Micropayments, A Use Case for Internet Money

Bitcoin, ethereum and a host of other cryptocurrencies allow for the extremely efficient transfer of value. In non-geek speak, you can use these internet money technologies to send money easily. More interesting than just duplicating the functionality of credit or debit card payments and wire transfers, internet money transactions can be used to send tiny fractions of a cent. I might want to pay you 0.5 cents for the use of your WiFi connection for the 5 minutes I’m at your cafe. Perhaps I enjoyed that last blog of yours so much I’m willing to give you 50 cents. These so-called micropayments are enabled by these new financial technologies.

But wait, this isn’t all that new, the concept of micropayments has been around 20 years or so and has never really taken off. It’s not simply a matter of technology it’s also a matter of user interface. Nick Szabo points out the “Mental Accounting Barrier” in: http://szabo.best.vwh.net/micropayments.html. It is a brilliant and very non-obvious insight. He calls it a “cognitive bottleneck” and presents some thoughts on solving it that are too detailed for this article but points to the use of a GUI (Graphics User Interface) to present metaphors that can potentially break the bottleneck.

An interesting user interface is this blogging platform, Steemit. Readers simply vote up or down articles and that act is translated into monetary rewards for the author. It also removes the monetary component from the reader. I don’t really think about a payment when I vote an article up or down but a payment is occurring. The actual value comes from Steem not from my account which also removes the mental accounting burden. I simply vote and am done with it. It’s got some potential to succeed and only time will tell if this type of micropayment system for authors will last.