The future of hosted wallets and P2P

The person paying does not need to be online

You want to know a form of P2P payment that worked. Cheques. You could write a cheque on the spot and give it to someone and consider something paid. I still see references to businesses that take them every so often, even though I haven’t had a cheque book for decades. Another form of P2P payment is of course cash. If you say your new form of payment is like cash, it really isn’t unless you can do offline payments.

Cash makes sense

My prediction is that the most used hosted wallets will have a “cash” balance prominent in their application, which the user has chosen the level of and can use to pay even if they do not have an internet connection. You can do this in a basic sense with ElectrumSV now although you would have to carry around your laptop. You could maybe do this also in a basic sense with SimplyCash and a few others. Existing unhosted wallets are similar, but not even they really qualify yet.

Merchants make their own decisions based on reasoning

Craig has addressed the concerns people have with double spent payments many many times over the years, and does it much better than I could. Let me list some quotes:

  • “Fraud is fraud…. A double spend is larceny”, CSW, 2018–05–28, Metanet.ICU slack.
  • “The risk of a DS is 100s of times less than a card fraud”, CSW, 2018–07–25, Metanet.ICU slack.
  • “Crime — Fraud — Obtaining pecuniary advantage by deception — Worthless cheque presented in payment of debt — Whether ‘debt … evaded’ — Theft Act 1968 (c. 60), s. 16 (2) (2)”, CSW, 2019–08–24, Metanet.ICU slack.
  1. The sender does not have to have an internet connection.
  2. Require confirmed coins (cue SPV), they existed but may be double spent.
  3. If the coins turn out to have been spent, it is fraud.
  4. If the transaction was valuable, then identity was provided.
  5. Otherwise, the merchant likely has an internet connection or some risk profile they have chosen that works for them to do business.

Bonus points

This section is only interesting if you want to think about some technical stuff that occurred to me as I fleshed out this article.

Lost coins

One of the key APIs for developers is the ability to query spent outputs. If a hosted wallet has delegated offline spending of UTXOs to the user’s mobile app, then it has the outpoints that represent those outputs. It can find any broadcast transactions that spend them, and even know if they were spent. There are some gaps here in terms of if the merchant did or did not broadcast a transaction, and maybe some waiting period and additional heuristics that need to be applied here.

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