I believe that it is possible to have a decentralized peer-to-peer crypto-currency solution for frequent micropayments.
There are many parameters to be specified before an appropriate design can be made. Among them are:
- How do you seed the clients with the initial money to make transactions?
- Can they accumulate debts?
- What sort of communication exists "naturally" between the clients apart from the payments?
- Must offline payments be possible?
- Is the system "closed"? Can new arbitrary clients join?
- Is full anonymity desirable or is pseudonymity acceptable?
- Are the transactions a fixed small set of types or do you have to be able to "roll your own" like bitcoin?
If you go into more detail about the application then we can probably infer most of these parameters.
ByteCoin
The specifics of the application I'm looking at in particular is with an on-line video game with a persistent "avatar" (essentially an MMORPG) where players could exchange "goods" between each other and be paying for "services" within the environment of the game itself. The environment here would by its nature be open and arbitrary clients could come and go as they please, and "custom" clients or user interfaces into the network would be permitted. There would exist other forms of communication, so the payment part would only be a sub-section of the main purpose of the software.... still it would be something I think would draw people to playing especially if they could "earn" real money while playing the game.
One of the purposes I have here to insist on a P2P solution is an attempt to keep from having a massive server farm to run the whole show, and I think Bitcoins itself is a key element to make all of this happen. This is an application that simply couldn't happen without Bitcoins.
Anonymity would be a nice goal but it isn't for me a key feature and isn't strictly necessary. Essentially, I'd like people to have to work to prove the identity of somebody but it wouldn't have to be strictly important to be completely opaque in terms of identifying who is using the network at any given time. If possible, I'd like to give people the same level of anonymity that is found within Bitcoins itself. Not perfect but pretty good.
Can debts be accumulated? Yes, but I'd like to keep it small so nobody is really burned hard. Owing somebody $0.01 USD is likely not going to be that big of a deal, even if they owe that amount to a hundred people. The main point is that somebody who set up say a virtual restaurant can accumulate a couple bucks every now and then from the "customers" over time. Somebody trying to milk the system will eventually get booted and may even have something to lose by acting with bad faith.
I have considered that there may even be "exchanges" with "alternate currencies" of the sort that would be found within the game, but those would be floating currencies by their nature and be more typical with MMORPG currencies. The central part here is to set up some system that would permit content builders (aka somebody designing a village or a dungeon) to "earn" some bitcoins for each person who passes through and uses those features... as this is something which has an existing market and people willing to pay for such content.
I also think there are a great many other applications where something like this, or an adaptation of this concept could be used outside of a virtual world, which is why I'm bringing it up here in this forum section.