Nov 6th 2019 PROJECT RESEARCH - FS Insight · 11/6/2019 · Vitalik Buterin famously coined this idea of the “blockchaintrilemma.” For ... transaction sizes (ex. document storage)

November 6, 2019

Introduction Project Overview Network Analysis Mining Ecosystem Appendix

11

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7140 or via email [email protected].

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Digital Asset Research

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[email protected]

212-293-7133

PROJECT RESEARCH

This document is prepared solely for Fundstrat clients.

For inquiries, please contact Sales at 212-293-7140 or via

email [email protected].

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Sam [email protected]

For Reg AC certification and other important disclosures see Slide 39. www.fundstrat.com

Nov 6th 2019

Bitcoin SV believes its protocol best represents the original vision for Bitcoin. Specifically, this means that Bitcoin SVdoes not limit its block size and believes that developers have too much power relative to miners. Today, the network isprimarily used for storing metadata. BSV’s goal over the long-term is to provide usage both as a payments network andcommodity data ledger (metadata storage). With its ambitious goals, Bitcoin SV is contributing to the necessary protocoldesign experimentation in crypto. No cryptocurrency has achieved global adoption, thus the space needs projects tocontinue tinkering with protocol designs to find the optimal one that can accommodate global adoption.

• Bitcoin SV believes its protocol more closely reflects the original Bitcoin design than does Bitcoin Core orBitcoin Cash. Specifically, BSV believes BCH was wrong to add opcodes and make other changes not in theoriginal protocol and will soon be removing its block size limit; BTC and BCH limit block sizes to ~2MB and 32MB,respectively (though BTC now technically uses a “block weight” limit) (Slide 14). The challenge for BSV will be toprove that its protocol is not only the original Bitcoin design, but the best design for wide consumer and businessadoption (Slide 9).

• Protocol design requires tradeoffs between scalability, security, and decentralization. Bitcoin SV canachieve ~700 TPS at 256MB miner-chosen block limit (slide 14), but mining is concentrated with two pools>40% of total network hash power. Vitalik Buterin famously coined this idea of the “blockchain trilemma.” Forexample, BSV’s hash power concentration and cost to run a full node are such that its network security is ensuredthrough a small group of ecosystem supporters. The differences between BSV, BTC, and BCH can be similarlybroken out between use case, balance of power, and scalability (Slide 10).

• BSV is the biggest block Bitcoin. BSV believes corporates will require network throughput capacity much higherthan what is currently needed before they are comfortable using the network. Daily transaction value on the networkaverages ~$25mm with blocks 0.43% full vs. BTC daily value ~$2.6B and its blocks typically ~50% full (Slide 14).

• Today, the network is primarily used for storing metadata. Over the long-term BSV wants to be a commoditydata ledger for the internet. For example, the two most active apps on BSV are WeatherSV and Preev. The formerrecords weather data on-chain, while the latter is a crypto exchange rate calculator. These transactions are lowvalue but high volume; these microtransactions are supported by BSV’s low fees as a percentage of on-chainvolume (Slide 21).

• BSV could be more profitable to mine due to the higher risk associated with a smaller project. Though,mining revenues are currently very small at ~$0.30mm per day compared to BTC $17mm and BCH $0.50mm (Slide28). But, currently BTC is slightly more profitable to mine than BSV (1.2x vs. 1.1x price-to-breakeven).

Bottom line: It’s still very early days for cryptocurrency technology and there is little certainty around what thewinning implementation could be. BSV is contributing to the necessary experimentation to test which protocoldesign is most likely to achieve broad adoption. The data shows that the network lags BTC and BCHtransacted value, but it’s go-to-market strategy has advantages that could give it an edge in the enterprisemarket over the long-term.

Bitcoin SV TL;DR

• Split of Bitcoin Cash (which

itself came from split of Bitcoin

Core)

• Current block size limit = 2GB

• Genesis upgrade in Feb ’20 to

remove block size cap entirely

• Believes its protocol design is

the closest representation to

the original Bitcoin protocol

• Competes with Bitcoin Core

and Bitcoin Cash to own the

“Bitcoin” brand

• On-chain activity is low at

$4.5mm daily volume vs.

$1,400mm for BTC and $76mm

for BCH

• BSV has similar number of daily

transactions to BTC (~300k)

mailto:[email protected]

mailto:[email protected]

http://www.fundstrat.com/

November 6, 2019


Source: https://bitcoin.org/bitcoin.pdf

BSV emerged after a contentious split of the BCH network. BSV supporters disagreed with protocol changes to Bitcoin

Cash, which they contend deviate from the original Bitcoin protocol. BCH had itself emerged after a chain split with Bitcoin

Core (BTC) following BTC’s addition of SegWit. These protocol disputes represent clashing visions over how best to scale

(or not scale) Bitcoin.

• The BSV community disagreed with BCH’s proposed changes, such as adding opcodes not in the original

Bitcoin protocol and maintaining protocol limits (ex. block size) that BSV believed were temporary by design.

• BSV instead proposed (1) increasing max block size to 128MB from 32MB (2) restoring Satoshi opcodes from

version 0.11 and (3) removing the 201 opcodes per script limit2.

Slide 2

Figure: Timeline of BTC, BCH, and BSV protocol disputesPer Fundstrat

1. Opcodes: a set of commands used to construct the small range of operations that Script performs in the Bitcoin protocol. Script is the programming language

within the Bitcoin protocol used for transaction processing (ex. verifying transactions).

2. 201 opcode per script limit: defends network against cyber attacks invoking high computational load by limiting the number of opcodes contained within one

script (operations)

BTC Core

released

Jan ‘09

BIP125:

Replace-by-fee

Late

Aug ‘17

BIP141:

SegWit

Dec ‘15

Early

Aug ‘17

BCH and BTC

split

Aug ‘18

BCH community

disagrees on desired

protocol changesBSV and

BCH split

Early

Nov ‘18

“Hash war” lasts 11 days

Mid

Nov ‘18

BSV believes its project is

continuing the original protocol

1

2

3

4

5

November 6, 2019



The Bitcoin SV (BSV) community believes BSV is the closest representation of Satoshi Nakamoto’s original vision for the

Bitcoin protocol, undoubtedly a controversial belief. Their view of what Bitcoin was meant to be includes a raised block limit,

greater power with miners relative to developers, and fewer major edits to the project source code.

• Scalability, stakeholder balance of power, and use case are areas where BSV has taken its network in a different

direction than either BTC or BCH.

• The challenge for BSV will be convincing the broader crypto community not just that BSV is the original vision

for Bitcoin, but that it’s the best vision for gaining mass adoption.

Slide 3

• P2P Electronic cash

• Decentralized network

• Fixed monetary policy

• Predictable inflation

• Scalable

• Open source code

Satoshi’s Vision?

...BTC, BCH, BSV have

conflicting views

1

2

3

4

5

November 6, 2019



BSV’s strategy is to make blocks significantly larger than what is currently needed in order to attract corporate partners. Post-

Genesis upgrade, BSV’s block size limit is 2GB (though most miners are setting their block template size to 256MB).

• Although we estimate transactions per second (TPS) for BSV could reach 1500, this does not account for larger

transaction sizes (ex. document storage) and bandwidth needs. 600 tps is a more practical limit, especially since

most BSV miners currently set their block limit to 256MB. At full 2GB blocks, BSV could reach >5000 TPS depending

on transaction size.

• Further, at 1.1MB, BSV’s blocks are larger than BTC’s. Being 0.43% full, they can still accommodate future growth.

Slide 4

Figure: BSV is the “big block” Bitcoin

BSV chose biggest blocks for

highest theoretical TPS...

...but low on-chain activity

results in nearly empty blocks

and low actual TPS

in MB, 30 day moving average BSV BTC BCH

(a) 24H Transactions 236,479 319,354 42,363

(b) 24H Blocks 145 146 144

(c) = (b) / (a) Transactions / Block 1,636 2,189 294

(d) Average Block Size (MB) 1.10 0.98 0.10

(e) = (d) / (c) Average transaction size (MB) 0.000670 0.000448 0.000356

(f) Miner chosen block limit (MB) 256 2 32

(g) = (f) / (e) * 144 / (24 * 3600) TPS with 256MB chosen block limit 636.8 7.4 149.8

(h) = (d) / (f) Block fill % 0.43% 49.08% 0.33%

(i) = (a) / 24 / 3600 Actual TPS 2.7 3.7 0.5

What block size is just right?

2MB

32MB 2GB

BSV miners are

setting their

block limits to

256MB

1

2

3

4

5

November 6, 2019


Source: Fundstrat, coinmarketcap.com, blockchain.com, bitinfocharts

Slide 5

Figure: Mining profitability for main Bitcoin forks

As of 10/31/19

Using the Bitmain Antminer S9 and S17 Pro mining rigs as a reference, we show that both the BCH and BSV Networks are

operating at slightly lower profitability than BTC. We also note that a 3rd party, coin.dance, has often shown BSV to be more

profitable to mine than BTC or BCH (in our view reflecting the project’s higher risk).

• Miners are acting rationally, with little arbitrage available; we expect smaller projects to deliver higher

profitability to compensate miners for taking on higher risk on higher volatility of both price and hash power,

and lower network security.

• Notably, profitability suggests miners perceive BSV risk as comparable to its larger BCH competitor.

BTC BCH BSV BTC BCH BSVTotal Hashpower 88,995,440 2,925,400 1,368,800 88,995,440 2,925,400 1,368,800

Price $9,222.00 $281.31 $128.24 $9,222.00 $281.31 $128.24

Device Hashpower, TH/s 14.0 14.0 14.0 56.0 56.0 56.0

Share of Hashpower 0.000016% 0.000479% 0.001023% 0.000063% 0.001914% 0.004091%

Cost per rig $310 $310 $310 $2,969 $2,969 $2,969

Power consumption per device, Watts 1471.3 1471.3 1471.3 2696.4 2696.4 2696.4

Daily power cost @ 0.06 / kWh $2.12 $2.12 $2.12 $3.88 $3.88 $3.88

Overhead cost @20% $0.42 $0.42 $0.42 $0.78 $0.78 $0.78

Tokens mined per day 0.000295 0.008973 0.019177 0.001180 0.035893 0.076710

Depreciation / Token (24 month life) $1,460 $48 $22 $3,495 $115 $54

Cash cost per token $8,619 $283 $133 $3,949 $130 $61

Total cost per token $10,079 $331 $155 $7,444 $245 $114

Price / Cash Breakeven 1.1x 1.0x 1.0x 2.3x 2.2x 2.1x

Price / Breakeven 0.9x 0.8x 0.8x 1.2x 1.1x 1.1x

Bitmain Antminer S9 Bitmain Antminer S17 Pro

1

2

3

4

5

November 6, 2019


Source: Fundstrat

Slide 6

Current Genesis upgrade

Current block size

limit is 2048MB

Bitcoin SV will lift the theoretical block size limit from 2GB with its Genesis upgrade, allowing miners to set their own block

cap limit. Currently the block cap limit is 2GB with most miners setting their own limit to 256 MB. This design decision is

motivated by BSV’s desire to give miners greater control over the network relative to developers.

• Block sizes are constrained by the 10-minute block interval and the time it takes for larger blocks to propagate

through the network.

• In practice, the block size would increase with network usage (fuller blocks) and improved internet bandwidth.

256 MB 256 MBMiners can set

lower limit,

currently 256MB

Genesis upgrade will remove

block size limit entirely...

…But network capacity likely to

constrain miners’ block size settings

512

1024

2048

256

1

2

3

4

5

November 6, 2019


Slide 7

• Split of Bitcoin Cash (which itself came from split of Bitcoin Core)

• “Big block” Bitcoin implementation

• Targeting enterprise usage to drive consumer adoption

Overview

• Block cap = 2GB

• Genesis upgrade will remove block cap completely

• Wants to “freeze” protocol to reduce developer power

• BSV does not expect all users to run full nodes and doing so is cost prohibitive for retail users

Key features

• ~1 EH/s mining hash power

• Primary mining pools: Coingeek, SVPool, Mempool, ViaBTC

• Mining is more centralized vs. other chains but mining diversity has been increasing recently

• Larger blocks = higher cost to run full nodes

Mining

Partnerships to date include:

• DRIVE Markets (payments)

• UNISOT (supply chain)

• CryptoFights (gaming)

• Twetch (social media)

• ONEstore (mobile apps)

Partnerships

Infrastructure supporting BSV...

• 15+ wallets

• 25+ services accepting BSV as payment

• 10+ block explorers

• nChain (development arm)

• CoinGeek (media, conferences, mining, and investment)

Community

• CoinGeek London, Feb ‘20

• Genesis protocol upgrade in February 2020 to eliminate all block size caps

Upcoming catalysts

November 6, 2019



BSV emerged after a contentious split of the BCH network. BSV supporters disagreed with protocol changes to Bitcoin

Cash, which they contend deviate from the original Bitcoin protocol. BCH had itself emerged after a chain split with Bitcoin

Core (BTC) following BTC’s addition of SegWit. These protocol disputes represent clashing visions over how best to scale

(or not scale) Bitcoin.

• The BSV community disagreed with BCH’s proposed changes, such as adding opcodes not in the original

Bitcoin protocol and maintaining protocol limits (ex. block size) that BSV believed were temporary by design.

• BSV instead proposed (1) increasing max block size to 128MB from 32MB (2) restoring Satoshi opcodes from

version 0.11 and (3) removing the 201 opcodes per script limit2.

Slide 8

Figure: Timeline of BTC, BCH, and BSV protocol disputesPer Fundstrat

1. Opcodes: a set of commands used to construct the small range of operations that Script performs in the Bitcoin protocol. Script is the programming language

within the Bitcoin protocol used for transaction processing (ex. verifying transactions).

2. 201 opcode per script limit: defends network against cyber attacks invoking high computational load by limiting the number of opcodes contained within one

script (operations)

BTC Core

released

Jan ‘09

BIP125:

Replace-by-fee

Late

Aug ‘17

BIP141:

SegWit

Dec ‘15

Early

Aug ‘17

BCH and BTC

split

Aug ‘18

BCH community

disagrees on desired

protocol changesBSV and

BCH split

Early

Nov ‘18

“Hash war” lasts 11 days

Mid

Nov ‘18

BSV believes its project is

continuing the original protocol

November 6, 2019



The Bitcoin SV (BSV) community believes BSV is the closest representation of Satoshi Nakamoto’s original vision for the

Bitcoin protocol, undoubtedly a controversial belief. Their view of what Bitcoin was meant to be includes a raised block limit,

greater power with miners relative to developers, and fewer major edits to the project source code.

• Scalability, stakeholder balance of power, and use case are areas where BSV has taken its network in a different

direction than either BTC or BCH.

• The challenge for BSV will be convincing the broader crypto community not just that BSV is the original vision

for Bitcoin, but that it’s the best vision for gaining mass adoption.

Slide 9

• P2P Electronic cash

• Decentralized network

• Fixed monetary policy

• Predictable inflation

• Scalable

• Open source code

Satoshi’s Vision?

...BTC, BCH, BSV have

conflicting views

November 6, 2019



Slide 10

BSV

Scalability, balance of power, and use case identity are the core areas of contention fueling the Bitcoin debate both within and

between Bitcoin projects. The market will ultimately decide the right answers and so far, BTC is winning the popularity contest in

the market for decentralized value transfer (measured by total market cap).

• BSV desires a high throughout (scalability) data commodity network (use case identity) where power is shifted

away from developers towards miners (balance of power).

• The best variation will win in the marketplace as expressed through price and network activity...due to significance

of network effects, winning the “popularity contest” in fork wars is crucial.

Scalability Balance of Power Use Case

Capacity to handle transaction

activity pertinent to use case

Balance between devs, miners,

and nodes to control direction and

security of protocol

Should Bitcoin be digital cash,

digital gold, or a general use

commodity data ledger?

• 2GB block size (soon to have

no limit)

• Bitcoin must scale to be a

commodity data ledger

• Freeze protocol to reduce

developer control

• Centralized development

(nChain)

• Network stability = fewer

changes to protocol

• Digital cash / payments

• Commodity data ledger

• SegWit (now over 50% of tx)

• Scaling isn’t free – costs

security and decentralization

• Desire active developer

community

• Miners are commodity actors,

respond to incentives

• Digital gold at 1st layer

• Opportunity for payments with

2nd layer scaling

• 32MB block size

• Bitcoin must scale to be global

P2P payments network

• Desire active developer

community

• Miners are commodity actors;

respond to incentives

• Payments network / digital

cash at the 1st layer

BTC

BCH

Their view...

November 6, 2019


Source: https://bitcointalk.org/index.php?topic=1391350.0

Satoshi at least entertained the notion of increasing the block size in 2010 on a discussion Bitcointalk discussion thread,

and even suggested how it theoretically could be done.

• The idea of raising the block size limit is a concept that has been discussed since the earliest days of Bitcoin.

Slide 11

Theoretical solution – phasing in

larger block size limit after certain

number of blocks have been mined

Figure: Bitcointalk.com discussion thread on increasing block size limitFrom 2010

https://bitcointalk.org/index.php?topic=1391350.0

https://bitcointalk.org/

November 6, 2019


Source: https://bitcointalk.org/index.php?topic=1391350.0

In one email to Mike Hearn (former BTC core developer) in 2009, Satoshi suggested that the Bitcoin network could one day

scale to be much larger than the Visa’s online credit card network. In ‘09 Visa was processing ~15mm online credit purchases

per day, or ~170 tps vs. BTC’s current limit of 4-7 tps.

• It’s impossible to truly know Satoshi’s intentions, but this does seem to negate the notion that Satoshi would

not want Bitcoin to scale significantly.

• Separately, Satoshi even seems to accept the possibility of specialized mining operations.

Slide 12

Scaling to

compete with Visa

Advent of

ASICs not

expected

Figure: Email from Satoshi Nakamoto to Mike Hearne re: Bitcoin ScalingFrom 2009

https://bitcointalk.org/index.php?topic=1391350.0

https://plan99.net/~mike/

November 6, 2019


Source: Fundstrat, Bitcoin SV

Slide 13

Performance

Security

Governance

Regulation

Use case

applications

• Block size limit is currently set to 2GB, but will be removed entirely following the Genesis upgrade

(February 2020)

• With most miners setting block limit to 256MB, BSV theoretical TPS is currently ~700 TPS

• Actual TPS is ~2.1 due to low on-chain activity; blocks are currently carrying 0.30% of total capacity

• Miner concentration is high with the two largest pools approaching ~50% of total hash power.

• Though, with total network hash power ~1 EH/s, CoinGeek and ViaBTC’s significant share of hash power

(>40%) could be viewed as a defensive measure against another non-supportive pool waging a network

attack.

• BSV supports pseudo-anonymity, but not anonymity; believes there should be a minimum level of

transaction visibility for regulators to effectively monitor transactions for illegal activity.

• Developers are not prioritizing transaction anonymity on the network.

• Supports tokenization solutions on BSV that emphasize a regulatory friendly design.

• Micropayments

• The long-term and ambitious vision for BSV, highlighted by the introduction in December ’18 of the

“Metanet”, is for BSV to act as a commodity data ledger for the internet.

• nChain is the primary development team of BSV; code development is centralized with nChain controlling

all code changes.

• The Bitcoin Association owns the BSV node software, which differs from traditional open source projects in

crypto; it also funds node software development.

• BSV believes more power should be with miners than with developers (mitigating BSV’s centralized

development)

November 6, 2019



BSV’s strategy is to make blocks significantly larger than what is currently needed in order to attract corporate partners. Post-

Genesis upgrade, BSV’s block size limit is 2GB (though most miners are setting their block template size to 256MB).

• Although we estimate transactions per second (TPS) for BSV could reach 1500, this does not account for larger

transaction sizes (ex. document storage) and bandwidth needs. 600 tps is a more practical limit, especially since

most BSV miners currently set their block limit to 256MB. At full 2GB blocks, BSV could reach >5000 TPS depending

on transaction size.

• Further, at 1.1MB, BSV’s blocks are larger than BTC’s. Being 0.43% full, they can still accommodate future growth.

Slide 14

Figure: BSV is the “big block” Bitcoin

BSV chose biggest blocks for

highest theoretical TPS...

...but low on-chain activity

results in nearly empty blocks

and low actual TPS

in MB, 30 day moving average BSV BTC BCH

(a) 24H Transactions 236,479 319,354 42,363

(b) 24H Blocks 145 146 144

(c) = (b) / (a) Transactions / Block 1,636 2,189 294

(d) Average Block Size (MB) 1.10 0.98 0.10

(e) = (d) / (c) Average transaction size (MB) 0.000670 0.000448 0.000356

(f) Miner chosen block limit (MB) 256 2 32

(g) = (f) / (e) * 144 / (24 * 3600) TPS with 256MB chosen block limit 636.8 7.4 149.8

(h) = (d) / (f) Block fill % 0.43% 49.08% 0.33%

(i) = (a) / 24 / 3600 Actual TPS 2.7 3.7 0.5

What block size is just right?

2MB

32MB 2GB

BSV miners are

setting their block

limits to 256MB

November 6, 2019


Source: Fundstrat

Slide 15

Current Genesis upgrade

Current block size

limit is 2048MB

Bitcoin SV will lift the theoretical block size limit from 2GB with its Genesis upgrade, allowing miners to set their own block

cap limit. Currently the block cap limit is 2GB with most miners setting their own limit to 256 MB. This design decision is

motivated by BSV’s desire to give miners greater control over the network relative to developers.

• Block sizes are constrained by the 10-minute block interval and the time it takes for larger blocks to propagate

through the network.

• In practice, the block size would increase with network usage (fuller blocks) and improved internet bandwidth.

256 MB 256 MBMiners can set

lower limit,

currently 256MB

Genesis upgrade will remove

block size limit entirely...

…But network capacity likely to

constrain miners’ block size settings

512

1024

2048

256

November 6, 2019


Slide 16

Theoretical TPS exceeds BTC and BCH

BSV’s current block size limit of 2GB (and soon to be

unlimited) means that the theoretical TPS of the network

is significantly higher than that of BTC or BCH.

Centralized software development brings

efficiencies to process

With nChain as the primary development arm of BSV,

software changes are able to occur much more

expeditiously than with other chains.

Stable codebase

BSV aims to create a stable codebase by reducing the

number of changes to it going forward. Over time this is

something corporate entities may appreciate.

BSV regularly engages with community

CoinGeek regularly hosts large conferences and events

to bring together and grow the BSV community.

Owned node software discourages forking network

The Bitcoin Association owns the BSV node software,

which should discourage forking of the BSV network.

High block size could inhibit network propagation

In part due to large block sizes, BSV occasionally

experiences block reorgs though it is unclear what the

long-term detriment of such events could be.

Centralized developer community may turn off open

source software purists

Though it brings efficiencies to software changes, a

formalized centralized development arm may alienate

some members of the open source community.

Inhibiting developer power could have unforeseen

consequences

BSV will shift power away from developers and towards

miners. This could result in unforeseen consequences

especially if hash power remains concentrated

BSV total network hash power is low at ~1 EH/s

Network hash rate is ~1% of BTC’s hash power. The

lower hash power is, the lower the cost for attacking the

network.

Mining hash power is concentrated

The two largest mining pools, CoinGeek and ViaBTC

represent >40% of total network hash power.

PROS CONS

November 6, 2019


Source: Fundstrat, CoinGeek, nChain

Select Leadership

Calvin Ayre

CoinGeek Owner & Founder

Mr Ayre is a leader in online gaming and runs CoinGeek and its SHA256 mining operations.

Jimmy Nguyen

President, Bitcoin Association and former CEO, nChain

Mr Nguyen is the President of the Bitcoin Association and previously led nChain, the entity driving BSV

R&D and software development. He was previously a leading intellectual property lawyer.

Dr Craig Wright

Chief Scientist, nChain

Dr. Craig Wright is an Australian computer scientist and is currently Chief Scientist of nChain, the

development arm of Bitcoin SV.

Steve Shadders

Chief Technology Officer, nChain

Steve Shadders , an early contributor to Bitcoin, provides project oversight and liaises with sponsors and

industry.

Slide 17

November 6, 2019


$2

$4

$8

$16

$32

$64

$128

$256

$512

$1,024

$2,048

$4,096

Nov

'18

Jan '1

9

Mar

'19

May

'19

Jul '

19

Sep

'19

BTC BCH BSV

1,000

2,000

4,000

8,000

16,000

32,000

64,000

128,000

256,000

512,000

1,024,000

2,048,000

4,096,000

Nov

'18

Jan '1

9

Mar

'19

May

'19

Jul '

19

Sep

'19

BTC BCH BSV

$5$10$20$40$80

$160$320$640

$1,280$2,560$5,120

$10,240$20,480$40,960$81,920

$163,840$327,680$655,360

$1,310,720

Nov

'18

Jan '1

9

Mar

'19

May

'19

Jul '

19

Sep

'19

BTC BCH BSV

Slide 18

Figure: Transaction levels for BTC, BCH and BSV

7 day moving average

BTC on-chain transaction value and daily fees are an order of magnitude higher than BSV or BCH.

• Transaction count is more comparable across the three competing protocols, but average transactions are much

smaller for BCH and BSV than for BTC.

• The BSV is primarily used for metadata transfers, which helps explain why its avg. transaction value is so low.

Source: Fundstrat, Coinmetrics

Transaction Value ($M) Daily Fees ($)Transaction Count

Tx value

spiking up

to catch up

to Tx count

Daily BSV fees

of $220 trail

BTC’s $325k

November 6, 2019


0kB

500kB

1000kB

1500kB

2000kB

2500kB

3000kB

3500kB

4000kB

4500kB

Nov '18 Jan '19 Mar '19 May '19 Jul '19 Sep '19

BTC BCH BSV

Slide 19

Figure: Average block size BTC, BCH and BSV

Since 11/15/18, 7 day moving average

• BSV’s block size has been growing since the spring, and is now comparable to BTC’s block size despite

significant differences in the makeup of each network’s respective block composition.

• Both BTC and BCH block sizes have been roughly static over the past year while BSV has seen its average

block size climb from lows in June 2019.


BSV average block

size has grown while

BTC and BCH have

been stable…

November 6, 2019


$2

$4

$8

$16

$32

$64

$128

$256

$512

$1,024

$2,048

$4,096


BTC BCH BSV

$4

$8

$16

$32

$64

$128

$256

$512

$1,024

$2,048

$4,096

$8,192

$16,384

$32,768

$65,536


BTC BCH BSV

Slide 20

Figure: On Chain and Exchange daily traded value

$ millions, 7 Day Moving Average

Exchange volume is substantially higher than on-chain volume, our measurement of “speculation relative to utility.”

• BTC exchange volume is currently 15.9x on-chain volume, BCH is 17.2x while BSV is 20.4x.

• At 20.4x greater than it’s on-chain volume, BSV’s speculative relative to utility is higher than both BCH and BTC.


On-Chain Volume Exchange Volume

BSV exchange

volume is 20.4x on-

chain volume

November 6, 2019


0.00001%

0.00002%

0.00004%

0.00008%

0.00016%

0.00032%

0.00064%

0.00128%

0.00256%

0.00512%

0.01024%

0.02048%

0.04096%

0.08192%


BTC BCH BSV

Slide 21

Figure: Fees as a % of on chain transaction volume

7 Day Moving Average

BTC remains relatively expensive to transact on, compared to BCH and BSV, although all have much lower costs than

traditional payment networks.

• BCH and BSV have lower fees as % of on chain volume despite having lower average transaction sizes.

• Large block size and low fees allow for users to save data files to the blockchain for use cases such as legal /

real estate documents and contracts.


BSV fees are

currently 0.001% of

on chain volume

November 6, 2019


4,000

16,000

64,000

256,000

1,024,000


BTC BCH BSV

Slide 22

Figure: Daily active addresses for BTC, BCH and BSV

7 Day Moving Average

Active addresses for BTC have been relatively stable over the past year.

• BSV and BCH’s active addresses were both high at the original split but fell sharply over the following weeks.

• BSV addresses have been ticking up since early 2019 and now exceed BCH.


Steady growth in active

addresses since early 2019

November 6, 2019


0

50

100

150

200

250


Re

bas

ed

: 1

00

on

11

/15

/18

BTC BCH BSV

Slide 23

Figure: Rebased price for BTC, BCH and BSV

Since 11/15/18, 30 day moving average

BSV’s price performance has exceeded that of BCH since their split in November 2018.

• BSV is up ~7% since the Nov 2018 launch, while BTC is up 50% and BCH is down 40%.

• Most of the BSV price action took place between 5/20 and 7/1, delayed compared to the sharp BTC recovery

starting 4/1.


BSV price recovery

was later, shorter

and faster than BTC

Figure: Absolute price for BTC, BCH and BSV

Log scale, since 11/15/18, 7 day moving average

$25

$50

$100

$200

$400

$800

$1,600

$3,200

$6,400

$12,800


BTC BCH BSV

November 6, 2019


1

2

4

8

16

32

64

128

256

512

1024

2048

4096

8192

16384

1 9

17

25

33

41

49

57

65

73

81

89

97

105

113

121

129

137

145

153

161

169

177

185

193

201

209

217

225

233

241

249

257

265

273

281

289

297

305

313

321

329

337

345

353

361

30

-Day M

Avg

, re

base

d t

o 1

00

as o

f d

ay 1

Days from release

BCH DCR ZEC DASH XMR DOGE GRIN LTC AVG BSV

Slide 24

Below we show the price performance (indexed to 100) of BSV and its peers for the first 365 days since their launch in order

to gauge how BSV has performed relative to other cryptocurrencies.

• BSV’s price performance has lagged its competitor group average over its first year (launch was November ’18).

• Its launch in mid November ’18 coincided with a crypto bear market that lasted through March ’19.


Figure: Price performance for BSV and select other tokens

First year from initial release, 30 day moving average; dashed lines are tokens launched in bull market, solid lines in bear market.

BSV is flat since

launch, but trailing

peer average

Bear market launch Bull market launch

DASHLTC

BCH

DCRDOGE

XMRGRIN

ZEC

November 6, 2019


4

8

16

32

64

128

256

512

1024

3

12

21

30

39

48

57

66

75

84

93

102

111

120

129

138

147

156

165

174

183

192

201

210

219

228

237

246

255

264

273

282

291

300

309

318

327

336

345

354

363

30

-Day M

Avg

, re

base

d t

o 1

00

as o

f d

ay 1

Days from release

BCH ZEC DCR DASH XMR DOGE GRIN LTC AVG BSV


Slide 25

Figure: Active addresses for BSV and select other tokens


Below we show active address growth (indexed to 100) of BSV and its peers for the first 365 days since their launch in order

to gauge how BSV has performed relative to other cryptocurrencies. As a fork, BSV started with a lot more initial addresses

than some of the peers.

• Active addresses for BSV bottomed at 22% of the average over the first 30 days.

• Currently, BSV active addresses are at 120% of the initial average active addresses.

Active addresses have

been growing steadily

since bottom at ~60 days

Bear market launch Bull market launch

DASH

LTC

BCH

DCR

DOGE

ZEC

November 6, 2019


Slide 26

Figure: Transaction Count and Transaction Value for BSV and select other tokens


Below we show transaction count and transaction value growth (indexed to 100) of BSV and its peers for the first 365 days

since their launch in order to gauge how BSV has performed relative to other cryptocurrencies.

• BSV’s transaction count and transaction value have grown since launch at a lower rate than its peer group.


Transaction Count Transaction Value

0.25

0.5

1

2

4

8

16

32

64

128

256

512

1024

3

21

39

57

75

93

111

129

147

165

183

201

219

237

255

273

291

309

327

345

363

30

-Day

MA

vg,

reb

ase

d t

o 1

00

as

of

day

1

Days from release

BCH DASH XMR DCR ZEC

DOGE GRIN LTC AVG BSV

1

2

4

8

16

32

64

128

256

512

1024

2048

4096

2

20

38

56

74

92

110

128

146

164

182

200

218

236

254

272

290

308

326

344

362

30

-Day

MA

vg,

reb

ase

d t

o 1

00

as

of

day

1

Days from release

BCH DASH XMR DCR ZEC

DOGE GRIN LTC AVG BSV

Transactions

increasing...

DASH

LTC

DCR

ZEC

XMR

BCH

DOGE

... transaction

value bottomed

November 6, 2019


(1000)

(500)

0

500

1000

1500


Re

base

d:

0 o

n 1

1/1

5/1

8

BTC BCH BSV


Slide 27

Figure: Cumulative blocks mined less theoretical blocks mined at 10-

minute intervals

Since 11/15/2018 (BSV launch)

BSV has mined ~400 fewer blocks than expected since 12/1/2018, coinciding with a general decline in hash power.

• Compared to the theoretical number of blocks that should have been mined since 11/15/2018, BTC miners have

earned an excess of 1200 blocks, worth ~$122 million. In other words, mining hash power has grown faster than

difficulty over most difficulty adjustment periods.

• BCH has mined about 160 fewer blocks than it should have, mostly through year end 2019.

• On the other hand, BSV miners earned ~400 fewer blocks, despite difficulty staying roughly static since Dec 1

2018.

Figure: Mining difficulty

Since 11/15/2018 (BSV launch)

Stable mining difficulty YTD,

but cumulative block shortfall

growing

0

50

100

150

200

250


Re

base

d:

10

0 o

n 1

1/1

5/1

8

BTC BCH BSV

November 6, 2019



Slide 28

Figure: Mining profitability for main Bitcoin forks

As of 10/31/19

Using the Bitmain Antminer S9 and S17 Pro mining rigs as a reference, we show that both the BCH and BSV Networks are

operating at slightly lower profitability than BTC. We also note that a 3rd party, coin.dance, has often shown BSV to be more

profitable to mine than BTC or BCH (in our view reflecting the project’s higher risk).

• Miners are acting rationally, with little arbitrage available; we expect smaller projects to deliver higher

profitability to compensate miners for taking on higher risk on higher volatility of both price and hash power,

and lower network security.

• Notably, profitability suggests miners perceive BSV risk as comparable to its larger BCH competitor.

BTC BCH BSV BTC BCH BSVTotal Hashpower 88,995,440 2,925,400 1,368,800 88,995,440 2,925,400 1,368,800

Price $9,222.00 $281.31 $128.24 $9,222.00 $281.31 $128.24

Device Hashpower, TH/s 14.0 14.0 14.0 56.0 56.0 56.0

Share of Hashpower 0.000016% 0.000479% 0.001023% 0.000063% 0.001914% 0.004091%

Cost per rig $310 $310 $310 $2,969 $2,969 $2,969

Power consumption per device, Watts 1471.3 1471.3 1471.3 2696.4 2696.4 2696.4

Daily power cost @ 0.06 / kWh $2.12 $2.12 $2.12 $3.88 $3.88 $3.88

Overhead cost @20% $0.42 $0.42 $0.42 $0.78 $0.78 $0.78

Tokens mined per day 0.000295 0.008973 0.019177 0.001180 0.035893 0.076710

Depreciation / Token (24 month life) $1,460 $48 $22 $3,495 $115 $54

Cash cost per token $8,619 $283 $133 $3,949 $130 $61

Total cost per token $10,079 $331 $155 $7,444 $245 $114

Price / Cash Breakeven 1.1x 1.0x 1.0x 2.3x 2.2x 2.1x

Price / Breakeven 0.9x 0.8x 0.8x 1.2x 1.1x 1.1x

Bitmain Antminer S9 Bitmain Antminer S17 Pro

November 6, 2019



Slide 29

Figure: Incremental storage needs for a node over the next 4 years

Each block = 1 TB of storage

BSV needs much more storage than either BCH or BTC.

• Assuming a 50% block fill on BSV, the blockchain would grow at almost 4.5 TB per month or 200+ TB over 4 years.

• Over the same timeframe, even if 100% full, BCH’s blockchain would grow by 7 TB, and BTC’s by less than 0.5 TB.

• The need for large storage capacity could shut out individual hobbyists from running BSV nodes.

BSV’s big blocks lead to

large storage needs…

BSV BTCBCH

BSV BCH BTC

Block Size 2048 MB 32 MB 2 MB

Block Fill 50% 100% 100%

Block Frequency 10 mins 10 mins 10 mins

Daily Storage 147456 MB 4608 MB 288 MB

Monthly Blockchain Growth 4.42 TB 0.14 TB 0.01 TB

Storage in 48 months 212.3 TB 6.6 TB 0.4 TB

November 6, 2019


$843

$77$62

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

BSV BCH BTCSource: Fundstrat, amazon.com for hardware prices, Comcast Xfinity and Stealth communications for dedicated broadband prices

https://bitcoinsv.io/2019/08/02/bitcoin-sv-node-system-requirements/,

https://www.reddit.com/r/btc/comments/80y78b/current_bitcoin_cash_node_hardware_requirements/,

https://bitcoin.org/en/full-node#special-cases

Cost in 48 months is less than sum of line items assuming future costs of storage and bandwidth are lower than current, declining at 1% per month

Slide 30

Figure: Estimated monthly cost to run a node in 4 yearsNote: We assume unit costs for HDDs and bandwidth decline by 1% p.m.

We priced out computing and bandwidth requirements for a full node for BSV, BTC and BCH.

• A BTC node can be run on a budget i3 desktop or laptop, while a BCH node requires just slightly more mid-range resources, including

additional connected storage.

• A full BSV node requires significant compute power, storage, and bandwidth to be able to process, store large blocks, and bandwidth –

especially uploads speeds – for timely propagation of the state of the blockchain.

• A BSV node could cost $7000 upfront, a high end internet connection, and $80-90 in monthly hard disk purchases.

Over time BSV nodes

could cost 14 times

more per month

BSV BCH BTC

CPU Specs 12-core i9 i5-9400 i3-8100

Memory 64 GB 12 GB 8 GB

Power Consumption 1500 W 300 W 300 W

Price $7,095 $520 $395

Storage Cost / TB $20 $20 $20

HDD Power Consumption / TB 5.6 W 5.6 W 5.6 W

Recommended Internet Bandwidth 1 Gbps 250 Mbps 100 Mbps

Depreciation (48 month life) $148 $11 $8

Hard Disk Purchases $88.47 $2.76 $0.17

Bandwidth Costs $105 $80 $65

Electricity $116 $15 $13

Cost in 48 months $384 $77 $62

Sp

ecif

icat

ion

sM

on

thly

Co

sts

https://bitcoinsv.io/2019/08/02/bitcoin-sv-node-system-requirements/

https://www.reddit.com/r/btc/comments/80y78b/current_bitcoin_cash_node_hardware_requirements/

https://bitcoin.org/en/full-node#special-cases

November 6, 2019


F2Pool

15.9%

Poolin

12.7%AntPool

12.6%

BTC.com

16.8%

ViaBTC

7.1%

Huobi

6.6%

BTC.top

5.6%

Other

22.7%

BTC.top

12.2%

BTC.com

9.8%

BTC.top

12.2%

BTC.com

9.8%

Bitcoin.com

9.0%Antpool

7.1%

ViaBTC

5.1%

Other

56.8%

ViaBTC

23%

Coingeek

22%

Mempool

6%

SVPool

5%

OKEx

5%Other

39%

Top 2 pools account for

>40% of BSV hash power

Source: Fundstrat, coin.dance

Slide 31

Figure: Mining pools’ share of network hash power

As of 9/30/19. Past 7 days.

BSV takes a different stances on the role of miners in the network than does BTC or BCH. Specifically, BSV believes miners

should have more power than they do currently in either the BTC or BCH networks.

• Currently CoinGeek and ViaBTC control >40% of hash power. Though this does prompt security concerns, it’s

important to remember that CoinGeek is heavily invested in the success of BSV.

• Thus, launching an attack against BSV would conflict with their own economic and personal interests.

• The CoinGeek pool is a part of CoinGeek.com, which is a significant supporter of the BSV network (CoinGeek

hosts the largest BSV conferences globally); SVPool (5% of hash power) is a personal initiative of Craig Wright.

BSV BTC BCH

November 6, 2019


Source: Fundstrat, CoinGeek, nChain

Slide 32

• Primary development

arm of Bitcoin SV

• Funds node software development

• Sponsors conferences in support of BSV

• 1 of 2 largest BSV mining groups

• 1 of 4 largest BSV mining groups • Owner of Bitcoin SV’s node software

November 6, 2019


Slide 33

Source: Bitcoin SV

• Company: Enterprise-class blockchain products for financial

services and supply chain

• Why BSV: DRIVE Pay real-time remittance using BSV’s

ledger for recordkeeping and BSV for bridge currency.

• Company: Social media platform; twitter-like platform where

micropayments add financial incentives to user interactions

• Why BSV: Users can earn and spend BSV through their

interactions with other users on the platform. For example,

creating text replies (no image) costs $0.02 and liking a post

costs $0.10, of which $0.09 goes to the content creator.

• Company: Online gaming company

• Why BSV: Maintain permanent record of past games on BSV

ledger; potential for in-game items to become tradeable within

broader digital ecosystem.

• Company: Enterprise blockchain service provider

• Why BSV: BSV offers high transaction throughput with low

transaction fees, and smart contract functionality.

November 6, 2019


There are several wallet providers supporting BSV, including those listed below…

• Bitcoin SV can be traded on 80 exchanges, although liquidity is limited on many of them.

• Making BSV more accessible to a wider audience is crucial to broadening adoption.

Slide 34

Figure: Bitcoin SV Wallets Figure: Select Bitcoin SV Exchanges

Source: Fundstrat, Bitcoinsv.io, bitcoinassociation.net

Diverse options make it easier to

hold and trade BSV across markets

November 6, 2019


Source: Fundstrat, Bitcoinsv.io

There are several block explorers as well as numerous developer tools to support the BSV ecosystem.

• These tools help engineers build out products and applications on the Bitcoin SV blockchain.

• A diverse set of applications is necessary for Bitcoin SV to grow share vs competing blockchains. There are

now over 300 published BSV applications and developer tools.

Slide 35

Figure: Select Bitcoin SV block explorers Figure: Other Bitcoin SV tools

Developer tools support

community growth and

maturation

Block explorers improve

transparency

November 6, 2019


Source: nChain

Slide 36

Figure: Metanet example – Institutional record storage and interaction with social media

nChain proposed The Metanet as a blockchain powered, browser based distributed peer Internet. The proposal would create

a directed graph that can be reconstructed off chain and can essentially preserve the versions and history of content data,

preserving the state of, say, geospatial / image archive as of a point in time. The data can be accessed in a trustless manner

owing to the proof of work that goes into securely validating the data.

• One possible example application is the ability to securely validate the visual progress of a construction project,

especially if payment installments are to be released based on construction milestones.

• The BSV team has discussed many potential applications, including academia and social media, shown below.

• We would view adoption in construction, real estate, and illiquid asset title management as crucial evidence of

broader success in meeting a market need.

An institution can

follow its students

by year

Social media treeAcademic credentials

on social media point

back to institution for

verification

November 6, 2019


Source: Fundstrat

Slide 37

Category Description Bitcoin SV

Bitcoin

Core

Bitcoin

Cash Ripple Ethereum Litecoin

Enterprise cost

savings

Financing and

tracking l l

PaymentsReduced

payment fees l ◔ l l ◑ l

Digital commodity

Trusted asset

storage and

retrievall ◔ ◑ ◔

Enable open

sourced funding

Funding platform

or token open to

publicl l l l l

New business

models

New payment

streams l ◑ ◑ l ◑

Many of the opportunities for value creation in the economy by crypto projects stem from cryptocurrencies’ ability to offer

users frictionless (or near-frictionless) transfer of value (the transfer of 1s and 0s which represent value in digital economy).

Bitcoin SV has multiple

vectors for value creation

November 6, 2019


Source: G4S and Payments Advisory Group

Slide 38

Figure: Payment instruments by attribute

While some cryptocurrencies have gained traction as a potential store of value, the notion of a decentralized cryptocurrency

gaining mainstream adoption is still far out on the horizon.

• As Facebook’s attempt at launching Libra has shown, there are still significant regulatory hurdles and it’s

unclear that the public in the developing world is looking for alternative payment methods.

As a payments rail,

cryptocurrency faces

regulatory and

technological hurdles to

mass adoption

November 6, 2019


This research is for the clients of Fundstrat Global Advisors only. For important disclosures and rating histories regarding sectors or companies that are the subject of this report, please contact your sales representative or Fundstrat Global Advisors at 150 East 52nd Street, New York, NY, 10022 USA.

Analyst Certification (Reg AC)

Alex Kern, the research analysts denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect their personal views, which have not been influenced by considerations of the firm’s business or client relationships.

Neither I (Alex Kern), nor a member of my household is an officer, director, or advisory board member of the issuer(s) or has another significant affiliation with the issuer(s) that is/are the subject of this research report. There is a possibility that we will from time to time have long or short positions in, and buy or sell, the securities or derivatives, if any, referred to in this research

Conflicts of Interest

This research contains the views, opinions and recommendations of Fundstrat. The Bitcoin Association is a client of Fundstrat and receives Fundstrat’s published research reports. The Bitcoin Association has commissioned/paid for this specific research project and has permission to distribute. This report is intended for research and educational purposes.

General Disclosures

Fundstrat Global Advisors is an independent research company and is not a registered investment advisor and is not acting as a broker dealer under any federal or state securities laws. Fundstrat Global Advisors is a member of IRC Securities’ Research Prime Services Platform. IRC Securities is a FINRA registered broker-dealer that is focused on supporting the independent research industry. Certain personnel of Fundstrat (i.e. Research Analysts) are registered representatives of IRC Securities, a FINRA member firm registered as a broker-dealer with the Securities and Exchange Commission and certain state securities regulators. As registered representatives and independent contractors of IRC Securities, such personnel June receive commissions paid to or shared with IRC Securities for transactions placed by Fundstrat clients directly with IRC Securities or with securities firms that June share commissions with IRC Securities in accordance with applicable SEC and FINRA requirements. IRC Securities does not distribute the research of Fundstrat, which is available to select institutional clients that have engaged Fundstrat.

As registered representatives of IRC Securities our analysts must follow IRC Securities’ Written Supervisory Procedures. Notable compliance policies include (1) prohibition of insider trading or the facilitation thereof, (2) maintaining client confidentiality, (3) archival of electronic communications, and (4) appropriate use of electronic communications, amongst other compliance related policies.

Fundstrat does not have the same conflicts that traditional sell-side research organizations have because Fundstrat (1) does not conduct any investment banking activities, (2) does not manage any investment funds, and (3) our clients are only institutional investors.

This research is for the clients of Fundstrat Global Advisors only. Additional information is available upon request. Information has been obtained from sources believed to be reliable but Fundstrat Global Advisors does not warrant its completeness or accuracy except with respect to any disclosures relative to Fundstrat and the analyst's involvement (if any) with any of the subject companies of the research. All pricing is as of the market close for the securities discussed, unless otherwise stated. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, risk tolerance, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies. The recipient of this report must make its own independent decision regarding any securities or financial instruments mentioned herein. Except in circumstances where Fundstrat expressly agrees otherwise in writing, Fundstrat is not acting as a municipal advisor and the opinions or views contained herein are not intended to be, and do not constitute, advice, including within the meaning of Section 15B of the Securities Exchange Act of 1934. All research reports are disseminated and available to all clients simultaneously through electronic publication to our internal client website, fundstrat.com. Not all research content is redistributed to our clients or made available to third-party aggregators or the media. Please contact your sales representative if you would like to receive any of our research publications.

Copyright 2019 Fundstrat Global Advisors LLC. All rights reserved. No part of this material June be reprinted, sold or redistributed without the prior written consent of Fundstrat Global Advisors LLC.

Slide 39

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