Processing small amounts of money

One welcome innovation Bitcoin could bring about is in microtransactions.

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Processing small amounts of money

One welcome innovation Bitcoin could bring about is in microtransactions.

Typically, small amounts are something credit cards and services such as PayPal don’t even want to go through the trouble of processing. That’s why you have to buy two or three drinks at the bar if you’re paying with a credit card.

To make these small payments worthwhile, PayPal, as an example, charges a higher rate. Any transaction less than $12 gets charged 5% rather than the standard 2.9%.

All of that is because the current banking system is cumbersome. Bitcoin, however, is not because transactions don’t rely on third parties. You and I can swap $0.25 equivalents in Bitcoin all day long.

One place this is developing quickly is in publishing. Startups such as BitMonet and BitWall allow publishers to put a few lines of code on their sites to create an instant pay wall at the individual article level. Users then can access the piece by paying a penny or two, or maybe even just tweeting out the story.

What could make that so useful is that a penny that’s easily transacted is no huge obstacle. Most users would just click through the penny payment rather than struggle to get around the pay wall.

As a bonus, this could allow us to live in a less ad-invasive world. (I’m looking at you, Forbes.com.)

Forums and messaging platforms have seen some development in the micropayments space. Just last week on Reddit, for example, another user tipped me ~0.000325 BTC in place of an upvote for a comment.

One big area for micropayment is pretty obvious: Charity. Some of us already donate micropayments in the form of spare change, and Bitcoin has the chance to remove some of the friction that stands between a donor and needing recipient.

Of course, as with many innovations in Bitcoin, user adoption is one of the keys, as well as getting payment processors on board.

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