PayPal Files Patent for Off-Chain Payments to Speed up Cryptocurrency Processing
According to a recent patent filing, Paypal Inc. is developing a new protocol that will make crypto transactions faster — great news for bitcoin and other digital currencies. Published last week, the patent details a new system that would transfer private keys outside of the blockchain to speed up transactions. Such off-chain solutions have been hailed by the likes of as a solution to speeding up cryptocurrencies.
The payments processing company is one of companies hustling to file new patents related to bitcoin and other digital currencies. The application, filed with the U.S. Patent and Trademark Office, is for an “expedited virtual currency transaction system,” which the company claims will be able to significantly shorten digital currency transaction times.
What Does This Mean for PayPal?
The company says it wants to improve user experience and better compete against fiat credit card payments. Right now, its users experience a delay between the start of the transaction and when it is confirmed, with about a 10-minute waiting period being common.
“In many transaction situations, a 10-minute wait time will be too long for payers and/or payees, and those payers and/or payees will instead choose to perform the transaction using traditional payment methods rather than virtual currency,” PayPal said in the filing. “Issues like this have slowed the adoption of virtual currencies despite their advantages. Thus, there is a need for an expedited virtual currency transaction system.”
PayPal’s system will involve transferring private keys outside of the blockchain, using a secondary wallet with keys tied to predefined amounts of digital currency. The patent description explains:
“The systems and methods of the present disclosure practically eliminate the amount of time the payee must wait to be sure they will receive a virtual currency payment in a virtual currency transaction by transferring to the payee private keys that are included in virtual currency wallets that are associated with predefined amounts of virtual currency that equal a payment amount identified in the virtual currency transaction.”
Having to wait a long time for payments to go through has been one of the biggest criticisms levelled at bitcoin. It’s what led Stripe to end support for payments made in bitcoin earlier this year, with the company saying the digital currency had “evolved to become better-suited to being an asset than being a means of exchange.”
The “,” is another method that makes off-chain bitcoin transfers through channels, and is touted by its developers as having the potential to offer “billions” of transactions per second. The protocol is presently being rolled-out. If both services see high levels of adoption, bitcoin has a much better chance of mainstream adoption.
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Innovative technology companies are leveraging blockchain technology to build next-generation business models and Content Delivery Networks (CDNs) for video streaming, a multibillion-dollar industry that continues to grow. According to data revealed by Theta Labs, one of the companies covered below, the video content and streaming market accounts for 67 percent of current internet traffic and could reach 82 percent by 2020. The new players promise to decentralize global video streaming, while at the same time making it more efficient.
LBRY
According to Jeremy Kauffman, co-founder and CEO of the blockchain-based content distribution platform , blockchain technology could transform the monetization of online content by altering the way that creators get paid, and .
The LBRY protocol allows creators to publish online, making their content discoverable with a small payment in LBRY’s own cryptocurrency token. Viewers pay creators in LBRY tokens to see their work.
“[Blockchain technology] allows us to build technology that’s owned by the users rather than any one party,” Kauffman . “That’s the problem that blockchain [technology] solves.”
Kauffman explained that under the LBRY model, creators are paid without an intermediary taking an inappropriately large cut. Since LBRY is a protocol, the company can’t control what gets discovered.
Kauffman said that LBRY recruited 4,000 YouTubers in specifically targeted demographics, several of which have 500,000 or more subscribers, which seems a good first step toward challenging YouTube in its own turf.
Theta Labs
YouTube’s co-founder Steve Chen himself, as well as Justin Kan, co-founder of Twitch, are among the advisors of , a subsidiary of live video streaming company , which is announcing a new blockchain-based decentralized video streaming network.
“Theta’s innovation is set to disrupt today’s online video industry much in the same way that the YouTube platform did to traditional video back in 2005,” said Chen. “One of our biggest challenges had been the high costs of delivering video to various parts of the world, and this problem is only getting bigger with HD, 4K and higher quality video streams. I’m excited to be part of the next evolution of the streaming space, helping Theta create a decentralized peer-to-peer network that can offer improved video delivery at lower costs.”
Theta is developing a new blockchain-based network, outlined in the , which could enable users worldwide with unutilized PC bandwidth and resources to cache and relay video streams to others in the network, while mining Theta tokens at the same time, similar to bitcoin and Ethereum. According to the company, the new peer-to-peer decentralized network will allow for much more efficient, high-quality streaming without the need to develop expensive content delivery network infrastructure.
In December, Theta will implement its first generation of ERC20-compliant tokens on the SLIVER.tv platform. These application tokens can be used for virtual gifting and incentivizing streamers. Eventually, these ERC20 tokens will be 1:1 exchangeable for native Theta tokens when the new blockchain launches at the end of 2018.
“We’ve been on the cutting edge of live streaming technology, and by leveraging blockchain [technology] we will truly be able to transform the video and entertainment industry,” said Mitch Liu, co-founder and CEO of Theta Labs. “Theta will be uniquely built to leverage the incentive mechanisms of the blockchain, enabling end-users to contribute their excess PC bandwidth and resources to relay video streams to others and earn Theta tokens at the same time. It’s a win-win for all stakeholders in the ecosystem.
“We’re committed to solving the challenges of today’s video streaming industry,” Liu told bitcoin Magazine. “We think there’s a huge opportunity to democratize the video delivery infrastructure, to reward end users with excess PC resources and bandwidth to help stream to their neighbors and friends.”
“I think the Theta team is going to revolutionize video delivery with its new native blockchain,” Theta advisor and CEO told bitcoin Magazine. “I’m thrilled to be part of this innovative, organic platform to decentralize streaming. This will impact a number of industries from esports to advertising, benefiting our esports fans as well as influencers and content creators. I can see how Theta’s peer-to-peer mesh network will empower our G FUEL community, rewarding them with Theta tokens when they help stream to others in the network.”
Stream
Another new video platform, , has received $5 million to back its Ethereum-based Stream Token in an advisor round of funding led by blockchain investment firms including Pantera Capital, Fenbushi Capital and CoinFund, as well as individual participants like Jed McCaleb, David Johnston and Andrew Yashchuk.
Founded by , Stream wants to facilitate direct transactions between content creators and consumers with a zero-fee structure. Yu was a successful early cryptocurrency investor who became an internet celebrity with videos that received tens of millions of views. In 2011, Yu left his studies at Harvard and accepted a $100,000 , like Ethereum creator Vitalik Buterin before him, eventually launching and Stream.
The Stream Token to allow digital media creators to earn a fair living from their work, without being exploited by streaming platforms that take unreasonably large shares of their revenue. It is also designed to free content creators from the strictures of advertising models that limit creativity and freedom of expression.
“Stream Token is part of the larger Silicon Valley movement to fulfill the original intention of the internet: universal access to information. We can finally reward those who share information without curtailing freedom of expression. Content creation doesn’t have to be a zero sum game,” said Greg Kufera, CTO of Stream. “And we’re ensuring it won’t be.”
