As the Bitcoin block-size debate rages on in the bitcoin community, 21 Inc. has introduced a new payments system that allows high-frequency microtransaction between two 21 Inc.’s Bitcoin Computers. the new micropayment method is currently available on the company’s Bitcoin Computers and it is expected to be available for other machines sometime soon in the future.
The new Bitcoin microtransaction library is designed to execute loads of very small bitcoin transactions between devices without creating hundreds of entries on the Bitcoin blockchain. The new release was announced by the 21 Inc. team earlier today on the company’s blog.
Without creating records of each and every transaction on the blockchain. Yes, and it is nothing out of the blue either. The high-frequency bitcoin micropayment processing system created by 21 Inc. to an extent uses some of the not so well-known features already available on the Bitcoin network. The high-frequency micropayment feature on Bitcoin Computer uses nSequence and LockTime features integrated into the Bitcoin network since its inception by Satoshi Nakamoto. The main advantage of these features is to set up future payments. By utilizing this feature, applications of 21 Inc.’s bitcoin computers can accumulate bitcoin over a period of time and then send it as a burst at one certain future set time. It can also be used to send a continuous stream of bitcoin over a period of time, without having the transaction information written onto the blockchain for each individual microtransactions carried out over a period of time.
21 Inc.’s high-frequency microtransactions channel, a gamechanger?
In the blog, founders of 21 Inc. offer a detailed explanation about the implementation of this new feature into their flagship devices. Bitcoin Computers manufactured by 21 Inc. is built on Raspberry Pi 2 and it can be connected to regular computers running any off-the-shelf operating system. However, one advantage of Bitcoin Computer, over other computers is its efficiency in bitcoin mining. In spite of its less powerful specifications, the Bitcoin Computer comes inbuilt with a 21 mine feature which can be used to start mining bitcoin. The 21 Inc.’s mining pool works differently from other regular mining pools in terms of payouts. Bitcoin Computer users get their fair share of rewards constantly streamed to their inbuilt wallet. These wallets can be used readily to pay/receive bitcoin for applications, goods and services between other Bitcoin Computers.
When users start mining for the first time on Bitcoin Computer, they receive an initial advance payment of rewards, which is later on adjusted with bitcoin mined in the future. In order to make use of the micropayments channel, they have to make an initial deposit, which can be readily done with the advance bitcoin rewards they receive. This micropayment channel will be used to pay for applications, goods and services as mentioned earlier.
There have been issues regarding bitcoin transaction malleability, where the nodes can corrupt the transaction data, creating an invalid transaction hash. In such cases, even though the recipient receives the original transaction, he may be unable to spend it in the future as the previous transaction hash associated with that particular bitcoin might be invalid. The current Jeremy Spilman style payment channels are prone to transaction malleability. 21 Inc.’s micropayment channel uses CLTV (CheckLockTimeVerify) opcode which creates provably spendable outputs, thereby eliminating bitcoin transaction malleability. Read more about CLTV Opcode here.
Bitcoin micropayment channel offers a real-time payment option for clients and merchants in such a way that the customer can pay for services as and when he/she receives it. Otherwise, the client would either be required to pay in advance or after receiving the deliverable from the merchant. Such an arrangement, especially with bitcoin transactions creates trust issues as there is always a possibility of the merchant not delivering after receiving payment or the client not paying for the deliverables received. Now, with micropayment channels, the problem is solved. Similarly, it can be used for pay-per-access models on websites and other content delivery platforms.
Unlike Bitcore Payment Channel, which requires the developer/user to make changes to configuration manually, 21 Inc.’s micropayments channel comes included with libraries that can be readily used in the command to configure the payment channel according to requirements.
Bitcoin micropayments channel may be a temporary solution for the existing bitcoin scalability issue. The micropayment channel creates just two entries on the blockchain – one when the channel is initiated and another after its termination. It doesn’t matter even if ‘n’ number of transactions takes place through the channel, blockchain will have just two entries.