Bitcoin Inventor Discusses Difference Between Bitcoin and Trusted Third Parties
Bitcoin inventor and nChain Chief Scientist Dr. Craig S. Wright discusses with engineering head of tokenization entity smart wallet at the Bayesian Group and Money Button founder Ryan X. Charles the importance of security when it comes to Bitcoin and other digital payment systems. In a 10-part special featuring a line by line discourse on the Bitcoin white paper written by Dr. Wright under the pseudonym Satoshi Nakamoto, the meaning of the term “trusted third parties” is clarified.
“When we’re talking about no trusted third party, it’s not your normal everyday trusted third party. We’re talking about fiduciaries. A trusted third party is a defined legal term. So, we are talking about financial intermediaries, no fiduciaries here. So, nobody holds your money. It’s like cash, but they verify it. And when I hand you money, miners can’t intercept that. They can process it… but they don’t sign it. They don’t validate that it’s correct and then alter something and then stamp it… I hand you [money], and you get cash,” Dr. Wright said.
In this sense, a trusted third party is something like PayPal and WeChat, you send them money and they hold their money for you. And whenever money gets sent to you or you receive some, they charge fees that definitely more expensive than Bitcoin Satoshi Vision (BSV), the original Bitcoin based on the white paper.
The big difference here is the security of the system and your money. Imagine if PayPal or WeChat suddenly crashed or their network gets hacked and all data is deleted. Because they have a centralized system, if a hacker deletes all of their data, then all that information is lost, including your money. This would be catastrophic and many businesses and individuals will be crippled. But this is not the case for Bitcoin SV.
“If Monaco, who’s a big miner and owns 40% of the market, goes bankrupt, no one cares. 60% of the market go, ‘Our profitability is skyrocketing! Yippee!’ And they invest more money, because they’re getting more money back. It’s economic. That’s what I keep saying, It’s an economic system, primarily,” Dr. Wright explained.
This is because Bitcoin SV is built on a blockchain, which is an immutable public ledger that records information in a chronological manner. This makes it next to impossible to hack the system. Moreover, data is distributed, meaning it is copied and stored in all nodes within the network. This means that even if a node—which is operated by a miner—goes bankrupt and stops operations, its data is still stored in hundreds of other computers. No data is lost or deleted.
Your data and your money are all protected in the most efficient way. This is why Bitcoin SV rejects the concept of trusted third parties. While some may argue that miners are also trusted third parties, they do not actually hold your money for you. What’s more, miners cannot change anything without the system agreeing on it. Every action is recorded on the blockchain and can easily be audited.