This article covers part six of the video series titled Small payments are a big deal. In it, Isaac Morehouse talks to Dean Little about small payments and more.
Introducing Dean Little
Members of the BSV ecosystem probably already know Dean Little. He is the founder and CEO of Bitping, a company that uses micropayments on the BSV blockchain.
Bitping provides analytics for web apps and services using real users to test them. They make micropayments to users to complete the job. This gives more accurate analytics and data to owners.
Dean uses BSV but keeps an open mind about the different protocols. He says he could potentially use BCH or Solana for Bitping. However, he says that BCH is still significantly more expensive in sats per byte compared to BSV. When it comes to micropayments, these tiny sums add up and make a difference.
Some first obstacles with BSV micropayments
One of the problems Dean faces when running Bitping is that some users don’t want BSV. They want to withdraw money immediately, and it is difficult to do so because only a few exchanges list BSV. Likewise, those who have won a small sum and kept it have seen its value drop lately.
Isaac says he thinks this is a core issue that needs to be addressed for micropayments to really take off. Right now, Dean says sending USDC to Solana could be a potential solution. It is possible to send tiny payments over this network worth a fraction of a penny, and the stablecoin element eliminates volatility. However, Dean doesn’t see much to spend it on right now. Solana users might be able to return their micropayments for a JPEG, and that’s about it.
Criticizing the lack of entrepreneurship in the industry in general, Isaac says he thinks BSV has the most to offer, despite only having around 20 apps. He believes it is still extremely early and the industry is still focused on speculative trading and has largely forgotten about the possibilities of micropayments.
Which protocols are capable of sub-cent payments?
Isaac asks Dean to describe what the options are for protocols capable of paying pennies. He asks if there are others besides BSV, BCH and Solana.
Dean talks briefly about Litecoin on a good day and how Dogecoin might do them at some point. Isaac asks about Dash and Nano, but Dean says if you’re considering micropayments, you need to be able to count on 0.0001 cent fees at scale.
Isaac then wants to know more about true nano-payments at 1/110th of a penny or less. Dean says Solana can. Even though Solana is scaling, the fees are not increasing, giving it real potential as a micro and nano payments platform. On Solana, all transactions are treated the same in terms of fees. There is no price discrimination. Isaac asks if this is the cause of Solana’s recent technical problems. Dean replies that the bots are partly responsible for this but Solana’s servers are able to accept transactions and the network itself goes down.
“It’s bandwidth and throughput that they’re struggling with,” Dean says.
Which platform can scale best now and in the future?
Isaac then asks Dean’s opinion on Solana in relation to Big Block Bitcoin on a large scale and far in the future. He asks if there is one he trusts the most and why. Dean says that Bitcoin is battle tested and basically vanilla payment proof. He reserves judgment on complex scripts and says he’s been able to remove Bitcoin testnet nodes before, so we’ll have to see if he can handle these types of transactions reliably in the future.
Giving the example of Twitter and all of its daily interactions, Isaac asks if there is an existing protocol that could handle it today. Dean says the Bitcoin protocol could handle it, but nodes and node software could not. He thinks BSV would last the longest, but doesn’t think even BSV does enough to fit the dimensions of something like Twitter.
Talking more about potential use cases for micropayments, Dean starts with the internet marketplace for things under $1, like surveys. “There’s a lot of stuff on the internet that would be worth $1 that we can’t pay $1 for,” he says.
Talking more about the attitudes of different networks towards scaling, Dean gives his thoughts on the different approaches. He says BCH takes a ‘don’t build it and hope they come’ perspective, Solana always breaks and reacts but solves problems through willing cooperation, and BSV broke on Christmas due to a Node software malfunction, but officials blamed everyone. . He thinks Solana is currently doing better in admitting fault, taking ownership and working through the issues.
Why would Dean continue to work on BSV, given some of the issues he identified?
Dean still thinks he can pull off a lot of BSV. Although he is not happy with the current node software, he thinks that if the problems are solved, he could answer the original vision of bitcoin.
Dean is calling on BSVers to stop pretending that large file uploads scale and focus on its ability to reliably handle over 50,000 transactions per second. He believes that micropayments should be prioritized over other transactions on BSV.
Dean’s thoughts on the evidence of work and proof of participation
“When you have meaningful proof of work behind something, you can trust it in the absence of the rest of the blockchain,” Dean says.
Dean thinks proof of work is more reliable. Using the example of a block header on BTC, he says yes, it could be wrong, but you would know someone would have had to spend a lot of money to make this happen. One problem with proof of work is things like block reorganization attacks.
Proof of stake does not have these problems (reorgs) because the economic incentives are not there. His main criticism of proof-of-stake is that it leads to large exchanges running nodes because they have the most liquidity. Of course, they take a fee for that. He compares it to a network run by banks charging bank fees. This means that if you can accumulate a lot of liquidity, you can essentially control or overthrow the network.
Dean also notes that Proof of Stake is cheaper to produce than Proof of Work. This means that you only buy network effects. He also refers to the economics of coin locking to withdraw liquidity and increase the value of coins as “ponzinomics”.
Isaac asks if there is a fundamental reason why Proof of Stake should worry about higher fees than Proof of Work. Dean says they might if the big cartels that hold all the coins raise the fees.
Overall, Dean thinks they’re both good at solving different things.
Some criticisms of the current Bitcoin network
Dean always speaks frankly and remains impartial. Although it builds on BSV, it describes a problem with the current BSV network: false positives and false negatives from miners. He says these can mess up the graph of various apps like Twetch. He thinks these false positives and negatives need to be eliminated; it should be a yes or a no, and that’s it. He also thinks these issues could easily be solved with better node software and smarter business decisions.
“It’s incitement after incitement”, he says. He points out that the development of this software is closed source, that the developers get paid whether they do a good job or not, and that the miners are looking for block rewards and don’t care about other problems they cause. on the network. Both Isaac and Dean believe that the block subsidy reduction schedule was not aggressive enough and that many of these issues could be resolved if miners researched the fees on their own.
Dean thinks BSV is still the best place to test his software despite these issues. However, he doesn’t mind if it ends up living somewhere else long term.
In closing, Isaac asks Dean for his advice to anyone with an idea for a Bitcoin business. Dean says to start small with around 20 users, listen to customers and implement feedback, and remember that Bitcoin doesn’t have to solve all the problems; it just needs to solve the double-spending problem and be cheap enough to meet your needs.
Watch: Introducing CoinGeek New York, Micropayments for the World: APIs, Tokens, and Compute
New to Bitcoin? Discover CoinGeek bitcoin for beginners section, the ultimate resource guide to learn about bitcoin – as originally envisioned by Satoshi Nakamoto – and blockchain.