MNP, the fifth largest chartered professional accountancy and business consulting firm in Canada, has released a report that measures two blockchains – Bitcoin Satoshi Vision (BSV) and Bitcoin Core (BTC) – against the original vision of the Bitcoin protocol described in Satoshi Nakamoto’s 2008 white paper. Titled ‘The Original Bitcoin Protocol: What is it and Why Does it Matter?’, the report finds that Bitcoin SV is the blockchain implementation which stays truest to the original vision of Bitcoin.
‘After examining Bitcoin Core and Bitcoin Satoshi Vision compared to the original vision set forth in the whitepaper, forum posts, emails, and other writings by Satoshi, it is our opinion that Bitcoin Satoshi Vision is the implementation that currently best represents what Satoshi originally intended,’ the report states.
MNP examined a wealth of source material related to the original Bitcoin protocol to define a standard against which both the BTC and BSV protocols could be compared. This standard represents the vision of Bitcoin as described and implemented by Satoshi Nakamoto during the time when he was active in the development of the blockchain protocol.
Using this source material and Satoshi Nakamoto’s vision of Bitcoin as ‘a transaction network for digital cash to compete as a global payment system’, MNP built a robust assessment framework and defined specific criteria for comparing the adherence of BSV and BTC to the original vision for Bitcoin as described by its creator.
The original Bitcoin vision
MNP defined the original source code for Bitcoin software as being limited to versions 0.1.0 through 0.1.5, the software versions recognized as those released by Satoshi Nakamoto.
However, the investigation goes far beyond the code itself. In establishing the base truths of the original Bitcoin design, the report relies on the following sources of information:
- The original Bitcoin whitepaper posted in 2008.
- Early versions of the codebase including known Satoshi’s versions of the Bitcoin client software.
- Known emails from Satoshi, as summarized on the Metzdowd Forum.
- Posts by Satoshi, as summarized on Bitcoin Forum and P2PFoundation.
Based on these sources, MNP describes the capabilities of the original Bitcoin design as primarily comprising three areas: transaction validation, identity security and network access.
Transaction validation centres around the resolution of double spending provided by the Bitcoin protocol using a peer-to-peer distributed timestamp server to generate proof of the chronological order of transactions. Identity security refers to the design of the Bitcoin network as a system which does not rely on a third party and the subsequent exchange of personal information with intermediaries, which greatly increases the risk of exposure through negligence or a data breach. Lastly, network access encompasses the utility of the native Bitcoin token as well as the scalability of the network and its posited goal of handling transaction volumes comparable to digital payment networks like Visa.
MNP also identified several critical components which are crucial to the operation of the Bitcoin network as originally designed. These are as follows:
- Timestamp server – The timestamp server is the cornerstone of the Bitcoin ledger, providing cryptographic evidence that data existed at a certain time and that transactions happened between addresses within a given time frame.
- Proof of work – Proof of work is used to validate all transactions and blocks on the Bitcoin network and makes it increasingly difficult to change previous blocks as new ones are added.
- Incentives – Bitcoin nodes are rewarded every time they win the right to create a new block and add it to the chain with transaction fees and a block subsidy that declines over time as transaction fee rewards become greater in line with transaction volumes.
- Policies – Policies differ with each Bitcoin implementation, and the most salient of these to this comparison is that of block size limitations. Satoshi Nakamoto initially implemented a default block size limit of 1MB with the intention of increasing this limit in the future.
- Independence from trusted third parties – Bitcoin’s peer-to-peer network design means there is no cause for reliance on trusted third parties to facilitate or secure transactions. MNP’s analysis includes exchanges within the category of trusted third parties.
- Stakeholders – The primary stakeholders of Bitcoin are the node operators, users and developers operating on the Bitcoin network. Secondary stakeholders necessary for the system to function include electricity providers, hardware providers, and Internet service providers (ISPs).
- Network and blocks – Nodes must follow the basic rules outlined in the whitepaper for creating and writing transactions to the blockchain, and all nodes rely on data from the longest chain to be able to enter and exit the network freely. There is no need to have a large number of network nodes as long as there are good actors amongst the node operators.
- Security – Transactions are checked for double spending before they are validated, a process which can only be bypassed via a 51% attack on the network, which consumes an inordinate and unviable amount of computational power to accomplish.
In defining the original Bitcoin design, MNP has also highlighted the important concepts of block sizes, economic incentives, consensus mechanisms and Bitcoin Script opcodes.
‘These three attributes provide defining characteristics of any given Bitcoin implementation, how that network will perform and the functionality the network provides. Ultimately that functionality determines how various applications utilize the power of a particular blockchain network,’ the report states.
The report finds that block size is the primary factor in determining the ability of the Bitcoin network to scale and handle greater transaction volumes, with capped block sizes directly limiting the number of transactions that can be written to the blockchain every second. It notes that the importance of scaling block sizes to support increased transaction volumes is supported by an email sent by Satoshi to the Metzdowd mailing list which states that the potential size of a block could reach nearly 100 gigabytes (GB) in future.
‘Block size is also important from the perspective of economic incentives that draw node operators into running the distributed network. With a small block size, transaction fees will dramatically increase over time as the network gets used more due to the limited number of transactions that can be processed per block,’ the report states.
This increase in transaction fees over time will coincide with the built-in decline in block reward subsidies, making it a crucial component of the Bitcoin protocol’s economic incentive structure that transaction fees within are able to incentivise profitable mining in the future. Bitcoin’s proof-of-work consensus mechanism is also intrinsically tied to these economic incentives, as the commitment of computational power to validate and add transactions to blocks underlies the security of the network – protecting it from double spending and 51% attacks.
Finally, Satoshi Nakamoto’s vision of the Bitcoin protocol included a variety of opcodes written in Bitcoin Script, the protocol’s underlying Forth-like scripting language. These powerful opcodes enabled a fully-fledged programming language built on the blockchain, which in turned allowed for the creation of complex programs and functions written to the digital ledger itself.
Defining testing criteria
The scope of the MNP report is limited to examining the original Bitcoin protocol and contrasting it with BTC and BSV implementations as of March 31, 2021.
Certain Bitcoin implementations and aspects of the BSV and BTC protocols were excluded from the comparison due to their irrelevance to the criteria defined in the report, including the following:
- Valuation – The report does not address the mechanisms that inform the market pricing of either BTC or BSV.
- Reputation – The report does not address the publicly perceived perceptions of either BTC or BSV.
- Previous forks – The report does not include an analysis of previous forks, such as Bitcoin Cash, BitcoinABC, and BitcoinXT.
Based on the key components, critical and non-critical aspects of the original Bitcoin vision, MNP created a comprehensive assessment framework against which to objectively compare the BTC and BSV Bitcoin implementations.
‘In the framework, lines of inquiry were identified in several areas including approach and concept of Bitcoin, components, legality, privacy, design, external factors, resource usage, functionalities, functional and non-functional requirements, associated risks and use cases. Each area was subdivided into assessment procedures that were completed for BTC and BSV as well as the first release of Bitcoin ALPHA v0.1.0,’ the report states.
The results of this comparison, which found the BSV implementation to be more aligned to Satoshi Nakamoto’s original vision for Bitcoin, are summarised below.
Analysing BTC and BSV
The most significant technical differences between Bitcoin SV and BTC when comparing them against the original protocol concern Bitcoin SV’s theoretically unbounded block size and BTC’s antithetical artificial block size limit. BTC is limited to a maximum block size of 1MB, which means its ability to scale and to offer the high transaction throughput needed to realise the original vision for Bitcoin is hamstrung when compared with the larger block sizes offered by BSV.
The performance of BTC and BSV against the following selected testing criteria demonstrate how BSV’s design is closer to the original Bitcoin protocol than that of the BTC protocol:
- Network scaling and block size – Bitcoin SV has no default block size limit and can easily scale as transaction volume increases by increasing block sizes in relation to network market forces. BTC has an artificial block size limit of 1MB, which imposes a hard cap on the number of transactions that can be processed on the network daily, making it impossible to scale the network as transaction volume grows.
- Processing free transactions – As there is still Bitcoin to be mined, the original vision of Bitcoin states that free transactions should still be processed. This can and does occur on the BSV network, but free transactions may be ignored by miners on BTC and starve in the mempool.
- Energy consumption – As transaction volume grows, the amount of energy consumed to process each transaction falls on BSV and grows on BTC. This is because as block size increases in relation to transaction volume on BSV, more transactions can be included per block and the energy cost per transaction declines. On BTC, overall energy consumption per transaction increases with difficulty as the block size does not increase to accommodate greater transaction volume.
- Scripting and opcodes – Bitcoin SV has restored the original opcode functionality described in the Bitcoin white paper, enabling complex smart contracts and efficient data processing. BTC has disabled many of Bitcoin’s original opcodes, neutering its ability to function as a virtual machine for smart contracts and complex scripting.
Many attributes of BSV and BTC, especially those which describe network security and the mechanisms by which transactions are processed, perform equally well against MNP’s assessment criteria. However, the criteria summarised above show how the ability for BSV to scale in relation to transaction volume makes it far more aligned with the original vision of Bitcoin than the artificially limited BTC.
The report also examines other discrepancies between BSV and BTC across numerous criteria within its framework, including instances of double spending, incentive mechanisms, reliability, maintainability, and network independence.
MNP on the assessment framework
Bitcoin Association spoke to MNP Enterprise Risk Services Senior Consultant Joseph MacCallum and MNP Partner Hassan ‘Hash’ Qureshi about how they established the methodology and framework for comparing the BTC and BSV protocols with Satoshi’s original vision for Bitcoin.
MacCallum explains that the framework was established to be blockchain-agnostic and technically capable of comparing any protocol with the original vision of Bitcoin as described in the white paper.
‘We wanted to have a bunch of lines of enquiry that we could use to then go and make observations in any blockchain. By looking at the lines of enquiry, we could then compare codebase with codebase and see whether these do the same things,’ MacCallum says.
‘If they don’t, then there is the need for required testing. The testing would be dependent on what we came up with for the assessment criteria.’
The philosophy behind creating the assessment framework was to establish the truth of Satoshi’s vision as described in his own code, white paper and conversations and to rely on these as a source of truth to resolve any conflicts discovered during the comparison.
‘The white paper gives a very good ground truth. We try to pull out a broad vision – we rely on the white paper heavily as well as forum posts because we can confirm those are Satoshi,’ MacCallum says.
The biggest discrepancies between BSV and BTC arise from the latter’s artificial limit on block sizes, which the report found to be misaligned with the original vision for Bitcoin as described by Satoshi Nakamoto. This limit places direct restrictions on the scalability of the network, which MNP found contradicts the original design for the Bitcoin protocol to function as a scalable payment processing system.
‘In terms of scalability, there’s a clear narrative there that it should be scalable, it shouldn’t be limited to a number of a finite number of transactions and it should be able to handle everything in a period,’ MacCallum says.
‘The white paper doesn’t really give us a set limit on [block size], but there are several conversations about it throughout the Metzdowd forum. I think one was in response to a bug and they needed to cap the block size, but literally right below that, Satoshi says look, this can be changed, we’ll make it bigger later – it just needs to be this small for now. From looking at the white paper, the code and the direct forum posts, it’s very clear that any block size limits were meant to be temporary.’
In contrast to BTC’s narrative around blockchain and cryptocurrency as ‘store-of-value’ systems designed to facilitate speculative investment, MNP excludes the valuation of each protocol’s token from its study due to its irrelevance when considering the foundational vision of the Bitcoin network. Qureshi explains that token valuation is driven by speculation and is completely unrelated to the adherence of any protocol to the original vision for Bitcoin.
‘We were laser-focussed on the mandate, and that was: what did Satoshi want and what was his vision articulated in the white paper and source material?’ Qureshi says.
‘Satoshi in the white paper didn’t say “I want the most valuable coin”, so while the value is interesting it actually works against the idea of a payment processing system. That’s why the value of the token wasn’t included in our assessment framework.’
A detailed explanation of the assessment framework and the study’s findings is available in the full MNP report.