In the fourth session on Day One of The Bitcoin Masterclasses, Dr. Craig Wright talked about how party-to-party transactions work on Bitcoin. It’s clear that P2P transactions will revolutionize every industry and change the world for the better, thanks to the traceability of the Bitcoin blockchain.
Ways to use party-to-party transactions
Dr. Wright begins this session by asking the audience to devise ways to utilize party-to-party transactions because this way of doing things will change many industries dramatically.
Some of the ideas spoken about include:
Splitting bills and tipping service workers more effectively – making it possible to tip kitchen staff, waiters, and so on individually.
Revolutionizing how remittances work – attaching restrictions to where the money can be used for. People could even approve invoices or reject them straight from their wallets, eliminating the need to send money home.
Improving shipping and logistics – wherein ships that aren’t full could advertise available space, allowing other parties to bid for space directly. Parties could even trade or swap space thanks to tokenization.
Enabling party-to-party gambling with timestamped bets to keep everything transparent and legal – This could potentially eliminate bookmakers and enable any two parties to bet globally.
Transforming services like Amazon Kindle – allowing friends, colleagues, or any two parties who wish to swap books and other media formats for limited periods of time. Dr. Wright points out that NFTs would play a pivotal role in this.
Making it possible to tip others directly on social media – even allowing people to specify who they want to remunerate when things like Tweets go viral.
Selling energy from party-to-party – and using economic incentives to encourage people to use energy in desired ways. This ties in nicely with the push for smart homes and efficient energy use.
Enabling people to rent their cars out – when they’re not using them utilizing an official contract since they are two distinct parties. This would lower carbon emissions and encourage efficient usage of vehicles.
Elaborating on the concept of ‘party-to-party’
“Party-to-party doesn’t even need to be geographic,” Dr. Wright says, pointing out that it can involve exchanging information between associated people and others.
Utilizing Bitcoin’s Sigops, we can have someone sign a partial input, allowing us to split multi-coin payments between different parties, requiring them to sign only for the coins they intend to spend. For example, if we have a 10-coin transaction split between five parties, we can have each party sign to spend two coins without the need to sign for everything. Bringing this to the real world, Dr. Wright imagines a $100 restaurant bill being split by five people for $20 each.
“We need to start thinking outside the box,” Dr. Wright reiterates. “We don’t need to be geographically present. We don’t need to have the bill go to someone at the restaurant or at the supermarket anymore. We can send things for authorization to different parties.”
What’s a real example of this? Dr. Wright asks us to imagine running a store as part of a chain; requests between the store manager can go directly to whoever controls the treasury at the Head Office, and both the manager of the store and the treasurer need to sign, creating true accountability. In this example, if there was collusion between a store manager and a treasurer to commit fraud, there would be a timestamped record of everything, enabling auditors to detect it.
Revolutionizing business models through party-to-party payments
Pivoting to remittances, Dr. Wright explains that concepts such as this exist because of the high costs, creating minimums, and the need to send money in chunks.
“This changes your buying and selling behavior, making it more likely [that] you’re going to put money in as a block. However, if you can spend 20 cents at a time, you’re going to have a different way of reacting,” he says.
Speaking more on the psychology of micro and nano payments, Dr. Wright explains that when we’re talking thousandths of a cent, even the poorest people will spend freely without much thought. He gives the example of accessing Google searches for fractions of a cent. “No one cares,” he says. Furthermore, companies like Google (NASDAQ: GOOGL) would make more money and wouldn’t get pinged for things like monopolistic behavior since they would have true competition.
“If we’re paying for a service, things are different. We move away from the concept of being the product into being the customer,” Dr. Wright says once again. He has been making this point for years when talking about Silicon Valley companies, their business practices, and how Bitcoin can change them. Thanks to the blockchain and minuscule fees, things like fractionalized ownership and payments are possible.
Provability, transparency, and trust
Looking back to the 2008 financial crisis, Dr. Wright says that one of the main problems with CDOs was the lack of transparency. This can change with the blockchain, bringing everything to light.
One of the other key aspects of the blockchain is provability. We want to be able to link everything and prove it, building in controls and knowing who we’re dealing with, Dr. Wright says. Using PKI infrastructure to ensure we’re dealing with legitimate people and corporations, we can see on the blockchain when certificates were created, altered, ratified, etc. This could prevent things like the DigiNotar hack or at least would make them easily and quickly detectable.
“This is what it means to push things out to the edge,” Dr. Wright says. “This matters because, rather than relying on DigiNotar to tell us what’s wrong, we have every client watching and noticing changes…When you have things on-chain, everyone can see it, and you have immutable proof that it happened; it’s a little bit more secure.” This is the sunshine principle, Dr. Wright states, noting that corruption happens in dark, damp places without light and air, and with lots of people watching, it will happen less. When corruption does occur, the blockchain makes it provable.
Wrapping up for the day, Dr. Wright reiterates the main point of these lectures: privacy and anonymity are different things. Privacy protects individuals’ details and allows them to conduct legal business without everyone knowing, while the sort of anonymity talked about by BTC maximalists and advocates of so-called privacy coins favors criminals and those operating in the shadows.
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.