Craig Wright and Xiaohui Liu tackle Bitcoin transactions to places you’ve never thought of

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There’s so much more to Bitcoin than making payments. In fact, if you watch enough episodes of “Bitcoin Class with Satoshi” with Dr. Craig Wright and sCrypt’s Xiaohui Liu, it’s possible to forget Bitcoin was ever supposed to be just a new kind of money—even though it still does that job extremely well.

The most surprising moment in the latest episode is when Liu gets Dr. Wright to admit that Raspberry Pis may have a use on the Bitcoin network after all—but you’ll have to watch it to find out how.

Ep 7 DFA continued: how to make oil pipelines harder to be hacked and how to distribute block headers to SPV clients. Spoiler alert: it may involve BTC satellites and raspberry pi’s https://t.co/bi4U7UNeqC https://t.co/ltTmQttMaQ #bitcoinclass

— sCrypt Official | OP_CAT 🐱 (@scryptplatform) May 17, 2021

‘Complex automata’

What machines should do what? What needs to be validated by transaction processors (miners) and what doesn’t? Why do people still not “get” SPV?

Dr. Wright talks of “transactions with embedded outcomes that can, one by one, update a system … each time we want a new state, we have a new transaction type for the next block cycle.”

The purpose of all this is “to get people to think beyond just on-chain exchanges, into SPV, and how they can now utilize transactions” in interesting and creative ways. BSV permits this kind of creativity because its transactions are so fast and cheap, it’s not necessary to consider what each one costs. Nanotransactions can be used as signals, simply to convey information and prove that something has happened, rather than transferring funds from one party to another.

They can be part of complex processes or as simple as binary signals, like telling a machine to turn on or off, accepting or rejecting a software update, etc.

You don’t even need to loop the transactions on-chain, Dr. Wright says. Not everything on-chain needs to be directly linked to other on-chain transactions—logic can be taken off-chain to another device and still use on-chain information.

Liu admits “this is not a concept I’ve heard of often,” and as is common in this series, sometimes it’s just a matter of getting the idea in your head first, then thinking later about use cases.

It’s all up to the software you write

Dr. Wright gives examples of how this information could be calculated and conveyed between different pieces of software (e.g. challenge-response with exchange of information only transacting parties share, such as UTXOs, Diffie Hellman secrets or other data). This way, you could build “identities” that certain parties are able to trust, or even form a composite identity, depending on the purpose. Note that we’re talking about “identity” in the sense that only the other party needs to trust it, not a form of universal on-chain ID (at least, not just yet).

This way, you can identify, prove and trust a transaction even if it uses addresses that have never appeared previously on the Bitcoin blockchain.

The benefit of using such methods, Dr. Wright says, is that it’s harder for a potential attacker to target you based on a Bitcoin address, if that address isn’t known and has never appeared on the blockchain previously. This creates a resilient system, he adds, and the processes can be built into hardware devices, or firmware.

“The bad guy needs to find you first. It’s not really security through obscurity, but more of a camouflage principle.”

In machine-to-machine transactions, the software can calculate potential addresses even if one of the machines has been offline for a while (even if it’s been offline a whole month, or only connects to the network intermittently). You could have a million IoT machines out there, send an update via a public broadcast, and yet still have only the relevant machines interpret the information they need to calculate key information only each individual machines know. This is practically impossible for attackers to find.

Bitcoin makes it more secure

It’s also far more secure than using digital certificate services, the current preferred method for authentication but one that’s open to several vulnerabilities. Rather than a single compromise bringing down the whole system, blockchain records allow parties to find where something went wrong, remove only information related to that part, and rebuild.

“This is what I want people to get started thinking about. It can be much bigger than just a little bit of script on-chain. It can be entire external processes.”

As with many of the Bitcoin Class episodes, the discussion is often conceptual and concerns automation scenarios that haven’t been invented yet. But that’s because there are near-infinite possibilities.

You’ll always hear Bitcoin opponents posturing on social media with comments like “Craig Wright doesn’t know what he’s talking about.” But remember this: People have been saying that since the first time Dr. Wright opened his mouth about Bitcoin in public—and to date no-one has proven that Bitcoin is unable to perform the tasks he says it can. Quite the opposite, since BSV continues to prove it every day.

What Dr. Wright is doing is explaining that concepts that no-one in Bitcoin has ever thought about before. They’re explanations that could only come from Bitcoin’s inventor himself.

To watch previous episodes of the Theory of Bitcoin and Bitcoin Class with Satoshi, check out the Theory of Bitcoin YouTube channel here and the Bitcoin Class with Satoshi YouTube channel here.