bitcoin micropayment channels

Bitcoin Micropayment Channels

@meinharrd | @SatoshiPay

Bitcoin transactions shortcomings:

Not instant

Blockchain bloat

Relatively high fees

Solution: Smart Contracts

Micropayment Channels

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

Direct bitcoin transaction (tx)

TxSender Recipient

Direct bitcoin transaction (tx)

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)

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

Allows nanopayments

Questions?

meinhard@satoshipay.io