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Author Topic: One man's micropayment is another man's daily wage.  (Read 2198 times)
hello_good_sir
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June 14, 2011, 07:42:06 AM
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Bitcoin has the potential to be the global currency.  However it has several usability issues.  One such issue is the minimum transaction size and the non-proportional fees.  (Speaking of fees, is there a single sentence explanation?)

I have seen some discussion on micropayments.  I believe that eventually everyone will come around to the idea that we need micropayments.  However I want to speed this consensus up by basically remarking that there is no such thing as a micropayment.

40% of the world population lives on less than 0.1B per day.  Ok so these people are probably too poor to use bitcoin anytime soon.  What about....

Israel, Czech Republic, Portugal, and Poland?  The median income in all of these countries is less than 2B per day.

In Turkey and Mexico the median income is less than 1B per day.

Want to buy a 2004 Ford Taurus with bitcoin?  I live in Maryland.  Send me a private message if interested.
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June 14, 2011, 08:03:11 AM
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Unless they have enough to afford a computer and a broadband connection, they won't be getting on the Bitcoin bandwagon anytime soon. Bitcoin is a very classist currency.

EDIT: A Bitcoin client usable from smartphones or even normal feature phones (maybe via SMS?) would change that. Mobile devices are a lot easier to come by.
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June 14, 2011, 08:06:43 AM
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Unless they have enough to afford a computer and a broadband connection, they won't be getting on the Bitcoin bandwagon anytime soon. Bitcoin is a very classist currency.

Bitcoin has created the technological class. Nerds of the world unite and rule!! Cheesy

Quote
EDIT: A Bitcoin client usable from smartphones or even normal feature phones (maybe via SMS?) would change that. Mobile devices are a lot easier to come by.

There is Bitcoin my email already that can be used by going to a internet shop, but its not very useful for micropayments. There is also Bitcoin in paper, but I dont know how easy to accept that will be.
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June 14, 2011, 08:56:21 AM
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Here's more info on transaction fees:
 - http://en.bitcoin.it/wiki/Transaction_fee

Withing days (hours?) version 0.3.23 of the Bitcoin client will be out and the minimum transaction fee will be reduced to 0.0005 BTC.  That's about a penny's worth of bitcoin.

The decentralized nature of Bitcoin might make the fee a little harder to understand.  Because there is no central authority to mandate the fee amount, bitcoin lets the miners individually establish whatever fee, if any, they wish to require.  

If the fee is too low and the miner wishes to exclude any transactions because the fee is too low, then that transaction will have to wait until a future block is solved by either a miner who is more generous or a miner who is more hungry and will accept the fee that was too small for the earlier miner.

Though it would be nice if bitcoin could also handle really small transaction amounts, it wasn't designed to do so.  There is an expense to transmitting and storing these ultra-small transactions and though bitcoin is an incredibly cost-effective replacement for payment networks, it probably is too expensive for nickel and penny-sized transactions.

Bitcoins still works well for a service that charges really small amounts, but instead of passing each transaction on to bitcoin, the service has an account for the user and bitcoin is used simply as the method to top up the account, or used to withdraw funds after some threshold is reached.  

witcoin.com is one example of a microtransaction service where actions cost even less than a penny's worth of witcoins (the name for bitcoins held in a user account on witcoin).  When earnings are significant enough to warrant a withdrawal, then withdrawing to a bitcoin address can be made.

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June 14, 2011, 12:21:36 PM
 #5

Bitcoin has the potential to be the global currency.  However it has several usability issues.  One such issue is the minimum transaction size and the non-proportional fees.  (Speaking of fees, is there a single sentence explanation?)

I have seen some discussion on micropayments.  I believe that eventually everyone will come around to the idea that we need micropayments.  However I want to speed this consensus up by basically remarking that there is no such thing as a micropayment.

40% of the world population lives on less than 0.1B per day.  Ok so these people are probably too poor to use bitcoin anytime soon.  What about....

Israel, Czech Republic, Portugal, and Poland?  The median income in all of these countries is less than 2B per day.

In Turkey and Mexico the median income is less than 1B per day.

The median income in Israel was about 5 Bitcoin per day back in 2006 (at 20 Bitcoin per $), just after the UK, I'm pretty sure it's risen up since then.

Please do not pm me, use ron@bitcoin.org.il instead
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June 14, 2011, 09:28:32 PM
 #6

yes, i think when a p2p currency hits cellphones in the developing world, it will be a Really Big Deal. Cell phone minutes (and cards) are often used as currency in parts of Africa (ie; Zimbabwe) and money can already be sent by SMS (ie; M-Pesa in Kenya and elsewhere). In some ways this is much more advanced than even the US, etc (sure you can use paypal, etc from your smartphone, but can you text a few bucks to your bartender for a beer?

http://en.wikipedia.org/wiki/M-Pesa

The digital divide is starting to be bridged, but it will happen with mobile phones, which are now ubiquitous around the world not with FIOS to your door.
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June 14, 2011, 11:32:18 PM
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Bitcoin has the potential to be the global currency.  However it has several usability issues.  One such issue is the minimum transaction size and the non-proportional fees.  (Speaking of fees, is there a single sentence explanation?)

I have seen some discussion on micropayments.  I believe that eventually everyone will come around to the idea that we need micropayments.  However I want to speed this consensus up by basically remarking that there is no such thing as a micropayment.

Micropayments of arbitrarily small value sizes are already handled well by online wallet services such a Mybitcoin.com.  A secure cellphone interface, such as is used by M-Pesa, will come much quicker, and be more widely adopted than a cellphone client.  I want an independent smartphone client, but it's not realisticly needed for the vast majority of users.  These 'bitcoin banks' are, truthfully, a partital centralization of the Bitcoin system; but the key is that the user always has the option of switching wallet service providers or using his own client. 

These wallet services will become somewhat ubiquitous, and over time as the Bitcoin economy grows, the current p2p network will trend towards being a form of major settlement backbone; while the average user with a cell phone, wallet services provider (which could easily be his actual cell service provider, as M-Pesa is actually run by Vodaphone) and a cell phone app to securely interface with his wallet service, and not directly to the Bitcoin network.  As this occurs, wallet service providers are likely to develop their own parrallel network to allow them to interact directly, and thus reduce the number of bitcoin transactions that actually must hit the network.  Imagine it like this...

Joe has an account on Mybitcoin.com, and a widget on his phone to let him sent coins to any bitcoin address.  Jane has an account on MtGox, and Ron has a client running on his home computer.  Both Jane & Ron need to send a small amount to Joe, because they are sharing the cost of a dinner out (before their California 3-way) and Joe is paying the check with local fiat currency, and the others are paying him back.  Jane uses her cellphone to tell MtGox to send some to Joe's address.  MtGox immediately checks it's own records to see if that is an address that belongs to a MtGox member.  It's not, so the next step is to reach out across the parallel wallet services network to see if that is an address connected to an account with one of it's competitors for which it has an agreement of mutual settlement.  Mybitcoin responds that it belongs to a member.  MTgox doesn't care which member, only that they have a settlement agreement with Mybitcoin.  So Joe's Mybitcoin account is credited, Jane's is debited, and sometime later the accumulated imbalances between MtGox and Mybitcoin are settled in one, much larger, lump sum transaction.  This all happens before Jane can pull her finger away from the "send bitcons" button.  If both Mybitcoin and MtGox both have a large user base (each is already in the tens of thousands) then most of the transactions between users of each tend to balance out, so settlement would become rather rare.  However, Ron uses his cellphone remote control client (or a native android client) to send Joe theat same amount over the Bitcoin p2p network directly.  Ron doesn't trust wallet services, which is his right, but then must (likely) pay a transaction fee to make certain that Joe will have his coin before the night is over, since Mybitcoin won't credit Joe's account before at least a few confirmations.

I hope that I have illustrated here how Bitcoin can serve as a micropayment currency system into the indefinate future, even though the above scenario isn't yet possible.  The economics provide for the above scenario to be probable.  And the only thinkg that prevents this from happening is a secure and standardized parallel communications network for which bitcoin wallet services can develop theses kinds of interparty trust agreements around.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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June 15, 2011, 12:43:45 AM
 #8

Bitcoin has the potential to be the global currency.  However it has several usability issues.  One such issue is the minimum transaction size and the non-proportional fees.  (Speaking of fees, is there a single sentence explanation?)

I have seen some discussion on micropayments.  I believe that eventually everyone will come around to the idea that we need micropayments.  However I want to speed this consensus up by basically remarking that there is no such thing as a micropayment.

Micropayments of arbitrarily small value sizes are already handled well by online wallet services such a Mybitcoin.com.  A secure cellphone interface, such as is used by M-Pesa, will come much quicker, and be more widely adopted than a cellphone client.  I want an independent smartphone client, but it's not realisticly needed for the vast majority of users.  These 'bitcoin banks' are, truthfully, a partital centralization of the Bitcoin system; but the key is that the user always has the option of switching wallet service providers or using his own client. 

These wallet services will become somewhat ubiquitous, and over time as the Bitcoin economy grows, the current p2p network will trend towards being a form of major settlement backbone; while the average user with a cell phone, wallet services provider (which could easily be his actual cell service provider, as M-Pesa is actually run by Vodaphone) and a cell phone app to securely interface with his wallet service, and not directly to the Bitcoin network.  As this occurs, wallet service providers are likely to develop their own parrallel network to allow them to interact directly, and thus reduce the number of bitcoin transactions that actually must hit the network.  Imagine it like this...

Joe has an account on Mybitcoin.com, and a widget on his phone to let him sent coins to any bitcoin address.  Jane has an account on MtGox, and Ron has a client running on his home computer.  Both Jane & Ron need to send a small amount to Joe, because they are sharing the cost of a dinner out (before their California 3-way) and Joe is paying the check with local fiat currency, and the others are paying him back.  Jane uses her cellphone to tell MtGox to send some to Joe's address.  MtGox immediately checks it's own records to see if that is an address that belongs to a MtGox member.  It's not, so the next step is to reach out across the parallel wallet services network to see if that is an address connected to an account with one of it's competitors for which it has an agreement of mutual settlement.  Mybitcoin responds that it belongs to a member.  MTgox doesn't care which member, only that they have a settlement agreement with Mybitcoin.  So Joe's Mybitcoin account is credited, Jane's is debited, and sometime later the accumulated imbalances between MtGox and Mybitcoin are settled in one, much larger, lump sum transaction.  This all happens before Jane can pull her finger away from the "send bitcons" button.  If both Mybitcoin and MtGox both have a large user base (each is already in the tens of thousands) then most of the transactions between users of each tend to balance out, so settlement would become rather rare.  However, Ron uses his cellphone remote control client (or a native android client) to send Joe theat same amount over the Bitcoin p2p network directly.  Ron doesn't trust wallet services, which is his right, but then must (likely) pay a transaction fee to make certain that Joe will have his coin before the night is over, since Mybitcoin won't credit Joe's account before at least a few confirmations.

I hope that I have illustrated here how Bitcoin can serve as a micropayment currency system into the indefinate future, even though the above scenario isn't yet possible.  The economics provide for the above scenario to be probable.  And the only thinkg that prevents this from happening is a secure and standardized parallel communications network for which bitcoin wallet services can develop theses kinds of interparty trust agreements around.

Brilliant! But Applebees should just take the BTC from the get go...lol.
I'll test the iphone app wallet Smiley

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   Fingerpick      #       /|\
       for            #     (o\_)=="#
    BitCoins      _#_      / \
                     ( # )     \  \
                     / 0 \     ~   ~
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killer2021
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June 15, 2011, 08:48:28 AM
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Unless they have enough to afford a computer and a broadband connection, they won't be getting on the Bitcoin bandwagon anytime soon. Bitcoin is a very classist currency.

EDIT: A Bitcoin client usable from smartphones or even normal feature phones (maybe via SMS?) would change that. Mobile devices are a lot easier to come by.

There are also 5 BILLION people who use cell phones. To put that in perspective, only about 1.3 billion people have internet. For bitcoin to be successful IT HAS to able to do payments from mobile to mobile. In fact, if people in developing countries use bitcoin then it could be a game changer for bitcoin. Would be pretty hard to say, "ban bitcoin." When 3-4 billion people use it as their primary currency. It will also foster a HUGE bitcoin economy.

http://en.wikipedia.org/wiki/List_of_countries_by_number_of_mobile_phones_in_use

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rahl
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June 15, 2011, 05:27:59 PM
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I have seen some discussion on micropayments.  I believe that eventually everyone will come around to the idea that we need micropayments.  However I want to speed this consensus up by basically remarking that there is no such thing as a micropayment.

BitCoin does not need to support micro-payments. It is more efficient to do that in a centralized system (the actual cost of sending payments around between accounts in the same centralized server cluster will always be way lower then doing it in a p2p network) and a centralized system will work fine for it because of the low amounts that you need to risk in a micro-transaction only wallet are low (also dumping BitCoin to an off-site location to avoid sieazure is way easier then dumping gold). So third party BitCoin based payment solutions will solve this issue.

The reason there are very few of those now is that a 0.01B transaction still seem the clear pretty fast without paying any fee. You can just download the right version of the client and you don't need to pay a service fee to the micro-payment guy at this time. Once transactions actually get expensive these services will start to pop up...

Those 5 billion people may have mobiles but they don't have smartphones. They need to get smartphones first ... then they can use one of those micro-transaction services on it ...

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June 15, 2011, 05:37:28 PM
 #11


Those 5 billion people may have mobiles but they don't have smartphones. They need to get smartphones first ... then they can use one of those micro-transaction services on it ...

Smartphones are not necessary for m2m micropayments if the cell provider is the primarly wallet service provider.  The necessary functionality is already present in any cell phone that I've ever used, it's just that that function is only used by the cell service provider to permit the user to manage his cell service account.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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