Author: Peter Todd 2014-12-13 02:34:58
Published on: 2014-12-13T02:34:58+00:00
Micropayment channels can enable a payor to incrementally pay a payee by locking a deposit of Bitcoins in a scriptPubKey. Transactions are created each time the payor wants to send more money to the payee and double-spends the previous one. The payee can close the channel by signing the most recent, highest value transaction with their key. Using a nearly completely untrusted hub, any number of parties can mutually send and receive Bitcoins instantly with near-zero transaction fees. Each participant creates one or two micropayment channels with the hub. Multiple hubs can send to each other, again in a trustless manner. In general, the micropayment hub breaks the linkage between payor and payee, with respect to the data available from the blockchain. A business disadvantage with a hub-and-spoke system is that it ties up capital, creating a tradeoff between fees saved and Bitcoins tied up. Many embedded consensus schemes like colored coins are compatible with micropayment channels.
Updated on: 2023-06-09T14:49:40.368274+00:00