Quote
“We think payment in BTC is not as big an improvement at the present time over standard ways to purchase macroscopic physical goods. Offline currencies are fairly well adapted for that use case. We believe that where bitcoin really shines is for micropayments, as a medium of exchange for digital goods and services.”
Hopefully they are planning ways to handle micro-payments off-the-blockchain, in batches or in their own alt-coins.
I know an application that would fill a whole day of 1MB blocks on its own in just a few hours if it was using micro-payments with 1 tx per translated sentence... and it is not a large application by any stretch of the imagination, more like a tool/utility. For widespread use, even 1 GB blocks would not be enough, especially not if you understand "machines" as in "internet of things".
Machine to machine micro-payments is an interesting project, but if it is to scale, it probably needs something "more decentralized" than bitcoin, ie. that does not rely on a single, world-wide blockchain.
I suspect that they are addressing the wrong problem: a bitcoin client is a simple lightweight affair, especially with cloud-based APIs & services, what's limiting machine to machine is not the ability to discover services, issue or request payments.