Micropayments are something we’ve had available to us forever, there’s no reason a custodial wallet like PayPal can’t offer them - or couldn't have offered them at any point in the last two decades. People don’t want them. And they certainly don’t want them at up to $60 a pop haha. Or over LN which still requires an on chain transaction to open a channel.

Nick Szabo has a great write up that outlines my thoughts exactly [1]

[1] https://nakamotoinstitute.org/static/docs/micropayments-and-...

Nobody used micropayments when they were a hassle. Today there are already Lightning-based apps breaking down that barrier, live in production using mainnet BTC.

Spinx[0] and Zion[1] are chat apps that offer room hosts the option to set a fee for joining and/or sending messages to a channel, for the purpose of spam reduction. Another cool feature already live in the app is pay-per-minute streaming of podcasts and videos.

[0]: https://sphinx.chat/ [1]: https://www.getzion.com/

The reason that people typically don't accept tips in anything but crypto is that it would eliminate the pseudonymity that crypto would offer...

Also accepting tips via CC exposes you to chargebacks, were people can actually financially damage you (ex. they donate and chargeback, they get their money back, you get nothing + a ~$20 chargeback fee)

Also credit cards are an extraordinarily expensive way to send fifty cents.

Stripe charges 2.9% plus 30 cents per successful transaction.

So your fee on a fifty cent micropayment would be 63%.

The lightning network would be free or perhaps one sat, which would be 0.08% of a fifty cent transaction.

Lightning Network is not a side chain. It's basically a way to interactively update transactions between nodes before they're broadcasted and settled on blockchain. It forms a network where payments are routed through nodes without having to trust anyone. It's scalable and private.

You conveniently forgot to mention that you have to have a lightning node connected to the network 24/7 to protect yourself from fraud. Or, you have to use and trust a third party node.

Can you elaborate on this? I was under the impression that each update had to be signed. Why then would you have to be connected 24/7 to protect yourself from fraud?

Everytime the balance in the channel is updated, a new transaction is created and signed. If one party in the channel publishes an old state ( which they could have more bitcoin than they should), you have to be online to detect it and publish the latest one, in which case they lose all their bitcoin for publishing an old state as punishment.

Technically you don't need to be online 24/7, just often enough to detect the fraud before the timeout, default is two weeks I think. Or you can pay someone a tiny fee to monitor the blockchain for someone publishing an old state for you.

In practice, nobody is trying to commit fraud, because : a) if you get caught you get punished severely b) most channels do not have enough BTC in them

Lightning is for small, instant, fast payments, average channel size is about 0.02 BTC.

The bigger problem is how to maintain up to date backups, and not accidentally publish an old state when recovering from a crash. We're working on it. Taproot bitcoin upgrade brings some interesting improvements we can build upon to improve things further.

EDIT: forgot to mention this is only really a problem if you want to run your own non custodial solution ( which I do). For most people, using a 3rd party custodial solution for their low balance hot wallet seems to be the norm.

> pay someone a tiny fee to monitor the blockchain

A.k.a trust a third party.

> For most people, using a 3rd party custodial solution for their low balance hot wallet seems to be the norm.

Just like Venmo or PayPal?

If you want to eliminate trust, with Bitcoin and lightning you can. If for you it's too much hassle, you don't have to. Unlike every single other blockchain, in which you have no choice but to trust centralised solutions, because they are centralised. See Solana switching their blockchain off for a while, lol [1]https://coingeek.com/solana-blockchain-implodes-what-happene...

>>If you want to eliminate trust, with Bitcoin and lightning you can. If for you it's too much hassle, you don't have to. Unlike every single other blockchain, in which you have no choice but to trust centralised solutions, because they are centralised.

*Bitcoin Cash enters the chat*

Solana bad, therefore Bitcoin good?

> A.k.a trust a third party.

True, but in a very limited sense. You're trusting a third party to protect you from your counterparty posting an out of date state. And adding further complexity, your counterparty gets punished if they get caught publishing this state, and they have no way of knowing if you are watching or not.

So, from a game theory perspective, it is unlikely for this to even come into play.

Oh, and you can technically have multiple third parties doing this.

There was recently a paper published on Inherited IDs, which proposes changes that would not only solve the on-chain scaling problem, but also eliminate the need for watchtowers: https://github.com/JohnLaw2/btc-iids/blob/main/iids13.pdf

Thanks. Where can I get materials on Lightning and its code?

A dishonest node can try to settle an outdated state of the channel on the main chain. You have 24 hours to stop that from happening. So, if your node is offline for longer than 24 hours, you could lose all the money tied up in the channel.

Isn't this what Brave tried doing in their browser circa 2016?

Doesn't seem like micropayments fit the current consumer mindset the way periodic subscriptions do.

lightning network wasn't available in 2016. Lightning network makes micro-transactions feasible with bitcoin by almost eliminating the fee.

Yes, but Brave made their own token (BAT)

Leaving BTC and lighting aside, I don't think most people would opt out of ads in favor of micro payments. There is a minority who have the money that would but I see nothing in society that points to making such a change possible. Do you have any studies that show people would pay for news/socials/etc. in exchange for no ads/tracking/+privacy? Even the paid streaming services have ads and even when you pay, I'm sure they are still selling tracking data.

Many people already have opted out of ads. People like Glenn Greenwald and Matt Taibbi who have massive, lucrative substacks, for instance.

Many others have done patreon. Many, many youtube creators and podcasters have strong incomes due to that.

What percentage of regular people participate in these schemes though?

What percentage of regular people would participate in this new scheme, though?

Why are we considering these regular people when this is becoming the new regular?

Perhaps not everybody, but this is a core business model for a lot of mobile apps. "Pay and we remove the ads". I've paid for quite a few apps just to get the ads out of the way.

Twitch and similar platforms are absolutely inundated with users who are quickly growing used to regularly donating via micropayment of sorts, not even via subscription but just as one-off donations. And they hate ads. It's very common for the wealthier streamers to run the absolute minimum number of ads required by their contract. When users don't have the money to donate, they will explicitly say "give me ads" and the streamer will run them.

I pay for youtube premium to avoid ads. Paying in a micro form over a lump sum form wouldnt matter for me as long as its reasonable in price and easy.

Really micro payments add-value is that most things on the internet are just not worth a visa charge or the slow fraud detection calcs on the back end. Like access to someones tweets. Its basically opening up a new economy and suitable for the metaverse in general.

Like imagine you have augmented reality glasses and are walking through a city outside a restaurant, and a digital food menu third party gives you access for 5 cents btc or eth.

Bit of a tangent here but the use case is fascinating.

I pay for Youtube and multiple podcasts on Patreon for exactly this reason. I think both ad-supported and subscription-supported are viable, and where possible creators should support both.

Do we know why they're not doing it off-chain, similar to the way a crypto exchange will transfer crypto from one user to another off-chain?

Lightning network is "off-chain". Basically a network of 2-of-2 locked bitcoins called _channels_ that exchange valid Bitcoin transactions to update the balances within these channels, but only need to settle them by broadcasting them to the Bitcoin network in case of disputes.

I don’t know the specifics of this, but:

Because they don’t need to. My guess is that you just associate a lightning address with your username, and all Twitter does is present that to a wallet. This way twitter doesn’t need to do KYC, or ever hold any funds. They’re just the phone book.

I'm guessing they also don't want to. If they took custody of the Bitcoin, I believe that would make them a MSB, and hence get to do all of the "fun" associated with that. Also, the additional security and financial implications of holding money for their users.

LN doesn't have addresses, it has invoices that can't be reused.

Ah, okay. I'll admit that it's been quite a few years since I've used lightning.

(I used it back when it was in beta to buy something from blockstream, but that was it. Back then it was an extremely complex process.)

Exactly. LN is like opening a "tab" in a bar. You ultimately settle on the chain, just like how you settle the final tab on your credit card.

LN is an unnecessary solution to a made up problem. Other cryptos have proved that much much more transactions can be easily processed by merely increasing the blocksize.

Increasing the blocksize makes running a node much more expensive (due to storage, mainly) which in turn makes the network less decentralised. Bitcoin (rightly) selects for decentralisation over transaction speed, hence LN as an L2...

Bitcoin blockchain size: 350 gb

12tb harddrive: $199.

Bitcoin blockchain is increasing at less than 100gb per year. The storage cost of 100gb is about $1.6

I'm sure people running nodes can spend more than 1.6 a year to store a bigger chain.

As someone who runs a full node, this is not accurate at all. Space is cheap, bandwidth is expensive. I frequently upload > 1TB a month via my full node, if blocks were twice as big and full, then I would be uploading > 2TB a month. How many people in the world have an internet connection which can handle that? Then you have to process each block, the bigger they are, the most computation needs to be done. Everything is a trade off, Bitcoin has chosen decentralization over throughput, other chains have chosen differently.

In India there are MOBILE plans that allow you 2GB everyday for $2 per month! My broadband is unlimited data at 30 mbps for our $10 per month. Do quit this bullshit argument.

I don't run a node but I imagine if you're conscious about bandwidth you can choose not to upload anything (or very little) and still have the opportunity to maintain an up-to-date copy of the blockchain.

100 Mbps internet connections are really common nowadays. 1 TB of bandwidth in a month is really nothing. I use more than that just for Netflix and torrents.

He is talking about uploading though. Synchronous 100 Mbps connections are sadly not so common.

Thank you for doing the math.

they're doing it via lightning, which is off-chain until payment channels are settled.

But you still have to make a transaction to open a channel.

People that call bitcoin "crypto" are likely to describe bitcoin technology incorrectly

This is a cynical stub of a thought if I've ever seen one. Say more?

Crypto is (was? ugh.) cryptography, for starters.

Crypto are the projects created to market themselves as decentralised bitcoin clones. They are projects controlled by a small group of insiders that run pump and dump and wash trading scams.