The Integration Of Micropayments With Cryptocurrencies

Danny Boahen
Feb 5, 2019 · 3 min read

The invention of the blockchain technology and Bitcoin gave rise to the next generation of the micropayment network. Just as we know, the Blockchain technology is referred to as a decentralized database of transactions.

The database concurrently exists on diverse, if not thousands, of independent computers. With the aid of this Blockchain technology, the micropayment system has been built to execute payments.

What are Micropayments?

Micropayments were built at first to pay off diverse copyright holders for their compound work. From there, the system kicked off, and lots of it were proposed and ultimately developed. However, none had any successful breaks in the commercial sphere. There was a major reason why the micropayment faced issues back then.

The reason why its emergence had issues was that the transaction cost was not low. Back then, in the banking institution, vendors were charged 10–30p for each transaction. With this, the vendors could not keep up with the competition in the micropayment establishment model.

From then onwards, the system stayed within niches that were basically small. But, with the advent of the Blockchain technology, all that has changed today.

Simply defined, a micropayment is a monetary transaction with a relatively decreased amount. They are basically used in buying goods and services on the internet. These goods and services range from;

  • Books
  • Memberships
  • Music, and so on
  • Fee settlements

Going by its name, Micropayment transactions are relatively small with amounts of $10 or even below, dependent on the use case scenario.

Majority of its payment providers offer APIs at trader’s websites. These APIs link those who want to purchase products to the website of the provider. The buyer will ultimately drop his or her financial details for processing to be executed. Finally, the details dropped will be routed to the account of the vendor.

Micropayments With Cryptocurrency

Micropayment provides a different option that has the prospects to back up quality contents. This is done without users being trapped in a distinct subscription for a long term.

The idea behind micropayment is to spend just a small amount every time contents are viewed.

Meanwhile, Cryptocurrencies are plagued with the issue of scaling, and this makes a large number of transactions take up lots of computing strength and acquire high fees. And so, if transferring some cents for an article and a large percentage is eaten up in fees alone, it turns into an inefficient way of funding the content.

To bypass this issue and to write little transactions to Blockchain, diverse organizations make use of channels. Instead of documenting each distinct transaction directly to the Blockchain and acquiring fees for each, the channel payments are documented as a collection. This leads to a micropayment channel been built.

When it is built, a particular number of Cryptos are locked in it and the sender signs on every single payment. For the receiver, they can choose to withdraw each signed amount or wait until the channel gets closed and take the full amount.

In a case where you as the receiver decides to wait for the channel to get closed before documenting the amount to the Blockchain, it reduces the number of transactions. This makes it more effective and affordable.

To Wrap It Up

This micropayment system has been able to make transactions simple and easy. Individuals can now pay all over any platform of their choice. This is done with a distinct computerized wallet. With the wallet, there is no need to create another account for each website.

See you with the next articles and updates.

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We are building the first blockchain-based remittance platform for financial services.

Danny Boahen

Written by

Head of Business Operations & Co-Founder at ETHA



We are building the first blockchain-based remittance platform for financial services.

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