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Micropayments Revisited

Micropayments Revisited. Written by Silvio Micali and Ronald Rivest Presented by Charles Song and Michael Wasser. Digital Payments. Involves Buyers, Merchants, and Brokers Simplest form is ‘electronic checks’ Usually involves manual entry/signing Some transactions are too small

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Micropayments Revisited

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  1. Micropayments Revisited Written by Silvio Micali and Ronald Rivest Presented by Charles Song and Michael Wasser

  2. Digital Payments • Involves Buyers, Merchants, and Brokers • Simplest form is ‘electronic checks’ • Usually involves manual entry/signing • Some transactions are too small • Sum of micropayments may not equal a macropayment

  3. Micropayment Goals • Make payments of variable size with little user intervention • Aggregate small transactions into larger ones • Simple yet secure • All parties incur low transaction costs and: • Buyer: No user intervention in process with no risk • Merchant: Low expenses (low transaction cost) • Bank: Verifiable transactions

  4. Common Deviations • Buyers make fake payments or underpay • Venders try to overcharge or cheat the broker • Collusion between two parties against the third

  5. PayWord • Buyer creates “H-chain” • x0, x1, x2, ..., xn xi = H(xi+1) for i = 0, 1, ... n where xn is random • Sends x0 to merchant • Buyer makes payments to merchant (xi, i) • Merchant decides when to send bank (xi, i) and x0 • Bank verify payment amount by running H() function

  6. PayWord Analysis • Pros • If H is good, hard for parties to cheat the system • Cost of reversing the function can outweigh the benefit • Cons • Merchant cannot combine payments from multiple buyers, deposit might cost more than payment value • Every unit of payment requires calculation

  7. Rivest's Lottery • Merchant creates “H-chain” and gives the buyer w0 • Buyer creates “H-chain” and gives the merchant x0 • Buyer makes payments to merchant (xi, i) and calculates (xi mod 1/s) • Merchant gives (wi, i) to buyer and calculates (wi mod 1/s)

  8. Rivest's Lottery • if (xi mod 1/s) == (wi mod 1/s) then payment is worth 1/s * payment unit • Probability of (xi mod 1/s) == (wi mod 1/s) is exactly s • On average buyer pays and merchant receives the correct amount

  9. Rivest's Lottery Anaylsis • Pros • Lowers processing cost due to less payable transactions • Cons • Buyer and merchant must interact to determine payability • Buyer has the risk of over paying in short term, psychological burdens for buyer

  10. MR1 • T - transaction contains merchant, buyer, bank, merchandise, transaction time and value. • F - public function that outputs values between 0 and 1 • C - digital check

  11. MR1 • Buyer sends C to merchant, C = SIGu(T) • Merchant calculates F(SIGm(C)) • If F(SIGm(C)) < s then C is payable, merchant sends bank C and SIGm(C) • Bank can send SIGm(C) to buyer for verification • 1/s payment unit is made

  12. MR1 Analysis • Pros • Two-way interaction not required for transactions • Cons • Buyer still suffer from psychological burdens

  13. MR2 • SN - Serial number starting from 1 and incremented sequentially • MaxSN - maximum serial number processed by the bank so far

  14. MR2 • Buyer sends C to merchant, C = SIGu(T), along with SN and time • Merchant calculates F(SIGm(C)) • If F(SIGm(C)) < s then C is payable, merchant sends bank C and SIGm(C) along with SN and time from buyer • Bank makes 1/s payment unit to merchant • Bank charge buyer SN – MaxSN, set MaxSN = SN

  15. MR2 Anaylsis • Pros • Two-way interaction not required for transactions • User has no risk of over paying • Cons • Bank takes on all the risk of under payment • Punishment system might be hard to enforce • Honest user might be blamed for wrong-doing

  16. MR3 • t' and t - time of M's last and current deposit

  17. MR3 • Buyer sends C to merchant, C = SIGu(T), along with SN • Merchant groups all Cs between t' and t into (L1...Ln), values are (V1...Vn), total value V • Merchant computes Ci = H(Li, Vi) then sends C1,...,Cn to the bank • SIGm(t, n, V, H(L1,V1),...,H(Ln,Vn))

  18. MR3 • Bank selects k indices, i1, i2,...ik, and sends them to merchant • Merchant de-committing Ci1,...,Cik • Bank credits merchant account with V and debits the buyers in Li1,...,Lik according to the Sns • Selected buyers pay everything owed since last time they are selected

  19. MR3 Analysis • Pros • Two-way interaction not required for transactions • User has no risk of over paying • Bank determines which checks are payble • Cons • Bank takes on all the risk of under payment • Punishment system might be hard to enforce • Honest user might be blamed for wrong-doing

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