Author: Oleg Andreev 2015-02-12 13:36:52
Published on: 2015-02-12T13:36:52+00:00
On 12 Feb 2015, Mike Hearn suggested that if unconfirmed payments become unreliable, people may stop using Bitcoin and find alternative solutions. In response, a suggestion was made for a decentralized IOU-based payment network similar to Ripple, but exclusively for "dumb and daily" payments. This system would involve IOUs propagating from node to node, with trust established through a joint escrow transaction between each pair of nodes. The total amount of debt from one node to another would be limited to 50% of the locked amount, with debts being cleared by the debtor via a real BTC transaction or by closing the contract transaction with the correct proportion of outputs to pay off the debt. Each node may require an arbitrary fee for providing funds to back IOUs, and when making a payment, merchants/customers may choose the quickest/cheapest path. Centralization is possible at a proportional capital expense, meaning that some nodes may want to be Visa-scale with millions of contracts and a lot of fees to earn, but they would have to lock up a significant amount of money, which limits centralization. Payments would involve only 5-7 nodes, allowing infinite scalability without global consensus or protocol. This proposed payment system eliminates the need for zeroconf transactions and reduces the urgency of debating block size limits. However, some cash needs to be locked up with random nodes most of the time, and if one node is offline, payments cannot be cleared through that node. Despite this, as the network is useful for small-ish payments and every node will have 10-15 contracts, it can tolerate occasional unavailability of some nodes.
Updated on: 2023-06-09T16:53:44.806611+00:00