This is really a private payment network that happens to be denominated in Bitcoins. You have a balance denominated in Bitcoins on a server at &quot;21.co&quot;. &quot;Before you can execute an off-chain transaction in the 21 system, you need a bitcoin balance at 21.co.&quot;  It&#x27;s a centralized micropayment system. So only people with 21.co accounts can play. Hey, it worked for PayPal.<p>You can initiate a &quot;flush&quot; transaction which asks &quot;21.co&quot; to sell you real Bitcoins in exchange for their book-entry Bitcoins.  Sellers would presumably do this at least once a day, avoiding keeping a substantial balance on &quot;21.co&quot;.  Given the track record of &quot;hosted Bitcoin wallets&quot;, which tend to be &quot;take the money and run&quot; operations (anyone knowing the whereabouts of Cryptsy&#x27;s &quot;Big Vern&quot;, please contact the Silver Law Firm) that&#x27;s a good feature.<p>There&#x27;s no real reason this needs Bitcoins at all. This scheme would work if it was denominated in dollars.  There&#x27;s a startup opportunity here. Reuse the micropayment system, forget about the Bitcoins. You&#x27;d deposit money into your micropayment account with a credit card, and your computer can then spend against that balance.  Merchants could &quot;flush&quot; their balance via an ACH transfer to their bank.