- March 3, 2022
- Posted by: admin
- Category: BitCoin, Blockchain, Cryptocurrency, Investments
A team of developers at Suredbits recently posted a Bitcoin-based solution for recurrent payments. In theory, this alternative could enable users to pay for subscription services, such as Netflix, Microsoft, and others, and could be an important step in advancing BTC adoption to the mainstream.
Related Reading | Strike CEO Jack Mallers Explains Bitcoin To Kids On Lily’s Show
The Bitcoin alternative would operate by leveraging Discreet Log Contracts (DLC) which the developers compared to Automated Clearing House (ACH) payments. With the traditional method, users subscribe to a service, which then proceeds to deduct a particular amount of money to their bank account on specific dates.
In order to complete this process, users need to provide the service with sensitive information, such as their credit/debit card number and the card verification value (CVV). Bitcoin DLC payments would be more beneficial to the users, always in control of their funds and in control of their data, and for the company able to reduce costs in traditional payment rails.
Suredbits defines a Discreet Log Contract as a tool that enables developers to make Bitcoin payments by using oracle signatures. The DLC benefits from the network’s security and has additional benefits, such as refund mechanisms, privacy, reducing counterparty risk, and customization.
For the Bitcoin DLC recurrent payments in subscriptions services like Netflix, the tool would require a specific setup, as explained by the developers:
It requires a slightly modified DLC setup. Netflix would create an oracle representing a monthly subscription. They require that users setup DLCs to them that will be executed at the end of the month. Alice, a subscriber to Netflix, creates a unilaterally funded DLC to Netflix. She creates adaptor signatures for her payment and sends them to Netflix.
Users will have further control over the funds as it wouldn’t be required to create a Bitcoin transaction, “the DLC is unilaterally funded”, as explained by the developers. In addition, to cancel a subscription users would need to spend the UTXO.
A New Use Case For Bitcoin To Make Its Way Into The Mainstream?
Subscription services often require users to own credit or debit cards, and many people are often unable to access legacy financial institution or their tools to access Netflix or other similar products. Thus, why a Bitcoin-based DLC subscription could open the door for millions to enjoy these services.
As seen below, the whole BTC-based subscription will operate with low requirements and would prevent Netflix, corporations, or bad actors to steal the users’ funds. Suredbits describe the solution as a way to bring tradifi like payments to the Bitcoin ecosystem.
The developers added the following on the potential to benefit from a cryptography-based subscription payment model:
DLCs also give you the power to specify how much the service can withdraw. For instance, with Netflix, they shouldn’t have the ability to withdraw thousands of dollars worth of bitcoin. The monthly service fee is $20. With DLCs, you can cryptographically enforce that they will only receive $20. They cannot withdraw more or less money than they are authorized to.
Related Reading | Netflix Orders Doc Series About Crypto Laundering Of A Couple
As of press time, BTC trades at $42,438 with a 4.4% loss in the last 24-hours.
