Microtransactions – the future of online economy

As Bitcoin price is proceeding to fall and people begin to doubt its usefulness. But there are optimists, who see the unique niches that digital coins could fill in. Among these is also Nick Tomaino.

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Microtransactions – the future of online economy

As Bitcoin price is proceeding to fall and people begin to doubt its usefulness. But there are optimists, who see the unique niches that digital coins could fill in. Among these is also Nick Tomaino.

As a seasoned businessman Nick gives his comments on the recent acquisition of WhatsApp by Facebook and what benefit does it bring to the Bitcoin. A bit more on the matter of the purchase. On the previous Thursday, 20th February Facebook spend $19 billion (!) on WhatsApp – instant messenger for the mobile devices that made its fortune by saving its users from the advertisements.

WhatsApp costs 99 cents per year and for less than a dollar you get an absolutely advertisement free application. If you are into gadgets and there is not a single week that your device isn’t getting the fresh app installed, then you probably understand how important this is.

Speaking of software, the companies that provide desktop solutions also suffer from the vice of getting most of the revenue from the overloading user interfaces with advertisements. The reason for this problem to persist according to Nick is due to the incompatibility of financial system with today’s infrastructure. The issue has arisen when the Internet began its extremely fast-paced spread around the world. The financial system at the same time was not mobile or malleable enough to catch up with it. That is why we have to deal with annoying model that isn’t benefitting anyone.

The problem with traditional payments is that it is not profitable for merchants to accept small payments. The fee is too high to make microtransactions, which are usually less than a dollar, profitable. For example a fixed fee of one transaction via PayPal is 30 cents. So, to cover these 30 cents service provider must either make some bundles of its products, which is not really a viable option in Android or Apple app store, or indulge the advertisers by melting the consumers eyes with the information they do not need.

Instead of finding the ways to data mine for the advertisers much more developers’ effort could be turned to make the software better. That was how the WhatsApp chose to operate and it paid off. Despite the fact that 20% of all money spent by users in AppleStore used just to process the purchase of the app.  

However, that’s where the Bitcoin comes in. As one BTC can be divided into one hundred million parts called satoshi, it could be  used for microtransactions on a much smaller scale that we are used to, even if its price continues to grow (though seeing the damage it has taken recently, it won’t be in the near future).

The peer-to-peer relationship of the customer and service provider via cryptocurrency negates the necessity for money processing fees and lowers the time developers need to make advertisement profitable, thus making them available to create new features or get rid of the bugs. Quoting Nick: “This will ultimately make the Internet a more enjoyable place by helping to significantly reduce advertisements from consumer technology companies.”

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