The Micropayment Economy: What It Is, and Why It Matters

When we talk about Bitcoin, the focus is often on how it’s a store of value. But this loses sight of one of the most compelling use cases for cryptocurrencies that exist, and one that’s still being properly explored — micropayments.

In case you’re unfamiliar with the term, micropayments, or microtransactions, refer to transfers of small amounts of money. There’s no line of demarcation here — whereas some will class a micropayment as being under $1, others would say it’s for payments of under $20.

You may be wondering why existing methods for digital payments can’t fit the bill. After all, the likes of PayPal allow payments of any amount to be made using a credit card. But here’s the problem: transaction fees can be punishing through this e-commerce site — especially when fiat currencies need to be converted along the way.

Blockchain has delivered hope that micropayment systems can be created where small payments only cost fractions of a cent. This will become particularly important as the Internet of Things continues to gain traction.

Let’s take a look at some of the potential applications for micropayments — as well as the limitations that stand in the way of blockchain technology delivering it.

What Are the Main Use Cases for Micropayments?

There’s a demand for small payments to be made in real time with low transaction costs…and new business models are emerging all the time.

Through projects such as the Brave web browser, we’ve seen how altcoins can be used to reward users with digital currency whenever they opt in to view ads. Startups like Twetch have emerged which allow crypto enthusiasts to tip their friends on social media — giving them recognition for content that they enjoyed reading. 

Crypto-focused games have also been gaining in popularity, especially those where collectibles in the form of non-fungible tokens are exchanged between players. Transaction sizes in these games are usually small, meaning that inexpensive payment channels are needed.

It’s worth remembering that Bitcoin transactions can be tiny thanks to how this cryptocurrency is divisible. One BTC can be divided into eight decimal places — and 0.00000001 BTC is known as a satoshi. Assuming that a whole Bitcoin was worth $10,000, a single satoshi would be worth $0.0001 — perfect for small transactions.

But this brings us neatly on to the limitations that are suffered by virtual currencies.

Why Is the Bitcoin Network Ill-Suited to Microtransactions?

There are challenges in making micropayments mainstream.

Some argue that Bitcoin is ill-suited to be used for microtransactions because of how it is so volatile. This all harks back to the story of Laszlo Hanyecz, who spent 10,000 BTC on two pizzas back in 2010. Back then, this cryptocurrency was worth about $43 — but when Bitcoin shot up to all-time highs in 2017, it would have been worth $200 million. Critics rightfully argue this: won’t people be deterred from using BTC for small payments in case its value surges in the future? 

As a result, the attention then shifts to other cryptocurrencies such as Ethereum. But this blockchain has been fighting battles of its own… most notably scalability. For micropayments to be effective, the ecosystem that processes them would need to be able to handle millions of transactions per second, and in real time. ETH 1.0 has suffered congestion several times over the years, meaning it isn’t appropriate for microtransactions in its current form. It’s hoped ETH 2.0 will help fix scalability concerns.

The original memecoin, Dogecoin, is seen as one of the most popular ways to participate in the micropayment economy, as the coin is already popular for tipping on both Twitter and Reddit. However, Dogecoin is a coin based on a Shiba Inu dog internet meme, and it’s unclear how seriously it takes its future as a large-scale micropayments contender.

Even though the transaction costs seen through fintech giants such as Visa are much, much higher, blockchains need to prove that they can cope with just as many payment messages as debit card networks can — and instantaneously. All of this needs to be achieved without affecting accessibility, meaning that the micropayment solutions on offer must be easy for everyday consumers to understand.


  1. I’ve learn some good stuff here. Definitely price bookmarking
    for revisiting. I surprise how so much attempt you set to create this
    type of wonderful informative web site.

  2. Hi it’s me, I am also visiting this web page daily, this site
    is really pleasant and the users are truly sharing nice thoughts.

  3. Greetings I am so delighted I found your web site, I really found you by accident, while I was researching on Aol
    for something else, Anyhow I am here now and would just like to
    say kudos for a fantastic post and a all round interesting blog (I
    also love the theme/design), I don’t have time to browse it all at the
    minute but I have book-marked it and also added your RSS feeds, so when I have time I
    will be back to read much more, Please do keep up the
    superb job.

  4. I do not even know how I ended up here, but I thought this post
    was great. I do not know who you are but definitely you’re going to a famous blogger if you are not already 😉 Cheers!

  5. I love your blog.. very nice colors & theme.
    Did you design this website yourself or did you hire someone
    to do it for you? Plz respond as I’m looking to design my own blog and
    would like to find out where u got this from.
    thank you

  6. Having read this I believed it was extremely informative.
    I appreciate you spending some time and energy to put this informative article together.
    I once again find myself personally spending way too much time both
    reading and commenting. But so what, it was still worthwhile!

    quest bars quest bars

  7. You actually make it seem so easy with your presentation but
    I find this matter to be actually something which I think
    I would never understand. It seems too complex and very broad for me.
    I’m looking forward for your next post, I will try to get the hang of it!

    cheap flights cheap flights

Leave a Reply

Your email address will not be published.