Thu, 20 Feb 2003

Probability-Based Micropayments

Ron Rivest Suggests Probability-Based Micropayments [Slashdot]

Ya gotta respect a name like Ron Rivest, but, well, I have some experience in the micropayments arena, and I'd be willing to bet that this particular scheme will never fly. And it has nothing to do with the technology either....

I am sure that Peppercoin could prove, mathmatically, that the sytem would level itself out over time for any particular merchant or consumer. I am equally sure that Peppercoin must have (or thinks it has) some ace up it's sleeve to get the credit card processors to do their own micropayments without breaking them on transaction fees. If they don't, and are planning to hold an account, like PayPal (or my own, personal dot-bomb that we called iStamps) then the patent won't hold water, cause there's plenty of prior art (mine included). They'll also discover, like PayPal has and I did, about banking regulations. It ain't pretty .... And if the ace is simply holding an account until it reaches an acceptable limit for a debit, they'll discover all kinds of minute losses as people use the service once or twice, then lose (or change) their credit card. That could potentially be even uglier than holding an account, especially from an investors point of view.

No, the obstacles to this system will be social, not technological. Try explaining a random distribution curve to a mom and pop gas station owner - "Whaddya mean I get a 'null token' - that kid just left with a candy bar! I'm callin' my lawyer ...."

Good luck, Ron!

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