Hacker News Reader

Comment by AndrewStephens | Hacker News Reader

I get the sentiment but micropayments just don’t work - the main problems are not technical but social. Even in the gaming sector, nobody really charges less than about a dollar for items - that is the smallest unit of money where putting up with fraud, complaints, and chargebacks becomes worthwhile.

Add to this the huge race to the bottom (they are charging 3 cents for their article, read my summary for 2 cents) and you quickly begin to see why micropayments have never taken off.

Finally, I wrote a blog post along these lines with more detail[0]. For those who disagree, ask yourselves; would you pay me 2 cents before you click that link.

[0] https://sheep.horse/2024/11/on_micropayments.html

View on HN

The problems you describe are technical problems. How do you increase efficiency and avoid charge-backs due to fraud? Perhaps it is enabled by cryptocurrency (some systems like payment channels, RaiBlocks already exist for this). I would go into more detail about this but I think i've already debated you about this already.

The entire field of cryptography is about developing technical solutions to previously intractable social problems.

As I have described earlier, the race to the bottom is a feature, not a bug. It encourages other sites to mirror your content.

I would pay you 0.002 cents before clicking on that link. I already have to expend time and energy reading it, and I already pay for an internet connection to read it. If you put some sort of PoW firewall to deter AI scraping like many sites have been doing, I already have to expend money in the form of electricity to access the site.

That just moves the fraud to the other direction by making it hard for legitimate chargebacks. Say someone steals your card info, then uses it to buy some news crypto.

Firstly, that appears to be a negative externality. It seems to affect people who use the conventional credit card system as opposed to the new cryptocurrency/micropayments system I propose. So it has the effect of strengthening the cryptocurrency/micropayments system against competition.

For example, I would say that the credit card system is essentially subsidized through other forms of payment via transaction fees/cashback (I can go into detail why I think this is the case, if you would like). This is a mechanism that benefits the credit card companies at the users of other payment mechanisms (cash, crypto, etc.). So this mechanism of the credit card payment system has the effect of strengthening it against competition.

Secondly, I am not even sure if it's a negative externality. It depends on how fraud is handled in the conventional banking system and who takes the blame. Let's say that the charge-back goes all the way to the exchange, so now the exchange that facilitated the transaction is down both X cryptocurrency and Y dollars. In order to be profitable, the exchange needs to charge more in fees and needs to spend more in surveillance to counteract fraud. So ultimately the users of the exchange would pay for fraud.

Lastly, it is important to differentiate the two sources of fraud. There is the fraud inside of the micropayments system, where I pay 0.01 cents to view a webpage and I don't receive what I want. That's a very low-risk fraud, and by gaining a fraction of a cent, they can lose like 100x that in potential business through micropayments.

Then there is the fraud that happens at the border of "hard" money (cash/precious metals/crypto) and "soft" chargeback-able money in the conventional credit card system. This is pretty much facilitated just by these hard forms of money existing and being exchangeable with soft money. I would argue the weakness lies in the insecurity of the soft money systems (specifically the outdated systems of authentication). But you could still apply some sort of limit to the amount of money a single bank account can exchange for crypto (say, $20 a day) without hurting the micropayments system, because the payments involved are so small. So the risk of fraud at the exchange could be much lower for this specific use-case of cryptocurrency.

Even in a fully crypto world there is still boundless fraud potential. Even more than traditional banking.

The most obvious one that comes to mind is someone gets a script to run on your browser that loads a ton of the attackers 1 cent paywall articles. Any legitimate financial tool needs a way to roll back fraudulent transactions.

I imagine that the micropayments system would be facilitated transparently through some popup in the browser, similar to how the browser asks for use of your webcam. I also imagine that some basic, configurable limits would be involved. It would look like "Give news.com ability to request up to 0.10 cents (0.01cents per page load)? Y/N". The first time you load the page.

This is an aside, but in an ideal world, such a mechanism would also be used to reduce fingerprinting! You would have to accept a popup for a page to use features like WebGL, for example.

>Any legitimate financial tool needs a way to roll back fraudulent transactions.

I strongly disagree. I would even say the opposite: the ability to bureaucratically roll-back transactions threatens the legitimacy of money. Specifically, it makes the money non-fungible.

In cryptocurrency, there are transparent multisignature-based escrow systems that allow you to have a defined window of time where the money is co-managed according to certain rules. But transactions need to be able reach a "finalized" state where they are irreversible. Otherwise you just can't ever have a truly secure method of payment between untrustworthy parties and micropayments become useless.

Also, it does not need to be cryptocurrency. Micropayments just need to be efficient, secure, and irreversible. There are other payment systems based on Chaumian cash, (GNU taler being one example) that this could be built on.

> As I have described earlier, the race to the bottom is a feature, not a bug. It encourages other sites to mirror your content.

The problem is that bottom in this case is “free, with ads.” As soon as you post your well researched expensive to produce content, I will summarise it and offer 90% of the experience for free. That’s if Google doesn’t do it first with AI summaries.

There are plenty of crypto projects that tried to do micropayments. They failed mainly due to technical reasons but if they had worked they still would not have gained traction - nobody wants micropayments.

this is a good counterpoint, but I would say this in response:

1. Ad networks tend to benefit from having more data. There are economies of scale for sites like Youtube vs random pop-up video hosts that would want to mirror youtube videos, for example. The "bottom" may still be a micropayments system because they're easier to deploy.

2. It's possible that the entire ad economy is destroyed anyways through the use of adblockers, which is increasing. Hence google's push for WEI and the general industry push for TC and such. As long as none of these mechanisms of client authentication are able to take over the web, the profitability for ad networks will dry up.

Absent micropayments, there will be other attempts to introduce sybil resistance to the web, due to threats like AI scraping. Currently people are deploying PoW-based solutions, because they are the lowest effort (they can be implemented by polyfill). I imagine a hybrid PoW/micropayments system could emerge where PoW mining shares could be used interchangeably with micropayments. Basically each website acts as a cryptocurrency mining pool, so the website gets some reward in the mean.

I think the main failure of micropayments lies in the integration with the web browser, it needs some sort of plugin where HTTP 402 is effortless to interact with. It goes without saying that if you don't build it, they won't come.

There is not really a "killer app" yet. Some attempts in the bitcoin community like nostr and stacker.news are marginally used (but only to facilitate bitcoin dork-to-dork communication), and there have been some experiments in live-streaming and gaming. But nothing stands out. The barrier to entry of any app that requires putting money in, even a small amount, is naturally very high. A hybrid PoW/micropayment system is promising because it has the lowest barrier to entry.

On the technical side, you have tradeoffs between the complexity of using the app (especially with bitcoin payment channels) and decentralization. I don't regard it as an intractable problem.

The social problem is that most internet users are short-sighted and don't care about decentralization. They are just looking at some new company/service to throw their money into and escape their current service provider, which creates the problem they are running from. See: users fleeing twitter for bluesky, users fleeing streaming services after fleeing cable.

So pretty much any solution with a tradeoff between complexity and decentralization will suffer compared to a totally centralized and simple solution.

The decentralization of the new system needs to enable some new feature to get a foothold. Facilitating piracy is one such example, it could be the "killer app" for micropayments. Sites like Anna's archive already have some sort of cryptocurrency donation mechanism.

But how many people would really go to another site just to save 0.002? I can already go to the internet archive to read paywalled content. If needed and that option will still be available for the people that dont want to pay the 0.002.

Its a social problem and all it takes is one player breaking through. People have done this with far far worse things that people thought were unviable socially. Microbetting, microloans, gaming microtransactions, hardware subscriptions,

Your response is predicated on the fact that sites like archive.org already exist and don't charge. In a world with accessible micropayments, I think pretty much everyone would charge.

Sites like the internet archive are already funded by donations from viewers like you. I see the scheme as essentially spreading out the donations based on who uses the most bandwidth. It makes it easier for anyone to spin up a mirror of archive.org, and it makes it more secure for sites like archive.org to accept donations.

"Intermediate" micropayment solutions already exist. Anna's archive charges like $5 a month for a "donation" that puts you in a fast lane to download PDFs that you would otherwise have to get from some book site or a scientific journal. I bet they would prefer to charge per-download if they could feasibly do it.

I agree that some (most?) applications of micropayments are really gimmicky. But some applications are naturally suited to micropayments. The advantage of micropayments is that you can interact with ad-hoc vendors without setting up a pre-existing financial trust-relationship. For example, you could be at an bus terminal and have several pop-up vendors for wifi or electricity that charge per MB or per watt-hour. It enables competition.

The more gimmicky applications you mention like hardware subscriptions all involve some element of vendor-lock in that prohibits the advantage of micropayments systems in dealing with ad-hoc vendors. This is more analogous to those in-flight wifi services on airplanes: there is an established financial relationship with the airline and no competition, so there's little use for the low-risk micropayments.

I dont think everyone would charge. I think everyone who currently runs ads would charge but there would still be purists who host without ads and without micro transactions. It would still cost to implement the processing on your website and simple sites would not want to do this. It might lower the barrier to donation so sites funded by donation could receive more donations but still keep it optional.

Internet archive is not funded on donations from viewers. Its funded off government grants and corporate donations. individual donations make up a tiny %. Micropayments would make Internet archive less reliant on charity from government and corporations and it would not impact peoples ability to spin up a mirror. people can already spin up a mirror but its expensive and would remain expensive.

Anna's archive is whale pricing, a tiny % of people are willing to pay that $5 and the hope is that they subsize costs for the rest of users. I hate this type of monetization and will always oppose it as its highly risky and unfair.

> For those who disagree, ask yourselves; would you pay me 2 cents before you click that link.

A straw man. That's not the only way to do it. Asking this instead is helpful: "what might make this work?" and explore that in depth and try some experiments.* It might be a collective action problem or a first-mover problem or a culture problem. Such classes of problems are hard, sometimes even insanely hard for anyone lacking massive influence, but not categorically unworkable or impossible.

> I get the sentiment but micropayments just don’t work

I don't buy this generalization. Maybe micropayments don't "work" yet according to some (unstated, unfortunately) ideas of scope or degree. But smallish payments have worked (to some degree, for some periods of time) for music downloads and political contributions, just to mention a few things. There is something to smaller-than-usual payments, this seems pretty clear. (Yes, there is a sort of lower quantum based on the slice a payment processor takes, so creative bundling is often needed.)

Maybe micropayments according to some particular definition are unlikely to work for online content under current constraints. Still, the world is a big place, and the future (hopefully) leaves a lot of room for experimentation.

Aside: maybe a bigger problem is the status-quo idea of "news". Most of the "news" I real feels almost like junk food.

* I prefer to ask "what would make something work?" or "what is blocking something from working?" rather than claiming "X can (or can't) work". This is not because I'm naive or an optimist. I'm neither. But I'm genuinely curious about how and why things work, and the way one frames the question has a big effect on where your brain leads you.

P.S. WRT exaggeration or overconfidence: just say no. Let's make nuance the norm. It can start here, one comment at a time.

P.P.S. I'll say this again, and it _should_ make people uncomfortable: I'm getting more value out of interacting with a high quality LLM with a solid prompt than a typical comment on HN, and this does not bode well. I still hope that people can step it up, but we're not there yet, for various reasons.

Reply on news.ycombinator.com