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What are micropayments?

What are micropayments?

Micropayments are small transactions, that enable friction-less and comparatively small payments for content online. Micropayment business models before the invention of Bitcoin had been previously unavailable due to the prohibitively high cost and friction of accepting payments online.

Transcription

What's up, party people? Chris DeRose here, community director of the Counterparty Foundation. And today, I wanted to address the question: What are micropayments? So I get this a lot, and I often get it with people who are kind of jeering at it, like it's not going to be important or it's not a big thing. So I really wanted to tackle the question in the meaningful way. Let's get started. Micropayments don't have a very specific definition. There is this sort of generally accepted definition that is too small to be done with credit cards, which for me would probably be something under a dollar typically, maybe even a little bit more, certainly a little bit less as it is perhaps acceptable definitely under ten cents.

I think the minimum transaction fee on any credit card is going to be like 15 cents or something. Even that doesn't really make any sense on a credit card because with the 15-cent minimum, there's also the 15 cents transaction fee. Before you know it, you spend more money processing the payment than you've collected. So the theme of the micropayment move or sort of phenomenon is that micropayments themselves are worth doing because the transaction cost is low or zero, which is what we see with Bitcoin. It's not zero, but it's pretty close. And they will trend toward zero over time probably.

So micropayments, we don't know exactly where they're going to be useful, but there's a lot of obvious places where we could use them. Certainly you can look, right now, what you're doing online as being encumbered by advertising. So anywhere that you see an advertisement, be it a YouTube video, be it a web page, be it a Google search. Sometimes they're really good. Sometimes we like them, but sometimes they're really damned annoying. So if you want to ever.

..I don't know. You come across this link-based stuff, and it's like the 15 most shocking things you've ever seen. And then you click page by page by page and you've seen so many damn advertisements and the page loads slowly or you have to watch the whole ten second video about something you don't care about, that's a crappy experience. Nobody wants that.

Well, I don't know what the advertisers make exactly, but it's probably under a penny. Certainly it's under ten cents, and it's reasonable to believe that you would, perhaps, want to spend a penny or pennies to just forego that whole encumbrance and get right to the content, see the 15 most important things or shocking things on one single page. Now, yes, that's an easy sell. I think everyone would probably accept that. The big part of the micropayment movement is typically how to make these experiences fluid. So users don't want to have to click a bunch of billing information, the next button, approvals, etc, in order to progress past the pay wall of any kind.

So part and parcel with this micropayment movement are all the user experiences that will make this thing seamless. Now, I envision... And what I've seen demos of already is something that either it's done as part of the http header negotiation..

. Maybe it will be a quick JavaScript link, where you've authorized, perhaps, your Google web browser to spend no more than a dollar a day or 50 cents a day for you. And maybe you get a quick little alert that says, "Do you want to accept this payment or no?" And if you choose no, it shows you ads, and if you choose yes, it bypasses the ads. It may also be that there's no prompt, that you just have any spending limit under like 10 cents, like to show you a little icon that it costs you money or something. And there is no friction whatsoever. That is the model that I foresee being probably what we go towards, and you can't do that kind of stuff with traditional credit cards certainly.

There's really no other way you could do it, other than something like Bitcoin, if not Bitcoin exactly. Certainly I believe Bitcoin is a way we'll do it, and probably it will be a very standard process by which we add to the http protocol and/or through JavaScript and/or through even, perhaps, some web gateways the ability to interface with our web browsers. We'll probably see the web browsers start to integrate micropayments directly and either probably, like extensions at first. Then it may just be a mainstream feature. I would love to see something like GoogleChrome support it, maybe through GoogleWallet or some such thing. These things need to take time.

I think a lot of people want to see it happen, not least of them being consumers. So it's mostly a matter of the people, probably in the bigger space like web browser companies, maybe even some some banks or something like that, be it a coin banks type bank or a traditional one, start to interface with this stuff more. But it will become a more mainstream thing, and I think what will happen is we'll look back in hindsight and say, "How the hell did we ever use the internet before micropayments" because it will be so obvious that we use them every day. It will probably spur a whole lot of innovation in the content creation space, as people make business models out of this type of content. So we'll see what happens from here. That's the case to be made for micropayments and what they are and why they're important.

And perhaps you have some more questions. If you do, go ahead and ask them to me. I'm very accessible. I can be reached on twitter at DeRose Tech. You can email me Chris@ChrisDeRose.com, or you can comment on this video below.

And if you like this answer and you want to see some more questions answered, subscribe to the channel. I would love to keep you around. Later, party people!