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I really wish articles would stop repeating the blanket claim that Bitcoin payments have lower fees than traditional transactions. While true in many cases, it

by clarkm 13y ago

I really wish articles would stop repeating the blanket claim that Bitcoin payments have lower fees than traditional transactions. While true in many cases, it is definitely not true with regard to micropayments. At the protocol level, Bitcoin is horrible for micropayments. Don't get me wrong, Bitcoin is great for some things like moderately-sized international payments, but is not designed for frequent small payments. The recommended fees are already too high for this to be practical. And if such small payments become common, they would flood the blockchain, driving fees up further as a result. If you want to see how this has played out before, look at Satoshi Dice. How does BitWall address this problem?

dobbsbob 13y ago
The fees to transfer bitcoin are nothing compared to the fees to get bitcoin. You need to be really savvy and find a local trader or else you are paying funding fees, trading fees and withdraw fees. Even on localbitcoin prices are usually marked up above the current exchange rate over multiple points of exchange. The biggest advantage to bitcoin is painless refunds, and of course no central authority to regulate anything.
ewillbefull 13y ago
Depends on what you define as 'small'. The smallest amount you can send (right now) is about $0.007 at current prices, which is pretty small for most purposes, especially content monetization. It is smaller than any alternatives by a large margin.
- nwh 13y ago
  You missed the point. Yes you can receive many small payments, but to spend them again will cost me almost as much again in fees. Combining lots of small inputs is not efficient.
  - VMG 13y ago
    Why not? A single transaction can have many different inputs. A receiver of many micropayments can bundle many separate addresses into one. Anonymity might be an issue then, but the transaction isn't.
    - Titanous 13y ago
      Because each input increases the size of the transaction, increasing the fees: https://en.bitcoin.it/wiki/Transaction_fees https://en.bitcoin.it/wiki/Transaction_fees
walden42 13y ago
How micro are we talking about here? The default transaction fee is 0.0001 BTC per kilobyte, or about 1 cent, and it's usually the amount you need to pay. Hardly the expensive transaction. Yes, handing someone some cash is cheaper, but the fees, at least as they are now, is nothing to complain about.
jyu 13y ago
Did I miss something? BitWall sits on top of Coinbase. Coinbase right now eats transaction fees (or if it is Coinbase 2 Coinbase, then it's just an "in the network" transaction that possibly does not need to hit the bitcoin network and incur a transaction fee). Satoshi Dice is an example of how not to do volume micropayments because you incurr transaction fees. If you want to do micropayments the right way, either you need to sit on top of someone else's payment network, or build your own. The biggest fees right now are the hassles of opening and waiting for an exchange account, and the associated exchange fees associated with converting $ to bitcoin, and bitcoin to $. With something like BitWall, you can start accepting and spending bitcoin without the hassles of dealing with an exchange.
- nicmeliones 13y ago
  jyu, thanks for providing clarity there. I'm the CEO of BitWall, and to reiterate what you said - transactions from readers to merchants on BitWall are off blockchain (i.e. in-network), meaning we can power them with 0 transaction fees because of our integration with Coinbase.
  - ixcyth4 13y ago
    What coinbase has implemented is not off-the block-chain microtransactions. Basically, they are just moving money between two coinbase accounts. So looks like only Coinbase users can use your service, if others use it they will end up flooding the block-chain.
zhoutong 13y ago
I wonder how feasible it is to do batch payments for Bitcoin or even credit card. Apple seems to do this successfully with its iTunes store (a typical micropayment use case) by charging credit cards in batches of $20 to $50 over a certain period. If there's a payment aggregator doing this for a number of micropayment merchants, I can see some future in this. However, Bitcoin protocol is not compatible with polling transactions retrospectively, so that requires either a "credit" account or a small deposit to start with.

by clarkm 13y ago

dobbsbob 13y ago

The fees to transfer bitcoin are nothing compared to the fees to get bitcoin. You need to be really savvy and find a local trader or else you are paying funding fees, trading fees and withdraw fees. Even on localbitcoin prices are usually marked up above the current exchange rate over multiple points of exchange. The biggest advantage to bitcoin is painless refunds, and of course no central authority to regulate anything.

ewillbefull 13y ago

Depends on what you define as 'small'. The smallest amount you can send (right now) is about $0.007 at current prices, which is pretty small for most purposes, especially content monetization. It is smaller than any alternatives by a large margin.

nwh 13y ago
You missed the point. Yes you can receive many small payments, but to spend them again will cost me almost as much again in fees. Combining lots of small inputs is not efficient.
- VMG 13y ago
  Why not? A single transaction can have many different inputs. A receiver of many micropayments can bundle many separate addresses into one. Anonymity might be an issue then, but the transaction isn't.
  - Titanous 13y ago
    Because each input increases the size of the transaction, increasing the fees: https://en.bitcoin.it/wiki/Transaction_fees https://en.bitcoin.it/wiki/Transaction_fees

walden42 13y ago

How micro are we talking about here? The default transaction fee is 0.0001 BTC per kilobyte, or about 1 cent, and it's usually the amount you need to pay. Hardly the expensive transaction. Yes, handing someone some cash is cheaper, but the fees, at least as they are now, is nothing to complain about.

jyu 13y ago

Did I miss something? BitWall sits on top of Coinbase. Coinbase right now eats transaction fees (or if it is Coinbase 2 Coinbase, then it's just an "in the network" transaction that possibly does not need to hit the bitcoin network and incur a transaction fee). Satoshi Dice is an example of how not to do volume micropayments because you incurr transaction fees. If you want to do micropayments the right way, either you need to sit on top of someone else's payment network, or build your own. The biggest fees right now are the hassles of opening and waiting for an exchange account, and the associated exchange fees associated with converting $ to bitcoin, and bitcoin to $. With something like BitWall, you can start accepting and spending bitcoin without the hassles of dealing with an exchange.

nicmeliones 13y ago
jyu, thanks for providing clarity there. I'm the CEO of BitWall, and to reiterate what you said - transactions from readers to merchants on BitWall are off blockchain (i.e. in-network), meaning we can power them with 0 transaction fees because of our integration with Coinbase.
- ixcyth4 13y ago
  What coinbase has implemented is not off-the block-chain microtransactions. Basically, they are just moving money between two coinbase accounts. So looks like only Coinbase users can use your service, if others use it they will end up flooding the block-chain.

zhoutong 13y ago

I wonder how feasible it is to do batch payments for Bitcoin or even credit card. Apple seems to do this successfully with its iTunes store (a typical micropayment use case) by charging credit cards in batches of $20 to $50 over a certain period. If there's a payment aggregator doing this for a number of micropayment merchants, I can see some future in this. However, Bitcoin protocol is not compatible with polling transactions retrospectively, so that requires either a "credit" account or a small deposit to start with.