Machine to machine payments

M2M Payments

@meinharrd | @SatoshiPay

Machine to machine?

1971: Caller ID for landlines

First machine to machine communication

1982: Carnegie Mellon University Coke machine

First IoT device

1995: Siemens M1 GSM module

Stripped down Siemens S6

IoT going mobile

Industrial applications:monitoring, tracking, telematics

Point of sale terminals

After 2000: More features, faster, smaller

IoT payments

Proprietary solutions byKORE, Gemalto, FTS

Revolving around vending machines and POS

Future use cases

Road tolls

Public battery chargers

Selling sensor data

Drones charging for delivery

M2M payment benefits

No cognitive load

Instant

Cost-effective

Deep integration in business logic / contracts

Permissions

Anonymity

Challenges

Transaction fees:

Cryptocurrencies potential solution

Security:

Storing payment data on devices

Legal:

“The current revision of the European Payment Services Directive is not fit for M2M payments.”

Prof. Dr. Rolf H. Weber (Zürich)

Cryptocurrencies

Also known as blockchain

No coin, no chain

Open

Programmable money

Standardised

Identity

21 Inc

Pre-installed payment infrastructure

+ ?2

(2013)(2014)

Cryptocurrency shortcomings

Not instant

Blockchain bloat

Relatively high fees

Solution: Smart Contracts

Bitcoin Payment Channel

Contract between sender and receiver

Funds parked on multi-signature escrow address

Transaction drafts exchanged “off-chain”

Contract can be executed by both partiesat any given time

Sender Wallet Recipient Wallet

Sender Wallet Recipient WalletTx

Sender Wallet Recipient WalletTx

Sender Wallet Recipient Wallet

Sender Wallet Recipient Wallet

Escrow

Sender Wallet Recipient Wallet

EscrowFunding Tx

Sender Wallet Recipient Wallet

EscrowFunding Tx

Refund Tx

Sender Wallet Recipient Wallet

EscrowFunding Tx

Refund Tx

Payment Tx

Sender Wallet Recipient Wallet

EscrowFunding Tx

Refund Tx

Payment Tx

Bitcoin Network

Sender Wallet Recipient Wallet

EscrowFunding Tx

Refund Tx

Payment Tx

Signature SignaturePayment Tx

Bitcoin Network

Sender Wallet Recipient Wallet

EscrowFunding Tx

Refund Tx

Payment Tx

Signature SignaturePayment Tx

Payment Channel

Bitcoin Network

No fees apart from 2 transactions

Instant

No blockchain bloat

Nanopayments

Thanks!

@meinharrd

@SatoshiPay

slidesh

are.net/meinhard