Have you ever spent 30 minutes checking and double-checking before sending a cryptocurrency payment? What about sending a small test transaction just to ensure that you’re sending it to the right person?
When sending a crypto payment, you have no information about the recipient or who they are. This is scary, no...it’s terrifying.
Traditional payment services don’t have this problem. With Venmo or Paypal, you can see a person’s username, picture, social media accounts, email addresses, or other identifying information
Enter blockchain domains
Blockchain domains are usernames for receiving crypto. It’s DNS 2.0 - domains are stored by users in their cryptocurrency wallet, instead of by registrars like Godaddy. You can use them for decentralized websites, but you can also use them to receive money - like a decentralized Venmo account.
Having a user-controlled name for receiving money is an important improvement in the user experience of sending crypto. But there are still all sorts of information missing. What does the person look like or at least, what is their avatar? Do they have any sort of social history that is relevant to my transaction? For example, if I’m to pay someone for marketing assistance, is this crypto address tied to accounts with a reputation for providing such services?
Oracles to the rescue
Oracles allow you to verify data from off-chain sources on-chain. Existing sources of reputation exist inside of traditional apps, not on the blockchain. Social media accounts, email addresses, and other identifying information all exist off-chain and must be verified. Oracles have the ability to address the problem of crypto addresses not having any real-world identifying information, making it safer to pay someone.
So how do blockchain domains and oracles come together to make crypto payments less scary?
You link your Twitter handle to your blockchain domain so that anyone who wants to pay you can see your account before doing so.
First, you need to register a blockchain domain.
Then you point your domain to a Twitter account you own by signing a message with your private key.
Next, you send out a tweet from your Twitter account to prove they truly own it. This tweet is then fetched by a Chainlink-powered decentralized oracle network, cryptographically hashed, and stored on the Ethereum blockchain to tie it to a specific domain name.
Last, you go into a wallet, type in the blockchain domain, and see the Twitter account displayed before sending money.
Why does this matter?
For crypto payments to go mainstream, senders need to feel confident they’re paying the right person. Do you feel that right now when you send a crypto payment? I don’t and I do it rarely, despite being passionate about the technology.
The problem is that crypto payments need to be safer before they can go mainstream. Verifying that a social media account is tied to a crypto address is a small step toward making it less scary to send crypto.
Where is this going?
While this is the first time that oracles are being used to tie a real-world ID (Twitter) to the blockchain, it won’t be the last. Imagine the power of verifying all sorts of real-world identifiers and then tying them all together. The user is in control and the data is stored on the blockchain. Users will decide what information to verify about themselves as well as which applications they share that information with.
It’s a world where both payments and real-world identifiers are on blockchains.
Try it out here.