bitcoin micropayment channels
TRANSCRIPT
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Bitcoin Micropayment Channels
@meinharrd | @SatoshiPay
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Bitcoin transactions shortcomings:
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Not instant
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Blockchain bloat
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Relatively high fees
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Solution: Smart Contracts
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Micropayment Channels
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Contract between sender and receiver
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Funds parked on multi-signature escrow address
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Transaction drafts exchanged “off-chain”
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Contract can be executed by both partiesat any given time
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Sender Recipient
Direct bitcoin transaction (tx)
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TxSender Recipient
Direct bitcoin transaction (tx)
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TxSender Recipient
Direct bitcoin transaction (tx)Not suitable for payments below €0.50
● Too expensive (~€0.05/tx)● Too many (bitcoin currently allows 3 tx/s in total)● Too slow (min. 10 minutes confirmation time)
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Escrow
Sender Recipient
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Funding TxEscrow
Sender Recipient
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Funding Tx
Refund Tx
Escrow
Sender Recipient
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Funding Tx
Refund Tx
Payout Tx
Negotiation
Escrow
Sender Recipient
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Funding Tx
Refund Tx
SignaturePayout Tx
Signature
Negotiation
Escrow
Sender Recipient
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Funding Tx
Refund Tx
Payout Tx
SignaturePayout Tx
Signature
Negotiation
Escrow
Sender Recipient
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Funding Tx
Refund Tx
Payout Tx
SignaturePayout Tx
Bitcoin Network
Signature
Negotiation
Escrow
Sender Recipient
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Funding Tx
Refund Tx
Payout Tx
SignaturePayout Tx
Bitcoin Network
Signature
Negotiation
Payment Channel
Escrow
Sender Recipient
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Funding Tx
Refund Tx
Payout Tx
SignaturePayout Tx
Bitcoin Network
Signature
Negotiation
Payment Channel
Escrow
Sender Recipient
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No fees apart from 2 transactions
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Instant
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No blockchain bloat
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Allows nanopayments