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TAAL lowers Bitcoin SV transaction fees to support enterprise blockchain applications
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TAAL lowers Bitcoin SV transaction fees to support enterprise blockchain applications

Taal Distributed Information Technologies Inc. (formerly Squire Mining Ltd.) (CSE:TAAL) (“TAAL”) is pleased to announce that it will be implementing the following changes to transaction fees charged by its cloud computing operations on the Bitcoin SV (“BSV“) network:

  1. A reduction in the transaction acceptance fee (-blockmintxfee) from 1 satoshi/byte to 0.5 satoshis/byte.
  2. A reduction in the relay fee (-minrelaytxfee which is the minimum fee required for double spend protection and for relaying of a transaction) from 1 satoshi/byte to 0.25 satoshis/byte.
  3. In an additional, but unrelated, change the restrictive limit of 25 unconfirmed ancestors will be immediately raised from 25 to 50.

Joseph Chin, Chief Mining Officer and Corporate Secretary of TAAL explains: “TAAL is reducing these transaction fees as a short-term policy in order to support long-term growth of applications which generate high-volume transactions on the Bitcoin SV blockchain. This is another step in TAAL’s leadership role to support use of the Bitcoin SV blockchain for large-scale enterprise applications. We believe that this step is needed to generate high volume transactions and more overall transaction fees in order to sustain blockchain cloud computing operations profitability in the years to come.”

Currently, the transaction fee component of the block reward in Bitcoin SV mining represents a very small amount of the revenue earned for each BSV block successfully won by a miner.  (For reference, the BSV block reward currently consists of a fixed subsidy amount of 12.5 coins, with a transaction fee component averaging approximately .0191 coins as at January 6, 2020, according to BitInfoCharts.com data).

TAAL does not anticipate the transaction fee change to materially impact the profitability of its BSV cloud computing operations at this time and anticipates that the change will incentivize more enterprise blockchain applications to engage in a high volume BSV transactions, which would be beneficial for greater opportunities and profitability in the long term.

Why is TAAL changing its BSV transaction fees?
“TAAL is an advocate for changes that will allow miners to price fee structures in fiat currency terms alongside satoshi units in order to give certainty of future fees in contractual relationships with enterprise users,” observes Stefan Matthews, Chairman of the board of directors of TAAL.

On the bitcoin network, transaction fees are paid to miners to have a transaction (including data) added to a block and written to the blockchain. Currently, the transaction fee is expressed in the number of satoshi (the smallest divisible unit of a bitcoin) per byte of data, rather than as a fiat currency price. Therefore, the monetary amount in fiat currency of a transaction fee fluctuates due to the market fluctuation of the coin price. This fluctuation has a more significant impact on applications that generate large volumes of transactions on the blockchain. This is happening now on the BSV blockchain, as applications are taking advantage of the BSV blockchain’s greater data capacity to generate transactions which write large amounts of data to the blockchain daily. For example, the BSV applications WeatherSV and Preev generate over approximately 100,000 transactions per day.

As a result, business participants in the BSV ecosystem have recently begun to explore alternate transaction fee models that provide, in fiat currency terms, greater reliability for BSV business applications – including business deals for miners to directly handle a particular application’s set of transactions for negotiated fee rates or development of tools that enable greater fee customization to be offered by miners to applications.

This evolving fee marketplace is new to bitcoin; it was not possible on the Bitcoin Core network due to its smaller block size and significantly higher transaction fees. This new fee marketplace is only recently enabled by BSV’s greater data and microtransaction capabilities. This is expected to present excellent opportunities for TAAL to take a leadership role in exploring innovative fee options, and find its unique niche, in BSV’s emerging transaction fee economy.

Additional Change: Raise Transaction Ancestor Limit
Additionally, TAAL is also immediately raising the restrictive limit of unconfirmed transaction ancestors from 25 to 50 for its BSV mining. The 25 ancestor limit was inherited from Bitcoin Core (BTC) which does not have BSV’s vision to create a Bitcoin network with high volumes of enterprise data transactions. This is a first step in raising this limit on the BSV network. Although this change is unrelated to TAAL’s reduced BSV transaction fees, it has a similar goal to support enterprise blockchain applications on BSV. A higher limit of 50 unconfirmed ancestors is expected to enable business applications to create longer sets of chained transactions before they are mined in a block.

Periodic fee monitoring & future plans
TAAL is committing to regular review of the above announced lower Bitcoin SV transaction fee rates with respect to fiat equivalents in order to maintain a fiat-stable transaction fee rate. Providing a fiat-stable transaction fee rate is expected to help incentivize more enterprises to use BSV for data applications, as big businesses generally want predictability in their costs. TAAL is expected to adjust its BSV transaction fee rates (currently expressed in satoshis per byte) as relevant to respond to market forces.

“Genesis” hard fork on Bitcoin SV – change to default fee rates
The Bitcoin SV network is preparing for a hard fork protocol upgrade on February 4, 2020 (code-named “Genesis”). TAAL notes that one of the changes included in the Genesis hard fork beta release of the Bitcoin BSV Node software is a change to the default fee rate to 0.5 satoshis/byte and a change of relay fee to 0.25 satoshis/byte. Once this software release is widely deployed among miners, which is expected to occur in January 2020, there will be consistency in overall fee rates which will enhance the 0-confirmation (instant transaction) properties of the Bitcoin SV network.

Precautions for BSV network participants
Until a lower relay fee rate is widely adopted, it is NOT zero-confirmation safe to send transactions with a fee rate below the old default rate of 1 satoshi/byte.  For transactions that involve two parties without trust, the fee rate should remain at 1 satoshi/byte until after the Genesis hard fork of the Bitcoin SV network (scheduled for February 4, 2020).  Transactions that do not involve a counterparty can take advantage of the lower fee rates immediately (e.g. data transactions from applications like WeatherSV, who negotiated BSV transaction fee deals directly with miners).

About TAAL Distributed Information Technologies Inc.
TAAL is a Canadian based technology company engaged, through its subsidiaries, in the business of developing and operating and managing cloud computing data infrastructure and system technology to support global blockchain applications related to Bitcoin SV, Bitcoin Core and other associated SHA-256 derived digital assets.

Periodic fee monitoring & future plans
TAAL is committing to regular review of the above announced lower Bitcoin SV transaction fee rates with respect to fiat equivalents in order to maintain a fiat-stable transaction fee rate. Providing a fiat-stable transaction fee rate is expected to help incentivize more enterprises to use BSV for data applications, as big businesses generally want predictability in their costs. TAAL is expected to adjust its BSV transaction fee rates (currently expressed in satoshis per byte) as relevant to respond to market forces.

“Genesis” hard fork on Bitcoin SV – change to default fee rates
The Bitcoin SV network is preparing for a hard fork protocol upgrade on February 4, 2020 (code-named “Genesis”). TAAL notes that one of the changes included in the Genesis hard fork beta release of the Bitcoin BSV Node software is a change to the default fee rate to 0.5 satoshis/byte and a change of relay fee to 0.25 satoshis/byte. Once this software release is widely deployed among miners, which is expected to occur in January 2020, there will be consistency in overall fee rates which will enhance the 0-confirmation (instant transaction) properties of the Bitcoin SV network.

Precautions for BSV network participants
Until a lower relay fee rate is widely adopted, it is NOT zero-confirmation safe to send transactions with a fee rate below the old default rate of 1 satoshi/byte.  For transactions that involve two parties without trust, the fee rate should remain at 1 satoshi/byte until after the Genesis hard fork of the Bitcoin SV network (scheduled for February 4, 2020).  Transactions that do not involve a counterparty can take advantage of the lower fee rates immediately (e.g. data transactions from applications like WeatherSV, who negotiated BSV transaction fee deals directly with miners).

About TAAL Distributed Information Technologies Inc.
TAAL is a Canadian based technology company engaged, through its subsidiaries, in the business of developing and operating and managing cloud computing data infrastructure and system technology to support global blockchain applications related to Bitcoin SV, Bitcoin Core and other associated SHA-256 derived digital assets.

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