Have a read of the chapter
in this document entitled "Open loop payment systems with instant availability of funds". The distinction between a monetary medium that separates the settlement layer from the transaction layer, and one that doesn't is adequately made there.
Including the part where it says "Typically, the central bank serves as settlement agent."
There's no central bank here. It's between users. There's no trust, no central bank - third party, no counterparty risk and you are always in control as you can close the channel.
It is a win-win.
Bitcoin isn't currently practical for very small micropayments. Not for things like pay per search or per page view without an aggregating mechanism, not things needing to pay less than 0.01. The dust spam limit is a first try at intentionally trying to prevent overly small micropayments like that.
Bitcoin is practical for smaller transactions than are practical with existing payment methods. Small enough to include what you might call the top of the micropayment range. But it doesn't claim to be practical for arbitrarily small micropayments.
...
Forgot to add the good part about micropayments. While I don't think Bitcoin is practical for smaller micropayments right now, it will eventually be as storage and bandwidth costs continue to fall. If Bitcoin catches on on a big scale, it may already be the case by that time. Another way they can become more practical is if I implement client-only mode and the number of network nodes consolidates into a smaller number of professional server farms. Whatever size micropayments you need will eventually be practical. I think in 5 or 10 years, the bandwidth and storage will seem trivial.
So, per the creator of the coin:
- you can't have small micropayments right now
- you can have them in the future though with tech progress and cheaper hardware/bandwidth which will allow more on-chain txs
- you could scale to any level, including micropayments, if you altered the decentralized nature of the network into a less p2p and more client/server one by consolidating it into a few server farms.
All of the above make sense in terms of tradeoffs. But as I said earlier, we are not here to make centralized paypal #2. We are here for a p2p protocol. Yes, if Bitcoin was hosted on 1-2-5 servers and everyone connected through a thin client, it would scale to visa levels and beyond right now. But how would that be decentralized? How would it be trustless? How would it be protected from someone going in and shutting it down. It wouldn't. It's very simple really. Why all the hate towards bitcoin devs for trying to find alternatives while keeping the nature of bitcoin decentralized?
There is no change in the nature of money. There is no "multiplication" of bitcoins or fractional reserve. There is no trust or counterparty risk. All you have is "locked" funds between two parties, inside the channel, as they are conducting lots of micropayments between them, funds that can be "unlocked" when they want to close the channel. If this can be used to increase adoption and allow more scaling while keeping decentralization, why not? It's a win-win.
i thought i read somewhere where they admitted if one person did not close the channel or did something like that it could screw things up? they said they were working on a solution but the whole thing is still vaporware right now anyway.
or will it be a new start ? 
