BitPay Launches Bitcoin Payment Protocol
Payment service provider BitPay said last week that it is launching the Bitcoin Payment Protocol, which aims to eliminate much of the human error in making a payment with the virtual currency.
A user clicks on a payment link, or scans a quick response (QR) code, and the wallet software offers the options of paying or not paying. The user no longer has to copy the address and amount into their wallet.
The wallet supplies a refund address along with the payment, thus eliminating another potential source of error in refund situations. This approach to refunds works on the block chain, with any wallet software, and does not require the buyers to have a BitPay account.
The payment protocol supports optional secure sockets layer (SSL) signatures on payment requests, which provides certainty that users are sending their payment to the intended recipients (all BitPay payment requests are signed). Currently Bitcoin-QT and the Android Bitcoin Wallet support the payment protocol.
BitPay also supports BIP-73, which improves the usability of QR codes for Bitcoin payments. BIP-73 reduces the information required to be embedded in a payment request QR code, reducing their density. Less dense QR codes are easier to use in low light situations or from longer distances. These lower density QR codes are also normal hypertext transfer protocol uniform resource locators (HTTP URLs), offering an opportunity to provide additional information and instructions to users of devices that don’t already have a wallet installed.
There are now two different versions of the QR code on BitPay invoices, one that is backward compatible and denser, and one that is exclusively for use with payment protocol compatible wallets and is less dense. Users can toggle between these two QR codes by clicking or tapping on the QR code on a BitPay invoice.
Lastly, the payment protocol eliminates the need to use the Bitcoin mesh network for communicating a payment from sender to recipient. The mesh network currently serves two purposes: communicating payments from sender to recipient and communicating payments from originator to miners.
By communicating payments directly from sender to recipient, the mesh network can be used exclusively for communicating payments from originator to miners. The network is then free to propagate or ignore transactions without adversely affecting the communications between sender and recipient. This allows for the emergence of a true market in transaction fees. By reducing the load on the mesh network to just those transactions which are profitable for miners, it improves Bitcoin’s scalability.