Contrary to what Core will tell you, you don\u2019t need everyone verifying every transaction. You need a way to verify it. Humans form hierarchies. I\u2019m sorry, but it does not matter how you construct your society. We form hierarchies\u2026if you look at the only systems that work, they are all hierarchical. - Dr. Craig S. Wright The fifth video in the Ryan X. Charles\u2019s Theory of Bitcoin: The Bitcoin Whitepaper series with Dr. Craig Wright takes us through the third section of the Bitcoin whitepaper which is dedicated to the timestamp server. Dr. Wright points out at the beginning of this episode that even though he left it \u201cunfleshed out,\u201d one of the most important sections in the Bitcoin whitepaper is the timestamp server. But what is a timestamp server anyway? https:\/\/youtu.be\/CojHv3YhUnk Defining timestamping Dr. Wright describes a timestamp server as \u201ca way of proving that something occurred at a particular time,\u201d for example a payment or the execution of a contract. \u201cTimestamping is actually an incredibly valuable part of most of what happens on earth,\u201d he said. Timestamping underlies a lot of commerce and has been doing so for decades. Dr. Wright cites timestamping within the UNCITRAL provisions for electronic commerce from 1996 and mentions how notaries keep records in addition to physically stamping things. He explains how all of the SWIFT system involves timestamping\u2014credit cards, interbank transfers, etc. SWIFT is one form of EDI (electronic data interchange) and Dr. Wright points out that Bitcoin can replace this system. In fact, some of the early areas Dr. Wright patented include doing EDI over Bitcoin protocols. If we put EDI on Bitcoin, the technology can replace SWIFT and transactions would be automatically timestamped, ordered and instances of fraud greatly reduced. The distributed timestamp server is one of the greatest innovations of Bitcoin Existing timestamping systems are based on PKI (public key infrastructure) and if a PKI system gets hacked, there are multi-points of failure. The problem with PKI is that we have a single, centralized server that we can\u2019t distribute. With PKI we can get certification, but it\u2019s not publically time stamped, rather its privately time stamped. So how can you trust it? With Bitcoin, we have a distributed timestamp server and therefore a better security model. If we log when a key gets revoked on the blockchain, we know the exact time when it happened. If there\u2019s a compromise, instead of all the certificates being compromised as they would with a PKI system, we know the exact time and can simply re-issue. The contracts that were stamped before the compromise remain secure and the compromise is contained, its limited in time. If we don\u2019t have the time logged and someone compromises a certificate, they comprise the certificate both back and forward in time. The nodes (miners) are a distributed timestamp server \u201cContrary to what Core will tell you, you don\u2019t need everyone verifying every transaction. You need a way to verify it,\u201d Dr. Wright said. He also points out the requirement of having fixed rules for the system to run properly. He goes on to explain that there are two different types of \u201cdistributed\u201d with Bitcoin. The full nodes are distributed because there\u2019s more than one full node. Block headers are also distributed, but far more widely than the distributed timestamp server because the nodes running simplified payment verification (SPV) wallets distribute block headers and there are more of them. The security model of Bitcoin actually requires SPV nodes to be a large number of people all over the world with these block headers because the more people who have the block headers, the more secure the system will be. Proof of work & competition Another major innovation of Bitcoin is competition amongst the nodes. The ability to do proof of work is actually proof that the full nodes have invested into the network and \u201cthat\u2019s what it\u2019s about,\u201d explained Dr. Wright. Proof of work allows the full nodes to coordinate (not including SPV nodes). There are a small number of full nodes and this \u201ccore\u201d of Bitcoin is effectively a peer to peer network, but not a huge peer to peer network because problems would eventually develop, such as coordination challenges. Therefore, the network must be small enough and all the nodes must trust each other. But how do they trust each other? Well, they have to invest money. \u201cThe proof of work aspect is I have to invest and advertise. This is not the average user on the network. This is the competitive process between each individual in the node peer network,\u201d Dr. Wright explained. It\u2019s a \u201cpeacocking principal,\u201d Dr. Wright said. Nodes signal. Think of buying a used car\u2014you\u2019d trust the salesman who has a big, shiny lot because it\u2019s obvious he\u2019s put in a huge investment and you know where you could find him if there are any problems. Compare this to the salesman on the street corner who could disappear overnight\u2026which salesman are you going to buy from? \u201cWe have 10 minutes and we want to get a small group to agree on the order of transactions and that\u2019s the vote. We\u2019re honest, we\u2019re saying that\u2019s true. But remember, anyone can come along and audit this. And anyone can contest it in court,\u201d Dr. Wright pointed out. Not all nodes are created equal The idea that not all nodes are created equal is embedded in the economics of Bitcoin\u2014there is a hierarchy of success amongst the nodes. Other chains such as BTC and ETH reject the hierarchy and this is one of the reasons why their systems do not function properly. Dr. Wright actually dislikes the idea of equality in general. He believes we need to have prestigious schools and to give less fortunate children the opportunity to mingle with wealthy and educated people to escape poverty. \u201cWe don\u2019t want a world full of mediocre,\u201d he said. Some will be better than others at certain things. \u201cHumans form hierarchies. I\u2019m sorry, but it does not matter how you construct your society. We form hierarchies\u2026if you look at the only systems that work, they are all hierarchical,\u201d Dr. Wright explained.