If Bitcoin was a family plan

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This article was originally published on the Unbounded Capital website and we republished it with permission from Dave Mullen-Muhr.

For years, one of the predominant debates in Bitcoin has been the block size debate. Should Bitcoin have “small blocks,” processing small amounts of data per computation every 10 minutes? Should Bitcoin have “big chunks” processing as much data as possible? Or should Bitcoin find a golden loop area somewhere in between? As this block size debate raged, the different points of view became irreconcilable and each vision went its own way creating independent “forked” blockchains. Today we have BTC continuing the small block vision with approximately 1 megabyte (MB) blocks, BCH continuing the Goldilocks vision with 32MB of data allowed per block and BSV continuing the large block vision with an unlimited block size that produced blocks containing more than 600MB of data. BSV’s goal is to soon process gigabyte (GB) and ultimately terabyte (TB) and petabyte (PB) size blocks.

If you’re still with me, I’m honestly a little impressed. 1 MB? 32 MB? 600 MB? Terabyte? Eh? What does it all mean? For the average person, a megabyte is not an intuitive unit. Perhaps you know the market price for a 1TB hard drive for the weeks and months after your purchase from Amazon. If you work in IT, maybe you have a more embodied and enduring understanding. But in general, the data is difficult to capture. Especially when you are trying to think in terms of price or data value which are units and values ​​that change rapidly (getting bigger and cheaper) over time.

There is, however, one major exception: mobile phone plans. The average person has a monthly cell phone bill with a data plan. This is usually a significant cost, especially for heads of households who pay 4 or more lines each month. Due to the cost, people generally shop for the most competitive option. This gives people a clear idea of ​​the cost of data and, in practice, the different sizes of data you will get. Is 10 GB of monthly shared data enough? Should we upgrade to the 15 GB option? Or maybe you just go for the unlimited plan? These are tradeoffs that most people understand. Let’s take this opportunity to better understand the data debate regarding block size in Bitcoin.

If BTC was a family plan

BTC continued its small block vision for Bitcoin. This means that only 1MB of data can be processed every 10 minutes. Because it’s so small (the average iPhone photo is around 2MB for reference), and especially for a network with global aspirations, there’s more demand to reserve a slice of this data than there is no offer (1 Mo). As a result, a fee market has developed so that users can bid on each other to purchase their entry into the network. Ultimately, these charges pay for data, much like how you pay for cell phone data. Let’s take a look at the April 2021 phone bill using the BTC carrier.

$ 250 million for 5.2 GB of data (I hope those 0.2 GB are not overages!). It seems a bit higher than Verizon. In the defense of carrier BTC, they offer data that is qualitatively different from that offered through a Verizon mobile phone plan, but this framework gives an idea of ​​the relative cost. An apple-to-apple comparison with BSV, which followed the big boulder path, will be instructive.

If BSV was a family plan

How is the BSV transporter located? With unlimited block size, there is no artificial scarcity on the supply of space on the BSV network that can be occupied by user data. For this reason, the fees Marlet is not necessary. BSV transactions have a fee (the current median fee is $ 0.00013), but this fee must pay the “BSV operator” for the inclusion of their data, and not outbid the other person who also wants to use the artificially scarce space of the network. What did the April phone bill look like for operator BSV?

If Bitcoin (BSV) was a family plan

$ 55,000 for 31.3 GB of data. It’s still off the market for typical cell phone plans, but compared to the $ 250 million worth of BTC for 6x less data, it looks pretty good.

Long term planning

Part of choosing which telephone company to use is taking into account what will become of the telephone plan. Maybe they offer free data for the first month after you sign up. Great! But if I’m locked into a multi-year plan, I’ll want to read the fine print. What will happen to my bill next year? Will the price of my carrier’s data plans decrease over time (as they should given technological innovation)? Will my carrier limit my data usage under certain circumstances or will I be able to use the data as I see fit? These are key questions. So what’s in the fine print for BTC and BSV carriers?

BTC carrier roadmap

The operator BTC offers only one plan: 5 GB of shared data, the price of this data will increase significantly over time and you will only be able to use the data as they or they Willingly, it will be limited for all unapproved use cases.

Eh? Yeah, that’s right. BTC has more or less committed to its 1MB block size for the foreseeable future. Some influential BTC developers (think of them collectively as CTOs with majority voting rights for carrier BTC) have even suggested reducing that number to 300KB. If successful with this decrease, your 5GB of shared monthly data ( shared with your global “family”) will be reduced to approximately 1.5 GB. Even if this does not happen, it is likely that you will end up with 5 GB for the foreseeable future.

But if the data allowance is capped, how will the costs be to augment? Despite the constant progression of computer chip innovation, your BTC support data packet will (and MUST) increase orders of magnitude over time. Popular BTC thought leaders are encouraging users to “embrace” the “high and sustained charges” of the network which they believe is a feature, not a bug: “charges are designed to pump forever”!

Okay… well, at least that data will be extremely useful. Law? Well, as a client of the BTC plan, you will be able to use the data in any way the CTOs want. If you’re looking to use your plan to play games or apps that aren’t sanctioned, you’re out of luck.

A convincing offer!

The BSV carrier roadmap

Maybe the ever increasing costs with limited functionality on a stagnant (maybe declining) data plan are not what you want! What is the offer of the competition? The BSV operator does indeed offer an unlimited data plan. A plan probably familiar to buyers of phone plans in 2021. Today, data is cheap and increasingly cheaper. So consumers rightly expect this to be reflected in their data-dependent utilities. The BSV plan includes unlimited data with a pay-as-you-go structure, with costs per unit of data decreasing over time, and complete freedom over how that data is used by the customers who buy it.

If you want to use 50 GB this month, go for it! The BSV carrier will bill you for your usage at market price with very fine margins. If you’re off the grid on a tropical vacation and don’t need a lot of data, you’ll be charged very little.

The very thin margins of your plan will also have an impact on the future price of your plan. The margins are so slim because the BSV carrier is served by an open market of suppliers. These service providers compete to process your data. As innovation continues to drive down storage and compute costs, this will show up in your bill. When using BSV carrier data, you can rest assured that you are getting a fair price. Today, $ 55,000 for 31 GB of data is high, but next year that $ / GB ratio should be much better. The same cannot be said of BTC which wants (and needs) this ratio to move in the opposite direction.

The freedom to use your data however you want is probably a must for most cellphone buyers. Imagine if Verizon said you can ONLY use your data plan to watch movies on Netflix. If you prefer Hulu, you’re out of luck! If you want to look for a recipe, never mind! Being able to use the data you have purchased the way you want is a key part of BSV carrier ethics. The carrier BTC effectively prohibits customers from using the data for anything other than financial transactions. On BSV, customers can use the data for financial transactions if they wish, but they can also use it for games or applications. How they use their data is up to them!

Conclusion

While it is a fair criticism to suggest that the blockchain-as-phone-bill is not a perfect 1: 1 analogy, the framework for understanding what you are buying when you pay a $ 30 transaction fee on BTC per Compared to what you are buying when you pay a fee of $ 0.0001 on BSV is nonetheless useful. Years of conversations about block size and transaction throughput have taught me that most people have wide eyes when you start to mention megabytes and gigabytes. Next time you come across this discussion, I hope you use this framework to make it clearer.

The operator BTC offers a family of 7.6 trillion 5 GB of monthly data shared in perpetuity whose hope will become exorbitant and more expensive over time.

Operator BSV currently offers unlimited data with a pay-as-you-go plan that will drop in price dramatically over time.

New to Bitcoin? Discover CoinGeek Bitcoin for beginners section, the ultimate resource guide to learning more about Bitcoin — as originally envisioned by Satoshi Nakamoto — and blockchain.



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