It's a Micropayments World
We live in a world that is dominated by money. Money drives us to get out of bed in the morning and grind out the work day. To grab a quick sip of coffee then head out into bumper to bumper traffic until we labor for hours on end. Money has the power to create fear in us, or to create that a secure sense of satisfaction. We are not here today to discuss the philosophical ramifications of money in this article. Instead, we will be focused on micropayments and how they are taking over the world.
If you are unfamiliar with micropayments, they are as the name implies. Small, incremental payments that add up to larger payments over time. PayPal considers anything less than $12 a micropayment, whereas Visa claims it as a transaction valued at less than $17. With today's current banking system, payments less than $2 are considered impractical given the costs and fees associated with those payment amounts. If you've been to a store before and were told you have to spend at least $5 to use that plastic card in your wallet, that's why.
Today, with the invention of cryptocurrency, each unit can be broken down into many smaller units compared to fiat currency. Generally, $0.01 is the smallest an average person would break down a dollar (unless they physically cut one in half with the jaws of life). XRP, a digital asset designed specifically for payments, can be broken down to individual “drops”, the smallest being 0.000001. It would take 1 million drops to equal 1 full XRP, and with that comes the ability to create the smallest and most useful type of micropayment, especially for streaming payments in real-time.
Along with the growing XRP ecosystem came Coil and the proposed Web Monetization API standard. Now, creators can be paid for content without employing advertising of any kind because consumers are paying a single monthly subscription to access ALL Web-Monetization features available across the internet. XRP micropayments are now streamed to creators in REAL TIME (which gets me crazy excited).
The reasons why XRP works well to facilitate the world's micropayments are:
Microscopic breakdown
XRP can be broken down into 1 millionth of a full unit. That is so small you'd need a high-powered microscope to see it.
Clark Kent speed
The XRP Ledger settles XRP transactions in 3-5 seconds using proof of consensus, or group of validators on the network who all agree on a particular transaction order.
Cost efficient
XRP costs fractions of a penny to send across the network. The small size of each micropayment creates the necessity of low transaction costs.
A traditional problem with facilitating micropayments has been walled gardens. In other words, the global financial system comprises of thousands of payment networks that do not interact with one another. If I have a PayPal account and wanted to send money to someone with Venmo, I couldn't do it. It's impossible. Enter stage right, the protocol to rule them all, Interledger.
Protocols such as TCP/IP and HTTP are the fundamental rails of data transfer. Interledger is also a protocol, but is designed for value transfer,
transforming walled gardens into interoperable payment networks.
🎤 Consider this mic drop moment from the Chief Technology Officer at Ripple, David Schwartz...
“I think micropayments are going to take over the world just like packet data took over the world. If you can make small payments very cheaply and you can make billions of them without a problem, you don't need anything else.” Source
And there you have it. We've already seen what the internet has accomplished with packet data. Micropayments are going to take over the world in the form of digital assets being sent over ILP, or Interledger for the above reasons. Size, speed, cost, and interoperability are all significant factors in creating a world that runs on micropayments.
Will we witness a world that not only embraces, but depends on the use of micropayments to fuel a portion of the global economy? If so, it won't happen overnight. But, I believe, little by little, use case after use case, the ecosystem will be built, and the early adopters (us) will benefit the most from the wave of innovation coming down the line. With the powerhouse combination of XRP and ILP, the internet of value is coming to life right before our very eyes.
Thank you for reading.
Related articles:
Ripple Pulse: Regulatory Clarity
Digital Assets: Go Long or Go Home
Former Ripple employee speaks up about David Schwartz's micropayments claim...
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