Micro-payments new avenue for Bitcoin.

Is Bitcoin The Future of Micropayments?


A micropayment is a type of payment that uses relatively small amounts of money to purchase every day items, such as food and drink. Now that bitcoin’s user base is growing, it may end up being the “missing link” that makes micropayments a viable option for everyone.

Also Read: Thoughts on Bitcoin Blocksize Economics.

The micro-payment idea originated with banks in the early 90’s. It was a pretty solid idea; load around 150 dollars on a card to buy things you need, which is safer than using a credit card and more convenient than using cash. Around 1995, micropayments were put into practice in the US and Belgium. For this article, I will solely focus in on the Belgian space, since the micropayment system was recently phased out.

One of the most famous micropayment systems in Belgium was called Proton. It grew in popularity after 1996 but around 1998 there were some questions about the security of the card. If the amount that you wanted to charge up was small enough, you could do that without giving your pin number. The banks corrected that security flaw immediately. Nevertheless, the damage had been done to Proton’s image.

Payment methods in 1999. www.vub.ac.be and www.kubrussel.ac.be

Payment methods in 1999. www.vub.ac.be and www.kubrussel.ac.be

In a graphic, created by the Catholic university Brussels, we can see that Proton was used much more that Visa or MasterCard. The reason was that proton didn’t have any fees for a certain period of time. The fees depended on the issuing bank, but most banks kept them at a bare minimum. This graphic was built on 10.000 bits of data about transactions in the region of Brussels. This makes the graphic pretty accurate with only a + or – 1% mistake margin.

After 2001, Proton’s popularity began to decrease, so banks began putting fees on the system. The card users were hit by fees as well as the surcharge for merchants and retailers that used proton terminals in their shops. This eventually led to the slow but certain death of Proton at the end of 2014.



Though banks gave up on micropayments, other sectors didn’t abandon that idea so easily. The gaming sector picked up where banks left off and modified micropayments to suit their needs. These micro transactions were successfully introduced in MMORPGS and other MMO’s, and then spilled over to other games, like Assassin’s Creed Unity. Steam and PlayStation Network have integrated micro transactions as well. Some game reviewers ( skip to 26.39 for the part of micro transactions), and the gaming community in general, have commented on this recent development.

The core points of micro payments are: fast, easy and secure way to pay for everyday items that do not exceed the price of 125-150 dollars, euros or whatever other local currency. Bitcoin is fast, easy, secure and has extremely low fees — if any.

For businesses that use bitcoin in their business models, it is more profitable since the equipment is already available and much cheaper than any other payment option. A small business holder has to follow certain rules and have a certain amount of payments per day or week to be able to have a Visa or MasterCard terminal. If the business doesn’t generate enough payments, it will get fined by the issuer of the credit card terminal. That is one reason you will not see credit card terminals at many small, local stores.

So, if Bitcoin is such a great tool for micro payments, why isn’t it being implemented everywhere? Trust is one big issue that Bitcoin needs to overcome.  There have been a lot of scams associated with Bitcoin in the past, like companies promising amazing products but never fulfilling pre-orders. Rumors of pending bankruptcy are floating around the Bitcoin foundation. If the rumors are true, then Bitcoin’s reputation will take another hit in the mainstream.

Another huge issue that we as a community need to address is education. This is an observation made by prominent members inside and outside the Bitcoin world. We need to educate the general public about the uses of Bitcoin and what the benefits are.



Regardless of the troubles that Bitcoin has, it is still the best option for micro payments that is currently available. It is fast, secure, has low fees, and is advantageous for both consumers and business owners. There are already start-ups working to improve Bitcoin’s viability in every day industries like parking, vending machines, and laundry.

However, some might point out that as Bitcoin’s usage grows, the wait time for miner confirmations will get longer. To make sure Bitcoin will remain a fast and reliable micropayment option, maybe it is prudent to create a separate blockchain or a sidechain that is linked to the main Bitcoin blockchain. Then, the blockchain no longer be a single chain, but a series of interlocking blockchains. In doing so, the pressure on the main blockchain will be reduced, making confirmations faster. Whatever the case, it will be quite interesting to see what start-ups will be come up with regarding micropayments.

Is bitcoin a good currency for micropayments? Let us know in the comments below!

Sergio Schout

Sergio Schout

Serge, aka Sergio, has been travelling the world since he was 6. Thailand, India, Sri Lanka, Malaysia, Singapore, java, Sumatra, Bali, Japan, US, Entire European region, etc. are a couple examples of his travel destinations. He has been curious about different cultures and practices. This curiosity has led him to pursue a couple of university degrees. Serge has a couple master’s degrees from top European universities. While attending university, he wrote a lot of scientific papers concerning socio-economic and financial developments in the past and present. During his studies at university he offered his free time up to do volunteer work, along with some friends. They helped the homeless get back on their feet ( some of these "homeless" now have small companies of their own and Sergio has good connections with them). It was at during his studies at university, in 2009, when he first heard about "Bitcoin". Being a coin collector and economic expert, he was intrigued by it and is active in the Bitcoin and digital currency community ever since. He translated the Bitcoin comic from Spanish to English and he is also using his connections to get the comic into the Belgian and Dutch comic market, he is an official member of the Belgian Bitcoin Association and he is a freelance investigative journalist that has written under his own name as well as under a pseudonym for a multitude of news outlets. After graduating he was immediately hired by the university that he graduated from. After moving on from that research position he was hired by a famous European think-tank as a researcher. His hobbies are: dancing (from Argentine tango to Zouk), collecting coins and determining them, writing articles, translating, proof reading and doing scientific research. In 2014 Sergio and Jp combined their forces and created the crypto news outlet called Cryptoarticles. Sergio attended most of the European Crypto currency conferences, where he made a lot of connections and friends along the way.

  • votingmachine

    I don’t think of $100 as a micro-payment.

    I can see a role for bitcoin in micropayments. Fees in micropayment may be higher than bitcoin fees (and bitcoin currently is fee paid by bitcoin printing). I’ve used a parking app that charges at a high percentage. I think something like $0.35, which is quite a lot for $1 parking meter payments. Generally, I keep some quarters in my car.

    But micropayment are that level. Not $100-ish.

  • johnwratcliff

    I expect bitcoin will be the backbone for micropayments but the network itself should not be used directly for that purpose. Using side-chains or other forms of off-blockchain transactions would be preferable so as to not clutter the bitcoin network with a lot of noise. And, when I say micropayments, I really mean just that. Imagine getting one penny every time someone reads an article you wrote online. In aggregate that can really add up and be a great way to monetize content.

  • DigiBytefan

    We have learned so many things from Bitcoin in the past.Now DigiByte is working on DigiSpeed this will match visa in transaction carrying capacity!

    1) DigiByte block timing will increase from 30 seconds to 15 seconds.
    2) DigiByte block size will increase from 1 MB to 10 MB initially, with built in future increases.
    3) Custom block propagation code based upon Microsoft research will dramatically increase network efficiency.
    4) DigiByte transaction capacity will increase from 140 TPS to 5800 TPS (Visa averages 1736 TPS).
    5) DigiByte reward will stay on track for 21 Billion DGB in 21 Years.
    6) MultiShield will be improved even more to allow for even greater security (90% of 1 of DGB’s 5 mining algos, plus 51% of others will be required for an attack) making MultiShield even more secure.

    These changes will make DigiByte the most secure, fastest and largest transaction carrying-capacity, decentralized, POW cryptocurrency in existence.

    Official website http://www.digibyte.co/


  • mike

    As wonderful as bitcoin is, DigiByte is much better suited for making micropayments, it was designed for this purpose. DigiByte out performs both bitcoin and Visa and this is the truth so I hope you don’t pull this comment down like you have previous ones.

  • Milly Bitcoin

    Bitcoin transaction fees are not cheap and the system was never designed to be a low fee system. It was designed to be a trustless system and fees and speed of use are the tradeoffs. It appears to be a low fee system currently because the currency is being distributed via “block rewards” to miners who record the transactions.

    Services sitting on top of Bitcoin can use centralized systems to transfer micropayments such as changetip. However, these services require fees so those services can continue to operate and things like changetip do not have sustainable business model unless they find other ways of making money from running the tipping service.