Visa’s Head of Cryptocurrency Speaks Evidently in Support of Blockchain Micropayments
"the problem is with systems that do not permit for a fraction of a cent"
The head of cryptocurrency at Visa Cuy Sheffield argues for blockchain micropayments in his personal Twitter thread. While sharing his views in support of blockchain micropayments, he made a case for using cryptocurrencies especially the leading asset bitcoin (BTC) for blockchain micropayments.
In a document, Nick Szabo who is known as the inventor of the term “smart contracts”, talked about some of the problems of micropayments and mental transaction costs arguing why micropayments have not succeeded on the internet.
The problems that Nick highlighted are “uncertain cash flows, incomplete and costly observation of product attributes, and incomplete and costly decision making”.
Sheffield addressed this particularly in his twitter thread and said that currently the problem is with systems that do not permit for a fraction of a cent while Bitcoin does with Satoshis where one sat is equal to one hundred millionth of a BTC.
Opportunity for micropayments exists
According to him, the opportunity for micropayments exists. He claims that one cent is considered as lower bound. He gave an example and said that if people had to pay a cent for each comment or like on a social media post, they would want to do this for 100/day and before they know it, it would add up to a $30 bill per month. This fear will compel people to think twice before they take such kind of actions.
He said that it would give rise to mental transaction costs. However, if people need to pay a tiny fraction of a cent i.e. 1/100th of a cent every time then they would not have to worry about mental transaction costs. Therefore, they will spend only $3 for month. Hence, the opportunity for micropayments exists.
Some regarded the use of XRP, a digital dollar or the US dollar stablecoin, the Dai as better tools. While responding to this point, he asked them what one ten-thousandth of a Dai is called. According to him, there should be a name for micro units. He stated on 16th Feb 2020:
“I’d argue that it’s a better consumer experience to have a unique micro unit of account name and familiarity to remove mental transaction costs than using more decimals than ppl are used to.
An item priced at 1 sat is small enough I don’t even care about conversion vs $0.0001— Cuy Sheffield (@cuysheffield)”
Sheffield tweets were in response to the comments of Coinbase founder and CEO Brian Armstrong. Coinbase founder said in his thread that reducing the costs will automatically affect the behavior of people and explained his point by giving the example of SMS.
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