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Author Topic: Micropayments and scalability  (Read 654 times)
max
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August 07, 2011, 08:54:51 AM
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I know Bitcoin is not designed for micropayments. But also knowing almost instant secure transactions are possible with Bitcoin I wonder what would happen to Bitcoin network if people would start using bitcoins for micropayments? Could it still scale or would it become unusable? Maybe transaction fees would raise accordingly and made it unusable for micropayments?
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fennec
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August 07, 2011, 11:40:23 AM
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If I remember correctly, fees are only necessary to speed up payments, which would mean fees won't eliminate micropayments (though they might not be fast).

I'd also like to know about Bitcoin's scalability in this sense. What's stopping someone from flooding the network with a huge number of micropayments?

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BitcoinBug
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August 07, 2011, 03:03:19 PM
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As Bitcoin scales and matures, fees will take dominant role. I have a feeling fees in the range of 5 dollar cents will be required for successful transactions, but that too will be part of supply-demand. Greater demand, higher transactions fees. And microtransactions would definitely raise demand. I believe Bitcoin will rule the microtransaction world for the next year or two, but later not so much. Maybe some hybrid centralized token system will take its place.
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August 07, 2011, 03:13:53 PM
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As Bitcoin scales and matures, fees will take dominant role. I have a feeling fees in the range of 5 dollar cents will be required for successful transactions, but that too will be part of supply-demand. Greater demand, higher transactions fees. And microtransactions would definitely raise demand. I believe Bitcoin will rule the microtransaction world for the next year or two, but later not so much. Maybe some hybrid centralized token system will take its place.
Indeed. It depends on your definition of "microtransaction". Some people call transactions of $1..$5 "microtransactions" (for example, to pay for ingame items). For those, bitcoin is very useful, and will remain useful for a long time. The fee wil be way less than what Paypal - or god forbid, SMS providers - charge.

But for really very small amounts (<$0.10), it is not well-suited and that will become even worse as volume ramps up.

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