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Cryptocurrencies are usually used for monetary transactions, but they can also be used to share data. Many coins have a dedicated “memo” field, but broadly speaking, any cryptocurrency that allows custom data can also be used to exchange messages.

Messaging is a simple idea, but it can be applied in complex ways – and it also has some unexpected implications.

Basic Messaging

Bitcoin offered basic messaging from the start. In fact, the original genesis block included a news headline in its coinbase field. Later on, Bitcoin users used the blockchain to store Bitcoin’s entire white paper.

Unfortunately, since Bitcoin’s block sizes are fairly small, the white paper had to be radically compressed – as a result, deriving the white paper from the blockchain is quite a chore.

For practical purposes, Bitcoin can only store short messages. This is true of many other cryptocurrencies as well: each transaction may only provide enough space for a brief line of plain text. Fortunately, even the simplest message fields introduce plenty of possibilities.

They can be used to attach important pieces of information to a transaction, such as a timestamp, a description, or a return address. Bitcoin users have also used the blockchain to store marriage proposals, racial slurs and ASCII art.

Messaging is especially promising for privacy coins, as a means of exchanging confidential information. Zcash has offered memo fields for some time, and Bytecoin recently announced its own plans to integrate a similar feature.

Unlike transparent ledgers like Bitcoin, both Zcash and Bytecoin encrypt transactions, allowing messages to be read only by the sender and the recipient.

Advanced Applications

Some blockchains take messaging much further. Bitcoin Cash, for example, uses fairly large blocks, allowing larger messages to be stored within each transaction. This became the basis of memo.cash, a social media site that stores each of its posts in Bitcoin Cash transactions. Unlike Facebook and Twitter, memo.cash cannot censor content, because that content is stored on a permanent ledger.

However, messaging isn’t just useful as a means of self-expression. It can also serve a technical purpose, and messages are sometimes meant to be handled by an automated system. For example, some exchanges use memo fields to identify their users and sort their transactions. Lumenauts has explained how memos work on the Stellar blockchain -and how exchanges use that information – in great detail.

IOTA, meanwhile, has developed a very advanced communication protocol called Masked Authenticated Messaging (MAM). This system offers a wide variety of privacy options, and it also allows developers to create complex data streams to communicate with external systems and devices. This is all part of IOTA’s efforts to integrate with IoT devices and the machine economy.

Watch What You Write

Messaging comes along with a few issues. First of all, custom data fields can lead to confusion, and some users will accidentally publish private data. For example, in 2017, several Steemit users shared their passwords in the memo field of their Steem transactions. Only a few users made this mistake, but this sort of complication could conceivably be exploited more widely by a phishing campaign.

There is also the matter of censorship. Messages can be stored permanently on a blockchain, but the frontend operator that retrieves those messages might not want to display abusive or illegal content. Peepeth, for example, is a Twitter clone that uses IPFS and Ethereum to store and handle messages – but it also moderates its content, so users will not see hidden messages.

Finally, block size is also a contentious issue. Blockchains with larger block sizes can store more content, at the expense of other network dynamics. Bitcoin SV, for example, uses blocks as large as 128 MB, and is aiming to provide a blockchain that is capable of storing media, not just messages.

Many critics believe that large block sizes cannot be implemented securely, and Bitcoin SV has indeed run into security issues related to its maximum block size.

The Cost Of Messaging

Messaging and custom data can make cryptocurrency transactions very versatile. These fields can be used as a means of sending important information, as the groundwork for uncensorable social media platforms, and as a way of communicating with automated systems. This is no longer impractical, and new cryptocurrencies have made on-chain messaging systems more useful than ever before.

But there is an important trade-off: messaging introduces a human element to crypto transactions. It may also be a slippery slope toward on-chain data storage and larger blocks, which could have repercussions on any given blockchain’s overall security. Time will tell just how far cryptocurrency-based messaging and data sending can go.