How offline payments are possible in the PayCoupons system

I would like to point out a particularly interesting technological aspect of our system (and welcome a discussion about it): offline payments. Not just off-chain as in the Lightning Network or similar, where participants still have to monitor the blockchain to detect fraud. Instead, in our case, no Internet connection is necessary at all – you could pay via Bluetooth between devices in a shop, for example.

While this sounds like magic, it's rather a side effect of a currency design choice we made early on. Whenever you have a digital currency accepted by a multitude of parties, parties have to communicate to allow detecting anyone's double-spending attack (and the blockchain is how this communication and trust is organized). However, when you have "micro currencies with one acceptance point each", like each user's coupons in PayCoupons, no communication with third parties is necessary, and thus no Internet connection. The accepting user can just look into own records to see if a balance has been spent before. (Note that in the case of centralized digital currencies, such as GNU Taler, there is only one issuer and the issuer can detect and prevent double-spending attacks; but here the issuer is distinct  from the recipient of payments, which means that the recipient has to communicate with the issuer to verify a payment has been received. Because of this, GNU Taler, Cyclos3 and similar systems can't be used with offline payments.)

Of course, the reason to have a currency with multiple acceptance points is the very reason of using money at all: to have a universal product that simplifies economic exchange, as bartering is just impractical. So we had to solve that issue differently, and we solved it with automatic, algorithmic multi-party bartering, which is much more flexible than one-on-one bartering.

Offline payments are of course interesting from a privacy perspective, but maybe even more for the potential uses in low-infrastructure regions – the growth markets of the next decades.

For more details about offline payments, see our whitepaper in chapter "4.5. Payments".