Bitcoin Microtransactions: The Future is Now

Vlad Dramaliev


During the past few years we have witnessed a number of hypes in the Bitcoin sphere that have led many to see a distorted reflection of this new technology, failing to acquire a deeper, more natural understanding of its fundamentals. Superficial news reports in popular media were surely a factor in this development, pure greed and fear of being left behind were another, but credit must be given to human imagination as well. I would like to shortly focus on the latter.

A great fan of sci-fi literature and movies, I believe imagination is a driving force of progress in our society. There are numerous examples of technologies that have been foreseen by literary authors, decades before their appearance was possible. Individuals who recognize the potential of these tools are often misunderstood and disregarded, only to be considered visionaries after their ideas are materialized in the real world.

Bitcoin is definitely an implementation of a revolutionary idea and its potential will slowly be realized by more and more people. Until 2009 decentralized digital currency was but a reverie. Once it became a fact and its multi-disciplinary nature received a physical form, human imagination started absorbing it and molding it into different shapes. The less imaginative saw quick profits, Ponzi schemes and money-laundering, while the more creative minds conceived anarchic utopias, based on purely free markets, free of governmental parasitism and oppression.

A few dynamic years later, we have seen a number of attempts to realize ideas occupying different areas on the imaginative spectrum that Bitcoin technology created in people’s minds. Some of them had their fair share of attention from the public and industry (many times primarily due to the effects produced by their demise), others stepped quietly into oblivion.

In 2016 there is another global hype inspired by Bitcoin — the private (or permissioned, centralized) blockchain. The wave of proto-applications that went extinct were considered as exemplifying the “dark side” of Bitcoin and were quickly used as arguments in favor of moving away from bitcoin. A significant fallacy was made in the form of perceiving bitcoin as inherently bad, unneeded and not merely as a tool for expressing human nature. Moreover, some of its most important characteristics, clearly going against the power-centric status-quo of the financial world, were deemed incompatible with the archaic business models of the banking sector. But there was something to Bitcoin that, notwithstanding its drawbacks, was attractive to the 1%. They decided to call blockchain technology DLT (distributed ledger technology), announce that the Bitcoin beast is tamable and engage in attempts to prove that they can create their own, improved and centralized copies of a technology, whose fundamental advantage lies in its decentralization.

Imagination runs wild in the financial world today and I am sure that in the next few years we will witness a proliferation of pseudo-blockchain applications. Currently all such R&D is done behind closed doors and I feel that there is not enough clarity about how blockchain technology can be used, and even why. Nonetheless, the failures and successes produced by the current blockchain hype will ultimately benefit Bitcoin. I, however, believe that imagination is again taking many away from the fundamental nature of Bitcoin and the importance of bitcoins.

There is untapped potential in Bitcoin technology as it is. I have come to believe that a large part of Bitcoin’s future and much of its disruptive potential lies in its ability to allow for microtransacting. Bitcoins, the inconvenient side-technology according to the hegemons of today, have and will continue to be vitally important to the future of the Great Bitcoin experiment.

What is microtransacting and why is it important?

There are a number of definitions of a “microtransaction”. According to PayPal, anything below 12 USD is a micro payment, and thus subject to higher fees. For most businesses in the US, the smallest, economically viable transaction is 10 USD, again due to the higher fees of payment processors such as Visa and Mastercard. In the bitcoin world, however, a microtransaction could be anything from 5 USD cents to thousands of a cent. In the case of 21 Inc.’s payment channel implementation, a microtransaction could be lower than .0004 USD cents at a bitcoin price of 400 USD (21). Such transactions, however, will be more appropriate for machine-to-machine payments, part of the Internet-of-Things vision.

I believe the smallest possible bitcoin microtransaction (announced on the Bitcoin network) should be defined as not being lower that the fee paid. The usual fee today is 0.0001 BTC or 4 USD cents at current prices (433 USD/BTC). Thus, one can consider the current commercial bitcoin microtransaction definition to be 4 USD cents. This is significantly lower than what was possible up to now and opens the doors to disruption.

On the commercial side — it allows for monetization of very small chunks of content/information, allows more efficient remittance and stimulates good online behavior.

A very interesting project that came to my attention recently was PopChest. It is a service that could help video creators quickly monetize their content. 15-seconds of a video are shown and in order for its full length to be made available — a small fee equal to 0.25 USD cents must be paid. Thanks to the immediate appearance of an unconfirmed bitcoin transaction, the time required for unlocking the video is equal to a few seconds. Moreover, the payee is does not leave any sensitive financial information that needs to be centrally secured by PopChest. It is quick, cheap, easy and secure. The same approach could be applied to many other kinds of content — basically everything that could be digitally represented (for article content monetization — check out BitMonetBitMonet).

Remittance is another strong use case for bitcoin, precisely because of the ability to send small amounts globally. I have a bit different view on remittance than the classic one. I am fascinated by the ability provided by bitcoin, to pay for my friend’s restaurant bill, real-time, me being in Sofia, Bulgaria and him dining in Toronto, Canada. One can send small chunks of value to anyone else, instantly and globally. The great thing is that a restaurant bill falls in the range of “large” transfer in the bitcoin world. I can pay for my friend’s coffee.

Bitcoin micropayments could also stimulate good behavior and more productive discussions in online forums or social networks. A great real-world example here is BoostVC-supported ZapChain (ZapChain). ZapChain is an online forum where users can interact by sending each other small amounts of bitcoins as rewards for good postings. If you like my comment, why don’t you buy me a candy bar, an ice-cream or a cup of latte? Receiving goods or services-redeemable currency is more substantial than a “Like”. Through ZapChain one can begin a discussion and award the best comments with certain amount of bitcoin bits (5000 is standard, equal to 2.2 USD at current prices). This is a great way to stimulate participants to refrain from “trolling” and produce more relevant content. Similar approaches have been applied by other forums, r/Bitcoin being one of them. Unlike ZapChain, however, r/bitcoin implements this through a ChangeTip functionality (ChangeTip).

ChangeTip itself is a product and catalyst of the emerging “bitcoin tipping” trend. A commercial company that has already secured 3.5 mln USD in seed funding, ChangeTip does not currently charge any bitcoin deposit/withdrawal fees. I believe that its value will be derived from the number of integrations with other websites that it establishes. This should bring in more “tippers” and thus grow bitcoin’s user base. Last week the company announced a new service — a decentralized web wallet. Integrating a decentralized wallet with its tipping services is a smart move and will make it easier for people to engage in bitcoin tipping from scratch.

ProTip is another interesting application of bitcoin microtransactions that I believe will be significant in the future. ProTip is an extension for Chrome that provides a decentralized wallet. When you visit a webpage, ProTip searches for bitcoin addresses and automatically highlights them green. If one is found, then the time you spent on that website is recorded. Thus, one can set up automatic periodic donations, based on time spend on websites or a pre-determined, fixed amount. Mr. Chris Ellis, who is trying to make running a full Bitcoin node more accessible, and Mr. Thomas Hunt, the person mostly known for his popular MadBitcoins YouTube channel, are the driving forces behind ProTip.

Microtransactions for non-profits

The possibilities that bitcoin microtransactions open could be considered as even more significant in the case of non-profit organizations. Apart from low fees for small sums, quick global transactions and privacy, bitcoin provides another significant advantage in comparison to legacy payments systems — transparency. A Bitcoin address is fully transparent and anyone can at any time check its balance. This is great for donors and charities — they can look at this “public IBAN” and know with 100% certainty that the information is correct, the Bitcoin network ensures it.

There are a number of charities around the world that currently accept bitcoin, including, Direct Relief, Red Cross, Greenpeace and the BitGive Foundation. If you want to learn more about the bitcoin-related experience of, you can check out this article.

Bitcoins for charity —

The noteworthy advantages of bitcoin micropayments stated above, became some of the fundamental reasons behind the creation of BitHope.orgthe first “bitcoin crowdfunding for charity” website in Europe. Through it, we are trying to help smaller non-profits acquire additional funding for their charity initiatives. There are numerous such organizations in every country and we believe that through bitcoin, the Bitcoin user base will be able to support their work.

But why don’t they just install a bitcoin wallet, announce the address on their website and start receiving donations?

Going into bitcoin is not that easy, as some of you may know. There are usually questions related to security and consequential exchange for fiat. For a small non-profit, these could be reasons to refrain from engaging with bitcoins. Moreover, even if a charity from (for example) Slovakia with staff of three people announce its BTC address publicly, who learn about it and will anyone trust them enough in order to donate?

At we go through a thorough KYC process with all charities willing to announce their campaign on the website, secure all bitcoins in our TREZOR hardware wallet and take care of the exchange for fiat. We make sure that funds are spent in accordance to the charitable goal stated in the contract between our two organizations and provide downloadable official documentation confirming all statements. Transparency is vitally important.

We hope that in the future, with the growth of the bitcoin user base, more and more non-profits will look in the direction of bitcoin and start benefiting from transparent, instant, cheap and secure microtransactions. Much like all the other projects in the sphere, is pushing bitcoin to the mainstream by showing people what the Bitcoin network can offer them now. Imagination is a great thing, but with bitcoin — the future is now.



Vlad Dramaliev

Marketing Manager @ Mettalex | Founder @ BitHope Foundation | Founder @ Sofia Crypto Meetup | Former Director of Communications @ æternity