We have noticed you are using an ad blocker
To continue providing news and award winning journalism, we rely on advertising revenue.
To continue reading, please turn off your ad blocker or whitelist us.
Can cryptocurrency in the form of nanopayments afford content providers an alternative revenue stream now that so many people use ad-blockers to try and remove irritating, creepy adverts on the internet?
Bitcoin nanopayment platform SatoshiPay attempts to monetise content with a frictionless system that's also highly flexible. Hold a small amount of bitcoin in a digital wallet and there's no service to sign up to or software to download. Users can pay for individual articles, songs, downloads across websites; or at a more granular level per paragraph of an article.
People have been sceptical about micropayments for content on the web; there's the obvious ingrained expectation that content on the internet should be free. In addition, the computer science and legal scholar Nick Szabo argued that "mental transaction costs" outweigh the hassle associated with buying decisions involving very small amounts of money.
SatoshiPay's CEO Meinhard Benn told IBTimesUK his service reduces mental transaction costs by "making it very, very easy to pay, encouraging very low prices for content (0.5p to 5p). And using a token system (satoshis), so the reader is not constantly thinking about how many pennies this or that content costs. In-game currencies have successfully used this model. We can learn a lot from games; micropayments work amazingly well there.
"Personally, I have always thought content should be free. But then I started realising that for some quality content there is a sizeable number of users, including myself, who would be willing to pay a small amount."
He pointed out that some content payment systems ask for 50 pence and up to several pounds for an article. "It's just ridiculous. Especially looking at distribution costs, it's not justified. Maybe it's cross financing people that don't pay, but if everybody paid in that system the price goes way low, and everybody can pay in the system if it's very easy to do with one click or completely automatically."
Benn believes users lack control over existing nanopayment systems: "Usually these nanopayments or micropayment systems are a closed loop. You can send your money somewhere and it's locked up, and another party has full control over the money. Although they give you the chance to spend it through them, the money is gone. If you decide that you don't like that system you can't really get your money back.
"We leave the user in full control of their funds at all times. Cryptocurrencies allow us to have a fully functional payments system that just works in your browser without you needing to give any details or any kind of data. There's no payment method because bitcoin itself is the payment method."
Users have shown a clear vote by switching on ad-blockers in different countries and markets, accounting for up to 30% of web population. Publishers need to look for alternatives.
Benn said: "Users have clearly said they don't like ads. They're creepy; they follow you and kind of track your behaviour. I might want to read information but I don't want to do it in a way that I feel always watched. So that's a big reason for many people to use an ad-blocker.
Browsers have apparently come a long way now to the stage where they support cryptography. SatoshiPay's first iteration, which will launch later in January, is a WordPress plug-in to detect an ad-blocker; when an ad-blocker is detected, it asks for a small payment for that website. The ad-blocker detection can also be used in combination with content that needs to be paid by all readers or switched off completely.
"So a publisher [using SatoshiPay] can say, ok, we respect your privacy, we respect the fact that you don't like ads, but we need to survive so please give us a small payment," said Benn.
He mentioned that there are "acceptable ads programmes" that the main ad-blocking companies are pushing. "They make millions with it. It reminds me of the Mafia kindly asking for a protection fee. We don't do that. We provide a sustainable solution for all sides."
An obvious issue concerning lots of very small bitcoin transactions is the fact that these could clog up the blockchain. Benn pointed out that SatoshiPay offloads transactions from the bitcoin network using a smart contract system.
"Basically it's a valid transaction, it's just not broadcast to the bitcoin network yet. But both parties have a signed copy and at any point in time they can decide to broadcast that to the bitcoin network and it will be executed. But just sending around this kind of contract draft is good enough for actually making sure that payments are done.
"Again, cryptography allows us to do it now so it's a signed contract; that's really a big innovation that we are using within the system, called Bitcoin Payment Channel."
'Pay as you consume'
Back in July 2015 SatoshiPay won second place in the Coinbase BitHack v2 and shortly afterwards received seed funding from entrepreneurs Jim Mellon and Stephen Dattels, as part of an investment round led by Coinsilium.
Coinsilium executive chairman Cameron Parry said: "We think SatoshiPay is poised to unlock the 'pay as you consume' model to monetise internet use. We believe that is how mainstream usage is heading and we are highly confident in Meinhard and his team's ability to deliver SatoshiPay's nanopayment gateway to the market.
"From Coinsilium's point of view, we've enjoyed building our working relationship with SatoshiPay and proud to have been the lead investor in their seed round and involved in the strategic direction of SatoshiPay moving toward nanopayments gateways, from our first meetings with Meinhard back in early 2015."