The difference between Bitcoin software, network and protocol
Something that people don’t usually consider: when someone says “BSV” or “BTC”, what do you think of? Is the coin traded on an exchange? Is it the platform on which people develop blockchain applications? Is it the peer-to-peer network of nodes? Or is it the software running said nodes?
Well, if you’re not sure, rest assured you’re probably part of the vast majority. It is hoped with this article to clear some of this up, as the ‘crypto’ industry is full of many misunderstandings and misdirections, of which this is one of the most common. After we’ve cleared up the differences between these, I’d like to turn to the issue of chain splits (sometimes called “forks”), which can occur when the nodes in the network don’t reach majority agreement on what the ledger state should be. . Why is this relevant? Well, as we all know, chain splits are very disruptive to blockchains, leading to splits in the developer community, and battles over which side gets to keep the standing token ticker symbol. Why is it important to understand chain splits? Well, because when blockchains are generally integrated into society’s common law, we need to arm ourselves with knowledge of how the implementation of law will affect the operation of blockchains.
Up to this point, the narrative that has been unraveled is that blockchains, due to their decentralized nature, live entirely above the law, and beyond the reach and understanding of ordinary laws. This couldn’t be further from the truth, since given enough time, laws have a way of catching up with what technology or society can come up with. There were no airline safety laws before the time of the Wright brothers, nor were there laws against using radioactive radium in toothpaste at the turn of the century, but would it have been reasonable for scientists to argue that laws surrounding the harm done by unseen forces such as radiation poisoning never could be imagined? Well by the same reasoning, crypto supporters have argued for years that laws could never be enforced against a decentralized network like those employed by blockchains…and people still believe that today. And this is relevant and timely considering the upcoming clash between the “common wisdom” of crypto and the law in the cases surrounding Craig Wright’s claim for stolen bitcoins. But first, let’s clear up some terminology.
What is BSV, BTC?
BSV is a ticker symbol that represents a protocol, and the Bitcoin SV node is simply software for a node that is compatible with that protocol. Similarly, BTC is a protocol, and BTC-Core is node software that follows the BTC protocol. Of the protocols, BSV is the closest to the original Bitcoin protocol as described in the original Bitcoin White Paper, as it does not include any of the changes that were pushed into the BTC or BCH protocols to support different higher-layer protocols and platforms1 such as the Lightning Network. The BSV protocol feature for feature is closest to what Bitcoin was in 2009. With that understanding, Bitcoin SV is just what happens to be the most widely used node software currently available, but it is by no means the only one. In fact, there are several other node software available for those who don’t want to use the official version, including those implemented in Go, Rust, and an upcoming one called Teranode, which promises to be able to process terabyte-sized blocks. No matter what node software you run, but as long as it adheres to the open protocol of BSV, BTC or BCH, your node will remain in sync or ‘in consensus’ with other nodes running on that protocol.
Seen in this light, chain splits are just a simple matter of some servers falling out of consensus with each other, and not being able to follow the chain. If they fail to upgrade their software to the version that the miners (hereafter referred to as ‘block producers’) are running, then they simply never receive any new blocks, and for them the blockchain will essentially have stopped. They can see a lot of transactions and traffic on their network, but blocks will simply never come. Only listening nodes have no ability to cause a chain or ledger to split. They have no power whatsoever, as they are only listeners.
A chain split is when the block producing nodes do not all agree on the rules. When a significant proportion of the producing nodes run incompatible software, with incompatible protocol rules, the potential for chain splitting exists. This is what happened twice in the past – first when BTC split from Bitcoin with the introduction of the “SegWit” change, and then later, when BCH introduced a change to enable tokens that the majority did not accept. In each of these previous splits, the protocol that remained closest to the original rule set had to change the ticker symbol of their token, due to the fact that the exchanges where the tokens were traded were confused about which of the token ledgers would use the existing ticker symbol , and who will get a new one. But in general, a chain split is unlikely (because it’s expensive2) to result when a majority of block producers agree on which version of the node software they will run, and therefore which ruleset they will support.
From a perspective, BSV, BTC and BCH node software is simply a set of protocol rules to follow, and different block producers running different software will result in seeing different versions of the ledger. The effect of this is that with each ledger split, a new token is created3 or “airdropped.” This is how the current situation turned out, with 3 major tokens all claiming to be Bitcoin. But it is only after the examination of the protocol and the set of rules they enforce that one can begin to form an opinion about what is the closest match to what “bitcoin” really is. Contrary to popular belief, it is not necessarily the ledger token that exchanges have decided to assign the old ticker symbol to. After all, the stock exchanges do not get to decide what a product is.
Therefore, if ‘bitcoin’ is just a protocol, and not the network, or a coin, then the BSV node is just the version of software you’re running, and what software you’re running determines what version of the ledger you see. What this means is when the time comes for law enforcement to implement a coin freeze, whether it is to stop the proceeds of criminal activity or to recover lost funds, all that is required is for a majority of block producing nodes to be running versions of software that will honor confiscation of frozen coins. And given that any confiscation transaction cannot be created unless a majority of block producers agree on the status of the coins in question, there will be no chance of a chain split. The current method of performing freezing and reissuing coins by court order while only implemented in the BSV node software was written to be compatible with BTC node software, so it is conceivable that block producers could contract developers to patch the BTC node software with necessary changes to comply with the recovery process. Whether the government will be able to force a majority of blockchain producers to upgrade their software will be another matter, and one that will play out in the real world, and not on the blockchain. But that’s for the lawyers to worry about. Not the technologists, or the users.
Jerry Chan
WallStreet technologist
***
Notes:
[1] Presumably because they were used as a solution to the bogus “scaling problem” with bitcoin, which BSV solved simply by going back to the original bitcoin rules.
[2] to support a chain split, the minority side must constantly burn money producing blocks that may have no future value, forever.
[3] although which is the new symbol and which is the old symbol is undetermined and up to endless pointless debate.
See: Here’s how Bitcoin works as a base layer for other blockchains
width=”562″ height=”315″ frameborder=”0″ allowfullscreen=”allowfullscreen”>
New to Bitcoin? Check out CoinGeeks Bitcoin for beginners section, the ultimate resource guide for learning more about Bitcoin – as originally envisioned by Satoshi Nakamoto – and blockchain.
