BSV Blockchain Association on Twitter Spaces: Different Use Cases for Token Protocols

On April 18, the BSV Blockchain Association held a Twitter space discussing BSV token protocols. Kurt Wuckert Jr., James Belding, Brett Banfe, Brendan Lee, Jab Wahab, David Case, Brenton Gunning, Ken Sato, Thomas Giacomo and Ty Everett participated as speakers.

https://t.co/gpcywfQnlJ

— Bitcoin Association (@BitcoinAssn) 18 April 2023

James Belding talks about tailored approaches to meet issuer needs

Belding opens the discussion by saying that Tokenized considers utility and user/issuer needs and wishes as guiding principles. They explored all the possibilities, starting with the results they wanted to achieve in mind and working their way back to the technology.

Many BSV token protocols are quite close in terms of value proposition, says Belding. The most important differences are at issuer level. He doesn’t think many people have put themselves in the position of issuers and thought about what they need to manage tokens effectively. For issuers, tokens represent relationships, and the designs must be tailored to specific business needs.

Kurt Wuckert Jr. discusses colored coins and 1Sat Ordinals

Wuckert then talks about tokens as a high-level concept in Bitcoin. Casting his mind back to colored coins, he says they are the first thing he has heard of that could be considered tokens. Painting or coloring satoshis would allow them to be stable coins, NFTs, pointers and more. This has been his personal favorite way to implement tokens, but no one has wanted to do it.

Wuckert then explains that he is a fan of 1Sat Ordinals, and GorillaPool provides some additional infrastructure to help it along. He likes this protocol for its simplicity and says it’s just another way to count satoshis. “It’s a fancy way of saying that a sat is a sat plus a little extra value,” he notes.

Noting that there are probably ten different token protocols on BSV, Wuckert believes that 1Sat Ordinals is so low-level that it allows us to collaborate, including in ways that use the existing token protocols.

Brendan Lee asks what tokens really are

Lee begins by talking about tokens in general. He says that if the issuer does not offer something of value that relates to a person’s ownership and control of a token, then it is unclear what the token is. He sees much of the “crypto mentality” in situations where issuers create tokens, sell them on marketplaces, and have nothing to do with them.

Elas has its own token-issuing mechanism, which Lee hesitates to call a protocol. Using it, an issuer distributes a bunch of satoshis, and each is labeled as a particular token and indexed as such. These tokens can be transferred with simple scripts like P2PKH; the only condition is that the wallet used must understand that it is a symbol and not mix it up with other types of satoshis.

“It’s about keeping things as simple as possible initially so that the complexity you have to build in later is simple,” says Lee. This can allow the construction of all sorts of interesting use cases.

David Case talks about different token use cases

Case begins by saying that he agrees that Ordinals are low-level and intrinsic to Bitcoin, and there are many token use cases that don’t require issuers to become currencies, etc. He believes there is value in having something you own that can updated and transferred to the blockchain. Because Ordinals have unique serial numbers, indexers can point to them, allowing them to be tracked over time.

Case says there are many things we can do by defining tokens ourselves. There are different levels of definitions of what tokens are, but ultimately they all run on a blockchain that allows us to prove the intentions of what someone did, what has happened to a token over time, etc. There are different use cases for tokens, and not all require strictly defined rules about issuance, use and other such factors.

“You work on different layers, but those layers are completely compatible with each other,” he says.

Jad Wahab wants to see a fully tokenized world

Wahab has spent a lot of time working on wallets for nChain and the Bitcoin Association. He says there are some things he likes and others he thinks could cause problems. He hopes to see a world on the chain where everything is interoperable and composable. He would love to live in a world where everything is tokenized.

Wahab advises against getting caught up in technical details that may not matter in the end. He says that many of the token protocols are trying to achieve the same thing, and it is important to focus on moving into a tokenized world in a way that is as simple as possible.

Deggen Kellenschwiler on wallets, applications and Ordinals

Kellenschwiler wears several hats in the BSV ecosystem. He begins by saying that he has been deeply involved in developing applications that work and interact with tokens for a couple of years now. To him, defining tokens is difficult, and a couple of different approaches make the most sense, given their different use cases.

Kellenschwiler finds Ordinals super interesting because it takes a fungible token protocol (Bitcoin) and creates a non-fungible protocol. He points out that people in different positions will have to take different approaches to keeping track of tokens (eg miners and developers), and that it is possible to come up with extremely simple application-specific tokens that use the base layer of Bitcoin. He advises people not to get bogged down in choosing between different token protocols because different use cases may use different ones as needed.

Brenton Gunning says blockchains are data and programmable ownership systems

Gunning begins by saying that he wishes this discussion had taken place earlier. He says that, after stepping back from the RUN, he can see the landscape more clearly and likes what he sees. He finds Ordinals interesting and would like to see some consolidation around token protocols in BSV.

Gunning says he has always viewed blockchains as data and programmable ownership systems. Tokens are a use case for that, and RUN wasn’t really a token protocol – they called them Jigs to avoid this confusion. As with some of the others in the discussion, he says that it is difficult to find an exact definition of what tokens are, and he enjoys the different perspectives shared in this discussion.

Ken Sato wants to see scalable peer-to-peer token transfers with SPV

Sato joins the Twitter room from Japan and it’s 6:00 am with him when it takes place. He says he has been researching token protocols at BSV for the past three years and has tested them all. Each has pros and cons, and since it’s very early days, there aren’t many examples to go by. While his product is almost ready, the team has yet to decide on a token protocol.

Sato notes that all token protocols suffer from the Back to Genesis problem, and he and his team have been working on their own solution and are optimistic about it. He believes that a token verification solution is necessary for SPV to allow peer-to-peer transfer of tokens.

Thomas Giacomo talks about STAS

Giacomo works at the BSV Blockchain Association, building tools to make it easier for developers to build applications on the blockchain. He wants to talk about STAS.

With STAS, the token amount and ownership is transferred from sender to receiver using native Bitcoin transactions. The first iteration of STAS was built by TAAL and was intended to serve enterprise-class use cases. A complete technical audit was carried out, and STAS is suitable for regulated use cases such as in the banking industry.

Ty Everett encourages experimentation

Everett elaborates on Ken Sato’s point about general verification and peer-to-peer exchange of tokens via SPV. He says this is relevant for all UTXO-based token protocols and he supports this approach.

As for token protocols in general, he believes many different approaches will be applicable. There is no requirement to follow one particular methodology, and there is room for everyone to experiment. He sees value in wallets that can interact with various token protocols. He is not advocating any particular protocol, but he is happy to hear Ken Sato talk about verification and peer-to-peer sending of tokens via SPV.

Open floor and discussion

The host then opens the floor for all speakers to give their opinions.

Lee says that in theory it’s fine to talk about protocols that anyone can use for anything, but in reality issuers will have strict control over what their tokens can be used for.

Belding reiterates his position that things need to be planned by a core team that tackles all the key issues, just as Bitcoin was designed. He says the entire industry has failed to build anything useful other than novelty, and to get to the next stage, real complexity will kick in, requiring planning.

Wuckert counters that we’ve had it, with teams dedicated to node software, various token protocols, and more. He says we need to go faster, smash more things and let the chips fall where they may.

Everett says he has read many technical standards (around 50) and has room for much more. He encourages people to share their thoughts about them, creating dialogue and a better understanding of the different approaches that exist.

The host then takes user questions, which you can hear by listening to the Twitter Spaces episode via the link at the top of the page.

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