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Comment by johnyzee | Hacker News Reader

The killer application for bitcoin, IMHO, is microtransactions. For global, universal microtransactions to take off, we need exactly something like bitcoin; purely digital, both a protocol and a service and not owned by anyone.

Once microtransactions take off it could turn a lot of things on their head. For example I wouldn't mind paying 0.001 cent to read an article. It just isn't possible with any current systems.

There are other fields where I easily prefer bitcoin over credit cards (pretty much any online purchase under $10), but microtransactions are the big one to me.

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Nor is it possible with Bitcoin: the current default minimum transaction fee is 0.0001 BTC (which is ~$0.05). People often make a big deal about the transaction fee having been "lowered" (it used to be 0.0005 BTC), but as the transaction fee is measured in Bitcoin (which has highly-variable worth with respect to the things it is being used to purchase) this value must be adjusted occasionally, and Bitcoin happened to become much more valuable, requiring this fee to be lowered. At the same time, transactions less than this amount (by only about half, a 0.543 multiplier, so still larger than one cent) became "non-standard", which means that they will not be relayed; because, to quote the Bitcoin release notes, "storing them costs the network more than they are worth and spending them will usually cost their owner more in transaction fees than they are worth". The blockchain just isn't designed for this kind of use case, and the idea of "dust" (tiny transactions that overwhelm the blockchain) started becoming a serious political problem in the community due to a gambling service called Satoshi Dice that managed to become a large percentage of the total traffic on the blockchain despite moving almost no money. In reality, attempts to build microtransactions on Bitcoin are based on the same approach that people use to build microtransactions over bank accounts and credit cards: a separate currency stored with (and thereby "owned by") a single entity that can move the virtual money "effectively for free". Coinbase recently started offering these "off-blockchain microtransactions" as a service, allowing people to withdraw funds only once they accumulate 0.01 BTC (so ~$5.00).

What kinds of use cases can you think of for microtransactions?

There's a reason entire industries are moving toward the pay-by-the-month/year model instead of pay per use (Spotify, SaaS, online edition of newspapers, etc.).

> For example I wouldn't mind paying 0.001 cent to read an article.

Most people would actually prefer paying a monthly price rather than pay each time they consume content. Why? Clay Shirky explained it best almost 15 years ago: http://www.openp2p.com/pub/a/p2p/2000/12/19/micropayments.ht...

In short, consumers HATE micropayments because they want predictable and simple pricing.

And advertisers will pay much more than 0.001 cent per impression.

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