In 2015, I wrote a column, “Moving beyond micropayments to nanopayments,” in which I laid out some of the possible uses for small micropayments, much smaller than anything possible today. Like others, I assumed that blockchain technology would be the key to lowering transaction costs enough to support micropayments as low as fractions of a cent.
Indeed, micropayments are on the horizon, but we’re getting there with a slightly different route than many imagined. However, the need is more evident than ever.
How often have you clicked on a link to an article in a top-tier magazine that looked like it might be interesting, only to find out that you ran out of “free views” of that magazine’s articles? Your only option to read the article is to accept its trial offer. If it’s not worth the time, hassle, or future subscription costs, you’ll move on.
But a one-time digital micropayment of 3 cents, processed through a cryptographic Blockchain account, could give you access to that article and compensate the publisher 2 cents, with 1 cent covering the transaction fee. A win-win solution.
The cost of transactions
Early cryptocurrency enthusiasts were optimistic about the possibility of performing these kinds of near-zero-cost transactions using the Bitcoin blockchain. They were confident that blockchain technology would not only enable secure transactions, but also enable the cost-effective processing of extremely small value transactions (micropayments) to purchase goods and services in minute amounts.
These early micropayment enthusiasts were almost right. We haven’t gotten there yet though, because the cost of a Bitcoin transaction is now almost $2.00, although it has been as low as 5 cents in the recent past.
Continuing the example above, no publisher will, of course, pay $2 to collect 2 cents, so for now, they’ll continue to entice us with introductory offers that they hope will transition us to long-term, full-price. subscribers. News services will continue to bundle offers from multiple publishers and charge a monthly fee that is anything but “micro.”
So if high blockchain transaction fees prevent micropayments, what is the alternative? It turns out that some newer distributed ledger technologies have much lower transaction fees and could even get us to the point of fee-free transactions.
How could that change our lives? These are just some examples.
Access to Content
This type of micropayment system will give each of us the opportunity to buy small experiences and items that we would not otherwise be able to buy, for example, a single magazine article.
On the other hand, it might also require us to buy something we previously had access to for free: a limited number of items in Fortune, for example, or access to video clips that we currently only “buy” with our time while we wait for the opportunity to happen. ignore the commercial that precedes it.
But soon we will have the opportunity to have ad-free, full-access online experiences no matter which newspaper or magazine we click on. Researching, browsing, learning and growing will be easier than ever.
In fact, there will be so many micropayments for content in this area of our daily lives that the situation could become a nuisance if not handled well. For some, the time cost of authorizing numerous micropayments could outweigh the value as we click “Approve” endlessly. To prevent this, we will enable broad levels of approvals, so that our consumption of content can be seamless and uninterrupted, whether for ads or approvals.