The Emerging Crypto Micropayments Industry
In 2015, I wrote a column, “Going Beyond Micro-Payments to Nano-Payments” where I talked through some of the possible uses for tiny micropayments far smaller than anything possible today. Like others, I assumed blockchain technology would be the key to getting the transaction costs low enough to support micropayments as low as fractions of a penny.
Micropayments are indeed on the horizon but we’re getting there with a slightly different route than many envisioned. The need is more evident than ever, though.
How often have you clicked a link to an article in a premier journal that seemed like it could be interesting, only to be informed that you’ve run out of “free views” of the articles from that journal? Your only option to read the piece is to agree to their 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 Blockchain crypto 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 making these kinds of near-zero-cost transactions using the Bitcoin blockchain. They were confident that blockchain technology would not only enable secure transactions but would allow for cost-effective processing of extremely small-value transactions – micropayments – for purchasing goods and services in minute amounts.
These early micropayment enthusiasts were almost right. We’re not there yet, though, because the cost of a Bitcoin transaction is now almost $2.00, although it’s been as low as 5 cents in the recent past.
Continuing with that example from above, no publisher, of course, will pay $2 to collect 2 cents, so for now, they’ll continue to lure us with introductory offers they’re hoping will transition us into long-term, full-price subscribers. News services will continue to bundle the offerings of multiple publishers and charge a monthly fee that’s anything but “micro.”
So, if high blockchain transaction fees are precluding micropayments, what’s the alternative? As it turns out, some newer distributed ledger technologies have far lower transaction fees and could even get us to the point of fee-less transactions.
How could that change our lives? Here are just a few examples.
Access to Content
This kind of micropayment system will give us each the opportunity to purchase small experiences and items we wouldn’t otherwise be able to buy – a single journal article for example.
On the other hand, it might also require us to buy something that previously we had access to for free – a limited number of articles in Fortune for example or access to video clips we currently only “purchase” with our time as we wait for the chance to bypass the commercial that precedes it.
But soon we’ll have the opportunity to have ad-free, full access, online experiences no matter what newspaper or journal we click on. Research, browsing, learning, and growing will be easier than ever.
In fact, there’ll be so many content micropayments in this area of our daily lives that the situation could become a nuisance if it’s not handled well. For some, the time cost of authorizing numerous micropayments could outweigh the value as we endlessly click “Approve.” To get around this, we’ll enable broad levels of approvals, so our content consumption can be seamless with no interruptions – either for ads or for authorizations.
Incentivizing Ethics and Morality
As a society, we’ve become very focused on punishing people for bad behavior, but we’re still pretty inept at incentivizing them for doing something good. Unfortunately, peer pressure and societal norms aren’t enough to keep us in line, let alone convince us to be noble and gracious. But if we knew we were receiving micropayments for doing the right thing, we might go about our days in a slightly different manner.
Lots of details would need to be worked out, of course. Who would define good behavior and the amount of cryptocurrency rewarded for that act? How would the behavior be monitored if it’s not happening online? Who would assign the reward or penalty for each deed?
In a metaverse, every step we take and each encounter we have can be monitored and logged to be rewarded or punished with a micropayment receipt or deduction.
But I don’t see people accepting that kind of intrusion in the physical world. What kind of Big Brother system would we have to have that records each time we opened a door for someone, wished a stranger “Good Morning,” bagged our own groceries, or took the time to perform any other social nicety that would make someone else’s day a little better?
Initially, then, we would need to limit this micropayment reward system to things that are verifiable by a third party, ideally online (e.g., voting, filing a tax return, making a charitable contribution, earning an “A,” etc.).
But that’s a good starting point.
Turning Consumers into Prosumers
A “prosumer” is a person who both consumes and produces items. Outside of our jobs, we all produce items of value in our everyday lives – but few of us are paid or somehow rewarded for them.
- Marketers capture our browsing and clicking records to better understand our preferences and commercial trends in general.
- Sensor data from smart cars provides information to city planners and others about traffic and road conditions.
- Data that are generated by the Internet of Things (IoT) appliances and systems in our homes is used by manufacturers to design and make even better IoT-enabled appliances and systems.
- Our health data has tremendous value that’s not being used by anyone except our own caregivers, even though it could be very useful for medical researchers.
If someone has nothing to hide in these and similar areas, why shouldn’t they have the option to sell this self-generated data to those who want it and can use it for good or at least for no harm? The value these institutions place on each separate small glimpse into our lives is minuscule, to be sure, but the value of the sum of those glimpses is potentially large.
It’s a perfect job for a micropayment system.
What if we paid a tenth of a cent for every “like” given to a post on social media, and we receive a similar tenth of a send for when someone “liked” one of our posts?
What if we charged the public a tenth of a cent for every email we received and paid a tenth of a cent for every email we sent out? The number of spam emails we received would drop off precipitously.
The number and types of startup businesses that would be created would be breathtaking!
The Bottom Line
A macro system of micropayments will be transformational to our world.
It will give businesses better information to evaluate their goods and services. It will provide more diverse data for health researchers. It will better reward artists and other content producers. It will empower each of us to have the option to benefit from the value we generate automatically in the course of our everyday lives. And we’ll all have the opportunity to be better informed and hopefully even newly exposed to ideas and thoughts we wouldn’t otherwise encounter.