input in your wallet waiting to be spent. If you want to spend those three $20 bills (three inputs) it will cost you ~$2 in BTC fees per bill (input) spent. Let’s say you want to buy an item for $50. You give the cashier three $20 bills (three inputs) and there are two outputs, the $50 you paid and the $10 in change you receive. Using BTC, this would result in ~$6 in fees to spend $50. This is not sustainable.

BTC proponents like to point out when millions of USD are moved on BTC for a transaction fee of $2 but they never mention when someone pays $6 to move $50, or $1,000+ for a single transaction that consolidates a large number of inputs.

This is a very expensive fee to use a very small amount of data on the BTC blockchain.

Why does this happen? Because BTC has a 1MB blocksize. This means BTC can only process ~1MB in data roughly every 10 minutes. The cap creates a fee market where users compete to pay for the privilege of using the 1MB BTC blocksize. This fee market makes BTC expensive to use in majority of cases and completely broken in times of heavy usage.

You’ll hear that BTC is a “Store of Value” and “digital gold”. Many talking heads in BTC claim these fees are good for the network. But look behind the people promoting this narrative. Their companies (or themselves) are financially tied to BTC operating in a limited fashion with high fees. Blockstream, the main company responsible for BTC’s direction the past several years, is based on selling products that take advantage of these expensive BTC fees.

Read the Blockstream whitepaper for yourself: https://blockstream.com/sidechains.pdf

What did Blockstream say when BTC fees last exceeded $100?

Personally, I'm pulling out the champaign that market behaviour is
indeed producing activity levels that can pay for security without
inflation, and also producing fee paying backlogs needed to stabilize
consensus progress as the subsidy declines. - Greg Maxwell, Blockstream CTO

Translation: high fees justify limiting BTC to create a marketplace for Blockstream products.

Here are your Blockstream products:

If what I’m saying is true, why does BTC continue to appreciate in price? I don’t know, but I have a hunch it has something to do with this Tether chart.

Don’t trust anyone, including me. Fact check what I’m saying.

Summary: the investment thesis of BTC is that this artificially limited and expensive to use network will be adopted globally because BTC is a Store of Value and/or digital gold. Please ignore that BTC cannot scale without third party products that financially reward those in direct control of BTC development.

Let’s compare BTC to BSV. First, here’s a comparison of BTC fees vs BSV from coin.dance

BSV fees are generally under 1 cent vs BTC fees of ~$2 per input spent.

But how can BSV operate with such low fees? BSV is scaling to millions of transactions per 10 minutes. The goal is exceed Visa volumes in the near future. At scale anyone can spend BSV, includuing making micropayments on the Internet, for nearly zero fees. At scale BSV will survive off fees as the Bitcon block reward continues to halve every four years. BSV is scaling for the world to use, no third party products needed.

This makes BSV a stable and inexpensive platform for commerce and application development.

Let’s look at transactions (algorithmic chart). BSV in red. BTC in yellow.

BSV can handle orders of magnitude more transactions than BTC at orders of magnitude lower fees.

Summary: BSV is positioning for high volume and low fees. BTC is positioning for high fees and low volume.

One of these approaches has a future and one does not. Let’s see who wins.

This post first appeared on Coinspeak.io

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The Information Renaissance

Mankind is shifting into a new era I am calling The Information Renaissance.

The Renaissance was the period in Europe between the 14th and 17th centuries when there was a surge of interest in and production of art and literature. … In Old French renaissance means “rebirth.”

vocabulary.com

You can see the need for a rebirth of information all around us. Misinformatoin has been a weapon of armies, politicians and elites for hundreds of years. Propaganda flyers dumped from planes are now Twitter bots manipulating Twitter trending topics. News organizations are no longer impartial. Newspapers and networks are a means to spin the political agendas of their billionaire owners. Deep fake videos are now very difficult to spot and increasingly easy to create.

Information is power. Enron was able to fake the books, even as a public company, because they could manipulate information. Madoff kept investors in the dark for years while running a billion dollar ponzi scheme. Epstein was able to pretend to be a savvy investor while doing little more than buying index funds. The most powerful organization in the world, The Federal Reserve, operates in an information black hole. No one knows who owns the Federal Reserve!

Today, there is much debate about the veracity of the Corona Virus numbers in China and other countries. In all the cases above there is no way to verify the truth due to manipulation, censorship and misinformation. This misinformation is costing untold billions of dollars and many lives.

Those who control the information wars control the story. As they say, “history is written by the victors.”

How does society cope with this explosion of information both real and fake? If we can no longer trust what we see with our own eyes how do we operate safely and free from control?

What’s been missing is a single source of truth for humanity. A source that records the time information is created as well as the author. A global immutable ledger of transactions and events. Could bad actors still record false information? Yes, but it would not be profitable long term. Today, entire companies exist to spread misinformation because it is profitable. This is a worsening problem that must be stopped.

This single source of information is possible on Bitcoin SV. BSV is a truth machine. Here’s how this works.

How did Enron get away with so much fraud given they must disclose immutable financial records? Easy, they kept two copies and auditors only saw what Enron wanted them to see. According to financial regulations Enron’s financial records were permanently burned onto a CD that cannot be altered but there was no way to audit what they provided was true. Enron controlled the information from start to finish. It was trivial to manipulate.

This is the problem of double entry accounting. I can not verify that the information you provided is true.

As the fable Ring of Gyges illustrates absolute power corrupts absolutely. In this fable a man discovers a ring that grants invisibility and then succumbs to temptation eventually killing his King and marrying the Queen.

…asks whether any man can be so virtuous that he could resist the temptation of killing, robbing, raping or generally doing injustice to whomever he pleased if he could do so without having to fear detection.

wikipedia

In today’s world having power over information is a ring of invisibility. If a person can act immorally, illegally or unethically with no consequences then eventually they will abuse that power. The key to that power is control of information.

Enter BSV and the triple entry accounting ledger.

Triple-entry accounting can be thought of as a way of agreeing on objective economic reality…placed side by side, the bookkeeping entries of both parties to a given transaction are congruent. The third entry in the system, entered into the blockchain, is both a receipt and a transaction. It’s proof that something happened between two parties, which goes beyond the receipts that each party holds in double entry.

https://systemsinnovation.io/triple-entry-accounting-articles/

Think about all the scandals you hear about Government waste. If triple entry accounting were available for tax money the Government would be accountable for every penny they spend in real time. Imagine this for the Federal Reserve. Open books where Fed funding facilities could be audited at a moment’s notice. Where is 6.6 trillion in stimulus (tax dollars) going? We will likely never know.

If information is power then those who hold the information are powerful. In a triple entry accounting system the power is distributed. The “truth machine” cannot be fooled.

Now, here’s where things get really interesting. Google, Facebook, Apple and others are mass collectors of information. So much information they call it Big Data. I’m going to simplify this example for brevity’s sake.

An Artificial Intelligence is built on data. Processing speeds are so fast now that several months to you and me are a millisecond to a computer in computational power. Processors are not the bottleneck. What Google et al need to build an AI is data. Lots and lots of data. And we are giving it to them, for free.

Now imagine one of these companies has a breakthrough in AI. Overnight they could be the most powerful company that has ever existed. A functioning AI grants mind boggling power over information. Google protects their data so they can use it as a competitive advantage to build AI.

This is the next frontier in technological development. How do we counter a company from gaining AI capabilities and using it to further their own gains? The first company to develop a working AI would have the Ring of Gyges.

To counter this, we use an independent source of truth. We use Bitcoin SV. The blockchain as a single source of truth in a triple entry system that is immutable and uncensorable. The data it not owned by any company. It’s public.

All of the examples of fraud and abuse of power above cannot happen if BSV is used as a global ledger.

Truth wins and the Information Renaissance begins.

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