# 12.4 Custodial Payment Systems

When identity and payment authorization are cryptographically unified, intermediaries become unnecessary.

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### Legacy Custodial Model vs PTERI

<table><thead><tr><th width="179">Category</th><th>Traditional Model</th><th>Problems</th><th>PTERI Replacement</th></tr></thead><tbody><tr><td>Fund Control</td><td>Funds held by intermediaries</td><td>Custody risk</td><td><mark style="color:$primary;"><strong>Self-custody</strong></mark></td></tr><tr><td>Fraud Handling</td><td>Fraud detection after the fact</td><td>Reversibility assumptions</td><td><mark style="color:$primary;"><strong>Signed payment intent</strong></mark></td></tr><tr><td>Dispute Model</td><td>Dispute-based resolution</td><td>Operational overhead</td><td><mark style="color:$primary;"><strong>Deterministic settlement</strong></mark></td></tr><tr><td>Automation</td><td>Manual review and approval layers</td><td>Limited automation</td><td><mark style="color:$primary;"><strong>Native machine execution</strong></mark></td></tr><tr><td>Settlement</td><td>Platform-mediated clearing</td><td>Global settlement friction</td><td><mark style="color:$primary;"><strong>UTXO-based settlement on Litecoin</strong></mark></td></tr><tr><td>Identity Link</td><td>Identity separate from payment authorization</td><td>Weak attribution</td><td><mark style="color:$primary;"><strong>Identity and payment provably linked</strong></mark></td></tr></tbody></table>

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### Core Principle

> *"Identity and payment authorization are provably linked."*

When payment intent is signed, custody, reversal logic, and intermediary trust are no longer required.

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