6 ms·

Credit card transactions generally take 2.9% + $0.30, which completely removes the possibility of making money on micropayments. Theoretically crypto should ena

Credit card transactions generally take 2.9% + $0.30, which completely removes the possibility of making money on micropayments. Theoretically crypto should enable lower-fee transactions which could enable micropayments. I say that, but a transaction on the Bitcoin ledger has been more expensive than $0.15 since mid-2016 and fluctuates wildly. Other cryptocurrencies might be able to handle this better. I'm optimistic about Stellar being a useful transaction network, but I don't think the value of 1 XLM is going to move much relative to 1 USD.

zionic 6y ago
IF... and I stress IF ETH 2.0's sharded blockchain system works then we'll see a 64x increase (from 64 shards) in throughput on launch with a roadmap to scale to 1000 shards. The gist of it is you have a "multi core blockchain" that is only verified by a randomly chosen subset of validators that then sync their state back up to an oversight chain called the beacon chain.
- sq_ 6y ago
  I'm not up to date on ETH, but is this the same fabled upgrade that people have been talking about for years now? The concept sounds like it could have real potential.
  - DennisP 6y ago
    Yep that's it. As of now they have a multi-client testnet running a near-final version of the beacon chain, using proof of stake. Assuming all goes well, they'll launch for real later this year. The sharding design is integrated with that but won't actually be implemented until next year. First version of sharding will only store data; execution on shards will be after that. The other thing going on is various layer-two systems called "rollups" which compress on-chain data to a minimum and prove its validity with either fraud proofs or a cryptographic zero-knowledge proof. Some of those are in or near production and can take today's Ethereum to about 2000 tx/sec, for simple transactions like transfers and exchanges. The data-only phase of sharding will multiply that by the number of shards.
grey-area 6y ago
Micropayments and cryptocurrencies are really separate concerns. All you need for micropayments are low fees - that doesn't require a pseudo-anonymous collective keeping a shared public database of transactions. In fact it's better if you know who the counterparties are. Companies like stripe, apple, google or banks like monzo could offer low fee transactions for example between two counter-parties who are both customers, bypassing payments networks and taking on a little more risk for a lower fee. Payment networks are ripe for disruption, but I'm not sure bitcoin et al will do the disrupting - it's solving the wrong problems.
- AnthonyMouse 6y ago
  > All you need for micropayments are low fees - that doesn't require a pseudo-anonymous collective keeping a shared public database of transactions. Oddly it kind of does, but for bad reasons. Existing rules for payment processing basically require the payment processor to eat the cost of fraud. That means you can't have small transaction fees because they have to cover the cost of fraud or the payment processor goes out of business. A payments system where there is no "payment processor" middle man to foist the cost of fraud onto thereby doesn't require that middle man to charge high transaction fees to cover it. In principle that could allow lower transaction fees. > Companies like stripe, apple, google or banks like monzo could offer low fee transactions for example between two counter-parties who are both customers, bypassing payments networks and taking on a little more risk for a lower fee. Scenario: Mal uses your payment service to buy goods from Alice, Bob and Carol and pays you with a credit card, possibly stolen. As soon as the goods change hands, Mal (or the real owner of the card) disputes the charge with the credit card company. You have a bootstrapping problem. You need a way for the customer to get money into the system which doesn't impose the cost of fraud on you if the charge gets reversed after the goods change hands. This could also be solved by changes to the law, but easier said than done, especially with a bunch of incumbents enjoying the larger vig from the status quo.
  - holdenk 6y ago
    It was my understanding that in the current system merchants tend to eat the cost of fraud under our current system (see charge backs, rolling reserves, etc.)
Vadoff 6y ago
Bitcoin block transactions are terrible for microtransactions, since the amount of transactions that can be held are intentionally limited, which means higher fees. Lightning network is capable of solving the issue though, as these transactions are done over a secondary layer.
- dylkil 6y ago
  >Lightning network is capable of solving the issue though, as these transactions are done over a secondary layer. The lightning network whitepaper states a base block size of 155mb is needed for it to work at scale. Right now bitcoin has a 1mb block size limit. And as you said, this size is intentionally limited, so i doubt we'll ever see lightning network work at scale.
centimeter 6y ago
Bitcoin Lightning (and, in principle, similar netting layers) allows transactions with fees on the scale of a few satoshis (or on the scale of $0.0001) without any reason to expect they would increase very much over time. This sort of system (off-chain private netting) is kind of the only system that makes sense for substantial scaling, because 1. It allows you to forget (most of) the system's history without sacrificing the consistency of the system 2. It allows you to distribute/factor out the work of the system into lots of independent components 3. It maintains decentralization, whereas most "fast" "cryptocurrencies" actually just work by having a trusted central authority, once you peel back enough layers of obfuscation
- dylkil 6y ago
  >Bitcoin Lightning (and, in principle, similar netting layers) allows transactions with fees on the scale of a few satoshis The lightning whitepaper also says a minimum block size of 155mb is needed to work at scale. Bitcoin currently has a 1mb block size. I dont see lightning network being useful on a large scale until thats resolved.
  - centimeter 6y ago
    > The lightning whitepaper also says a minimum block size of 155mb is needed to work at scale. Where? I just checked and can't find it. This statement also seems nonsense in isolation - positing block size requirements involves a lot of assumptions about network topology and load.
    - dylkil 6y ago
      it is in the conclusion, 133mb not 155mb, my mistake "If all transactions using Bitcoin were conducted inside a network of micropayment channels, to enable 7 billion people to make two channels per year with unlimited transactions inside the channel, it would require 133 MB" https://lightning.network/lightning-network-paper.pdf#section.12 https://lightning.network/lightning-network-paper.pdf#sectio...
elil17 6y ago
Credit card pricing is not a fixed thing. PayPal, for instance, offers 5% + $0.05 microtransaction pricing. Surely that also works as a solution
XorNot 6y ago
Microtransacting is easy: someone offers to act as a microtransaction aggregator, I pay them like, $1, and they keep it and disburse funds to the things I microtransact against. The real issue is no one cares about microtransactions because they're "micro" - and not enough to actually live off. See the artists spotify pays for plays - living that microtransaction lifestyle and making nothing.
- AnthonyMouse 6y ago
  There are 7.8 billion people in the world. If you can get 1% of them to pay you a penny once a year, you're making $780k/year. You can make $100k/year by getting $0.10/year from one person in every 7800. If you can get people to pay you $0.01/week, you can make $100k/year from less than 200,000 people. But not if your $0.01 transaction has a $0.30 minimum transaction fee.
  - TuringNYC 6y ago
    Everything you say makes sense, except the last line. I dont understand my the minimum transaction fee matters -- as long as you have a middle-person (such as Apple Music or Apple News), they can charge $15/mo or whatever, and do the many-to-many disbursement in bulk, right?
  - makeee 6y ago
    I’m not particularly convinced consumers want to pay with micro-transactions nor that it makes financial sense for producers. What’s the experience? Do I need to click a button to commit to paying someone $0.01/week or is it somehow automatic? Because if you can get 200k people to make the decision to pay you a penny a week I think it’s likely you could raise your price and get 50k people to pay you a dollar a week.
  - astrofinch 6y ago
    My issue with microtransactions is that the cost of making the decision seems like it outweighs the currency cost. Like, I used to buy computer games (e.g. from Steam) when they were on sale. Now I ignore any sale which has a price greater than $0.00, because if a game is free, I don't have to spend any time figuring out whether I will like it. Where do you see microtransactions being applied in practice?
solotronics 6y ago
I have been using Lightning network (second layer network that runs on Bitcoin) for over a year and it works great. Extremely low fee near instant transactions. Really a game changer for Bitcoin.
dehrmann 6y ago
Once cryptocurrencies gain any traction as currencies, expect Visa and Mastercard to either lower that fee or remind you about that time you had to issue a chargeback.
nytf3 6y ago
BTC fees are currently ~$2.50 (11PM EST 4/30/20)[1] [1] https://twitter.com/CoinFees/status/1256045351024418821 https://twitter.com/CoinFees/status/1256045351024418821
decompiled_dev 6y ago
There isn't an inherent cost to that fee. Whatever crypto does central processors can do cheaper.
memossy 6y ago
The microtransaction element doesn't require crypto. This can be seen by the 0 fees on network on Alipay and WeChat Pay which don't use crypto and transact more volume now than Visa and Mastercard seamlessly. With the rollout of DCEP why use the others?

zionic 6y ago

IF... and I stress IF ETH 2.0's sharded blockchain system works then we'll see a 64x increase (from 64 shards) in throughput on launch with a roadmap to scale to 1000 shards. The gist of it is you have a "multi core blockchain" that is only verified by a randomly chosen subset of validators that then sync their state back up to an oversight chain called the beacon chain.

sq_ 6y ago
I'm not up to date on ETH, but is this the same fabled upgrade that people have been talking about for years now? The concept sounds like it could have real potential.
- DennisP 6y ago
  Yep that's it. As of now they have a multi-client testnet running a near-final version of the beacon chain, using proof of stake. Assuming all goes well, they'll launch for real later this year. The sharding design is integrated with that but won't actually be implemented until next year. First version of sharding will only store data; execution on shards will be after that. The other thing going on is various layer-two systems called "rollups" which compress on-chain data to a minimum and prove its validity with either fraud proofs or a cryptographic zero-knowledge proof. Some of those are in or near production and can take today's Ethereum to about 2000 tx/sec, for simple transactions like transfers and exchanges. The data-only phase of sharding will multiply that by the number of shards.

grey-area 6y ago

Micropayments and cryptocurrencies are really separate concerns. All you need for micropayments are low fees - that doesn't require a pseudo-anonymous collective keeping a shared public database of transactions. In fact it's better if you know who the counterparties are. Companies like stripe, apple, google or banks like monzo could offer low fee transactions for example between two counter-parties who are both customers, bypassing payments networks and taking on a little more risk for a lower fee. Payment networks are ripe for disruption, but I'm not sure bitcoin et al will do the disrupting - it's solving the wrong problems.

AnthonyMouse 6y ago
> All you need for micropayments are low fees - that doesn't require a pseudo-anonymous collective keeping a shared public database of transactions. Oddly it kind of does, but for bad reasons. Existing rules for payment processing basically require the payment processor to eat the cost of fraud. That means you can't have small transaction fees because they have to cover the cost of fraud or the payment processor goes out of business. A payments system where there is no "payment processor" middle man to foist the cost of fraud onto thereby doesn't require that middle man to charge high transaction fees to cover it. In principle that could allow lower transaction fees. > Companies like stripe, apple, google or banks like monzo could offer low fee transactions for example between two counter-parties who are both customers, bypassing payments networks and taking on a little more risk for a lower fee. Scenario: Mal uses your payment service to buy goods from Alice, Bob and Carol and pays you with a credit card, possibly stolen. As soon as the goods change hands, Mal (or the real owner of the card) disputes the charge with the credit card company. You have a bootstrapping problem. You need a way for the customer to get money into the system which doesn't impose the cost of fraud on you if the charge gets reversed after the goods change hands. This could also be solved by changes to the law, but easier said than done, especially with a bunch of incumbents enjoying the larger vig from the status quo.
- holdenk 6y ago
  It was my understanding that in the current system merchants tend to eat the cost of fraud under our current system (see charge backs, rolling reserves, etc.)

Vadoff 6y ago

Bitcoin block transactions are terrible for microtransactions, since the amount of transactions that can be held are intentionally limited, which means higher fees. Lightning network is capable of solving the issue though, as these transactions are done over a secondary layer.

dylkil 6y ago
>Lightning network is capable of solving the issue though, as these transactions are done over a secondary layer. The lightning network whitepaper states a base block size of 155mb is needed for it to work at scale. Right now bitcoin has a 1mb block size limit. And as you said, this size is intentionally limited, so i doubt we'll ever see lightning network work at scale.

centimeter 6y ago

Bitcoin Lightning (and, in principle, similar netting layers) allows transactions with fees on the scale of a few satoshis (or on the scale of $0.0001) without any reason to expect they would increase very much over time. This sort of system (off-chain private netting) is kind of the only system that makes sense for substantial scaling, because 1. It allows you to forget (most of) the system's history without sacrificing the consistency of the system 2. It allows you to distribute/factor out the work of the system into lots of independent components 3. It maintains decentralization, whereas most "fast" "cryptocurrencies" actually just work by having a trusted central authority, once you peel back enough layers of obfuscation

dylkil 6y ago
>Bitcoin Lightning (and, in principle, similar netting layers) allows transactions with fees on the scale of a few satoshis The lightning whitepaper also says a minimum block size of 155mb is needed to work at scale. Bitcoin currently has a 1mb block size. I dont see lightning network being useful on a large scale until thats resolved.
- centimeter 6y ago
  > The lightning whitepaper also says a minimum block size of 155mb is needed to work at scale. Where? I just checked and can't find it. This statement also seems nonsense in isolation - positing block size requirements involves a lot of assumptions about network topology and load.
  - dylkil 6y ago
    it is in the conclusion, 133mb not 155mb, my mistake "If all transactions using Bitcoin were conducted inside a network of micropayment channels, to enable 7 billion people to make two channels per year with unlimited transactions inside the channel, it would require 133 MB" https://lightning.network/lightning-network-paper.pdf#section.12 https://lightning.network/lightning-network-paper.pdf#sectio...

elil17 6y ago

Credit card pricing is not a fixed thing. PayPal, for instance, offers 5% + $0.05 microtransaction pricing. Surely that also works as a solution

XorNot 6y ago

Microtransacting is easy: someone offers to act as a microtransaction aggregator, I pay them like, $1, and they keep it and disburse funds to the things I microtransact against. The real issue is no one cares about microtransactions because they're "micro" - and not enough to actually live off. See the artists spotify pays for plays - living that microtransaction lifestyle and making nothing.

AnthonyMouse 6y ago
There are 7.8 billion people in the world. If you can get 1% of them to pay you a penny once a year, you're making $780k/year. You can make $100k/year by getting $0.10/year from one person in every 7800. If you can get people to pay you $0.01/week, you can make $100k/year from less than 200,000 people. But not if your $0.01 transaction has a $0.30 minimum transaction fee.
- TuringNYC 6y ago
  Everything you say makes sense, except the last line. I dont understand my the minimum transaction fee matters -- as long as you have a middle-person (such as Apple Music or Apple News), they can charge $15/mo or whatever, and do the many-to-many disbursement in bulk, right?
- makeee 6y ago
  I’m not particularly convinced consumers want to pay with micro-transactions nor that it makes financial sense for producers. What’s the experience? Do I need to click a button to commit to paying someone $0.01/week or is it somehow automatic? Because if you can get 200k people to make the decision to pay you a penny a week I think it’s likely you could raise your price and get 50k people to pay you a dollar a week.
- astrofinch 6y ago
  My issue with microtransactions is that the cost of making the decision seems like it outweighs the currency cost. Like, I used to buy computer games (e.g. from Steam) when they were on sale. Now I ignore any sale which has a price greater than $0.00, because if a game is free, I don't have to spend any time figuring out whether I will like it. Where do you see microtransactions being applied in practice?

solotronics 6y ago

I have been using Lightning network (second layer network that runs on Bitcoin) for over a year and it works great. Extremely low fee near instant transactions. Really a game changer for Bitcoin.

dehrmann 6y ago

Once cryptocurrencies gain any traction as currencies, expect Visa and Mastercard to either lower that fee or remind you about that time you had to issue a chargeback.

nytf3 6y ago

BTC fees are currently ~$2.50 (11PM EST 4/30/20)[1] [1] https://twitter.com/CoinFees/status/1256045351024418821 https://twitter.com/CoinFees/status/1256045351024418821

decompiled_dev 6y ago

There isn't an inherent cost to that fee. Whatever crypto does central processors can do cheaper.

memossy 6y ago

The microtransaction element doesn't require crypto. This can be seen by the 0 fees on network on Alipay and WeChat Pay which don't use crypto and transact more volume now than Visa and Mastercard seamlessly. With the rollout of DCEP why use the others?