The Bitcoin Referendum

The whole world recently stood still to await the outcome of a nerve racking referendum famously known as Brexit.
It was one where we watched the Brits take to the polls to make a decision on their status in EU(to remain or exit).

It is still very fresh in our memory how the result shocked the whole world. The effects of which still tastes quite sour in the money market.

But that's not really the point of this article.

However, it now seems that the Bitcoin community has also caught the referendum bug.

The community is divided over a new payment protocol that seeks to augment the current bitcoin payment protocol-BIP 70.
The protocol is believed to be able to provide bitcoin mobile payment the breakthrough features that can make it earn trustworthy status with merchants and buyers, so as to grow its users and make it more mobile payment friendly.
I guess you're thinking the proposal looks innocent and straightforward... right?

But the community thinks it different, as the new protocol is causing quite a stir with a 'yes' divide and a 'no' divide.

Just so you know(if you didn’t)
A payment protocol is a communications channel between merchants and buyers before payments are made. It is responsible for replacing the complex bitcoin address with human readable names.

And, BIP stands for Bitcoin Improvement Proposal.

BIP 70

The controversial BIP 75 is a layer 2 protocol that seeks to improve on its predecessor BIP 70. It proposes to upgrade the bitcoin payment from a 1 way protocol to a 2 way protocol.

Here are the features of the current payment protocol- Bip 70:

The Bip 70 is the protocol that helped bitcoin payment integrate into the ecommerce payment wallet.
It helped get rid of the long string of wallet addresses that was very difficult to remember and didn't make sense.
It keeps an offchain record of transactions along with the address of the corresponding wallet from which payment originated.
As a 1 way protocol, It only authenticates the receiver. This makes bitcoin mobile payment(as a viable payment choice) unattractive.
And It is also flawed in the area fund retrieval. Lets take for instance, you accidentally sent bitcoins to a wrong wallet address, based on its one way protocol it is lost forever, i repeat... it is lost forever(unless the the recipient grows a conscience and refunds it to you).

The ‘Yes’ People
The push for the the increase in consumption for mobile bitcoin payment, that reduced the cumbersome process of transferring bitcoin from one wallet to another with one or two clicks using the bitcoin wallet app called for better User experience and stronger security upgrade to fortify users smartphones against malwares/viruses.

So Matt and Justin of Netki and Breadwallet's Aaron and James got to work and came about with this new protocol- BIP 75.
They believe that this proposed upgrade will grow the usage of bitcoin mobile wallets as a viable mobile payment choice, by giving users the venmo-like experience along with solid security.

So here are the improvements proposed by the yes people:

They want to make it a 2 way identity exchange between both parties in the transactions, making retrieval funds easy(should you accidentally send the bitcoins to a wrong account).


The new improvement ensures payment information is secured by strong encryption, to prevent third party intrusion, i.e end to end encryption.

Single address for all transactions without risking a hack/intrusion(via BIP 32 wallets). It generates a new bitcoin address for each payment to avoid reuse.

Past transactions would be stored in people’s names instead of a list of random bitcoin address.


Users will be able to store their wallet names in a static domain style, e.g Paul.pip.me


Better upgraded security features to prevent the plague of malwares/ viruses on users’  smartphones when transacting with mobile bitcoin wallets.


Wallets will be able to receive payment request online and offline.


It will allow P2P(peer to peer) payment.

Now here is the core offering of all these proposed improvement- it is mobile bitcoin payment friendly.

But Peter Todd has a problem with it( The ‘No’ People)

He is soooo opposed to the idea that he along with his supporters are campaigning for a boycott of every wallet with a BIP 75 protocol.

And his reasons borders on just two compliances that would will forfeit the privacy crown of the bitcoin community, which are AML(anti-money laundering) and KYC(Know your customer) policy.

Just so you know(if you didn’t)
AML(Anti-money Laundering): it is a set of procedures, laws or regulations designed to stop the practice of generating income through illegal actions. In most cases money launderers hide their actions through a series of steps that make it look like money coming from illegal or unethical sources was earned legitimately.

KYC(know your customer): It refers to due diligence activities that financial institutions and other regulated companies must perform to ascertain relevant information from their clients for the purpose of doing business with them.
The KYC strictly demands:

Collection and analysis of basic identity information.
 Name matching against lists of known parties (such as "politically exposed person" or PEP).
Determination of the customer's risk in terms of propensity to commit money laundering, terrorist finance, or identity theft.
 Creation of an expectation of a customer's transactional behavior.
 Monitoring of a customer's transactions against their expected behavior and recorded profile as well as that of the customer's peers.

Their fear….
According to the Peter Todd’s camp they believe to go the BIP 75 way will open the door to that very threat the bitcoin community has deemed unwanted- Government intrusion.

Conclusion
It appears that both camps have valid points.
But i am sure the ultimate decision would have to be made by the bitcoin community on the way forward for the bitcoin payment protocol, which in turn will affect the future of the mobile bitcoin payment.
Or maybe a protocol that incorporates both sides of the argument will have to be authored.

Let's keep our fingers crossed…..