Topic: How do we make Bitcoin work as a global micro-payment system? (Read 2788 times)

+1 You summed it up!
In 2011 we worked on getting funded (done), in 2012 we will deliver usability and legal/fiscal framework (or at least we will start filling the void) for merchants.

I would add that even if my aunt had an easy way of getting come bitcoins (which she does - from me), and the exchange rate were stable (which it isn't), she would still have a hard time finding a place to spend those coins directly. Sure, there are several gift-card options, and a list of merchants accepting btc, but realistically it's all very limited.

The bitcoin network is here, and it works. I actually use it in real life on regular basis, for international money transfers - not because I simply want to, but because it works better than any other option. Other than that, there is not much going on (except for lots of wishful thinking) - no offense. What is needed now are several things going on in unison:

- we need developers to keep improving and diversifying clients, light clients, secure storage, and Web solutions
- we need people offering services and goods in exchange for btc
- we need to face the fact that 2012 is the year in which first taxation and legal decisions regarding Bitcoin will be made, following the 2011 breakthrough. BTC businesses and people with lots of vested interest should act prudently and cautiously now more than ever before: hiring good attorneys where needed, and consulting and coordinating with peers.

Yes i am, but the problem is making new people aware of them.

Are you aware of InstaWallet?  BitcoinSpinner?  My Wallet (from http://www.BlockChain.info/wallet )? 

For those who hold $25 worth of bitcoins these wallets are all more than adequate. 

Even those with amounts that need greater protection are served by some of these -- as My Wallet, for instance, offers a multi-factor authentication method.

True 

Rome wasn't built in one day..   

Yup

Sure, it's still only beta (or alpha), but since new ppl will use it, i think it's one of the reason that are slowing down bitcoin adoption. Ok, there are other clients, but they famous, unless one find them on the forum

But i have to admit that the QR code and sign message thing of the latest version is pretty nice.

You mean the beta version? Yeah, the GUI has a long, long way to go.

The bitcoin client epic fail interface in my opinion is happily helping keeping users away from it. Add to that the management of the wallet (management? there is NO management) and of the blockchain (yeah sure -datadir) and you have the answer.

Yes, we will be announcing a very decent solution very soon now..

There certainly aren't many other global micro-payment systems out there.  The ones that do exist mostly are for accepting   This new service called Kanzaloo aims to do that but taking a look at it I don't know how "global" it is just yet.  Though they say they support 85 countries, the currency pricing is denominated in EUR, and the mobile phone networks supported looks to be mostly just EU companies:
 - http://www.kanzaloo.com

Incidentally, Bitcoin is already there:
 - http://www.dialcoin.com (21 countries)
 - https://bitcoinmarket24.com/BuyBitcoinsForSMS/InstantBTCforSMS.php (U.K.)

And there are numerous micro-payment systems for paying for gaming:
 - http://pocketchange.com  (though not all like the concept: http://www.androidpolice.com/2012/02/23/editorial-virtual-game-tokens-exist-and-theyre-even-more-evil-than-dlc )

Even PayPal has one (5% + $0.05 per transactoin) but as we know all too well, their restrictions and frozen accounts can be brutal.  Dwolla is U.S. only for now, but they allow don't charge for sub-$10 transactions.  Whether or not they want to see a lot of sub-dollar micro-transactions though I don't know.

Here's the scenario that will probably cause a bitcoin micropayments system to take off.  It will probably be a site that already uses bitcoins internally and then sees its customer base explode for whatever reason.  As a result, the amount held in all of the site's customer wallets gets huge as well.  The service then finds other companies wanting access to these customers and their funds.  So this service adds some API to provide that service and becomes a player in the micropayments space as the result.

Maybe this will be Ogrr?
 - http://www.ogrr.com

There's no doubt though, Bitcoin is becoming more suitable for the task than any alternatives.  Facebook Credits chewing 30% of the sale is one reason we should be confident that Bitcoin is better.  In the U.S., for instance, being able to go down to a bank with $25 and end up with $24.25 worth of bitcoins a half hour later (thanks to BitInstant, in this example) is a tell that the frictions using Bitcoin are becoming less.  And the exchange rate fluctuations appear to be getting less disruptive, at this point in time.

In other words, watch closely -- conditions are becoming ripe for a decent solution to emerge.

There are instances of bitcoin used for micro-payments already:

For digital goods:
 - https://strongcoin.com/blog/bitcoin_micropayments_with_strongcoin

For pay-per-action services:
 - http://bitcoinhorn.com

For donations:
 - http://www.youtipit.org
 - Any site with a donation widget or bitcoin address (can accept as little as just a few cents worth of BTCs)
 - http://btctip.com (Send a tip to a wallet that can be claimed by that Twitter username)

For voting (e.g., for upvotes on Reddit):
 - http://coinsmack.com  (and prior to that, Witcoin)

For gambling:
 - http://betsofbitco.in (predictions market)

No, wallet isn't encrypted.  I probably should, but... I don't.

Anyway, I was just saying from the customer side of things, Bitcoin is extremely easy to use.  I already had the client set up and running, yes, but I don't have to log in to anything, or browse to multiple pages and get redirected here and there.  It was a single payment page.  I click payment sent, it waits for payment from me, then as soon as it sees a transaction has been created, it gives me a receipt, and I'm on my way.  Easy as pie.

From the merchant standpoint, there is a ton to work through, I completely agree with you there.  Lots more polishing to do.  Exchange rates will stabilize with more usage, but it's going to take a LOT more usage for that to happen.  Like, on-par-with-the-economy-of-a-small-country levels of usage.  Lower fees and more instant-money services will come with more usage, too.

If I was going to set myself up as a merchant with the purpose of avoiding as much volatility as possible, I would have all transactions run through bit-pay, and just set it to the USD 2.99% fees option.  I believe that instantly gives me the USD equivalent of any BTC payment made to my bit-pay account.  And it's only half the 6% fee you are talking about.

Regardless, there is still plenty of room for more competition and improvement in the merchant services area.  Well, and in the client area too.  It will come with time.  Things are always being improved upon here, everyone trying to 1-up each other with better features and stability in their services and features.

Not to rain on your parade but take a look at this paper: the case against micropayments, Odlyzko et al. 

http://www.dtc.umn.edu/~odlyzko/doc/case.against.micropayments.pdf

Yeah micropayments are cool and I also like the ease of use of bitcoin payments and other possible uses (keep up the good work devs) but lets not forget to point out the real breakthrough of the proof of work block chain: for the first time ever (with the exception of a polynesian stone money system?) we can -guarantee- no counterfeiting or other secret inflation of a money supply.

 

You don't have an encrypted wallet that needs a password? Thats the same effort as a paypal payment. Lets not even mention start up effort to get the client up, working, and secure. Are you considering the effort the vendor has to go through to make use of the money sent? The exchanges are requiring more private info than paypal does, for less money moved. The exchanges are at best, as safe as paypal regarding account freezes. I'm not trying to be a negative Nelly, admittedly I'm a bit upset I wasted all of my time working for free last week because of this price dip. But as a person that's using btc for what it's for (selling services and goods for btc) I have tons of issues with btc that aren't there with traditional payment processors. Mainly revolving around two things-

I can lose a significant amount of my income overnight.

High fees (6% for me to get cash in hand as fast as paypal who charges 2.9% + $0.30)

OR

slow turnaround, where the volatility can screw me, plus money in limbo for up to a month. May lose more than the 6% above like I did this week.

If those two things are fixed btc would be 100x better for me as payment for my goods and services. Right now it's such a huge risk.

and if anyone is wondering why I didn't sell my btc at the time of sale reducing my exposure, well the site I use to cash out said they'd be back up Feb. 12th 0300 UTC but didn't actually start services until a day after that. Just so happened that night btc fell about a dollar. The other place I use to cashout doesn't lock in rates so by the time they got to my order the price had dropped the same aforementioned $1.

Actually, that's a good point.  I should look at putting my music up through bit-pay.  I bet it'd be a lot easier to get some automated digital goods download service going than it used to be...

I agree... and safer and less expensive and more satisfying.  
And there are getting to be more and more places I can use it instead of paypal and/or a credit card.

I would love to see my favorite musicians put Bitcoin addresses up on their websites so I can send
money to them directly instead of having to go through some parasitic middle agency. I wanted to
do that even before Bitcoin when I would download their music...  even though in most cases I already
bought their music in the form of records, cassettes tapes, cds etc.  

I say it's easier to use than Paypal.  I didn't have to log in to anything to pay for a copy of the Bitcoin Magazine with BTC through Bit-Pay, and I very much enjoy that aspect.  Was done with the whole process in about 10 seconds, because my browser auto-filled my address information too.

It doesn't really cut out the middleman, since in order to get fiat you have to go through a middleman anyway. Most of them are unreliable and charge higher fees than traditional payment processors. The only real benefit I see is no chargebacks. It's not easier to use than paypal, that's just nonsense.

Like you said too, the volatility isn't acceptable right now. I just lost 20% of my income over night due to this dip. Luckily that "only" cost me a few hundred,  imagine people who do huge volume.

Everything the op has said is very true and it is happening but very slowly.  I think its going to take another crisis to happen to accelerate this process.  We may be on the verge of that as we speak.