LeoGlossary: Micropayments

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Small transactions that are under a dollar (USD). They can even be as small as a fraction of a cent. These are usually carried out online.

Micropayments carry great potential to enter areas not previously embarked upon:

  • distribution of digital rights
  • royalties
  • in-game purchases
  • online tipping
  • coordinate devices connected via the internet of things (IoT)

Cryptocurrency is ideal for this purpose since many are designed with very small units. An example of this is Bitcoin with satoshis.

The use of blockchain allows for the tracking of all transaction but also having different assets such as NFTs in the wallets.


The term micropayment goes back before the World Wide Web. It was coined by Ted Nelson as a way to pay various copyright holders for compound work.

Other ideas sprung out of this. One of the most obvious was to use micropayments as a way to pay for processing power. At the same time, others thought of wall to sell stuff online. This also led to the belief that it could be used as a replacement for advertising.

In spite of the early ideas, the success of any initiatives was lacking. The problem is the impracticality of doing transactions of this nature since transaction fees always seem to get in the way.

Over the past few decade, this topic was discussed but little was done in practice.


The idea of cryptocurrency in the realm of micropayments is encouraging due to the fact that many have smaller units as compared to fiat currency counterparts. For example, most of the latter goes out two decimal points. This is something that is rare in cryptocurrency. Most go out a minimum of 3 with Bitcoin going out 8 places.

Another advantage to cryptocurrency might be a new way to handle transaction fees. Through the use of tokenization, there is the possibility to allot for the running of the network without a direct per transaction charge. This is not commonplace since most networks, include the EVMs, have fees as part of the model.

There is one, however, that seeks to alter this. Hive utilizes a token tied to the staked of the base layer coin. Through this, called resource credits, a system of quantified activity is established. Each feature that is utilized at the blockchain level has a cost associated with it. Since that is applied in resource credits, which are non-tradeable, it is not a true payment. Instead, the credits regenerate over time.

This means that one is not truly charged for transactions. It is a system that could open the door for micropayments.


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