M2M Payments

@meinharrd | @SatoshiPay

Machine to machine?

1971: Caller ID for landlines

First machine to machine communication

1982: Carnegie Mellon University Coke machine

First IoT device

1995: Siemens M1 GSM module

Stripped down Siemens S6

IoT going mobile

Industrial applications:monitoring, tracking, telematics

Point of sale terminals

After 2000: More features, faster, smaller

Payments

Proprietary solutions byKORE, Gemalto, FTS

Revolving around vending machines and POS

Future use cases

Road tolls

Public charging stations

Selling sensor data

Drones charging for delivery

Decentralised computing

M2M payment benefits

No cognitive load

Instant

Cost-effective

Deep integration in business logic / contracts

Permissions

Anonymity

Challenges

Transaction fees:

Cryptocurrencies potential solution

Security:

Storing payment data on devices

Legal:

“The current revision of the European Payment Services Directive is not fit for M2M payments.”

Prof. Dr. Rolf H. Weber (Zürich)

Cryptocurrencies

Also known as blockchain

No coin, no chain

Open

Programmable money

Standardised

Identity

21 Inc

Pre-installed payment infrastructure

+ ?2

(2013)(2014)

Cryptocurrency shortcomings

Not instant

Blockchain bloat

Relatively high fees

Solution: Smart Contracts

Bitcoin Payment Channel

Contract between sender and receiver

Funds parked on multi-signature escrow address

Transaction drafts exchanged “off-chain”

Contract can be executed by both partiesat any given time

Sender Recipient

TxSender Recipient

TxSender Recipient

Escrow

Sender Recipient

Funding TxEscrow

Sender Recipient

Funding Tx

Refund Tx

Escrow

Sender Recipient

Funding Tx

Refund Tx

Payout Tx

Negotiation

Escrow

Sender Recipient

Funding Tx

Refund Tx

SignaturePayout Tx

Signature

Negotiation

Escrow

Sender Recipient

Funding Tx

Refund Tx

Payout Tx

SignaturePayout Tx

Signature

Negotiation

Escrow

Sender Recipient

Funding Tx

Refund Tx

Payout Tx

SignaturePayout Tx

Bitcoin Network

Signature

Negotiation

Escrow

Sender Recipient

Funding Tx

Refund Tx

Payout Tx

SignaturePayout Tx

Bitcoin Network

Signature

Negotiation

Payment Channel

Escrow

Sender Recipient

Funding Tx

Refund Tx

Payout Tx

SignaturePayout Tx

Bitcoin Network

Signature

Negotiation

Payment Channel

Escrow

Sender Recipient

No fees apart from 2 transactions

Instant

No blockchain bloat

Nanopayments

Lightning Network

Bidirectional payment channels

Iota

Cryptocurrency designed for M2M payments

Some crazy shit: tangle, trinary, lazy tips

Whitepaper: iotatoken.com

HTTP 402 (Payment Required)

Added to HTTP/1.1 in 1996

“This code is reserved for future use.”

HTTP 402 response with additional headers

No standard for payment headers

21 Inc or ZeroClick

Example client request:

GET /paid-content.html

Server response:

HTTP 402

X-Price: 2500X-Bitcoin-Address: 1F1tAaz5x1HUXrCNLbtMDqcw6o5GNn4xqX

Client payment:

GET /paid-content.html

X-Signed-Bitcoin-Transaction: bd770796a9e790...493bb7d449485cf3

Server ships content:

HTTP 200

<h1>Here is your content, have fun with it!</h1>

docs.satoshipay.io/api

Thanks!

@meinharrd

@SatoshiPay

slidesh

are.net/meinhard