Text-based payments are financial transactions initiated or authorized through simple text messages (SMS) or messaging applications, rather than dedicated payment applications or web interfaces. In the crypto context, this typically involves sending commands or addresses via SMS to a linked service that then executes a cryptocurrency transfer on behalf of the user.
Mechanism
The mechanism relies on an intermediary service that links a user’s phone number to a cryptocurrency wallet. A user sends a formatted text message containing transaction details, such as recipient address and amount. The service authenticates the user, processes the command, and interacts with the blockchain to initiate the transfer, often requiring a confirmation code for security.
Methodology
The methodology aims to simplify crypto transactions for users without consistent internet access or smartphone capabilities, expanding accessibility. While offering convenience, it introduces dependencies on centralized intermediaries and potential security risks related to SIM swaps or phone compromise. This approach often finds utility in micro-transactions or remittance corridors where traditional banking infrastructure is limited.
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