micropayments at the tipping point?
TRANSCRIPT
Micropayments at the Tipping Point?
@meinharrd | @SatoshiPay
Bitcoin payment processing
but…
Exclusivelywhite-label
Micropayments
Visa: below €13
PayPal: below €9
Common sense: below €1
Bitcoin: doesn’t matter(above 546 satoshis)
Around since rise of web late 1990s
Charge for content or network service
Alternative to advertising
W3C Working Draft 1999:
“Common Markup formicropayment per-fee-links”
<meta>, <embed> and <object> parameters
Millicent Micro Payments
MicropaymentsNetBill
MilliCent Micro payments
MicropaymentsNetBill
MilliCent Micro payments
MicropaymentsNetBill
MilliCent Micro payments
MicropaymentsNetBill
MilliCent Micro payments
MicropaymentsNetBill
Challenges
Transaction costs
Payment method
Mental transaction costs
“Customer mental transaction costs come from at least three sources:
uncertain cashflows, incomplete and costly observation of product attributes, and
incomplete and costly decision making.”
Nick Szabo, 1999
Nick = Satoshi
No known photos
Bitcoin to the rescue?
Low transaction fees
But not low enough
Fee + dust = 1000 + 546 satoshis (€0.004)
Mental transaction costs remain
What do users say?
41% of Germans would pay for content
20-29 years: 47%40-49 years: 35%
(Statista)
Existing solutions
Coinbase tips
Future
Improve usability
Automate processes causing mental tx costs
Solution: ?
Cut fees
Solution: Micropayment Channels
Send single satoshis
Key: Bitcoin transaction with many “drafts”
Using lock time
Rapidly adjusted bitcoin contract
Off-chain but on-chain, stupid!
2 multi-signature transactions
1 signed, but not broadcasted
Adjusted transactions off-chain, e.g. HTTP
Advantages:
No blockchain bloat
Very small amounts: 1 satoshi (0.0002c)
Very low fees (2tx / n)
Instant confirmation
“2015 should be theyear of the payment channel.”
James Poole, RSA
Payment channel projects
Noteworthy
Zero Click
challengepost.com/software/zero-click-bitcoin-micropayments
Handles “HTTP 402: Payment Required”
Drupal spam protection via Coin Tools
drupal.org/project/cointools
Summary
Payment tech done
Powerful browsers
New visual metaphors
Automated purchases
Users willing to pay
What are we waiting for?
And yes, we are working on something… :)
Thanks!
@meinharrd
@SatoshiPay
slidesh
are.net/meinhard
Backup
Sources
http://en.wikipedia.org/wiki/Micropaymenthttp://www.w3.org/TR/Micropayment-Markup/http://nakamotoinstitute.org/literature/micropayments-and-mental-transaction-costs/http://www.dtc.umn.edu/~odlyzko/doc/case.against.micropayments.pdfhttp://de.statista.com/infografik/2834/so-viel-wuerden-die-deutschen-fuer-online-journalismus-zahlen/https://en.bitcoin.it/wiki/Contractshttps://bitcoinj.github.io/working-with-micropaymentshttps://www.cryptocoinsnews.com/solution-trustless-bitcoin-microtransactions/http://jamescpoole.com/2014/12/21/2015-year-of-the-payment-channel/
Credits
Victor MatekoleJames Poole
Banksy