In the past year, Bitcoin has flummoxed its critics and exhilarated its followers. Since January, the exchange rate per bitcoin has skyrocketed, venture capitalists have been spotted skulking through the halls of Bitcoin conferences, and each month there has been an increase in the number of businesses that have added Bitcoin as a payment option. Manu Sporny, chairman of the Web Payments Community Group at the World Wide Web Consortium (W3C), spoke at a Bitcoin conference in New York City in late July to put this tiny economy into perspective and to offer some advice. As of August, he said, there would be an estimated 1.6 million active Bitcoin addresses—diddly-squat when you consider the 2.75 billion people plugged into the Internet globally. The lesson? Push to get Bitcoin integrated into Web browsers.
Sporny is seeking cooperation from the Bitcoin community in developing the next generation of Web standards. His company, Digital Bazaar, has released an open-payments standard for Web browsers called PaySwarm, which is also under consideration at the W3C. IEEE Spectrum contributor Morgen Peck caught up with him after his talk to find out what the Web would look like if Bitcoin were integrated into browsers, and what it would take to make this happen.
Morgen Peck: First of all, we’re not just talking about Bitcoin, are we? You’d like to see the online payments process undergo a complete overhaul, and Bitcoin is just one part of that, right?
Manu Sporny: We’re trying to create the first universal, public standard for interfacing with financial networks. And that can be banks, it can be Bitcoin, or another type of alternative currency, like Ven. Basically, any type of currency is our goal. It’s not just Bitcoin. It’s not just U.S. dollars. It’s not just euros.
Morgen Peck: And I take it PaySwarm is what you’ve come up with. Can you tell us a little bit about it?
Manu Sporny: PaySwarm is the world’s first open, currency-agnostic, universal payment standard. The goal is to make sending and receiving money on the Web as easy as texting or sending an e-mail.
PaySwarm is being worked on in the Web payments group at the W3C. The goal is to augment the core of the Web’s architecture to create an open, programmable financial network. The group that is making this happen is open to the public, records all teleconference and design meetings, and is very transparent about how this technology is being built. It’s a very different process from how the established financial industry builds these technologies. One of the goals of the Web payments group is to democratize finance. We want to put financial tools that only large organizations and financial institutions have today into the hands of anyone with a connection to the Web. We want this technology to be available on a patent- and royalty-free basis.
Morgen Peck: Well, democratized finance is certainly a priority among Bitcoin and cryptocurrency advocates. So what would it look like if Bitcoin were part of the core architecture of the Web?
Manu Sporny: What putting Bitcoin into the browser would do is you could open up any browser—as long as you associate your browser with your Bitcoin wallet in some way—and you could go to a website and click “buy,” and that would be it. You wouldn’t have to fill in address information. You wouldn’t have to fill in credit card information. You wouldn’t have to sign up for an account. You could just buy.
Think about how you go to YouTube now and you just click “play.” If you remember way back in the day, you would have to download that video. You’d have to open the proper video player, all that kind of stuff. And what the W3C did—and this was back in ’97—was say, “Well, it’d be really nice if you could just play video in the browser.”
And so now, using any of the modern browsers, you can go to a website and click “play,” and it will be HTML5 video. You don’t have to do anything else fancy. No plug-ins. No downloading a file to an external application. None of that stuff. That’s what we’re trying to do for money.
Morgen Peck: So what are the various routes by which Bitcoin might be integrated into Web browsers? What’s the process, and who is involved?
Manu Sporny: If we look at how the Web came to be used by 2.75 billion people, there is one general thing that allows a technology to be built into Web browsers. It has to be an open, patent- and royalty-free technology standard. There are two organizations that work on creating these world standards: the Internet Engineering Task Force [IETF] and the W3C.
So, there are three ways that Bitcoin could be integrated into the core of the Web through the work the Web payments group is doing. The first is to integrate it directly with the browser, which is probably not going to happen. The Bitcoin block chain [the virtual ledger that keeps track of transactions] is too large for many computing devices, and it’s only going to get bigger.
However, Web-based Bitcoin wallets are a good match for PaySwarm, and coupling the two has a number of added benefits. For example, it would allow you to spend bitcoins instantaneously, without waiting 10 to 90 minutes to verify that the transaction went through. This is one of the things we’re working on in the Web payments group. Since PaySwarm is currency agnostic, you can send bitcoins just as easily as you can send U.S. dollars.
The other alternative is to get companies that use proprietary Bitcoin wallets to integrate with the Web Commerce API, a browser technology that Mozilla created that we’re refining in the Web payments group. The Web Commerce API allows us to do things like one-click payments and in-app purchases. We’re designing it to integrate with open-payment protocols like PaySwarm, as well as proprietary payment protocols like PayPal, Google Wallet, and other closed-payment solutions. Any closed Bitcoin wallet would be able to use the Web Commerce API to send money online.
Morgen Peck: And what’s in it for Bitcoin? Why should people who use Bitcoin right now, who are perfectly comfortable running a Bitcoin client or using an online wallet, care whether the browsers adopt this?
Manu Sporny: If you’re specifically talking about the Bitcoin ecosystem, the thing that gives Bitcoin value isn’t the number of people speculating on the currency. It’s the number of people using the currency. The thing that is going to give Bitcoin more legitimacy is more people using the currency. If you build the ability to transact bitcoins directly into the browser, you are giving 2.75 billion people direct access to this currency, and that’s a huge thing.
Morgen Peck: But I take it that you are more interested in implementing Bitcoin as a transactional protocol than elevating the bitcoin currency per se. Is that fair to say?
Manu Sporny: We’re trying to look at it more broadly. It’s not “Can we integrate Bitcoin into Web browsers?” It’s “What kinds of new cool things can we do with currency now that we have a Bitcoin-like technology?”
So to give you an example, we’ve got 1900 banks in the world that use a network that’s run by SWIFT [Society for Worldwide Interbank Financial Telecommunication]. SWIFT is the way they do interbank transfers to make sure all the banks’ balances are aligned with one another. The problem with that network is it’s really expensive and costly to run. SWIFT has their own standardization group, their own network, their own technology to do this kind of stuff. And using the Bitcoin chainlike technology would allow us to just completely remove that. You wouldn’t need that network anymore. Not only that, but you could then have people that are in charge of their own finances. So, using this technology, you could run your own bank for your community or yourself.
And a lot of the regulatory headaches around making sure that one bank has enough money to transfer to another bank—all that stuff kind of goes away. It’s replaced by the technology on the Bitcoin block chain. So that’s an example. Just looking at Bitcoin itself as the currency and the current implementation is being too shortsighted. This technology could have a real revolutionary effect on other fiat currencies as well as around the world.
Morgen Peck: So Bitcoin is a pretty disruptive technology. In fact, “disruptive” seems a bit inadequate, as the technology was quite obviously designed to redistribute financial power by directly undermining the business model of those institutions that turn a profit by moving and managing other people’s money. Is there any reason to think that the other members of the W3C will let something like this in? Doesn’t it seem more likely that they will do everything in their power to keep Bitcoin, or Bitcoin-inspired technologies, from gaining traction by voting against it when the time comes?
Manu Sporny: There’s always that chance. There’s always the chance that we start this work at the W3C and we get four large banks joining in, and they vote to remove Bitcoin from the protocol. And they can do that because they’re voting members, and that’s what being a voting member gets you. You can basically veto a technology. And that’s the big problem. That’s why I really want some of the Bitcoin folks to get in there as well, because if there are four Bitcoin companies to nullify that vote, then we could continue on with Bitcoin being in the spec.
But if the Bitcoin folks don’t join, then they’re not at the table when these decisions are made, and it’s a lost opportunity. You have to wait for the next round. That’s why I’m trying to get the Bitcoin Foundation involved. Because if they’re not at the table when the votes happen, they’re going to be shut out.