Will bitcoin become a prominent part of online retail? A growing number of companies believe so and are building cryptocurrency-enabled products and APIs to support retail applications.
One of those companies, Ziftr, recently announced a cryptocurrency API that will give merchants the ability to accept multiple cryptocurrencies, including bitcoin and Litecoin. In addition, it's even going one step further and is developing its own cryptocurrency, ziftrCOIN.
With activity and interest in bitcoin continuing to increase, especially in the retail space, I spoke with Ziftr's Chris Dunleavy about the rise of cryptocurrencies, the implementation of his company's API and ziftrCOIN.
ProgrammableWeb: What percentage of online retail payments do you think will be made with cryptocurrencies in the coming years?
Dunleavy: We have seen that cryptocurrency is accelerating quickly as more mainstream retailers begin to understand the benefits of this technology. Lower costs and more security for both consumers and retailers are two large drivers that directly impact the overall adoption of cryptocurrency as a payment method. While no one can know exactly where the market will go, we expect to see cryptocurrency grow to around 10% of online retail payments within the next couple of years.
ProgrammableWeb: While cryptocurrency payments reduce fees for retailers, they offer less buyer protection. Is this a barrier to greater adoption, and if so, how can platforms like yours help address it?
Dunleavy: Yes, this is a barrier — especially for smaller retailers that have less brand awareness. These smaller retailers may find that consumers are concerned or entirely unwilling to trust them without some form of credibility check. This will be less likely for larger retailers that have garnered public trust. To address this barrier, we will provide merchant authentications as part of our efforts to ensure consumers can find safe and trustworthy retailers to purchase from. This visible representation also benefits retailers, as it gives them an opportunity to communicate credibility and reliability to their customer base.
ProgrammableWeb: What are some of the challenges in building a cryptocurrency API? For instance, are there additional security considerations that had to be taken into account?
Dunleavy: We have to pay close attention to any of the normal security issues that affect finance and e-commerce, including protecting any sensitive user information and hardening the IT infrastructure around the API. With cryptocurrency specifically, if you have access to the user's private keys, you can make a transaction on behalf of the user.
We have accounted for this risk in our API by eliminating the requirement to have us hold the user's private key. This adds security by keeping the control of private keys distributed across users’ devices, rather than on a centralized server. If the user chooses to use our cloud wallet solution, however, then we will manage their private keys for them, distributing them across multiple machines and using multisignature validation to spend coins. This ensures that no single party (an attacker or even our own team) can access enough private keys to sign a transaction. And, of course, the customer and the retailers will be encouraged to take advantage of multifactor authentication to help protect their account from unauthorized entry through the front door.
ProgrammableWeb: How important do you expect the Ziftr API will be to your business going forward?
Dunleavy: The rise of the API economy has made APIs a critical part of doing business. Ziftr has used APIs internally to serve critical business functions since launching our first service over five years ago. Our private APIs receive tens of millions of requests per day.
This is the first time we are opening up parts of our systems directly to third parties and enabling the adoption of cryptocurrency among mainstream retailers. We’re allowing retailers to integrate a full shopping experience. Through this, their customers will benefit from more accurate data, more flexible payment options and more choices when shopping. Retailers will experience multiple benefits as well, including lowering costs and reducing risk. Because our API allows conversions of cryptocurrencies to fiat currencies through multiple exchanges, liquidity is also increased. Credit card and volatility risk are also significantly reduced.
ProgrammableWeb: Were there any major differences in integration between the cryptocurrencies you're supporting (e.g., bitcoin versus Litecoin)?
Dunleavy: Yes, there have been a few differences — nothing that will disrupt the functionality of our API for users, just some differences to account for on our end. For example, different types of coins have higher liquidity, so we’ve had to carefully consider how the user experience accounts for things like fluctuating markets and transaction confirmation time. Some coins have been easier to deal with than others. Fortunately, most coins (including ziftrCOIN) are based largely on the same open source technologies and are very similar.
ProgrammableWeb: In addition to your support for bitcoin and Litecoin, you've developed your own cryptocurrency, ziftrCOIN. How did you implement that?
Dunleavy: ZiftrCOIN is built on the open source technology that powers bitcoin and most other altcoins, but we’ve made some unique technical decisions that we believe make ziftrCOIN a very strong coin. Specifically, we have designed a mining algorithm that we call Sign To Mine, which we feel will make the coin less susceptible to 51% attacks on the network by limiting the creation of large mining pools.
We have also built ziftrCOIN to have a one-minute target block generation, which is 10 times faster than bitcoin's. We’re currently in the specifications phase of the technical implementation process and are very engaged in getting feedback from the community. We invite people to ask us questions or leave us comments using our subreddit.
ProgrammableWeb: What advice would you give to other companies considering integrating cryptocurrency support into their applications?
Dunleavy: Don’t try to go it alone. There are prebuilt solutions, such as Ziftr’s API, that will allow for anyone to integrate cryptocurrency support, and the cryptocurrency community is overall very supportive.
Also, focus on educating your users. Digital currency is a field that 99% of the population doesn’t know anything about yet, and they need to feel comfortable with it before they will adopt this revolutionary technology.