1/12
Did you know initially you could send #Bitcoin to an IP address?🤯
It was listed as the default method to send Bitcoin but now is long removed.
How did this work?
Why it was removed?
What is similar today?
🧵Thread👇
Discussion
2/12
Instead of giving someone a #Bitcoin address you would share an IP address.
Their node would connect to yours and would ask for a Public Key.
Then they would send Bitcoins and could add a message.
You had the option to reject the TX.
If not you would broadcast the TX.
3/12
The original Bitcoin client allowed sending Bitcoin to both Public Keys & Pub Key Hashes (addresses that start with 1).
Here we have the famous TX of @halfin where both he and Satoshi are using bare Public keys and NOT addresses
4/12
The software really only needs to Public Key, and an address is a Public Key with extra steps.
Making it:
- safer - error correction(checksum)
- shorter - hash160
- human friendlyer - base58 encoding
Also quantum proofing as a side effect(with caveats)
5/12
The advantage of using Pay-to-IP:
Better UX.
You just send 1 thing to sender, and then that's it.
You only send an IP - shorter than an address
Better privacy.
Makes fresh address use each time easier.
6/12
This operated under the presumption that you are always online.
Which is not that crazy, considering you would if you were mining plus most p2p applications operate like this.
Think Bittorrent.
So this is a disadvantage vs an addresses, when you don't need to be online.
7/12
The truth is that the pros were heavily outweighed by the cons.
IP is a terrible identifier for an entity.
Also starting around 2009 static IP usage was less and less.
Never mind that IP leaking has privacy drawbacks.
8/12
Man in The Middle Attacks.
There was no authentication method when using Pay-to-IP, so someone could intercept the communication and switch up with their own public key.
Nvm this traffic was not encrypted, but this kinda has always been a thing in Bitcoin.🥲
9/12
Something that always bothered me is calling #Bitcoin addresses, addresses instead of invoices.
"Invoice" is more descriptive, and discourages address reuse.
But we can see now where the name came from.
IP address -> Bitcoin address.
10/12
Even though there were some plans to improve this by Satoshi, this never happened and it got removed.
In the end the cons severely outweigh the pros and it just made more sense to build such functionalities outside of Bitcoin.
11/12
Some current ideas that offer some of the pros of Pay-to-IP:
- BIP47 - Reusable Payment Codes
- BIP78- PayJoin
- BIP352 - Silent Payments
(interesting all 3 are privacy focused)
BTCPayServer being the most mature fruition of the vision behind Pay-to-IP.
12/12
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Did you know early bitcoin versions had code for a marketplace? Think eBay in wallet gui.