150 sats \ 4 replies \ @nullcount 18 Jun \ on: Solving the Bitcoin Adoption Paradox bitcoin
Microtxns are neat, and I get that they can add up to become significant value. But why don't we see more companies using micro transactions today?
Of course, you can't send fractional pennies using the banking system, but companies can already create their own "digital credit tokens" backed by fiat. (Very similar to eCash with BTC).
For example, AWS has fractional-penny-per-minute pricing for their compute services. Nothing stops Netflix or other streaming services from pricing their services this way too.
Precise payments have additional cost to make them precise. Just like measuring something precisely requires more expensive equipment than measuring something roughly. Even if using BTC/LN/eCash, its often easier to just bill by month than try to compute a bill and settle it every minute.
Much of the economy operates on trust. Companies give you service today because they trust you will pay them next month.
Much of the value-for-value that happens isn't settled in currency. You get value from free email, email provider gets value from the ads you watch while reading emails.
My point is, sometimes, converting an exchange of value to an exchange of currency does not necessarily create more value (beyond the novelty aspect).
Micro transactions would probably be more popular in a society with low trust (or a market run by autonomous (greedy) agents). If you're certain your customer won't pay you next month, it may be worth the effort to bill them immediately.
Precise payments have additional cost to make them precise. Just like measuring something precisely requires more expensive equipment than measuring something roughly. Even if using BTC/LN/eCash, its often easier to just bill by month than try to compute a bill and settle it every minute.
I come back to how we zap here on @sn. These are microtxns that cannot (easily) be done with tradfi. But with the "stack" it's self evidently possible. The issue is that with minimum fees for Visa/MC, it is totally impractical, if not impossible to do a $0.005 credit card transaction, where we are doing zaps like that all day long.
Measuring data (bits) precisely is infinitely easier than measuring atoms precisely. And in the digital realm, Bitcoin will be the pre-eminent method of payment for the kinds of transactions that Visa/MC can't do. My thesis boils down to identifying new payment use cases that Bitcoin alone supports will likely be the driving factor for adoption.
Much of the economy operates on trust. Companies give you service today because they trust you will pay them next month.
Indeed. That is the way it has been for centuries. But now, with the emergence of autonomous systems that will be able to transact financially, they will need money to recharge or what have you, and I expect that Bitcoin and the stack will provide the solution. I don't see software applying for credit cards any time soon. Nor do autonomous non-human systems require or bestow trust. We will need trustless systems for these. Enter Bitcoin.
reply
People used to send micropayments onchain before it was required to pay a fee to miners. Even then, fees were so low that microtxns were possible for years.
I'm expecting LN and eCash fees to rise with adoption as well.
I think the "money for autonomous agents" is the most compelling attribute that may spark a new wave of adoption. Maybe as a side effect of companies optimizing their product and billing so agents to use it, we will also get an interface to pay for these services with BTC and increased privacy noKYC.
But in the meantime, gift cards priced in fiat will suffice.
reply
I'm expecting LN and eCash fees to rise with adoption as well.
LN fees will rise as the mempool gets saturated with LN channel opens, but I expect other Layer 2s and new Layer 3s will emerge further reducing on-chain pressure and enabling increased adoption at global scale.
But in the meantime, gift cards priced in fiat will suffice.
This is a bit of a kluge, like the email to fax solution. Using a superior tech bolted onto an inferior one. Not the killer app that Bitcoin needs for mass adoption.
I am a bit obsessed with thinking about entrepreneurship that @car hinted at, that leverages Bitcoin for use cases that simply cannot be solved with the current financial rails. As a SoV, Bitcoin is wildy successful. As electronic cash, it's a solution still looking for a problem. Substituting Bitcoin gift cards for fiat or using a Bitcoin Visa card won't get us to the promised land.