Digital payments have seen enormous growth in the last few years. According to Statista, the total transaction value rose from USD 6.25 trillion in 2017 to USD 17.73 trillion in 2024. That's almost a 3x increase in less than 10 years, and the projection is that this value will be close to 37 trillion in 2029.
Some factors behind this considerable increase are the increasing adoption of e-commerce and the rise in contactless payment boosted by the COVID-19 pandemic. It's a fact that digital payments are becoming more and more the preferred way to transfer money, even for in-person transactions.
However, despite all that, digital payments still face some obstacles.
The problems with digital payments
There are already many popular and well-established options available when it comes to digital payments. Applications such as Cash App or Venmo made digital payments easy, fast and free but they still face a fundamental problem: you can only pay someone if they are already on the app and there are many people around the world who simply cannot meet the sign-up requirements.
They work great, but they are very local.
Crypto fixes it... but does it really?
With the advent of blockchain technology, cryptocurrencies fixed that particular issue. Blockchain is open to anyone, anywhere; it works 24/7, and some networks also offer instant and free transactions.
With all that upside, one would think that crypto is the ultimate payment method, and that may as well be true; however, cryptocurrency and blockchain technology come with a downside of their own.
One major hurdle is adoption. Cryptocurrency is still very overwhelming to a lot of people. Many of them are way too intimidated to even try it, which means that while, in theory, crypto is open to anyone, in reality, it's restricted to the early adopters who are "bold enough" to try - at least for now.
Enter Token Locker Protocol (TCP)
Token lockers allow users to send cryptocurrency using regular channels that they are already used to, such as messaging apps. It aims to remove all the complexity of having to deal with things such as networks and wallet addresses that make people avoid dealing with crypto for routine payments.
BeerMe, a global alternative to Venmo powered by USDC, partnered up with Privy to implement that concept and enable true P2P payments.
This is how it works, according to Privy:
1- A Key-Pair Is Generated
- When you create a token link in BeerMe, a key-pair is generated locally. The public key is stored in the locker contract onchain, while the private key is embedded in a one-time-use link.
2- Share the Link
- The sender passes that link (containing the private key) to the intended recipient via any messaging channel.
3- Receiver Unlocks the Tokens
- When the recipient clicks the link, they generate a signature using the private key. Only someone with the link is able to generate a valid signature. To prevent frontrunners from hijacking the payment, the user’s desired deposit address is included in the message.
- The locker contract checks this signature against the stored public key.
If the signature is valid, the desired deposit address is recovered from the signature, and the tokens are transferred to the address.
4- Trustless Transfer
- The tokens transfer onchain directly to the recipient’s address, without any third party controlling or holding them.
In short, TLP enables non-interactive token transfers: You don’t need the recipient’s address first, and you don’t have to trust an intermediary to forward the tokens. It’s a 100% trustless design.
Final thoughts
Although I haven't tried BeerMe myself, I think this TLP approach is a very interesting one.
I commend their efforts to enable users to be instantly onboarded, quickly send and receive cryptocurrency and control their own keys—all that without the need for advanced crypto knowledge.
I still believe that instant and free direct transfers between wallets, much like what we have on Hive, is the ultimate solution, but perhaps TLP is a strong candidate for a transition phase where people who are not fully prepared to go full crypto can ease their way into the world of blockchain.