Bitcoin creator Satoshi Nakamoto, whose real-world identity is nChain Chief Scientist Dr. Craig Wright, has yet again written a lengthy explanation about what the phrase “purely peer-to-peer” means as stated in the revolutionary Bitcoin white paper.
Despite more than a decade since publishing the Bitcoin white paper in 2008 and launching Bitcoin the next year, it seems that the popularity, as well as notoriety, it has achieved so far does not sit well with Dr. Wright.
“Some people will call me angry. Some people will sense my frustration. But, there is a reason for it. I created Bitcoin as a peer-to-peer electronic cash system. I created a micropayment system that would enable the poorest people on earth to trade. Yet, it has been twisted into a criminal money laundering system and a Ponzi scheme,” Dr. Wright stated.
In order to quell his frustrations about his pioneering invention, Dr. Wright opted to explain his original design to correct misunderstandings and show the world that what BTC has become is not what he intended at all.
In a post on his website entitled “Directly from One Party to Another,” Dr. Wright defines the first sentence in his white paper, “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”
Key to this statement is the phrase “purely peer-to-peer,” which many are still disputing the meaning of, as well as its feasibility. The Bitcoin inventor’s explanation is definitely worth reading in order to fully understand what his original design and intention for Bitcoin truly is and how it truly has the power to revolutionize the digital world.
Purely Peer-to-Peer
First off, Dr. Wright explains that for something to be done purely means that something is done in “a manner without admixture.” This rejects the idea of any kind of third party that mediates the act.
In the sending of payments, “purely peer-to-peer” references the direct sending of money or electronic cash between two parties—without the need for the transaction to go through a bank or any kind of financial institution. It is much like how an over-the-counter transaction is made wherein a buyer pays the store in cash for goods provided or services rendered.
“The user component of a pure peer-to-peer network is one where there are no servers. A purely peer-to-peer system such as Bitcoin enables users to exchange value directly… By definition, if you are sending something to any party other than the final party, it is not a direct peer-to-peer exchange,” Dr. Wright explained.
Clarifying the Role of Nodes/Miners
But many are questioning the fact that the Bitcoin network is composed of nodes or miners that facilitate each transaction. If this is the case, then do transactions go through nodes? And if so, are they not considered servers or third parties that break apart the concept of “purely peer-to-peer?”
“You do not make a transaction directly by sending it through multiple hops. If you send a payment to a node, and then someone else collects from the node, the node is an intermediary,” Dr. Wright pointed out.
Dr. Wright clarifies that in his original design, transactions actually do not go through nodes nor do they act as third-party servers. Moreover, nodes only act to enforce the rules and they do not create them, clearly eliminating them as having the role of a financial institution.
Dr. Wrightfurther explains that in the case that Alice sends Bob a transaction directly, when Bob receives it, he can then confirm that it is a transaction that has not been double spent and free of other fraudulent acts. After accepting the transaction, Bob is alerting the nodes that it is validated, and only then will the nodes record it on the blockchain.
“When Alice gives a transaction and the related tokens to Bob, nothing goes through the nodes. The nodes do not decide whether the transaction is finalised and should be recorded. Bob does… In the exchange, the nodes operate to do nothing more than accept the reference of a time-ordered transaction from Bob and record it,” Dr. Wright clarified.
The Future of True Peer-to-Peer Functionality
Unlocking true peer-to-peer functionality in the form of direct communications between people and machines is not possible with IPv4 due its limited, and now depleted, addresses that do not have the capacity to provide a unique IP to each individual.
In order to facilitate true peer-to-peer, there has to be a direct line between IP to IP; and each person or device on the Internet should have its own unique IP address. With IPv6 having more than enough unique addresses to cover each present and future Internet user, this pre-requisite for peer-to-peer has been met.
And when IPv6 is combined with the original design of Bitcoin in the form of the BSV blockchain, which enables unbounded scaling—meaning having the ability to continuously scale in order to handle the increasing amount of data being used and generated daily and the growing number of transactions needed by businesses from different industries—it opens up a world full of opportunities.
“If I want to be able to trace a source of meat from end to end, so that in the future, if something like the mad cow incident in Britain happens, rather than killing practically every cow inthe country, I can monitor the individual farms, and pick and choose and have a surgical response—saving millions of farmers millions of dollars. We can do that,” Dr. Wright said during his keynote presentation at the recently held BSV Global Blockchain Convention in Dubai.
