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.