The Bitcoin Masterclass (London) Day 2
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 first session on day two, Wright discussed the concept of ordering transactions and having path-based sessions. He also discussed some of the practical use cases for nLocktime.
The importance of intermediaries in nLocktime
Wright noted that a key feature of his Bitcoin white paper is removing the reliance on trusted third parties for small, everyday transactions.
However, he noted that not all third parties are inherently bad or unnecessary and that intermediaries may be vitally important when dealing with intricate payments involving locked times, fees, and automation considerations.
The example he gave was of a potential intermediary that could serve as a “miner-like entity”, responsible for overseeing locked and timed transactions to ensure proper sequencing when transmitting them to the network.
Ordering transactions and path-based sessions
Wright also discussed the importance of ordering transactions and explained the concept of path-based sessions. He noted that before a transaction is finalised it is possible to have multiple potential inputs and outputs can be utilised, allowing for alterations until nLocktime‘s expiration, at which point a definitive transaction is added to the blockchain. Through a network of interconnected payment channels, the final recorded outcome can be determined.
Outsourcing these functionalities to the market is also possible, wherein third-party providers develop optimised solutions to facilitate this process, he said.
The discussion then turned to how to ensure that these intermediaries are acting in good faith with one another and are processing the right transactions. Wright noted that in this case intermediaries would be incentivised to identify and kick out bad faith actors as it would ultimately mean more work for them.
When all the steps in a process are arranged in a path-based order, and there is a mechanism to guarantee transaction settlement once all the variables are resolved, this structured approach can be applied to various areas of commerce, he said.
A practical use case of nLocktime
As a practical use case of how this could work in the real world, Wright turned to the example of an airline selling tickets for a flight or an event organiser selling tickets for a concert.
In both these instances, the tickets could be tokenized on the blockchain and sold as per usual. However, tickets that remain unsold shortly before an event or flight could then be made available through a fire-sale auction, offering them at discounted prices with specific conditions or limitations.
Additionally, purchased tickets could be re-sold with a percentage royalty paid to the initial seller. As long as transactions are ultimately settled, both parties involved in the transaction are satisfied, and profitability is maintained, the process proves successful.