Human users need to trust the Bitcoin network, but so do network nodes. Can they trust that everything’s still valid, even if they’re offline for a while? The answer is yes, according to Bitcoin creator and nChain Chief Scientist Dr. Craig S. Wright in the fourth session of his The Bitcoin Masterclasses series.
Dr. Wright’s The Bitcoin Masterclasses was a two-day event in London. It was aimed at developers, researchers, and all those curious about how Bitcoin is supposed to work. nChain’s series, which also looks at potential use cases most haven’t considered yet, has similar events planned for other cities outside the United Kingdom in the future.
You can view recordings of all eight sessions (including this one) starting here. Day Two is available here.
Trust, party-to-party, and SPV
Most in the Bitcoin world have heard the expression “double-spend.” For the rest of us, Dr. Wright describes it as an electronic simile to a check bouncing—someone is attempting to spend the same money twice or spend money that isn’t available to use.
Traditionally, this problem is overcome by the receiving party having some information about the payer. It could be formal identification, links to an account, or any rules to which the payer is accountable. How can this be done if transactions are digital, P2P/without banks or middlemen, and might involve parties that don’t know each other? Going back to the general theme of the first day (confidentiality, privacy, and anonymity), how do you maintain trust if real-world identities aren’t known?
(Note that Dr. Wright defines “P2P” in Bitcoin transactions here as “party-to-party” rather than “peer-to-peer.” This would include any kind of payment where transactions must be performed quickly, without intermediaries or long waits for confirmations)
In this session, Dr. Wright also leads a 10-minute workshop where Masterclass participants brainstorm potential use-cases for P2P transactions within groups. The groups might be families, business/trading partners, or other organizations, and members might even be located in separate countries. How do you keep all this fair and enforce any rules you’ve set?
“We have a number of unused SigOp processes in Bitcoin,” Dr. Wright says. These include SigHash flags, which can be used in stages of partial inputs/multi-party transactions. SPV communications between nodes and users can confirm transaction validity almost instantaneously.
“SPV was designed to work between people, and even nodes get to trust the network.”
The Bitcoin blockchain is perfect for maintaining trust
“We can build up much more than the PKI infrastructure we have now,” he adds. For one, a universal trusted source of truth (i.e., a blockchain) allows for timestamped certificates, instant issuing and revocation, provable deletion, webs of trust, verifiable pseudonyms, certificate and permission time limits, and quick flagging to take action on security breaches. Blockchain records also allow for greater transparency and third-party auditing of records.
“We need to start thinking outside the box,” he says. Many use case ideas leave Bitcoin as a faster horse and cart, but still a horse and cart. If payments can be sent by anyone, anywhere, there might not even need to be a payer/cashier relationship as in today’s retail and services. The larger the number of transactions required, the greater amount of resources required and thus the overall costs within an economy.
These costs have led to today’s internet model, where services are provided “for free,” but the user becomes the product. Bitcoin, by allowing P2P micropayments, would allow anyone to pay fractions of a cent for various services, which ultimately leads to more competition, and returns power and data ownership to users.
There are all kinds of shared transactions, ownerships, rentals, and other deals. Many haven’t even been thought of yet. If you’d like some inspiration, watching Dr. Wright’s The Bitcoin Masterclasses series will give you some inspiration.
Watch: The Bitcoin Masterclasses Day 2: Private Identity, Identity Proofs & Topic Reviews
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.