Bitcoin Bill Payment Services Taking Off Around the World

Jon Southurst (@southtopia) | Published on May 7, 2014 at 16:15 BST | Companies, Merchants, News

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Let’s face it, we all hate paying bills, but the ability to pay them with digital currency might help put a smile on your face.
Earlier this year, CoinDesk reported on the launch of Bylls, a Canada-based service that allows users to pay bills in bitcoin at more than 6,000 organizations, including the government. It was one of the world’s first.
Now, new services are popping up around the globe that allow you to pay for everything from basic utilities to taxes in bitcoin.
Like merchant bitcoin payment processors, bill payment services solve the problem of requiring every organization to develop its own bitcoin payment infrastructure.
The different systems available now have varying degrees of utility, from just a few cooperating payees, to use for everything from credit card bills to taxes.

Living Room of Satoshi, Australia

An Australia-based service called Living Room of Satoshi (LRoS) now promises to pay anyone on that country’s BPAY network in bitcoin for no cost.
BPAY is a universal bill-payment system in Australia that allows people to pay by phone or online by entering two numeric codes. Nearly every major business and organization uses the system, including federal and state governments, and credit card companies.
To use Living Room of Satoshi, users simply enter the BPAY Biller and Reference codes plus the amount, and the site generates a bitcoin address/QR code. BPAY will issue a receipt within 30 minutes.

Co-founder Daniel Alexiuc is a long-time developer and entrepreneur, whose previous venture was an e-commerce company shipping live aquarium fish through the mail.
Experience with paying transaction fees to banks and payment systems as a small business, plus other experience working for banks and payment processors himself, got him interested in bitcoin, he told CoinDesk. About the company he said:

“There are no fees to use LRoS. And we don’t make any money on the exchange rate either. Ideally, Living Room of Satoshi will always be a free service for the users. How is this possible? Because of our plan.”

The plan is to help build the bitcoin economy in Australia, and Alexiuc’s vision is to see a ‘Pay with Bitcoin’ option everywhere, with QR codes printed directly onto physical and digital bills.
Paying bills with bitcoin via BPAY is his way of getting people used to the idea of making such day-to-day payments, and presenting a large user base as a business case to potential companies in future.
Launched in 1997, BPAY was the world’s first “single bill payment service accepted across the banking system”, according to its website. Since 2002 it has also offered BPAY View, which delivers bills electronically to online banking sites, enabling payment directly from accounts.
In financial year 2012-13, BPAY processed A$265bn worth of payments. The average bill payment today is A$785. BPAY also has a ‘third-party service provider’ programme that allows software developers, printing companies, consultants, and other providers to link other services to the network, which is how Living Room of Satoshi was able to plug in bitcoin.

Quantified, Singapore

Like Living Room of Satoshi, Singapore-based Quantified also allows access to multiple companies and services, including government, meaning residents may also pay taxes and other governmental fees with bitcoin.
The company, which launched in March, offers a number of bitcoin exchange services of which bill payments is one.
One of its founders, Finnish entrepreneur Ville Oehman, describes the service as like using a debit card to pay someone in a foreign currency: they still receive the amount in their local currency and are never aware what was used in the original payment. Thus, bitcoin is exchanged and transferred to the payee in Singapore dollars.
Entering your bill details into Quantified’s online form generates an email with a bitcoin address and QR code, which the user simply pays and then waits for an emailed confirmation once the bill is processed.

Bitcoin values are generated via local exchange itBit’s API.
Quantified charges a 2.9% commission on the Singapore dollar (SGD) value of the transaction, and since bitcoin transactions are taxed in Singapore, a 7% of the commission itself is added as Goods and Services Tax (GST).

enBitcoins, Argentina

Launched in December amid the height of bitcoin’s most recent price boom, Argentina-based enBitcoins is the product of former Internet entrepreneurs who are now focusing primarily on the bitcoin space.

Founder Matías Alejo Garcia indicated he was considering a number of opportunities – including ventures into 3D printing and drone delivery – before turning his attention to bitcoin last year.
The idea arose from the difficulty the developers had in securing bitcoin in Argentina, but quickly grew in popularity due to its primary consumer use case, said Garcia, adding:

“It was just an experiment, it was something we built in a week or something, and we got a really warm welcome from the bitcoin community in Argentina and they started trusting us with their coins.”

Today, enBitcoins operates with the help of three partners that conduct free bill payment services, and doesn’t see earnings from the offering.

In the future, Garcia says enBitcoins may look to ink deals directly with major utility providers so they can earn as much as traditional bill payment intermediaries. However, such plans are still in the early stages.

Garcia indicates that enBitcoins is still a side project for the team, most of whom joined BitPay when it opened a new headquarters in Argentina at the beginning of 2014.

TuKarCash, Indonesia

TuKarCash is an Indonesian payment gateway that allows money to be sent from a number of different payment services including: Western Union, bank transfer, PerfectMoney, EgoPay, cash, and bitcoin.

Once the money is in the account, users can pay bills for utilities including telephone/Internet, water and electricity.

Bahtcoin, Thailand

Thailand-based buy-sell exchange Bahtcoin is doing well for a country where bitcoin’s legal status was once questioned.

Users can also use the site to pay bills for landline and mobile phones, Internet service and cable TV, plus power from Metropolitan Electricity, by submitting billing information via an online form and receiving a payment code. There’s even at least one language school on the list.
Image via Lisa S. / Shutterstock

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Is Bitcoin Really the Next Internet?

Ariel Deschapell | Published on April 27, 2014 at 12:10 BST | Analysis, Bitcoin protocol, Blockchain, News, Technology

Everyone who encounters bitcoin for the first time grapples with how it works, and what it means. The former is relatively easy enough to learn, the latter however is something that everyone seems to have a different opinion on. ‘Is bitcoin the next Internet?’ seems to be the question behind many news articles and passionate debates alike.

Entrepreneur and bitcoin advocate Marc Andreessen has most visibly made comparisons between the two, while CNBC reported that many more venture capitalists thought bitcoin could be ‘as big as the Internet’.

Despite the comparisons’ obvious buzz appeal, it’s a serious question with profound implications. How alike are bitcoin and the Internet, and what conclusions can we draw from the comparison?

A natural metaphor

Within the world of monetary theory and finance, bitcoin is unprecedented. It is such a radical concept that most in the field are sceptical that the kind of decentralized technology bitcoin represents is even compatible with the modern economy.

The Internet thus provides an obvious reference point for a technology that seems utterly similar in its decentralization, open-source code, state of development, and most importantly its potential to disrupt on a global scale.

Indeed, if nothing else, the comparison can help effectively communicate the magnitude of bitcoin’s technological achievement.

Chris Ellis, the co-founder of feathercoin, captures this sentiment eloquently:

“The first thing that humanity has built that humanity doesn’t understand, the largest experiment in anarchy that we have ever had.”

That’s actually a quote from Eric Schmidt, and he’s talking about the Internet or the ‘network of networks’. Every network it touches it liberates. Already we’ve seen publishing, education, retail, and most famously music and film be disrupted in ways we could not have imagined. Does bitcoin represent just such a moment for banking and finance?

Given the fact that bitcoin cannot be centrally regulated, ‘an experiment in anarchy’ seems like an apt description. However for any bitcoin/Internet comparison to be truly useful and tell us where bitcoin can go from here, we need to compare their characteristics in much closer detail.

Core difference

Bitcoin and the Internet are indeed both decentralized, but both serve rather distinct purposes.
The Internet evolved as the general purpose infrastructure for a limitless amount of applications and traffic, such as email. Bitcoin on the other hand has a very specific core purpose, a ‘peer-to-peer electronic cash system’ as described in the very title of Satoshi’s original white paper.

Ultimately most services built on top of bitcoin are meant to help it to more effectively achieve its primary goal as a medium of exchange in one way or another. It exceeds this function by leaps and bounds, accomplishing what the current financial infrastructure can never do.

However as a general platform for new applications to run on, bitcoin currently has severe limitations. Mastercoin, Counterparty, and others have attempted to build additional functionality on top of the Bitcoin protocol with limited success.

While the bitcoin block chain does contain properties that allow it to be used for third-party purposes, the resources are limited and have led to conflict in the past. Bitcoin simply isn’t designed to function as the flexible infrastructure for a wide range of applications like the Internet is.

Block chain potential

However, the potential exists to use the fundamental technology underlying bitcoin, the decentralised block chain, to build numerous decentralized applications.
Decentralized applications have been getting much media attention as of late as the true revolution behind bitcoin, and where we’ll see the most groundbreaking innovation. It opens the doors to decentralized email, domain names, smart contracts, and even Decentralized Autonomous Corporations. As David Jonston, Executive Director of BitAngels, put it:

“[Decentralized applications or DAs] have the potential to become self-sustaining because they empower their stakeholders to invest in the development of the DA. Because of that, it is conceivable that DAs for payments, social networking, and cloud computing may one day surpass the valuation of multinational corporations like Western Union, Visa, Facebook, Google, and Amazon that are are currently active in the space.”

Even Goldman Sachs remarked that the underlying technology behind bitcoin holds promise. Systems designed with the bitcoin blueprint can be extremely specific in nature, or instead provide a backbone that can support as many programs and applications as human creativity can generate – much like the Internet and web. Ethereum is currently being built on that very premise.

Bitcoin itself however remains first and foremost a means of exchanging value. While its block chain technology holds the potential to create a new platform of permissionless innovation, this platform has until recently seemed destined to be divorced from the main bitcoin chain and functionality.

Enter side chains

In the context of the Internet comparison debate, new side chain proposals have great significance.
If implemented into the bitcoin core code by the open-source community, it would enable anyone to create a side chain that can interact with the bitcoin block chain via two-way pegging. Coins can be moved from one chain to the other, allowing decentralized systems to be built that are interoperable with bitcoin.

“Rather than the next Internet, bitcoin can become the next killer app for the Internet, much like the web before it”

This means that new decentralized applications won’t require their own native unit of exchange and thus can avoid a new ‘race for scarcity’, as well as the extreme volatility that comes with a new, small market cap currency.

Instead such systems can utilize the rapidly maturing and more widely accepted bitcoin as their native means of exchange and operation. In turn, the utility of such systems will directly add to the value and staying power of the bitcoin network.

The implications of this are huge, as side chains will allow the general purpose infrastructure needed to allow the permissionless innovation the Internet and web are famous for. All tied in the end, to bitcoin.

Side chains could be the last piece of the puzzle that links together the bitcoin currency, to the limitless possibilities its block chain technology holds.

Brave new world

This would make bitcoin not ‘merely’ a new e-cash system that far outperforms the capabilities of modern financial infrastructure. It would make bitcoin the de-facto currency in a new decentralized online economy of unbound utility and possibility.
An economy of decentralized applications that can’t be shut down, regulated, or censored by governments or even traditional corporations. All exchanging a similarly decentralized transnational digital currency.
Thanks to side chains, bitcoin could become a frictionless global payment system, and a platform for decentralized innovation all in one.
‘Bitcoin is the next Internet’ has been a useful slogan to gain mainstream attention, and underscore bitcoin’s potential impact on the world. However when we take a more systematic view of bitcoin’s growing evolution as a whole, a more appropriate comparison becomes readily apparent.
Rather than the next Internet, bitcoin can become the next killer app for the Internet, much like the web before it. A massive network of decentralized applications run by instant microtransactions rather than the exploitation of users’ personal information and more. A new web with new rules, and new possibilities.
Bitcoin image via Shutterstock