Scalability and Programmable Consumer Protection

1. Scalability and Programmable
Consumer Protection
William K. Santiago (william@wksit.com)
Twitter (#williamsantiago)
Certified bitcoin Professional (CBP ID 69d4e6)

3. Challenge
Bitcoin Transactions aren’t instant
“Bitcoin Doesn’t Scale”
1 MB blocks (7 transactions per second)

4. Solution Options
Payment Channels or Transaction Channels
Increase block size from 1MB to 20MB 8MB
1.No increase in block size, fork will
happen or Increase in block size, extend
functionality
2.Bitcoin XT is released it gets the majority
for a hard fork

5. MicroPayments
Currently MicroPayments cannot be done with
any other payment network in the world

6. Transactions per day
VISA handles on average around 2,000
transactions per second (tps)
PayPal, in contrast, handles around 10 million
transactions per day for an average of 115
tps
Today the Bitcoin network is restricted to a
sustained rate of 2 tps due to the bitcoin
protocol restricting block sizes to 1MB

7. 2015 The Year of MicroPayments
New technologies for MicroPayments
“Payment Channels” or “Transaction Channels”
Examples:
The Lightning project
Enables micro transactions and off-blockchain transactions
Potential solution for the block size limit
Reduce the burden on the blockchain for smaller transactions
Stremium
Platform for streaming video and receiving payment by the second
(micropayments)

8. Lightning project
A decentralized system whereby transactions
are sent over a network of “payment
channels” whose transfer of value occurs off-
blockchain
Bitcoin transactions may occur between
untrusted parties and secured by the bitcoin
blockchain

9. Stremium
Stream live video directly to your viewers and
get paid instantly
No middlemen

10. What are “Payment Channels”?
Introduced a while ago (not a new idea)
Uses multi-sig
Allows two people to send transactions to
each other without hitting the Bitcoin
blockchain
The use of nLockTime (ability to postdate a
transaction) transaction becomes valid or
gets mined at a certain time in the future

11. What does “Payment Channels” do?
Aggregates lots of transactions into a single
transactions
“Single Transaction” Create a multi-sig
transaction that gets funded and gets payed
post-dated into the future
“Micro Transactions” Exchange signed
transactions but do not get processed unless
either party wants to settle account

12. With “Payment Channels” or Block
Size Increase
Bitcoin can scale to billions of transactions per
day or 11,500 transactions per second (tps)
Provide Programmable Consumer Protection

13. Programmable Consumer Protection
Time trigger refund
3rd party escrow
Arbitration services
Example:
Payment channel between three parties where you pay a
merchant to buy a flat screen TV and part of that payment
you have an automatic 30 day refund. If there is a dispute
the 3rd party can step in and do an escrow transaction to
refund the consumer.

14. Discussion and Questions