Data Streaming over Bitcoin Payment Channels

Abstract

Bitcoin and blockchain technology allow for value to be transferred in small increments. This property makes Bitcoin suitable for pay-as-you-go data streaming models as an alternative to subscription-based media streaming services. One of the key mechanisms Bitcoin provides to enable such use cases is payment channels. These channels allow two parties to perform value exchanges at high frequency, without settling each individual event on-chain, making them suitable for mediating the purchase of a digital data stream on a packet-by-packet basis. However, some existing designs for Bitcoin payment channels rely on funding transactions to escrow tokens, which increases the operational cost of a data stream and can lead to the funds of peers becoming temporarily stranded in the channel. In this paper, we outline a novel payment channel design that overcomes these challenges. Our construction leverages the inherent malleability of Bitcoin transactions to allow either party to unilaterally terminate the stream at any point, without sacrificing the security of the incremental payments that have occurred up to the termination point.