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Big Changes for Small Payments

I hate change. Cumbersome and anachronistic, coins are the Zeppelins of the monetary world. And the worst part is they jingle in my pocket.

Unfortunately, high transaction costs make using a credit card for small purchases impossible. Acutely problematic in the world of e-commerce, this sad state of affairs has been the ghastly bane of economic existence for too long. It’s time for a paradigm shift. It’s time for bitcoin.

Online content

Bitcoin was created in and for the digital world. It makes sense, then, that a paradigm shift would start there. Did you like that article or blog post? Tip the author! Micro-payments—tiny transactions of a few cents or even a fraction thereof—can be transmitted easily with bitcoin.

Tipping has the potential to revolutionize social media. Imagine a “tip” button beside the “like” button on Facebook. Instantly, bitcoin gives you the ability to monetize your witty, insightful content. Or your cat pictures. Zynga is already exploring and implementing the possibilities.

Banner ads are quickly becoming a thing of the past. Unsightly and just plain annoying, they will be eclipsed by pay-per-view and membership models. Don’t think you’d pay for content and apps? Think again: At prices less than one cent per “item,” who wouldn’t gorge themselves in a gluttonous orgy of ad-free internet?

Art

Walking down the street on a balmy evening, you hear an enchanting melody being played on a saxophone. You’d love to drop a dollar in the street performer’s tip box. Looking through your wallet, however, all you can find are twenties, plastic, and a car salesman’s business card. Alas, you pass on by. But what if the performer had a small poster with a QR code? Would you stop and scan it with your smartphone, instantly sending a few cents or dollars securely to the musician’s bank account?

The same principle applies to museums and galleries. Do you always put a dollar bill into the donation box? Probably not, but even if you do, you’re not giving it (or at least any substantial part of it) to the individual artists. Imagine a world in which you could send a couple bucks to the artist of a particular painting you enjoyed. Bitcoin makes that possible.

Consumer Goods

Farmers’ markets attract people in droves, myself included. Isn’t it incredibly annoying, though, that you can’t pay with a credit card? Even those tech-savvy merchants with souped-up tablets are forfeiting too-large percentages of their earnings to credit-card companies. Bitcoin enables low-fee or feeless electronic payments even at outdoor vegetable bazaars. Forget the trip to the ATM; all you need is your phone.

Due to the small size of each individual purchase, credit card transactions are also impractical at vending machines. You need to have cash. Thankfully, bitcoin can save the day again. Electronic payment for impulsive munchers—brilliant!

There’s also an intriguing possibility for grocery stores (and all consumer goods stores, for that matter). Bitcoin’s low transaction costs and logistical ease (scan a QR code to send money anywhere in the world) allow consumers to communicate with producers without the need for middlemen of any sort. Perhaps a shrewd entrepreneur will develop a business model in which consumers pay to enter the store (there are many other possibilities) and then remit payment for each individual item directly to its producer.

Charity

Walk into a store in December and what do you see? Bell ringers, of course, courtesy of the Salvation Army. With nothing more than a QR code needed, the Salvation Army could unlock the potential for preposterous gains. No change? No problem. The novelty of the idea alone would be enough to make me donate to each jingler I encounter.

Then there’s what I call “Walgreens” giving. You know what I’m talking about: scan your credit card, and before the transaction goes through, you’re prompted to donate to some cancer concern, veterinary clinic, or non-profit du jour. Here’s the problem: the lowest amount I can donate is a dollar. No thanks. However, if I had the option to donate just a few cents, I might do so. Now, instead of getting nothing from a whole bunch of people, they’ll a get a little something from a few. And that adds up.

Finally, there’s international charity. Horror stories abound of institutional organizations bamboozling well-meaning contributors (remember Kony 2012?). It’s commonplace for only a small percentage of your donation to reach the children of Africa (or wherever it was originally destined). With bitcoin, monetary resources can be sent wholly and directly to the individuals who need it, regardless of location.

Bitcoin promises a non-violent coup d’etat of the existing economic reality. The frequency of small payments will increase; new options previously precluded are now possible. The pieces are in place for a revolutionary paradigm shift.

Joseph S. Diedrich

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