The Bitcoin Masterclass (London) Day 1

Dr Craig S. Wright, Chief Scientist at nChain, held another edition of his Bitcoin Masterclass series at an exclusive venue in London in April. The Masterclass course forms part of a monthly series aimed at helping attendees understand the fundamentals of Bitcoin and the technology behind it.

The Bitcoin Masterclass series will give you a comprehensive overview of Bitcoin’s history, theory and design. Wright discussed the future of Bitcoin and the unbounded scalability of nChain’s blockchain solutions, with potential use cases across several industries.

In the third session on day one, Wright discussed the potential complexity of contracts on Bitcoin and how to handle situations where time-based transactions might conflict.

Complex – but not impossible

Wright began the session by noting that even automated payments and processes can be designed to adapt to changing conditions. He added that a UTXO (Unspent Transaction Output) can only be used for one transaction, and once it is spent, the transaction is recorded on the blockchain, effectively locking it.

This modification alters the contract state. As real-world actions impact the scripted conditions within the contract, specific nLocktime transactions can be excluded from the process, preventing the risk of double-spending. He added that the intentional creation of conflicting nLocktime payments can be integrated into the script, where past outcomes trigger one path while eliminating another.

nLockTime is a feature in the Bitcoin protocol. It is a field that can be included in a Bitcoin transaction to specify the earliest time (block height or timestamp) at which the transaction can be added to a block and confirmed by miners.

When creating a Bitcoin transaction, the sender can set the nLockTime field to a specific block height or a Unix timestamp. If the nLockTime value is set to a future block height or timestamp, the transaction will not be considered valid until that time is reached. This feature allows for the creation of time-locked transactions.

A contract that looks like a tree

Wright asked the audience to envision a contract structured like a tree with various conditions and possibilities, certain branches can be removed or paths adjusted. He notes that computers excel at handling this type of task and can even predict potential moves in advance. nLocktime proves to be instrumental in managing all of these complexities.

Wright highlighted the importance of planning this ‘contract tree’ and that real-world events can significantly impact the outcome of a contract, such as the death or incapacitation of one of the contractors, natural disasters, terrorist attacks, wars, or other unforeseen events beyond the parties’ control.

While accounting for every potential outcome is impossible, a contract can still encompass a broad range of contingencies, he said. He also discussed the possibility of considering unforeseeable circumstances within the terms of the contract. This can include incorporating a clause that activates arbitration or insurance or potentially renders specific sections of the contract null and void.