
You Can Now Send Micro-Transactions With Zero Fees On Coinbase - barmstrong
http://blog.coinbase.com/post/57483182558/you-can-now-send-micro-transactions-with-zero-fees
======
M4v3R
This only works between Coinbase accounts, which kind of defeats purpose of
Bitcoin - because it requires both parties to be tied to a single company.
Thus I don't see anything revolutionary about this - many Bitcoin services
already implement that feature for transfers between their accounts.

What I want to see (and I will try to develop in my upcoming service) is a
protocol that lets you transfer Bitcoins between different services instantly.
Right now it takes 6 confirmations in most services to receive a payment, but
with a mutual trust between them the confirmation time could be essentially
cut to zero. Mt.Gox tried to do something like that with their "Green
addresses", but it didn't catch on.

------
citricsquid
I think that if Bitcoin is going to succeed it will be because of bank-like
institutions using Bitcoin as the underlying protocol that the average
consumer doesn't interact with -- but could if they want to, so this is a
fantastic first step. At present money in the bank is not "money" "in" the
"bank", it's an entry in a database that is reconciled every so often, Bitcoin
should be used in a similar way for it to be compatible with current consumer
behaviours -- expectations of protections against fraud (chargebacks), human
error etc.

~~~
DennisP
It's the only way Bitcoin can scale to major-currency levels, since every on-
chain transaction is seen by every full peer.

If you have a bunch of "banks" who provide checking accounts, they can use on-
chain transactions just for periodic settlements. "In the past day you sent me
checks worth 10,000 bitcoins, and I sent you checks worth 11,000 million
bitcoins, so now I'm sending you 1000 bitcoins."

------
jcampbell1
This seems like a step in the right direction.

In ancient times before banks, people paid in gold or silver, but buying
something like one apple that cost less the smallest coin presented a problem.
The solution was, people left their gold or silver with a gold smith, and were
given small denomination notes to spend at the market. Merchants could use the
notes to redeem the gold at the end of the day.

It is fun to see 1000 year old ideas getting re-created for the modern world.

~~~
snitko
The problem with sending micro payments in Bitcoin is not that you can't
divide it into smaller coins, but the fact that unless you pay a transaction
fee, your transaction may not be included in a block (e.g. confirmed) for a
rather long time. Obviously, if the sum of the transaction approaches the
amount of fee, it becomes expensive.

Coinbase solves this by having its own DB of transactions and not performing
real Bitcoin transactions between its users.

~~~
TylerE
Of course, at the same time, losing everything worthwhile about bitcoin (and I
say that as a skeptic), and basically being a less-trustworthy paypal.

~~~
snitko
I'm not quite sure what do you mean by saying "losing everything". It's not
like anyone ties you to Coinbase. Have your own Desktop wallet for large sums
and transactions, use Coinbase to handle small ones.

------
bevan
Coinbase has been doing cool stuff recently (fancy new hire, css tweaks, this
story) but their base product needs work, and their support is weak.

I have yet to receive responses to two support emails I sent several months
ago, one of which regarded a transaction that disappeared from my account,
leaving me with less BTC than I had before.

Also, the last time I checked, their API callbacks were simply not
functioning. No answer from support.

Furthermore, their transaction confirmation emails often send days late (and
sometimes repeatedly, I think). It's very startling to see that you "just
sent" x btc, forcing you to go through your transaction history on the site.

There are other small bugs/issues I have with the product as well, none of
which seem like they'd be too hard to fix.

I hope they hire support and fix those bugs before they add the next cool
features / hires.

------
pixelcort
This is a great first step. The next one would be taking transactions between
large wallet providers and batching them up to reduce those fees as well.

~~~
mintplant
Wouldn't that kind of be re-inventing Bitcoin, except as an exclusive,
possibly proprietary layer?

~~~
YokoZar
If you and I do business 100 times a day, we could either send 100
transactions through the system and incur 100 transaction fees, or do a little
bit of accounting and only incur one. Using an API / trusted party like
coinbase to do the accounting doesn't undermine bitcoin in any way, as it
would still be needed for the end of day reconciliation (moreover, the
accounting wouldn't make any sense without it.)

------
nooron
This is awesome, so very awesome.

Scott McCloud's written a lot of real intelligent stuff about
microtransaction/digital currency programs, and implicit in that, why they
haven't worked out in the past. I'm hesitant to say bitcoin is The Answer, but
it (combined with some other qualities of the internet and modern UX/UI)
presents a plausible implementation.

To paint with a broad brush: cost is both financial and temporal. A successful
digital payment/microtransaction system has to reflect this fact.

The time cost of paying some amount of money should not outstrip its monetary
value. Having six options (or worse yet, having to type in an amount) for
payment size and three confirmation screens is infuriating when you want to
transmit the digital equivalent of a quarter or so.

My two satoshis: I'm not sure how it will ultimately be implemented, but I
think bitcoin (and its subdivided units) is a good way to build low-friction
payment schemes.

------
FlailFast
Oh hells yes. I've been waiting for something like this to make
[http://www.bitbanter.com/](http://www.bitbanter.com/) more interesting. Not
sure how I'll handle non-Coinbase microtransactions...but still, this is
really, really cool. Thanks Coinbasers!

------
pjbrunet
Cool blog post but I can't get excited about "micro-transactions" when we've
heard this same story so many times since the 90s. Zzzzzz. Few weeks of hype
(1 cent to read my blog = $120,000!?!) and it never materializes.

~~~
badclient
For every idea that ends up taking off, there is a skeptic like you swearing
it won't... cuz it didn't in the 90s.

~~~
RobPfeifer
This idea of money as simply electronically stored value was actually pushed
hard by Dee Hock back in the 70s. He even talked about the ability of someone
with a secure network or transactional platform to create new currencies. Hard
to do it though :)

(Dee Hock was the "founder"/driving force behind Visa btw).

------
todayiscrown
Just like the Zero fees, this has zero thing to do with bitcoin. Here I go,
party and counter-party are in my table and I flip a bit and it ZERO fees!
wohooo!

Ahemmm! Things people do for PR!

------
EGreg
How is it actually implemented? Is this like Ripple? Or are we once again
issuing banknotes essentially, derivative money?

~~~
M4v3R
It's implemented by just flipping bits in their database - no Bitcoin
transactions or cryptographic functions are used here. I'm don't really
understand what's awesome about that - many Bitcoin services already support
off-chain transfers between its users.

~~~
EGreg
But then you have to trust the provider to keep the record of off-ledger
transfers. I guess for small amounts it's fine

------
pdog
_> Bitcoin is an incredibly efficient protocol for moving money with low fees.
However, it does have a “miner fee" ($0.05 - $0.01 at current exchange rates)
if you want your transaction to be sent and confirmed quickly._

Should that be $0.01 - $0.05, or $0.005 - $0.01?

------
oscargrouch
this look like a trivial step.. but the vision explained in the article are
right, and this is quite revolutionary considering we could get into this
reality (with widespread adoption of bitcoin)

think about the fluidity of value.. if people could use little cents, imagine
what this can cause to donations.. for instance.. open source world..

things will get much more fluid, easy and fast.. money will flow not just for
the big guy, that can pay for the big schemes.. but to everybody, anywhere..

this is indeed, a trivial step, with unprecedent consequences.. revolutionary
"triviality" :)

------
sown
The low cost of sending BTC (packets, I suppose) is one of bitcoin's greatest
strengths. I wonder if it that feature is strong enough?

------
qwertzlcoatl
I always assumed the entire point of online wallets would be the ability to do
off-chain transaction clearing.

------
marcell
Does Coinbase do the equivalent of chargebacks in cases of hacked accounts?

~~~
zanny
The bitcoin protocol doesn't (on purpose) have a way to reverse transactions.
Unless coinbase isn't actually moving money, it won't be able to reverse
anything. Since they have their own database, though, they could provide
chargebacks for any transactions they haven't committed to the blockchain,
though I don't know if I'd want to use that as a merchant.

~~~
marcell
Right; bitcoin does not, but Coinbase is just flipping bits in their database,
since these transactions are off-chain. So, just a question of whether or not
they support chargebacks, and to what extent. The issue will come up sooner or
later, if Coinbase sees more mainstream usage.

~~~
nwh
In which case people who has compromised accounts wouldn't send it within
coinbase's system, they'd sent it on the real network where it can't be
reversed.

