WHAT IS BITCOIN?

Founded by
TABLE OF CONTENTS

Chapter 1: Bitcoin - a public and distributed data management system .............................................. 3

Chapter 2: Bitcoin architecture ....................................................................................................................... 5

Chapter 3: What makes Bitcoin different from existing data management systems? .................... 6

A monetary token for the monetisation of data and the Internet ............................................... 6

Hugely reduced cost of ownership, hugely improved efficiency .................................................. 7

The immutability of the Bitcoin database .......................................................................................... 8

A distributed server model .................................................................................................................... 9

Interoperability ........................................................................................................................................ 9

Interoperability in an IoT world ............................................................................................... 9

Traceability with permission-based access ......................................................................................... 10

Learn more about Bitcoin’s blockchain technology ................................................................................... 12

Chapter 1: Bitcoin - a public and
distributed data management system

Although Bitcoin is most commonly known as a monetary system, at its core, you’ll discover a
data management system with features and benefits that set it apart from all others.

Let’s look at how Bitcoin could operate in an everyday scenario:

Your company uses the Bitcoin blockchain instead of an on-site or cloud-based data
management system.

Each transaction or data record that is created within your company will be published to the
blockchain database. This database is not saved to the servers down in the IT department or to
a cloud-hosted server, but on a server made up of computers spread across the globe. Each
one of these computers will host an exact copy of the record, including your data.

When someone in your company updates data or completes a transaction, a new record will
be published to indicate the latest version. The new record will not, however, overwrite any
of the previous versions of your data. Additionally, the record will show which party was
responsible for making each change or transaction and the date and time it was published.

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Chapter 1: Bitcoin: a public and distributed data management system

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Bitcoin’s entire database is publicly accessible. Unless data is encrypted before being
recorded, anyone who accesses the Bitcoin database via a blockchain explorer over the
Internet will be able to sift through the data.

They will not be able to make sense of how one piece of data relates to another or who
created or made changes to any particular data record. This is because Bitcoin attributes
pseudonyms to each person who interacts with it by assigning each of them a blockchain
address. To decipher the identity behind a blockchain address, you would need to use
incredibly sophisticated algorithms.

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Chapter 2: Bitcoin architecture

Like all data management systems, Bitcoin is composed of hardware, software and a protocol:

• Bitcoin hardware is made up of specialised computers that are used to enforce the
network consensus rules.
• The Bitcoin protocol establishes the rule-set that governs the network and its participants.
This is based on a proof-of-work consensus model, where one CPU equals one vote and
honest activity is incentivised.
• Bitcoin software provides the bridge between the transaction processors and protocol
rule-set that delivers the work to the rest of the network.

BSV: A DISTRIBUTED DATA MONETIZATION AND MANAGEMENT PLATFORM

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Chapter 3: What makes Bitcoin
different from existing data
management systems?

Bitcoin has many aspects in common with other data management systems, but it is the
differences that translate into a range of benefits.

A monetary token for the monetisation of data and the Internet

BITCOIN IS THE FUSION OF DATA AND MONEY

BIT + COIN = BITCOIN

(DATA) (MONEY)

Bitcoin’s monetary token is perhaps its best-known feature. What is not commonly understood
is where it fits in within the bigger system. While the Bitcoin token is an essential part of the
network, it is not created for its own sake. We can say that Bitcoin fuses monetary value with
data. In doing so, it provides a set of features that are lacking in other data management
systems.

The benefits of Bitcoin’s fusion of data and money:

• The Bitcoin blockchain’s internal monetary system incentivises the network’s operators -
‘miners’ or ‘transaction processors’ - to manage and secure the network by paying them in
the blockchain’s native currency.

As a self-incentivised system, the network is independent from the control of central

parties, and available to any business or individual on a pay-per-use basis.

• The monetisation of the Internet through microtransactions. By fusing money with

data, Bitcoin lets us attribute value to individual data points while offering us a
channel through which we can trade that value.

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Chapter 3: What makes Bitcoin different from existing data management systems?

This ‘monetisation of the Internet’ creates a huge opportunity to improve existing

eCommerce systems and invent entirely new online business models.

• In a corporate scenario, the fusion of data and money also makes way for improvements
and innovation. Businesses can set the most complex criteria for collecting and trading
data and automate this process via the blockchain.

For example, a medical research company could canvas for participants in a study.
Individuals who choose to participate are asked to submit their existing medical records to
the blockchain under the condition that it can only be accessed by that particular medical
company.

To incentivise mass participation, the company could offer remuneration of between a

penny and a pound per data point. Whether a participant contributes a single record or a
lifetime’s worth, they are automatically paid upon submission.

SENDING $1 MILLION DOLLARS VS SENDING .01 CENT

Hugely reduced cost of ownership, hugely improved efficiency

When you utilise a public blockchain as your infrastructure, your business doesn’t have to
spend a cent to build or maintain your server systems.

But, is it environmentally responsible to utilise a system that is alleged to consume so much

energy?

When you compare that to the energy spent by the financial industry alone, you will realise
how Bitcoin’s energy consumption is misinterpreted.

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Chapter 3: What makes Bitcoin different from existing data management systems?

“BITCOIN CONSUMES MORE ENERGY THAN SWITZERLAND

(125TWh per year vs Switzerland’s 58 TWh per year)”

• Calculated on a small number of transaction throughput (4 - 7 tps)

• The BSV blockchain is up to 1245.33% more efficient (3,000,000 tx processed
in 24 hours at average of 40.36 per hour, 11/02/2022)
• Economies of scale: the BSV blockchain plans to scale to over 4,000,000 tps
• The financial industry is estimated to spend 263.72 TWh/yr

When you consider the BSV blockchain’s vision of scaling to replace all other data
management systems globally, you will get a sense of the model’s gains in efficiencies and
cost reduction.

How is the Bitcoin blockchain model able to be so efficient? Consider a few basic aspects of
the model:

• The Bitcoin blockchain is a self-incentivised system that can be utilised by any and all
organisations globally. As a single global blockchain, it will reduce the cost of managing
millions of systems down to managing one system. Since the Bitcoin network’s consensus
rules determine operations upfront, they are executed automatically and without the need
for manual interference (or the potential for manipulation).

The immutability of the Bitcoin database

Unlike other databases that allow people to read, write and erase data records, Bitcoin only
allows you to write new data and read existing data. ‘Write forwards and read backwards’ -
that’s the mantra.

The benefits of using Bitcoin as an immutable database include:

• Data or transaction records cannot be accidentally or purposefully manipulated or

erased. This makes it highly resistant to fraud.

• Cybercriminals, or any other criminals, cannot erase their footprints, making it easier to
stop them in their tracks before they do significant damage.

• With a record that states which parties created and made changes to data, ownership can
be attributed to intellectual property and data provenance ensured.

• When audit time comes, accountants will have 100% confidence in the submitted data’s
integrity.

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Chapter 3: What makes Bitcoin different from existing data management systems?

A distributed server model

Benefits:

• With millions of identical copies of your data hosted around the world, the risk of server
downtime is practically eliminated.

• The combined power and storage of a global network of computers translates into a force
that is difficult for other server models to match.

Interoperability

Bitcoin offers enterprises and individuals

a general-purpose data management
system, regardless of the type of data they
need to manage. Whether it is a music file,
financial data or medical records, it can all be
integrated into a single data management
system, the Bitcoin blockchain.

And so, instead of constantly having to

build new integrations between businesses
operating on different software and
databases (but within the same supply chain),
creating all applications on Bitcoin means
that they will all be interoperable.

This interoperability cuts out the need to upgrade software systems on an ongoing basis. And,
as the Bitcoin protocol is set in stone - with no more experimenting and unnecessary changes
- businesses and developers can build applications with the certainty they will not become
incompatible in five or 50 years’ time.

Interoperability in an IoT world

Given the possibility of integrating data from all spheres of the economy and society, there is
practically no limit to the automations you can programme.

Supply chains are already achieving considerable gains in efficiency and cost savings by
operating on Bitcoin. When it comes to broader society, our imagination is the only limit to the
possibilities we can achieve by plugging various IoT devices and applications into Bitcoin.

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Chapter 3: What makes Bitcoin different from existing data management systems?

Supplier Producer Logistics Distributor Retailer Consumer

DIGITAL THREAD - INSTANT UP & DOWN STREAM FEEDBACK

Imagine it is winter in North America, and you are scheduled to fly to another state to undergo
an urgent, life-saving operation. As often happens, your flight’s connection is cancelled due
to bad weather. You find yourself stranded at an airport in a town far from home. Fortunately,
your travel insurance policy provides cover against weather-related mishaps. And yet, your
time is running out to make it to the hospital in time.

Let’s assume that the airline and insurance industries as well as the weather service were all
managing their data systems on top of Bitcoin.

The moment your flight is cancelled, an automated process checks the cancellation
circumstances with the weather service to verify that your cover is valid. Next, it verifies your
time constraints. Given the urgency, it accesses commercial and charter flight schedules to
book a new itinerary that will get you to the operating room in time.

Traceability with permission-based access

There is great confusion about the privacy and transparency of data stored on the Bitcoin
ledger.

Bitcoin makes use of pseudonymous identifiers, which already provides an element of privacy.

In addition, zk-SNARKS (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge)

and other industry-recognised encryption techniques can be used to encrypt data payloads
within a Bitcoin transaction itself.

Some of the benefits of Bitcoin’s balance between privacy and traceability are as follows:

• Companies and individuals can secure sensitive data while making accessible what is in
the public’s interest.

• Given the permanent record of data interactions, a business can review its operations from
beginning to end to get a clear picture of inefficiencies and opportunities.

• If regulators should question your auditor’s report, they can query the Bitcoin record
to verify the underlying data’s accuracy. Though you would have to reveal your Bitcoin
address to the authority in question, your financial or other sensitive data will stay out
of the public eye.

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STABLE NETWORK AND PROTOCOL

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Learn more about Bitcoin’s
blockchain technology
Bitcoin Association, the Switzerland-based global industry organisation that works
to advance business with the BSV blockchain, recently launched BSV Academy
– a dedicated online education platform for Bitcoin, offering academia-quality,
university-style courses and learning materials.

Courses are divided into three streams:

• Bitcoin Theory
• Bitcoin Development
• Bitcoin Infrastructure

Within each stream, courses are offered at introductory, intermediate and

advanced levels. At the conclusion of each course, participants will undertake an
online assessment to test their understanding of the material, with certifications
awarded to those who pass.

Understand Bitcoin
blockchain technology today