Micropayments – Can cryptocurrency make this idea a success?
Micro Payments are very small transactions. How small?
Nobody really agrees on a standard definition of a micro payment. Some companies claim anything under $20, others say it’s $5, and some even as low as 1 cent. We already pay for small amounts on our mobile devices for games, music, and movies for less than $1.
The concept of Micropayments or micro transactions was coined far before cryptocurrency and even before the world wide web was invented.
- According to Wikipedia the idea of a micropayment was created to pay copyright holders for their work.
- When the internet came around the idea popped up again with the intention to pay people to create content
- Most recently cryptocurrency sparked up the conversations again and companies like SatoshiPay were created with a concept called nanopayments
Previous attempts to enable this concept never took off and fizzled away. Some of the reasons it failed is due to our current way of sending and receiving money and the fees associated with the transactions. It just doesn’t make sense to send someone a fraction of a cent and get charged more in fees than the transaction amount.
SatoshiPay has also had challenges with rising bitcoin fees and transaction times
Why would you use MicroPayments?
Our payments systems today are built because of the technology that was around at the time. It’s what we are familiar with. Let’s take an example and challenge the idea of our current payment system.
Electricity Bill – Today
- You receive a bill monthly, but does that make sense?
- In the past people would walk from house to house to get a reading from your meter
- Technology changed in the past 10 years and now most meters are digital and can be read remotely
- Today you don’t really understand the impact of your daily use because the financial impact is a month later
- Your power bill still comes monthly
Electricity Bill – Tomorrow
- What if you could pay daily, or hourly, or maybe even every minute?
- We have the technology in place. The meters already calculate it, but it’s not how we are charged
- You probably don’t think much about turning lights off, your computer’s power, or fall asleep watching tv.
- What if you knew exactly how much money you pay when you are at home vs when you are at work?
- This technology is possible today and I’m sure if you or I paid our electricity bill daily then we would use less
What will it take to enable MicroPayments?
- With all of the cryptocurrencies in the market there are several addressing the low to no transaction fee issues
- I believe cryptocurrency is what will turn this idea of micropayments into a reality
- In the example of power companies it will take time to introduce the tech, but it’s not unrealistic
- We already have many smart home devices from thermostats, voice assistants, and other home automation where we can really easily control our costs and behavior. With time this will only accelerate and improve.
What other problems can micropayment solve?
- The electricity bill is only one example
- Every bill you can think of including car payments, home water usage
- You could pay payments for things you normally wouldn’t. Maybe you prefer to pay the exact same amount every day, so you pay your barber $1 a day and get a haircut every few weeks.
- Let’s your imagination run wild. The technology is here and it’s a matter of time when we start seeing real life examples of micropayments that change the way we look at our bills