We are all used to free services on the internet such as Wikipedia and Facebook, services which continually need to either attract donations, as in the case of Wikipedia, or else advertising revenue, as in the case of Facebook. What if we were instead charged a fraction of a cent each time we made use of these services? This could provide an alternate funding model which in the case of donation funded services would be a god send as it would ensure that the costs of providing that service are covered and that the service can maintain itself without depending on the charity of others. Of course for the financially motivated sites like Facebook this would just provide an additional revenue stream to earn even more money which would be difficult to ignore.
But wouldn’t there be an uproar? A revolt from millions of Internet users? Perhaps, but then perhaps not if the charges are very, very small. After all, are you really going to miss a 10th of a cent or even 100th of a cent? Because of the pure number of users accessing these sites, even charging a very very small amount per access translates into millions of Rands generated per month.
One of the limitations in this model is that the Financial industry cannot handle micro-payments on any real scale and their existing business models are prohibitive of micro-payments. The finance charge to send the micro-payment would probably exceed the micro-payment itself.
This landscape is changing quickly though with the invention of crypto currencies which allows for digital value to be moved very quickly and very cheaply around the world. Banks typically take days to move money from one country to another and the costs are exorbitant since each player in the chain adds their commission. For Bitcoin it takes 10 minutes and at a fraction of the cost.
The block chain revolution has not only introduced crypto currencies to the world but also Smart Contracts which were introduced by Ethereum. In their own words:
“Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.”
What is not mentioned here is that these smart contracts are able to handle money, or rather tokenised value. They can receive value, hold value and send value. This is the first time in history that applications are able to fully handle value outside of a financial institution. Not only that but these contracts are “smart”. In other words than can be coded with some very clever logic to control those exchanges of value. So for example if I am buying a car, a Smart Contract could be written that states that ownership of the car will be moved into my name once I have undeniably paid for the car. Once I send the money to the Smart Contract it then immediately transfers the car into my name and pays the seller of the car. Neither the seller of the car nor myself are at any risk since we are both assured that we will receive the money and ownership of the car respectively. The contract guarantees it.
This is not dissimilar to a website only offering up it’s contents on receipt of a payment. So the foundation from a software point of view is already there. This is not to say that there are some very real obstacles for such “pay to play” websites that need to be overcome before they become practical.
The most serious obstacle is speed. Since each contract is stored publicly in the block chain and is calculated by every node, serious performance issues can arise. Also there is the question of scalability. Since each transaction must be mined for it to be confirmed, the addition of several million transactions may result in the length of time to confirm a transaction to be too long to be realistic i.e. it might take days rather than minutes for money to “clear” into an account.
These are not just obstacles for “pay to play” websites, but also for Ethereum in general and as such they are obstacles that are more than likely going to be removed by an ever innovative Ethereum development team.
With such obstacles removed, our children might very well experience a world in which they have to pay to use Wikipedia and Facebook, and every other service offered by the internet.
By: Garth Smith, Synthesis Software Technologies