Topic: Does Bitcoin fail if not Peer-to-Peer and self custody? (Read 258 times)

By design, The only way to do a "purely peer-to-peer transaction" with Bitcoin is using your own Bitcoin node.

I am not aware of any third party solutions or layer 2 solutions that offers truly peer-to-peer transactions.  If you are using any wallet other than a Bitcoin Core wallet you are using a 3rd party node to do your Bitcoin transactions.  Bitcoin was designed so that everyone could run their own node in order to support the network infrastructure while keeping it decentralized and enabling "purely peer-to-peer transactions".

Bitcoin does not fail even if p2p or self custody does. what fails is the system built around the p2p or self custody.
The idea of p2p is that it is to enable one withdraw or swap their coins to another. For self custody, different companies have their own designed wallets for cryptocurrencies that even if BTC fails to exist suddenly, it wouldn't stop their wallet from storing other cryptos.
BTC will not fail if p2p or self custody does unless it ceases to be an asset of value suddenly.

In my opinion Bitcoin is a medium of exchange free from manipulation by governments and banks in an attempt to give individuals financial sovereignty.  Our current monetary system allows both governments and banks to control and manipulate our money. I would also argue that money is the most concentrated form of power that exists.  

If we store our Bitcoin in banks and allow them to decide when we can use it(three party transactions), we have lost our sovereignty?  Peer-to-peer prevents this from happening.

What price are we willing to pay for perceived convenience?

With the advent of the Internet the banking system in no longer necessary for convenient transactions.  The Internet has given us the means to transact directly with a digital currency.
Bitcoin allows us to take back control of our financial well being by becoming a lender rather then a depositor.

Many people make those choices without fully educating themselves.  As we evolve, I would like to think we can move towards better systems that benefit the majority not the privileged few.

Third party transactions are no longer necessary so lets promote a truly peer-to-peer market that benefits the majority.

All of that being said everyone should be free to make their own choices as long as it does not adversely affect others. That is the essence of self sovereignty.

Well, why would anyone have a different opinion that is contrary to what Satoshi said himself about bitcoin in the Bitcoin whitepaper? even if any one should have a contrary opinion, i dont think such opinion can or will change this fact.

Some weeks back, i created a thread here stating Satoshi's true intentions for creating bitcoin, Satoshi didn't create bitcoin to be just a peer to peer version of electronic cash or money that can easily be transferred or sent from one party to another without any middle man or financial institution getting involved, Satoshi created bitcoin to also become an asset that people can invest in, just like people invest in gold, diamond and so on, Satoshi made bitcoin to become the digital version of gold, that is one of the reasons why he limited to supply to just 21 million coins, knowing fully well that a small and fixed supply with a high demand will result in a very high value..

So we should stop seeing bitcoin as just a peer to peer electronic cash or what ever, Bitcoin is far more than that,

a)  you're attempting to derail yet another topic
b)  off-chain can still be peer-to-peer.  It's up to each individual user to decide whether or not to trust custodial services.
c)  why are you such a reprehensible scumbag?

The Bitcoin network can still work without peer-to-peer and self custody services as we are seeing the dominance of centralized exchanges and close source or centralized wallet providers like Binance, Coinbase. What will be the point of using bitcoin rather than fiat currencies if this service doesn't exist? Bitcoin gained so much traction in the industry by promoting its decentralized economic ideology.

I can not imagine a decentralized bitcoin network without P2P and a self custodial wallet to store and use bitcoin. 

What’s the purpose of the link at the end of your post? To indirectly shill it? Or you’re being hired to do link building in forums?

Regarding your question. Bitcoin was created to eliminate 3rd party control from the government or banks when saving and/or sending borderless transactions from one person to the other.

And yes it is not decentralized when there’s 3rd party involved like some existing custodial wallets such as Coinbase, etc.

I don't think you are entirely wrong when you said Bitcoin has a third party. It was designed to be peer-2-peer means of exchange, and it is still P2P electronic cash but sometimes we introduce a third party into the equation, so it all boils down on us and how we use it.

An example of a scenario where a third party is used in Bitcoin exchange is the recent news making the headline of Honda Automobile acceptance of Bitcoin and Ethereum for the purchases of its cars. The purchase of Honda cars was supposed to be directly between Honda and the buyer but Honda contracted a third party, FCF pay to facilitate the payment process.

Did Bitcoin itself broke that protocol that has been written on the whitepaper? No.

What does it mean for us when many platforms like the centralized exchanges has adopted it? It can't be stopped when the platforms and institutions are starting to adopt Bitcoin because that's really has been seen.

We can still continue doing P2P on our own and it's still a trustless system that doesn't need a third party. There's no requirement that we need to go through third parties and Bitcoin is still good as is.

This is what freedom means for Bitcoin. The companies that would like to go through with third party transactions, they have a choice and us, we also have but it doesn't defeat the purpose of it being used for P2P transactions just as how we're enjoying it until now and we will continue to.

BTC is a decentralized digital currency that its trading is only between two traders(P2P) whom are whom to sell and whom are to buy as a course of exchange.
So What is the third party for? Do we say Bitcoin is a centralized currency as (P3P)? Of course absolutely not.
Bitcoin trading is not a corporative affair instead the other (s) has to Invest in one who has to be in charge of the wallet that is why it is a decentralized currency as a self custody.

We just need to think simply like this, people love bitcoin because it gives them the freedom of not having to depend on third parties like banks and gives them security. Therefore, if bitcoin transactions involve third-party intervention, I believe no one will care about it and will fail from the beginning. Peer-to-peer transactions are what sets bitcoin apart from the rest, so it would be a silly question to hypothesize that bitcoin would succeed if it lost its peer-to-peer status.

Yes Bitcoin does fails because I don't see a point of having another fiat currency which is what Bitcoin is going to be if it isn't P2P and self custodial because it means someone will be in control of our bitcoin when it isn't P2P and that's why centralized exchange and third party service are discouraged. An adoption with centralized exchange, payment processors and centralized wallets isn't the ideal progress envisioned by Satoshi. For Bitcoin to achieve it's full purpose it has to be adoption with it's decentralization without any regulation or censorship.


Bitcoin was introduced as a decentralized alternative to fiat currency so if Bitcoin doesn't get used more in a decentralized way, it should have failed. As pioneers of Bitcoin we have to lead by example and that's by encouraging the use of decentralized service providers and boycotting the centralized services. Instead of centralized wallets, lets make use of non custodial wallet, instead of centralized exchange, let's make use of decentralized (P2P) exchanges and most importantly let's not encourage the investment in altcoins not just for the risk of investing in altcoins but because a majority of them are centralized and the more we exposed people to centralization in the industry the further we push them away from understanding the benefits of Bitcoin.

If we add a third party, doesnt it kind of, well, ruin the whole point? But lets play devil's advocate for a moment.

Bitcoin was envisioned as this peer-to-peer dream. We all know that. But consider this: even with P2P, arent you using software, hardware, and network resources? Arent these also "third parties" in some sense? Where do we draw the line between whats considered a third party and what isnt?

Now, Im not saying we should accept financial middlemen willy-nilly. What Im saying is, as long as the core principle of decentralization remains, perhaps we can be a bit flexible on the peer-to-peer bit. After all, Bitcoin has evolved since its white paper days, hasnt it?

OP didn't state that the Bitcoin white paper promotes the use of third parties. He only reiterated the fact that the use of intermediaries during Bitcoin transactions defeats the purpose of the currency.
 

Many people use Bitcoin because of other benefits beside security. This set of people that don't care about their privacy so they are comfortable using these centralized third parties. Sadly there has been an increase in the number of people who use exchanges in recent times. But this doesn't defeat the purpose of Bitcoin because many people are also becoming security conscious because of their contact with the coin.

I'd argue that a large group of users defeating the purpose of p2p cash does harm to the entire network, as a whole, besides weakening their own security. Take a look on merchants that use BitPay or Coinbase as their payment processors. They clearly do harm to themselves, but that particular practice discourages their clients to paying in bitcoin. (In case you didn't know it, both implement KYC and treat the currency as non-fungible)

Ultimately, I think we're approaching greater decentralization as times goes by. People who forfeit their custody don't last long in bitcoin. We now have high-volume, peer-to-peer, decentralized exchanges that act as superior alternative to people who merely want to buy and sell bitcoin.

You know one thing about Bitcoin, its freedom! Bitcoin is a pure peer-to-peer transaction which still stands today, people send Bitcoin to each other the way they like but now, there are groups of people that brand exchange as creativity(centralized exchanges) which some people feel is safer for them( I don't blame, them, that is what they grow up to see when they come around) but using decentralized is more of p2p than centralized exchanges.

One of the challenges is that you can't stop how people want to use their bitcoin, it's meant to be pair to pair but some people also want trade their bitcoin into other branded altcoins they need or want to have, and the fastest way this can be done safely without running into a scam is through the middle man (third party in this case), so this is what you can't change but Bitcoin remain a pair-2-pair transaction.

You have failed to use bitcoins properly when you as a user do not use P2P for transactions, or when you delegate the duty of keeping your bitcoins safe to a CEX. Self custody is meant to be practiced, an investor in bitcoins knowing the exact security measures and practices to prevent theft of their bitcoins is how it should be, not the dependence on a CEX to keep your coins. You make the purpose of bitcoins to fail when you use bitcoins improperly.

Bitcoin doesn't fail anyone. It's the users who choose to "keep" their BTC on exchanges that are failing it. It's decentralized, you can't take away from it.

I agree with this 100%. People do have choices now and if there are others opting to be serviced by third-party platforms or solutions then it is their own right to do so...and this fact should not be tied with how good or how Bitcoin can be a failure. P2P is a big feature of Bitcoin and without it Bitcoin will never be Bitcoin but we can not forced it to all people in case they are attracted to something that for them can be more convenient or attractive.

You made me smile. The way you replied sounds like you're one of those impolite, insulting, and wise old-timers and legendaries here, or wannabes, who feel like they have the right to berate anybody for their ignorance rather than guide them.

Did you read the whitepaper yourself? I did it years ago and I didn't understand most of it, but it is not hard to remember that very familiar line. Try reading the whitepaper the other way around, from the first page rather than the last. You might find it right there in the very first line.

quoting for posterity of the guy that has been ignorantly promoting that everyone should offramp theur value security to a sub bridge network that requires middlemen routers and custodian partners to function

maybe topics like these will wake him up to his hypocrisy and he finally realises the failures of his own promotions, via reading his own words back to himself

the biggest failure are of these ignorant users that promote that using the bitcoin network is bad, flawed and then they promote actual flawed systems of middlemen as the 'solution'

Great point!!  Bitcoin can be used both ways.  Problem: most of the solutions provided by the market are third party because they benefit the provider and not the user.  The profit generating solutions require an additional revenue stream and that requires a third party in the transaction.  Can businesses provide solutions that don't centralize the transaction?

I think we can. Everyone needs their own node.  That was Satoshi's vision.  Each transaction from a privately held node. No node, no peer-to-peer.

There are two things that have to happen for a transaction to be p2p. First, each participant must have their own node and second, each participant must self custody their bitcoin.

If people want a new form of money that transcends the fiat currencies we have now, the only option available is Bitcoin used the way Satoshi intended. Otherwise we have fiat banking 2.0.

This concept is what gives Bitcoin it's value.  Without the potential to be a revolutionary money we are just using electricity to generate encryption codes.  Sounds like a waste of energy don't you think? But if that energy is used to create value stored in a new form of money then you have something.


https://webtc.io

I don't know how best to explain this but at some points I don't think Bitcoin would have survived this far with centralized exchanges or peer to peer at least not with all this loads of rules and regulations as well as restrictions placed on Bitcoin and cryptocurrency in general in most developing countries.
I'm glad that most countries especially big countries like Japan and rest are already welcoming Bitcoin and cryptocurrency because it will go a very long way to increase it's acceptance and if this developments where done since, then it's acceptance would have been more easier.

I would tell you that almost every core bitcoiner will tell you that they frown upon a middle man when a P2P transaction is done, if you can go through the forum on centralized exchanges you see replies of members warning people off it and telling them to trust decentralized exchanges where there isn’t a middle man. But as we have it this technology is still new even if it is a more than a decade old, and this has made some people doubt the ability of a free P2P without middle man and as such the idea of an escrow comes in handy which is definitely something the centralized exchanges do. If you asked me I would say it doesn’t solve any problem and also doesn’t defeats any purpose of bitcoin rather it creates an open space for everyone to use it to the way that it suits them. This is probably why bitcoin is characterized as pseudonymous by some. But the idea of Satoshi wanting it to be a direct P2P still hasn’t been changed, it depends on your preference

That's actually a tough problem: decetralised system can follow only two paths: either centralisation (and complete loss of all the benefits of decentralization), or forking (which can bring the overall system to an end at some point). So, it's nearly impossible to create sustainable de entralised system which would successfully balance between these two problems.

It's the users who tend to fail when they don't utilise self-custody.  Bitcoin was designed to be used with a sender and one or more recipients without middlemen.  That's the most secure way to transact.  Just because some people have opted to trust middlemen with their funds, doesn't mean the concept as a whole fails.  It just means those users have chosen to weaken their own security.

I am continually surprised by the number of people and businesses that support third party solutions when they know that this will defeat the purpose of Bitcoin.  Almost every business in the space is promoting a third party solution driving more and more adoption from individuals who don't understand that they are not getting the benefits of a truly p2p money.  This is being done because profit is more important to most people.  I guess sovereignty comes second.

I asked the question because I wanted to see if the people on this forum understand the simple principle that Bitcoin has to be stored in a self custody wallet and sent over their own node for it to be a p2p transaction.  Any other setup violates the core tenants of Bitcoin.

How many people want a truly p2p solution and financial freedom?

Clearly, the OP would like to do analyzes based on unrealistic and arguably imaginary probabilities. Although this seems a little naive, it explains the confusion in the minds of many, especially those who find it difficult to comprehend the idea that there is a transfer system that is actually capable of working without the help of a third party. It is a culture that has been entrenched in people's minds due to the current payment systems that always require the presence of an intermediary.
I hope that the op’s vision is a little clearer now and I invite him to further examine the details of the Bitcoin protocol as detailed by Satoshi.

Mike Hearn famously announced Bitcoin was a failure back in 2016 (or was it 2017?). Anyway, it does seem that Bitcoin is not on a path to be a p2p currency as described in the whitepaper. However, it can still be transferred p2p even if it can’t scale and you can still self custody, so there is hope that Mile will turn out to be wrong. However, the jury is still out.

Yeah, you know this and you're still seeking the opinion of others?  ..  asking for a third party simply means you'd require to ask permission before making a transaction and this person dictates how you spend your Bitcoin.
The reason custodial wallets services are not advisable for Bitcoin users is that they impose severe restrictions on your Bitcoin and are not even trustworthy and safe as they can also fall victims to hackers or funds being stolen and this defeats the purpose of Bitcoin being decentralized.

Bitcoin itself decentralised cryptocurrency and it was the biggest reason for the survival over a decade.Some of the coin like ETH,BNB was the centralised coin.Both coin was managed by the Binance and Ethereum owner.The price of the bitcoin was based on the demand of the market,no one can control the bitcoin price movement.Except the market the price of the bitcoin was unpredictable one.The other way of control was made by the whale of the bitcoin in the market.This control also the short term control by the whales.

What do you want to express, actually? Bitcoin doesn't need a third party; that's why it's decentralized. If you need a third party, then it's centralised, and there's no difference between digital fiat andYou are thinking about something that doesn't exist. Where have you found something wrong? We don't really need any financial institutions for Bitcoin transactions.

Please where in the white paper was that mentioned. In the last few pages of the bitcoin white paper, it's clearly stated that it does not need any form of third party in order to execute its transactions. That was its purpose from day one: to eliminate trusting someone to do it for you and explain why you can do it for yourself without needing approval from anyone.
 
Or did you read the back of the white paper? Or I was the one who did. It will be helpful if you can highlight the part that states the above statement that's getting you confused.

The Bitcoin white papaer: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution”

I think that if Bitcoin has a third party in the transaction then it fails to serve it's stated purpose to create a decentralized digital cash.  I would like to hear from people who have a different opinion on this.

https://webtc.io