Intercoin Applications: Micropayments


#1

Intercoin’s architecture enables each community to have its own currency, and transactions made in one community do not have to be recorded by every node on the network. This lets Intercoin scale a lot more than cryptocurrencies based on Proof-of-Work and Proof-of-Stake, where all transactions must go through one or a few computers.

Instead, Intercoin works more like the Internet: it connects local community currencies via a global “cloud” token, but most transactions happen locally. People cash in and cash out of the local economies, according to the rules set up by those projects and communities.

Communities don’t have to necessarily be based around a specific area, like a city. They can also be based around an industry, or a project. When people pay a monthly subscription fee to Netflix or Brave Browser, the internal databases at the companies behind Netflix or Brave store information on who watched which movie, or who visited what website. These are essentially micropayments, which are then aggregated and paid out to the vendors producing those movies and websites.

Intercoin’s design naturally lends it to support micropayments entirely using the core protocol, rather than kicking the problem down the line to “Layer 2” technologies. The architecture is exactly the one you’d expect when thousands of vendors want to aggregate millions of tiny payments and cash out.

According to Gresham’s law, people are much more likely to spend the local currencies that they can only spend within the community. And thanks to its ability to support stablecoin solutions, Intercoin can peg the community’s currency to one or more specific Fiat currencies, allowing customers and vendors to have confidence in their unit of account.

Intercoin can be used to quickly build a decentralized Netflix, or a decentralized Patreon, where more value is paid out to the content creators, and no one lives in fear of getting kicked off the entire platform. Micropayments can also be used by communities to fund projects they want to see created (whether virtual or real-world based). The funding can happen by pre-buying tokens, for instance, which can be used within the community to pay people.

Crypto-powered micropayments can power new models of managing projects and compensating employees, far beyond the Full Time Employment model prevalent today. At Qbix, we experimented with similar models and successfully motivated our developers to contribute improvements alongside the rest of the company.

The global economy is starting to see more and more instances of project-based funding and compensation, which gives more freedom to workers and better for who can invest in specific projects and have the workers’ incentives better aligned with the bottom line. It also goes hand-in-hand with the decentralization of institutions, as competition between siloed organizations gives way to collaboration around the world. This may be the future of work.


#2

Gresham’s law applies when an authority sets the value (of the monetary units) - otherwise Thier’s law applies.

Micropayments have so many applications. The current problems with privacy, tracking, and advertising on the web arose from the lack of a usable micropayments system.


#3

Agreed, micropayments were part of the original Xanadu Hypertext vision but never made it into the Web. A lot of the centralized business models would have been unnecessary. The disruption of competitive journalism by the race to the bottom resulted in a trend towards clickbait headlines and biased “advocacy” journalism domains catering to a repeat audience. And the incentives of centralized social media websites are for more engagement, so they serve up more of what you read, leading to increasingly isolated echo chambers. This has had a profound effect on American politics, and I am sure in many other countries as well. But the mechanics of it can be analyzed and measured.

I don’t think micropayments would have fixed everhting — for example, centralized social media sites would still want to increase engagement — but it would have greatly mitigated it by enabling other business models. I believe that decentralization is key to removing many of these problems that arise from centralizing responsibility and decision-making power, and cryptocurrencies enable removing the middleman that we used to need exactly for these things. Micropayments for a movie community without Netflix Inc. running the database means a completely different power dynamic, more permissionless, less rent extraction, less censorship.


#4

Just read about Gresham and Thier’s law. I agree that in a community, people will prioritize spending community currency because it’s more niche. I’m curious to see how all these incentives will play out in adaptation. Will dealers choose to accept community currency because they would otherwise miss out on potential customers, or will liquidity concerns trump that? I think power matters a lot here; just as really popular restaurants may have the power to say cash only, more popular businesses can say dollars only. Definitely worth exploring