First Mover: BSV Doubles in 2020 as Bitcoin Offshoot Wins Devotees

Fibo Quantum

Bitcoin Satoshi’s Vision, the controversial blockchain promoted by Craig Wright, is winning in digital-asset markets this year, with a token that has brought investors triple the returns of its better-known ancestor, bitcoin.

You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can subscribe here.

Bitcoin SV, or BSV as the token is known, has risen 96% so far in 2020, versus a 36% gain for bitcoin (as of Monday). It’s also beating the 18% year-to-date return for bitcoin cash (BCH), another offshoot from bitcoin. 

fm-june-2-chart-1-price
Source: TradingView.com

The project, which split off from bitcoin following a series of disputes in 2017 and 2018, has faced accusations in the past that its token’s price is prone to manipulation. And Wright, who leads the BSV community through his software company nChain and claims to be bitcoin founder Satoshi Nakamoto, is embroiled in a lawsuit with his late business partner’s estate. He was recently described as a “fraud” in a public message signed with bitcoin addresses he claims to own .

But some investors and developers say Bitcoin SV has technical advantages over bitcoin and other cryptocurrencies that make it a worthy blockchain to build applications on. Those include Twetch, a social media platform based on Bitcoin SV that grabbed headlines last week when its Twitter account was briefly suspended; just hours before, the company had sent a tweet trolling Twitter CEO Jack Dorsey for fact-checking a post by President Donald Trump.

“We think this represents an incredible opportunity for anyone looking to buy in more cheaply to make a long-term investment on the only blockchain trying to scale and have mass adoption as a database,” Zach Resnick, managing partner of the money manager Unbounded Capital, wrote in an email. The firm invests in BSV tokens as well as projects focused on the blockchain. 

It’s been just over a year since the giant cryptocurrency exchange Binance delisted BSV, with CEO Changpeng “CZ” Zhao tweeting at the time that Wright was a “fraud” and that “the real Satoshi can digitally sign any message to prove it.” In an interview in October with the publication Coin Rivet, Wright called CZ a “lowlife. Not exactly taking the high road.

The driving force behind BSV’s split from bitcoin during the late 2010s was the idea that a blockchain should be “scalable” – that is, able to smoothly handle a sudden surge in usage, similar to the way the virtual-meeting platform Zoom suddenly on-boarded millions of new customers during the first few weeks of coronavirus-related lockdowns.

Bitcoin SV’s backers say large data-block sizes, compared with those on the Bitcoin blockchain, could improve the network’s scalability. Bitcoin SV pushed to increase block sizes to 132 megabytes, compared with 32 megabytes for BCH and one megabyte for Bitcoin. And in February, BSV implemented a system upgrade that removed the size limits and enabled scaling up to 2 gigabytes per block.

According to the data aggregator Coin.Dance, the Bitcoin SV blockchain’s daily average transaction throughput exceeds levels for both Bitcoin and Bitcoin Cash.

fm-june-2-chart-2-transactions
Daily transaction volume on the Bitcoin SV, Bitcoin Cash and Bitcoin blockchains.
Source: Coin.Dance

Some Bitcoin SV critics say the data isn’t what it seems.

Moe Adham, CEO of crypto ATM operator Bitaccess, told First Mover in a direct message that he suspects much of the network’s transaction volume is “spam.”

“No exchanges support it, no services support it,” Adham said. “The only activity I know of is people dumping BSV to get out.”

Trading the token carries risks, such as thin liquidity on exchanges. Despite the ejection from Binance, BSV does retain listings on the cryptocurrency exchanges Huobi, OKEx and Bitfinex. But daily trading volume on legitimate exchanges averages about $30 million, compared with close to $2 billion for bitcoin, according to Messari data.

Such risks don’t seem to deter developers choosing the platform. Calvin Ayre, an online casino billionaire who has brushed with U.S. law enforcement and whose business interests include BSV mining, says on his holding company’s website that the token is the “one and only bitcoin.” 

Twetch founder Billy Rose said he likes the Bitcoin SV blockchain partly because the network can handle more than a million transactions in a single data block, versus about 3,500 transactions per block on the Bitcoin blockchain. That’s key for the social-media platform because every post, like and reply on Twetch is archived on the blockchain, and each of those is essentially a microtransaction, according to Rose. 

“BSV enables these low-fee microtransactions and on-chain scaling,” Rose told First Mover in an email. 

Ryan X. Charles, the first cryptocurrency engineer hired at Reddit in 2014, told First Mover in a phone interview that BSV could be ideal for sending small amounts of value, known as micropayments, across the internet or on social media. Charles is the founder and CEO of Money Button, which can be used to send payments over the BSV blockchain.

“BSV has been making a steady gain this year due to adoption of real-world applications being deployed using the platform,” Jerry Chan, CEO of TAAL, which provides mining and software services for bitcoin SV, wrote in an email.

Tweet of the day

Bitcoin watch

nl-chart-5
Source: TradingView.com

Trend: Bitcoin has pulled back slightly from the overnight high of over $10,300, but remains safely in bullish territory.

The top cryptocurrency by market value is currently trading near $10,130, having hit a 3.5-month high during the late U.S. trading hours on Monday. 

With a convincing move above $9,800, the cryptocurrency has broken out of a near month-long narrowing price range, as seen on the daily chart. Prices have now formed a pennant breakout, a bullish continuation pattern that often accelerates the preceding uptrend. 

As such, stronger gains could be in the offing, more so, as both the daily and weekly chart relative strength indices (RSIs) are reporting bullish conditions with above-50 readings. The weekly MACD histogram, too, is signaling stronger upward momentum with higher bars above the zero line. And last but not the least, the daily chart shows a golden crossover, a long-term bull market indicator. 

So, the charts look to have aligned in favor of stronger gains, possibly to $11,000 and higher. Popular analyst Josh Rager thinks the break above $10,000 is a positive development, but wants to see a daily close (UTC 00:00) above $10,370 before adopting an ultra-bullish stance.”Closing above $10,370 would be insanely bullish,” tweeted Rager. 

The new bullish bias would be invalidated if prices find acceptance once more below $10,000.

coindesk_newsletters_1200x400_24
Sign up to receive First Mover in your inbox, every weekday.
Disclosure

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.