Bitcoin Masterclasses – How party-to-party works when it comes to transactions on the blockchain

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In the fourth session on day one of the Bitcoin Masterclasses, Dr. Craig Wright talked about how peer-to-peer transactions work on Bitcoin. It is clear that P2P transactions will revolutionize all industries and change the world for the better, thanks to the traceability of the Bitcoin blockchain.

Ways to use peer-to-peer transactions

Dr. Wright begins this session by asking the audience to find ways to use peer-to-peer transactions, because this way of doing things will dramatically change many industries.

Some of the ideas being talked about include:

Share bills and tip service workers more efficiently – makes it possible to give tips to kitchen staff, waiters and so on individually.

Revolutionizing how money transfers work – place restrictions on what the money can be used for. People can even approve invoices or reject them right from their wallet, eliminating the need to send money home.

Improve shipping and logistics – where ships that are not full can advertise available space, so that other parties can bid for space directly. Parties can even trade or swap places thanks to tokenization.

Enables party-to-party gambling with time-stamped games to keep everything transparent and legal – This could potentially eliminate bookmakers and enable two parties to bet globally.

Transforming services like Amazon Kindle – let friends, colleagues or other parties who wish to exchange books and other media formats for limited periods. Dr. Wright points out that NFTs will play a central role in this.

Makes it possible to tip others directly on social media — even letting people specify who they want to pay when things like Tweets go viral.

Selling energy from party to party – and use financial incentives to encourage people to use energy in desired ways. This ties in nicely with the drive for smart homes and efficient energy use.

Make it possible for people to rent out their cars – when they do not use them using an official contract since they are two different parties. This will reduce carbon emissions and encourage efficient use of vehicles.

Extends the “party-to-party” concept

“Party-to-party doesn’t even have to be geographic,” says Dr. Wright, noting that it can involve the exchange of information between connected individuals and others.

Using Bitcoin’s Sigops, we can get someone to 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 use. For example, if we have a 10-coin transaction split between five parties, we can have each party sign to spend two coins without having to sign for everything. Bringing this to the real world, Dr. Wright imagines a $100 restaurant bill being split by five people at $20 each.

“We need to start thinking outside the box,” reiterates Dr. Wright. “We don’t need to be geographically present. We don’t have to get the bill to someone at the restaurant or the supermarket anymore. We can send things for authorization to different parties.”

What is 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 head office, and both the store manager and the cashier must sign, creating real accountability. In this example, if there was collusion between a store manager and a cashier to commit fraud, there would be a time-stamped record of everything so auditors could detect it.

Revolutionary business models through peer-to-peer payments

Turning to remittances, Dr. Wright explains that concepts like this exist because of the high costs, creating minimum requirements and the need to send money in chunks.

“This changes your buying and selling behavior, making it more likely [that] you are going to deposit money as a block. But if you can spend 20 øre at a time, you will have a different way of reacting, he says.

Dr. Wright talks more about the psychology of micro- and nano-payments, explaining that when we’re talking thousandths of a cent, even the poorest will spend freely without much thought. He gives an example of accessing Google search for fractions of a cent. Nobody cares, he says. Furthermore, companies like Google (NASDAQ: GOOGL ) would make more money and wouldn’t be pinged for things like monopolistic behavior since they would have real competition.

“If we pay for a service, things are different. We are moving away from the concept of being the product to being the customer, says Dr. Wright once again. He has been doing this for years when he talks about Silicon Valley companies, their business practices and how Bitcoin can change them. Thanks to the blockchain and small fees, things like fractional ownership and payments are possible.

Provability, transparency and trust

Looking back to the 2008 financial crisis, Dr. Wright says one of the main problems with CDOs was the lack of transparency. This could 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 connect everything and prove it, build in controls and know who we’re dealing with, says Dr. Wright. By using PKI infrastructure to ensure we are dealing with legitimate people and companies, we can look at the blockchain when certificates were created, changed, ratified, etc. This could prevent things like the DigiNotar hack or at least would them easily and quickly recognizable.

“This is what it means to push things to the edge,” says Dr. Wright. “This is important because, instead of relying on DigiNotar to tell us what’s wrong, we have all our customers watching and noticing changes… When you have things on the chain, everyone can see it, and you have immutable evidence that it happened; that’s a little more certain.” This is the sunshine principle, states Dr. Wright, noting that corruption happens in dark, damp places without light and air, and with lots of people watching, it will happen less. When corruption occurs, the blockchain makes it provable.

To conclude 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 legitimate business without anyone knowing, while the kind of anonymity that BTC maximalists and so-called privacy coin advocates talk about favors criminals and those operating in the shadows.

See: Bitcoin Masterclasses Day 2 – Private Identity, Proof of Identity and Course Reviews

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