Before Bitcoin was launched or widespread understanding of blockchain, a 2014 Marc Andreessen article has already predicted the impact of this technology on the world. One of the fascinating topics from that article is micropayments.
The Transformation
Blockchain is set to transform micropayments, especially for small businesses. Micropayments can be defined as transactions beneath a specified minimum such that any transaction fee associated with such payments often becomes higher than the payment itself. Even though credit card firms allow merchants to pay a lump sum for more minor charges, merchants are still paying outrageous amounts as transaction fees.
The Blockchain Solution
Aside from providing tech support, blockchain technology also allows tiny minimum payment units of digital currencies. Fees aren’t a problem as there are several protocols, with some of them charging a fraction of a cent as fees.
User privacy is one other benefit of using blockchain technology. The technology comes with asymmetric encryption that only exposes the payer’s public address during payments. Thus, it is almost impossible for anyone to hack that wallet through access to information about the wallet. Conversely, making a payment with a credit card requires the payer to disclose his details fully.
Possible Blockchain Micropayment Use Cases
Users can access single content from a subscription without committing to a recurring subscription for it. Compared to the complex solutions currently in use, the blockchain tech will enable immediate completion of micropayments without huge transaction charges or minimum limits.
A simple and effective monetization model is the barrier to IoT maturing to its enormous potential. However, the blockchain micropayment solution will enable data anonymity and user privacy when using data collected through IoT, especially data related to personal health matters.
Donation recipients can receive funds directly because it would now be easy for them to set up such accounts without involving any 3rd party or incurring any overhead costs. However, the problem is that fraudsters might also set up such accounts to dupe well-intentioned individuals. Hence, a rating and auditing feature might be a necessity to ensure transparency. Also, donors can make micro amount donations since there won’t be any minimum amount that can be donated.
This technology can also be used to set up funds for “low-income” nations. The world bank classifies any country whose citizens’ average salary is less than $3 per day to be a “low income” country. However, there must be a method to monitor the process and disbursement carefully to prevent fraud. Once the fraud aspect isn’t an issue, recipients will feel the direct impact of such donations.
When Andreessen’s article eventually becomes real, micropayments might become more appealing again as they have already lost prestige. There are several other use cases not mentioned here. For example, individuals can receive donations without third-party involvement, nations can be lifted out of depression, and business solutions could become more effective. The whole point is that blockchain tech could be the missing piece to an effective micropayment space.
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