Since it was first introduced into the market in 2009, Bitcoin has become the world’s first-ever digital currency and propelled the creation of an entire industry. Unfortunately, many events have happened over the years that caused Bitcoin’s reputation to be tarnished as being a haven for criminal activity, which is so far from what Bitcoin creator Satoshi Nakamoto, whose real identity is nChain Chief Scientist Dr. Craig S. Wright, originally envisioned.
In order to correct these misconceptions and clarify the true meaning of Bitcoin, Dr. Wright and engineering head of tokenization entity smart wallet at the Bayesian Group and Money Button founder Ryan X. Charles have created an educational series called “Theory of Bitcoin.” A special broadcast consisting of 10 episodes is dedicated to the Bitcoin white paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System,” which is the interdisciplinary work where Bitcoin was based on.
In the first Bitcoin white paper episode, Dr. Wright and Charles discuss in detail one of the main reasons why Bitcoin cannot be a haven for illegal acts. Because Bitcoin uses a digital signature to validate each transaction, people immediately thought that it provides anonymity. This is not the case at all, as Dr. Wright points out that a digital signature requires a real-world identity.
“In the last 10 years, we’ve had this anarchist [view] that digital signatures don’t mean any of that BS. Well, it does actually. And when people talk about using cryptographic keys to digitally sign, it’s [still] “digitally sign.” So, you’re creating a signature. You can’t take that word out of isolation and say that means other things. You don’t sign as nobody. You sign as somebody,” Dr. Wright explains.
Bitcoin providing anonymity is the same as entering a contract with someone and signing as “nobody,” which no court of law will recognize as valid. In this sense, Dr. Wright states that the term “digital signature” is used in a legal sense. For Bitcoin, a digital signature requires at least a partial identity, which is valid in the rule of law.
“You don’t need to give away your full identity, you can remain pseudonymous. I’ve talked about this in the past. But you still have a legal identity. So, the law recognizes partial identity. It has in Britain for hundreds of years now. We have a thing like pseudonymous author payments. But notice when I say, ‘pseudonymous,’ not ‘anonymous.’ As an author using a pen name, you can still get paid for your copyright. And no one knows who you are,” Dr. Wright clarifies.
Bitcoin is built on blockchain technology, which is an immutable public ledger that employs a time-stamping process to arrange records in a chronological manner. Moreover, records are distributed to all the nodes within the network, meaning even if all data is deleted for one or even 10 nodes, the remaining nodes all have a copy of the master record. In this way, Bitcoin has actually become an information Mecca for law enforcement agencies as criminal activities—if and when they do get through the system—can be traced back to a real identity. And the evidence is preserved in hundreds of copies.
Subscribe to the Theory of Bitcoin YouTube channel to learn more about the inner workings of Bitcoin from the inventor himself.
