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Nowadays micropayments are one of the most used transactions either at the bank, at home, with FIAT or cryptocurrencies. Maybe you have heard of them. If you want to learn how they work in this article we will tell you all about it.
A micropayment is the system used by a user to send small amounts of money. Micropayments are considered to be amounts from cents to 10 dollars. They can be found in various formats, either in physical form such as vending machines or the most common, online. Electronic micropayments can be made through prepaid cards, virtual accounts or services such as cryptocurrencies.
Origin of micropayments
Although the world of cryptocurrencies is relatively new to the economy, micropayments have been around for many years. To get an idea, micropayments come from physical businesses with high sales volume. A good example would be businesses where products are inexpensive such as vending machines.
Micropayments arrived in the digital world by 1980. It was introduced in the first on-line services such as the pay-per-click of the German Btx system. However, it was not until 1990 that thanks to the advent of the Internet and e-commerce, the boom in this system began. This is because many technological services require a small payment, such as reading a magazine or article or downloading a book or a song. As a result, many companies began to adopt micropayment strategies in order to expand their adoption.
An example of a successful micropayment model from that era was PayPal, although it is still in use today.
The origin of micropayments in the world of cryptocurrencies began in 2008 with Satoshi Nakamoto idea of turning Bitcoin into an alternative currency capable of replacing the traditional banking system and existing monetary systems.
To achieve this, the new currency would have to be accessible to citizens of any territory and had to be easy to use in everyday life. Although Bitcoin is evolving every day and is constantly increasing its users, it still has a way to go to become an everyday currency.
However, there are a number of features that the currency has implemented to get closer and closer to its goal. These are micropayments. Bitcoin is not the only cryptocurrency to do so, as the vast majority agree that it is a way to provide widespread accessibility to digital wallets.
How do micropayments work in cryptocurrencies?
Cryptocurrencies lead the way in terms of the implementation of this payment method. This is because it is one of the fastest ways to achieve greater adoption. This is done by reducing transaction costs by allowing direct transactions between both parties and leaving out the use of intermediaries.
In addition to saving the payment of intermediaries there is another cost involved. This is the cost of the blockchain infrastructure. This cost is usually lower than in traditional transactions. These micropayment systems can be combined with other services offered on the blockchain such as smart contracts or copyright control systems. As an example, we find cryptocurrency companies such as Steem.
Micropayments not only offer the possibility of transferring money, but also offer security. This is because if a user wants to make an online payment, but does not want to reveal his credit card details to the merchant, he can use an eWallet. This way users avoid revealing their bank details for each microtransaction they wish to make. Through this method the buyer only has to log in and choose the desired payment method.
This means a breakthrough in the general perception of cryptocurrencies, as such a complex system becomes accessible to all users. In this way cryptocurrencies are increasingly inserted into the world of digital finance. All this with the ultimate goal of making the use of cryptocurrency a more attainable system for traders and consumers.
CMicropayments offer an instant, secure and inexpensive payment solution. Little by little, cryptocurrencies are being introduced in our daily lives, whether to buy a coffee, a song on the Internet or simply to make transfers.
Bitcoin micropayment tools
Bitcoin has become one of the cryptocurrencies specialized in micropayments thanks to the development of Lightning Network, the specialized Bitcoin micropayment network. If you want to learn more about this network you can read our detailed article about Lightning Network.
There are already several tools that have taken advantage of these benefits and we will now take a look at some of the main ones:
- Bitwall. It is a payment system for viewing online content through micropayments with Bitcoin. With Bitwall, publishers can install paywalls that offer different payment options to users who want to view the creator’s content. Not only payment in Bitcoin is accepted, they can also pay in dollars. The minimum amount set on the platform is $0.01 for reading an article.
- Bitcoin Fax. This is a fax service over the Internet to any location without requiring any subscription. We only need to enter the fax number, upload the PDF document and send it. Basically it is a tool to replace online fax services that require expensive subscriptions. As expected, payments on this platform are micropayments in Bitcoin and sending rates vary from 11 cents to $7.58 in countries like Afghanistan.
- Blockcypher. It is a microtransaction API that allows Bitcoin payments in an easy and economical way. It is a company focused on offering a service that facilitates its users microtransactions and their issuance on the blockchain saving commission costs. The sender and receiver of the transaction can check the status of the transaction through live.blockcypher.com. This is because the transactions are instantly recorded on the blockchain. To check the status of the transaction they only need to enter the address of the transaction.