Online payments with Bitcoin

Hi,

I think the crypto ecosystem would benefit from mapping, so I’ve started writing a series of blog posts to this end. I’ve just published the first one which introduces mapping through a simplified example of Bitcoin payments:

It was hard to balance what to include/omit and I’m grateful for all feedback!

Best regards,
Agost

It’s a very solid analysis, thank you for that!

Map 3 is the best, and I think it could serve as a basis for further analysis - if fiat currency addresses the same user need as BTC, then what is advantage of BTC in that context?

I would love to see a bit more about legal and risk aspects (f.e. what happens if you accept a fraudulent transaction, how to protect from those, etc).

The “clearly superior technology” is a bit misleading to it. It is obviously more advanced, but superiority has to have fitness function defined. In the end, the ‘advancement’ of a technology does not matter that much, what counts is how well the end user need is met.

Map 6, as I read it, detaches BTC from Blockchain. A very good observation!

Oh, and if this is your first attempt to draw a Wardley Map, you have done an awesome job!!!

Hi Chris,

Thanks a lot for your quick answer, you made very good points and your course was very helpful to me in gaining confidence with mapping.

I’ve picked the somewhat contrived example of Bitcoin payments due to its familiarity for the introductory post, but people have mostly abandoned the idea of using Bitcoin for day-to-day online payments, so in the next posts I will focus on 3 areas of payments: settlement systems (Ripple, Stellar), stablecoins (incl. GlobalCoin by Facebook) and anonymous payments. Legal and risk aspects are very important for all of these, so thanks for pointing it out, I’ll make sure to detail them. I’m also very curious to find out what a stablecoin brings to the table over just having a settlement system and dollars and I will build on Map 3 and its variants for this analysis.

Also, you’re right that “clearly superior technology” sends the wrong message (most misguided crypto analysis comes from this angle), so I’ve replaced

The original goal of the Bitcoin paper was improving online payments, but the maps that we have developed so far paint a bleak picture of its prospects of replacing credit cards. Yet Bitcoin is clearly superior technology, so let’s see if we can devise a plan as an exercise to reach the paper’s original goal.

with

The original goal of the Bitcoin paper was improving online payments, but the maps that we have developed so far paint a bleak picture of its prospects of replacing credit cards. Yet there is clearly room for improvement, so let’s see if we can devise a plan as an exercise to reach the paper’s original goal while building on Satoshi’s technological breakthroughs.

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The point I wanted to make is that “clearly superior” most probably meant “more advanced” (you know, math and all that stuff), and that it does not have to be superior at all (that might be just my opinion). The ultimate fitness function is how good is a given component at providing value to end users, and more advanced version of payments (based on crypto) does not have to be better here than fiat currencies (which are way simpler, but, perhaps, have much lower overall costs associated with them).

This is me throwing my 0.02$, so feel free to ignore it :slight_smile: .

I appreciate you taking the time and I think I agree with your point, but haven’t conveyed my meaning properly: When I wrote “clearly superior”, I meant more advanced technology that promises faster and cheaper payments (this is the core value proposition of the Bitcoin paper) and then in the edit I meant that there is clearly room for improving online payments from the end user’s perspective. But as you say (if I’ve interpreted correctly) and as I infer in the post, just because there is a more advanced piece of technology in a value chain that promises greater value to end users, it doesn’t mean that the value will be realized.

I made an other sneak edit, as I haven’t circulated this post beyond this forum yet. Replaced:

The original goal of the Bitcoin paper was improving online payments, but the maps that we have developed so far paint a bleak picture of its prospects of replacing credit cards. Yet there is clearly room for improvement, so let’s see if we can devise a plan as an exercise to reach the paper’s original goal while building on Satoshi’s technological breakthroughs.

with

The original goal of the Bitcoin paper was improving online payments for both merchants and consumers, but the maps that we have developed so far paint a bleak picture of its prospects. Yet there is clearly room for improvement, so let’s see if we can devise a plan as an exercise to reach the paper’s goal of cheaper payments while building on Satoshi’s technological breakthroughs.

The reason I stick with the Bitcoin paper’s goals instead of looking at online payments from first principles is just to keep the introductory post compact and coherent. (I always refer to the Bitcoin paper’s goals instead of Satoshi’s and Bitcoin’s goals, because the latter are subjects of frequent flame wars in the crypto community that I try to keep out of. :slight_smile: )

I wrote a follow up post to map the challenges involved in launching novel payments solutions: https://agost.blog/2019/06/mapping-crypto-common-pitfalls/

One thing I struggled with was marking circular dependencies between merchants accepting and consumers making payments. Is there a common symbol for this?

Nope, I am afraid we do not have anything for this.

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