How Blockchain Protocols Can Support Micropayment Services?
Micropayments are financial transactions that are made for purchasing services and products available at very low costs from merchants online. These transactions usually involve very small amounts of money, sometimes as small as one cent. The term was first coined by Ted Nelson in the 1990s, but micropayment platforms eventually rose to popularity during the 2010s when a lot of micropayment platforms came into existence like M-Coin, Flattr, Swish, & PayPal to make the process of making small online transactions easier for customers as well as selling low-cost merchandise and services for the merchants.
Though making transactions through micropayment platforms hold numerous advantages like security, payment mode flexibility, anonymity, speed, convenience, reduced risks of credit card thefts, etc. but there are still some drawbacks of using micropayment platforms for making small payments to merchants eventually affecting the success of micropayment systems. One major disadvantage of using these platforms is the large transaction costs they hold along with a small individual transaction while charging the customers.
With the advancement in technologies and the emergence of blockchain protocols and cryptocurrencies, making micropayments with lower transaction costs has also become possible for customers. A blockchain is a technology which involves recording transactions made in either Bitcoin or other cryptocurrencies in a chronological fashion and linking those records using cryptography which is further managed by a community of users.
By using blockchain micropayments, it has now become possible to utilize the capabilities of micropayment platforms by combining a number of small transactions together as well as by recording the collection of individual small transactions on a blockchain and reducing the number of transactions, instead of recording every single transaction and charging customers a large transaction fee on each.
This micropayment solution comes as a relief for customers by eradicating the hassle of handling the large transaction costs involved with making each small transaction and actually handling just the transaction cost involved after combining numerous single transactions. This updated micropayment model using the blockchain protocol appears as a promising solution and can help in building a bright future for the micropayment industry.
Be it an online gaming site or a thought-provoking blog, a music site, or an eCommerce shop, making small transactions at low transaction fees has now become a reality, eventually helping merchants to expand their business and customers to buy small priced goods and services conveniently.