6 ms·

There isn't so much hate, as it's fundamentally DoA based on the financial system architecture of the United States, which creates strict liability, and a licen

by salawat 8mo ago

There isn't so much hate, as it's fundamentally DoA based on the financial system architecture of the United States, which creates strict liability, and a licensing requirement for digital money transmission. You do not get to opt out of that responsibility. Micropayments are therefore a pipedream that undermines all progress at making any type of AML or KYC possible, which then in turn makes fighting any type of financial crime nigh-impossible. The entire thing is held together through third party legal fictions that do the law enforcement as a pre-req of doing business. The government, and by extension the populace, would have to accept the intractibility of chasing down criminal financial networks were any sort of micropayment framework ever able to exist outside the regulatory regime. It's a perennial dream of the up and coming technologist, who has not been exposed to enough humanity to understand we can't have nice things. Sorry to be yet another buster of bubbles. I was you-adjacent once. Then I actually worked at a money transmitting firm. Boy, did that come with some reality checks.

sanex 8mo ago
If only there was some sort of alternate monetary system based on cryptography that enabled instant micro payments.
- salawat 8mo ago
  Using a public ledger, that is just surveilled and treated as prosecution futures, or targeting for kidnappers. Yes, we know. It's also got major usability issues, and tends to end up in practice defaulting to a centralized custodial model anyways for the vast majority of users. Where it can't, the onramps to convert to the currency of the land are outlawed.
  - sanex 8mo ago
    Still would work for the use case.
dynm 8mo ago
Everything you say makes sense. But can you help me understand why this doesn't also apply to the LLM service I use today? Doesn't that service, in effect, makes a "micropayment" to the LLM providers every time I make a query? Is the key difference that there are only a small-ish number of LLM providers? (Not doubting, just interested!)
- salawat 8mo ago
  As mentioned above, it's not a micropayment. It's just a payment. You can transact in whatever amounts you want, and backend systems will bump the numbers around just fine, even for fractions of a cent. Hell, that's how interest and currency exchange settle out. The LLM provider runs a meter. The meter tallies your activity, wraps it in a transaction, hands it to the backend, backend talks to other banks/payment gateways, an ACH happens, done. That isn't a "micropayment". That's just a payment. In fact, if you pay attention, some of the biggest winners in tech, namely cloud providers or AI providers, are as darling as they are because they figured out how to turn everyday compute tasks into billable transactions. We're exceptionally good at tracking the build up of value, even if your atomic unit of transaction is a thousandth of a cent, but x however many million customers you have, it quickly adds up. Micropayments have always, as long as I've been in the industry, implied a level of disintermediation on the behalf of sender/receiver. The chance to have that kind of utility died September 11th, 2001, when the U.S. and western world suddenly got the bright idea that the only way to protect themselves from terrorists was to modify the system to be able to surveil everybody l, all at once. Bringing us to a codger explaining why P2P micropayments are pretty much a pipedream in the finance world as she is legally practiced.
  - dynm 8mo ago
    Not too interested in debating the semantics of "micropayment", but it sounds like if we swap in "news sites" in place of "LLM providers" everything should still still be possible? Consumers could pay tiny amounts of money for individual articles?
    - salawat 8mo ago
hathawsh 8mo ago
Please help me understand better, because it feels like part of the problem has already been solved. Specifically, I've been told that the independent journalists that I watch on YouTube Premium receive a portion of my subscription fee. Is that not a form of micropayments? The system seems to work well enough for videos. Isn't there some way to adapt that kind of system to other media?
- yunohn 8mo ago
  The solution is called centralization by a middle man that takes a massive cut - eg YouTube Premium. Only Google makes real money off that, and the content creators rely on sponsors instead for their own revenue. So does it really work? I would despise a future where we solve micro transactions by giving up control to yet-another unnecessary body. Especially not even at the level of Visa or Mastercard, despite how much I dislike crypto.
- salawat 8mo ago
  Goes like the following: Google/YouTube have a userbase to track accounts for; they go to a bank (licensed money transmitter, with OFAC/KYC/AML programs implemented). Google gets paid by people looking to advertise, and that money goes into Google's master account. Google's finance system translates views/impressions to money movements to creator accounts hosted at other banks (same deal, OFAC/KYC/AML program in place). The main thing is, every party that actually moves around money, operates in such a way that the entire transaction chain is followable. It's not point to point, it's hub and spoke. The hubs keep track of everything to keep the Osama Bin Laden's or Russian Oligarch's, or Cuban nationals out of the U.S. financial system. "Micropayments" have always been something different. We technologists just figured there would be a way we could whip up some accounting software, or a spec, and allow people a way to store and transact without relying on a custodial holder, with all the extra regulation burden. Point is though, government and law enforcement don't want that, because with that, it becomes a great deal more difficult to follow the money, or to get away with things like mandating everyone report money movements over some amount to the tax authority; something easy to do when it's tacked on to the condition of maintaining your license to do business. Every money transmitter being well behaved and integrated with the state maximizes the risk for anyone attempting to utilize the financial system for illegal activity. Ergo... What you think of as already solved isn't "micropayments". It's traditional finance in the U.S. What we refer to when we say Micropayments, is a way to store value, maintain accounts, and run point to point transactions "blessed" or recognized by the world et al without an intermediary.
pzmarzly 8mo ago
Decentralized or direct P2P micropayments are unlikely to work, true. But why are there so few attempts at centralized micropayments providers? The only success stories I see in the space are GitHub Sponsors and LiberaPay, where their entire thing is aggregating payments together (so you have 1 big card transaction a month per user, not 20 small ones) and doing KYC procedures with donation receivers (once GitHub, or rather Stripe, says you are legit, you can take money from any GitHub user).
- salawat 8mo ago
  That's called starting a bank, or financial services company, and lots of places do it, but the bar to do so, and remain able to do so is fairly high. The margins, however, are exquisite. The middlemen eat fat off the percent they skim off the top.
hn_acc1 8mo ago
Would love to hear about some of those reality checks. Note: I'm not currently in favor of micropayments, but am willing to listen.
- salawat 8mo ago
  Well, there's OFAC, for one. In the U.S. alphabet soup, that's the Office of Foreign Asset Control, and they maintain the master sanctions list operated by the Federal government. This is a list, that as a matter of law, must be checked against every transaction. If there is a match on the receiving end of funds to a sanctioned individual, the transaction is immediately halted. If a sanctioned party is the originator, a flag may be raised for the institution to deal with otherwise. You do not want to end up on that list, because if you do, the U.S. financial system turns into a roach motel. Assets flow into the custodianship of the service provider, but are unable to move out. A very highly controversial feature to have implemented if I dare say so myself. Then there are the SAR's and CTR's, which are reports that must be filed by banks in the event of "suspicious activity". I.e. structuring, withdrawal of large amounts of cash, etc. They are specifically prohibited from informing you as a customer about these processes. Then there's the risk department integration. It is mandatory to hand over transaction information on request by law enforcement. The process is mandatory, and continued licensure is conditional on maintaining a program through which financial surveillance can be conducted by the State. Now, are these features inherently bad? No. Not at first blush. Do they have the potential to become horrifying? Well... Look at what happened to the ICC judge who got added to the sanctioned entities list. It doesn't just effect bank accounts. It involves anything that you engage in a digital transaction to maintain access to. That means entire sectors suddenly go from situation normal, to persona non grata, your business is not welcome here, at threat of massive fines for doing business with a sanctioned entity. I went into finance looking for a boring, uncontroversial line of work, and came out after a few years realizing the entire sector is so damn wired for power projection it's not even funny. Once you see it and understand how the bounds of what you can do are constrained by these people who are authorized to digitally transact on your behalf... Well... It can't really be unseen.
  - hn_acc1 8mo ago

by salawat 8mo ago

sanex 8mo ago

If only there was some sort of alternate monetary system based on cryptography that enabled instant micro payments.

salawat 8mo ago
Using a public ledger, that is just surveilled and treated as prosecution futures, or targeting for kidnappers. Yes, we know. It's also got major usability issues, and tends to end up in practice defaulting to a centralized custodial model anyways for the vast majority of users. Where it can't, the onramps to convert to the currency of the land are outlawed.
- sanex 8mo ago
  Still would work for the use case.

dynm 8mo ago

Everything you say makes sense. But can you help me understand why this doesn't also apply to the LLM service I use today? Doesn't that service, in effect, makes a "micropayment" to the LLM providers every time I make a query? Is the key difference that there are only a small-ish number of LLM providers? (Not doubting, just interested!)

salawat 8mo ago
As mentioned above, it's not a micropayment. It's just a payment. You can transact in whatever amounts you want, and backend systems will bump the numbers around just fine, even for fractions of a cent. Hell, that's how interest and currency exchange settle out. The LLM provider runs a meter. The meter tallies your activity, wraps it in a transaction, hands it to the backend, backend talks to other banks/payment gateways, an ACH happens, done. That isn't a "micropayment". That's just a payment. In fact, if you pay attention, some of the biggest winners in tech, namely cloud providers or AI providers, are as darling as they are because they figured out how to turn everyday compute tasks into billable transactions. We're exceptionally good at tracking the build up of value, even if your atomic unit of transaction is a thousandth of a cent, but x however many million customers you have, it quickly adds up. Micropayments have always, as long as I've been in the industry, implied a level of disintermediation on the behalf of sender/receiver. The chance to have that kind of utility died September 11th, 2001, when the U.S. and western world suddenly got the bright idea that the only way to protect themselves from terrorists was to modify the system to be able to surveil everybody l, all at once. Bringing us to a codger explaining why P2P micropayments are pretty much a pipedream in the finance world as she is legally practiced.
- dynm 8mo ago
  Not too interested in debating the semantics of "micropayment", but it sounds like if we swap in "news sites" in place of "LLM providers" everything should still still be possible? Consumers could pay tiny amounts of money for individual articles?
  - salawat 8mo ago

hathawsh 8mo ago

Please help me understand better, because it feels like part of the problem has already been solved. Specifically, I've been told that the independent journalists that I watch on YouTube Premium receive a portion of my subscription fee. Is that not a form of micropayments? The system seems to work well enough for videos. Isn't there some way to adapt that kind of system to other media?

yunohn 8mo ago
The solution is called centralization by a middle man that takes a massive cut - eg YouTube Premium. Only Google makes real money off that, and the content creators rely on sponsors instead for their own revenue. So does it really work? I would despise a future where we solve micro transactions by giving up control to yet-another unnecessary body. Especially not even at the level of Visa or Mastercard, despite how much I dislike crypto.
salawat 8mo ago
Goes like the following: Google/YouTube have a userbase to track accounts for; they go to a bank (licensed money transmitter, with OFAC/KYC/AML programs implemented). Google gets paid by people looking to advertise, and that money goes into Google's master account. Google's finance system translates views/impressions to money movements to creator accounts hosted at other banks (same deal, OFAC/KYC/AML program in place). The main thing is, every party that actually moves around money, operates in such a way that the entire transaction chain is followable. It's not point to point, it's hub and spoke. The hubs keep track of everything to keep the Osama Bin Laden's or Russian Oligarch's, or Cuban nationals out of the U.S. financial system. "Micropayments" have always been something different. We technologists just figured there would be a way we could whip up some accounting software, or a spec, and allow people a way to store and transact without relying on a custodial holder, with all the extra regulation burden. Point is though, government and law enforcement don't want that, because with that, it becomes a great deal more difficult to follow the money, or to get away with things like mandating everyone report money movements over some amount to the tax authority; something easy to do when it's tacked on to the condition of maintaining your license to do business. Every money transmitter being well behaved and integrated with the state maximizes the risk for anyone attempting to utilize the financial system for illegal activity. Ergo... What you think of as already solved isn't "micropayments". It's traditional finance in the U.S. What we refer to when we say Micropayments, is a way to store value, maintain accounts, and run point to point transactions "blessed" or recognized by the world et al without an intermediary.

pzmarzly 8mo ago

Decentralized or direct P2P micropayments are unlikely to work, true. But why are there so few attempts at centralized micropayments providers? The only success stories I see in the space are GitHub Sponsors and LiberaPay, where their entire thing is aggregating payments together (so you have 1 big card transaction a month per user, not 20 small ones) and doing KYC procedures with donation receivers (once GitHub, or rather Stripe, says you are legit, you can take money from any GitHub user).

salawat 8mo ago
That's called starting a bank, or financial services company, and lots of places do it, but the bar to do so, and remain able to do so is fairly high. The margins, however, are exquisite. The middlemen eat fat off the percent they skim off the top.

hn_acc1 8mo ago

Would love to hear about some of those reality checks. Note: I'm not currently in favor of micropayments, but am willing to listen.

salawat 8mo ago
Well, there's OFAC, for one. In the U.S. alphabet soup, that's the Office of Foreign Asset Control, and they maintain the master sanctions list operated by the Federal government. This is a list, that as a matter of law, must be checked against every transaction. If there is a match on the receiving end of funds to a sanctioned individual, the transaction is immediately halted. If a sanctioned party is the originator, a flag may be raised for the institution to deal with otherwise. You do not want to end up on that list, because if you do, the U.S. financial system turns into a roach motel. Assets flow into the custodianship of the service provider, but are unable to move out. A very highly controversial feature to have implemented if I dare say so myself. Then there are the SAR's and CTR's, which are reports that must be filed by banks in the event of "suspicious activity". I.e. structuring, withdrawal of large amounts of cash, etc. They are specifically prohibited from informing you as a customer about these processes. Then there's the risk department integration. It is mandatory to hand over transaction information on request by law enforcement. The process is mandatory, and continued licensure is conditional on maintaining a program through which financial surveillance can be conducted by the State. Now, are these features inherently bad? No. Not at first blush. Do they have the potential to become horrifying? Well... Look at what happened to the ICC judge who got added to the sanctioned entities list. It doesn't just effect bank accounts. It involves anything that you engage in a digital transaction to maintain access to. That means entire sectors suddenly go from situation normal, to persona non grata, your business is not welcome here, at threat of massive fines for doing business with a sanctioned entity. I went into finance looking for a boring, uncontroversial line of work, and came out after a few years realizing the entire sector is so damn wired for power projection it's not even funny. Once you see it and understand how the bounds of what you can do are constrained by these people who are authorized to digitally transact on your behalf... Well... It can't really be unseen.
- hn_acc1 8mo ago