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Comment by oska | Hacker News Reader

More like spend 5 millionths of a cent's worth of electricity to receive a transaction token that trades for 1 millionth of a cent. But that token (1 satoshi) has much more utility than as just a store of value and has been loaded onto your personal device without you having to do anything. And can be used by software on your personal device to give you extra functionality without again you having to do anything. Or even really understanding how it works or what is going on at the technical level.

People walk around with extra apps on their phones consuming battery life all the time. If a user was presented with an option to turn on some hardware in their phone that gave them all sorts of interesting additional functionality and at the same time were warned that it would decrease the battery life of their phone by 1 or 2 percent then I think you have a viable proposition.

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But provided a Satoshi has a magical value beyond as a way to make transactions, why not spend 2 millionths of a cent where electricity is less valuable (i.e., before it's been converted in a lossy fashion many times and stored in my pocket where it's worth a lot more) and just transfer that Satoshi to a wallet on the phone?

This play only makes sense if someone is extracting the actual currency value of a Bitcoin somewhere along the line.

If that value is going to me as the consumer, it's a terrible trade because it's taking the electricity that's gone through the most conversion losses from me in the place where it's most valuable. I might as well buy Bitcoin elsewhere. If some of that value is going to the chipset manufacturer or a middleman like 21, it's a straight up scam where somebody is stealing the electricity I put into my phone.

An HSM for Bitcoin wallets in a phone makes a small degree of sense to me, a mining ASIC makes none whatsoever.

> This play only makes sense if someone is extracting the actual currency value of a Bitcoin somewhere along the line.

I would think that's the very point. And it's not like there wasn't a precedence in the physical world already.

Stamps.

I still remember when stamps were occasionally used as a fractional currency. You could order small things over mail and send payment as stamps.

This phenomonenon was even used by Terry Pratchess as a minor plot detail in Going Postal, and subsequently in Making Money. The idea was dead simple: stamps had real value. Eventually, someone would need to spend it to actually mail things, but until then people could use them as a form of microcurrency. So a single unit might be "spent" several times in unofficial transactions before getting used for its intended purpose. The stamps weren't any more valuable as such, but their added utility made them useful in a wider setting.

There's some talk about the history in [0], and slightly better researched in [1].

0: http://message.snopes.com/showthread.php?t=16067

1: http://en.wikipedia.org/wiki/Fractional_currency_%28United_S...

EDIT: one more, this time something recent and still practiced - pre-paid call time as currency: http://www.economist.com/news/finance-and-economics/21569744...

"And can be used by software on your personal device to give you extra functionality without again you having to do anything."

Without you having to do anything but pay for and power a dedicated chip. If the utility of having a tiny amount of BTC on device is so high, and the cost so low, why not just have the device manufacturer pre-load a lifetime supply on the device (purchased or mined in a giant wind powered data center)? Seems the cost of this buying this chip is much higher than just buying the BTC outright for the user.

Worthless, unless you want to be beholden to 21's mining pool. The minimum block-chain transaction size is 546 Satoshis.

Why not have a background app that periodically purchases a satoshi now and then?

I guess an important (not to say THE) feature is that you get paid services without setting up any payment method like a credit card/paypal etc.

Because that would imply spending actual money. People don't usually see electricity as money.

>> all sorts of interesting additional functionality

I'm not sure I see the value proposition in paying 5 times over the odds for the smallest possible amount of bitcoin....

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