Micropayments have been discussed as an alternative to advertising online since the late 1990s but faced challenges with transaction costs and mental transaction costs for users. New technologies like Bitcoin payment channels could help overcome these challenges by enabling micropayments of even single satoshis with very low fees and instant confirmation through off-chain adjustment of transactions. Payment channel projects are working on this and 2015 may be the year that micropayments become viable through solutions that automate processes to reduce mental transaction costs for users and cut fees through off-chain adjustment of transactions.

1. Micropayments at the Tipping Point?
@meinharrd | @SatoshiPay

3. Bitcoin payment processing

5. but…

6. Exclusively
white-label

8. Micropayments

9. Visa: below €13

10. PayPal: below €9

11. Common sense: below €1

12. Bitcoin: doesn’t matter
(above 546 satoshis)

13. Around since rise of web late 1990s

14. Charge for content or network service

15. Alternative to advertising

16. W3C Working Draft 1999:
“Common Markup for
micropayment per-fee-links”

17. <meta>, <embed> and <object> parameters

20. Millicent Micro Payments
Micropayments
NetBill

21. MilliCent Micro payments
Micropayments
NetBill

22. MilliCent Micro payments
Micropayments
NetBill

23. MilliCent Micro payments
Micropayments
NetBill

24. MilliCent Micro payments
Micropayments
NetBill

26. Challenges

27. Transaction costs

28. Payment method

29. Mental transaction costs

30. “Customer mental transaction costs come
from at least three sources:
uncertain cashflows, incomplete and costly
observation of product attributes, and
incomplete and costly decision making.”
Nick Szabo, 1999

31. Nick = Satoshi

32. No known photos

33. Bitcoin to the rescue?

34. Low transaction fees

35. But not low enough

36. Fee + dust = 1000 + 546 satoshis (€0.004)

37. Mental transaction costs remain

38. What do users say?

39. 41% of Germans would pay for content

40. 20-29 years: 47%
40-49 years: 35%
(Statista)

42. Existing solutions

43. ChangeTip
changetip.com

45. Coinbase tips

46. tibdit
tibdit.com

48. Bitwall
bitwall.io

50. Bitmonet
bitmonet.com

53. GoUrl
gourl.io

55. SyndiCoin
syndicoin.co

57. Tinypass
tinypass.com

60. Dogetipbot
dogetipbot.com

62. @tipdoge
tipdoge.info

64. DogeRain
dogerain.io

67. Future

68. Improve usability

69. Automate processes causing mental tx costs

70. Solution: ?

71. Cut fees

72. Solution: Micropayment Channels

73. Send single satoshis

74. Key: Bitcoin transaction with many “drafts”

75. Using lock time

76. Rapidly adjusted bitcoin contract

77. Off-chain but on-chain, stupid!

78. 2 multi-signature transactions

79. 1 signed, but not broadcasted

80. Adjusted transactions off-chain, e.g. HTTP

81. Advantages:

82. No blockchain bloat

83. Very small amounts: 1 satoshi (0.0002c)

84. Very low fees (2tx / n)

85. Instant confirmation

86. “2015 should be the
year of the payment channel.”
James Poole, RSA

87. Payment channel projects

88. Streamium
streamium.io

91. Strawpay
strawpay.com

93. Noteworthy

94. Zero Click
challengepost.com/software/zero-click-bitcoin-micropayments

96. Handles “HTTP 402: Payment Required”

97. Drupal spam protection via Coin Tools
drupal.org/project/cointools

99. Summary

100. Payment tech done

101. Powerful browsers

102. New visual metaphors

103. Automated purchases

104. Users willing to pay

105. What are we waiting for?

106. And yes, we are working on something… :)

107. Thanks!
@
m
einharrd
@
SatoshiPay
slideshare.net/m
einhard

108. Backup

110. Sources

111. http://en.wikipedia.org/wiki/Micropayment
http://www.w3.org/TR/Micropayment-Markup/
http://nakamotoinstitute.org/literature/micropayments-and-mental-transaction-costs/
http://www.dtc.umn.edu/~odlyzko/doc/case.against.micropayments.pdf
http://de.statista.com/infografik/2834/so-viel-wuerden-die-deutschen-fuer-online-journalismus-
zahlen/
https://en.bitcoin.it/wiki/Contracts
https://bitcoinj.github.io/working-with-micropayments
https://www.cryptocoinsnews.com/solution-trustless-bitcoin-microtransactions/
http://jamescpoole.com/2014/12/21/2015-year-of-the-payment-channel/

112. Credits

113. Victor Matekole
James Poole
Banksy