Dr. Craig Wright, nChain co-founder and Bitcoin BCH visionary, is one of the most educated individuals in the crypto realm. He understands better than many what is happening with the ever-changing world of digital currencies and blockchains and also sees what has to be accomplished to take crypto to the next level. Yesterday, he responded on Medium to a message he received regarding Bitcoin notarization and provided some important insight into the fallacy of the belief.
Wright says that he was forward a quote made by Vitalik Buterin, Ethereum’s co-founder, which reads, “The value of blockchain ‘notarization’ is not proof of existence; it’s *proof of inexistence*. The ability to prove that message M is the *one and only one* of a certain type that has been signed, or that a message of some type *has not* been published yet.”
He responds by pointing out that notarization does not provide any proof of existence – it only provides evidence of existence. Wright explains, “Let us start with a message M. M is a certain type of message. Let us say, for simplicity, there are two options. M signs a message saying X or M signs a message saying Y. M could be a contract offer. We want to show definitively that the signed contract is not the only one available on a Blockchain. That is, M~X and M~Y cannot both exist. In fact, there are ways to have a version of M~X and M~Y co-exist.
“The simplest means comes from the collusion of the parties to a contract. Party A signs both X and Y to B, and now can choose the particular path they wish to prove “always existed”. In effect, we could have two sets of books. A block chain does not stop this and it is the adducing of other extrinsic evidence in support of the ledger and system used by the parties that leads to a court selecting from the two options.”
To further explain the problem, Wright points out the Enron scandal from about 20 years ago. Enron set up a series of fake companies and all of the books technically looked correct on the surface. Only through independent vigilance did the truth emerge about the company manipulating the books. The same, asserts Wright, can be seen with blockchain transactions.
Wright adds, “Mostly, the foolishly small minded idea of non-repudiation that so many ‘coders’ and ‘cryptographers’ tout is not something that is valid in law. I can always repudiate a transaction. The perfect code and cryptographic system does not preclude me from simply stating I was under duress or the key was stolen.”
Notaries are important that it provides authentication of virtually any type of transactions. They are responsible for not just publishing a document, but for verifying the authenticity of the document. The same type of notarization is needed for the blockchain, as a hash only indicates that the transaction existed at a particular time – it doesn’t validate the transaction.
“Just loading the hash on the blockchain is evidence of it having existed at a point in time, it is not a notarisation of that document,” explains Wright. “Signing a document with [an] unverified key is not proof. More, even if you come back later and hold access to a private key, you have not demonstrated that you had access in any prior time. You could make an attestation for this key and register it using an approved and regulated PKI based CA (Certification Authority) to the level required to show that this is your key to a level required to sign a deed, but then, it is no longer private. You now have a Bitcoin address that is associated to you unless revoked formally.”
In closing his response, Wright points out one last vital piece of information. He says, “Code is not law. Law is law and code is at best evidence.”