Short Paper: Deploying PayWord on Ethereum

We revisit the 1997 PayWord credit-based micropayment scheme from Rivest and Shamir. We observe that smart contracts can be used to augment this system, apply to ‘claim or refund’ paradigm of cryptocurrencies to remove the counter-party risk inherent in PayWorld, and use a smart contract to ‘staple’ real value (in Ether) to payments in the system. Our implementation is more concise than any Ethereum payment channel we are aware of and the offline payments are very compact values (264 bits). It only uses hash functions and not digital signatures. EthWord becomes cheaper than standard Ethereum transfers when more than 16 payments between the same participants are made and appears to maintain its advantage for up to 1000+ transactions, at which point signature-based payments become cheapest. The main drawback of EthWord is the moderate gas price of using the system—despite dropping signatures, it is still priced out of the micropayments use-case. Like any payment channel, requires only two on-blockchain function calls to open and close the channel, while allowing the rest to be made off-blockchain.