BlockCypher, a blockchain-based Web API company, has released its Microtransaction API. The API enables payments of as little as 2,000 satoshis (approximately 0.5 cents). Additionally, the API enables on-chain microtransactions as opposed to more traditional off-chain transactions. The new API complements BlockCypher's Transactions API to propagate smaller, but guaranteed, more frequent transactions that remain auditable.
The Microtransaction API could be a massive disrupter in e-commerce. Prior to its release, sending small amounts of money (i.e., less than $1) remained next to impossible because of the high cost of money transmission. For example, BlockCypher reports that Apple charges a 30% fee for microtransactions.
BlockCypher has received positive feedback on the API. "Micropayments have incredible potential for many industries worldwide," Yahoo co-founder Jerry Yang commented. "We're excited that BlockCypher has figured out how to make it cost effective and fast to do microtransactions on the block chain, fully demonstrating that it's possible to transfer small amounts using bitcoin."
A traditional hurdle to microtransaction affordability stems from the cost associated with keeping miners interested in verifying transactions. In the Apple example above, a 30% fee seemed necessary to adequately attract miners to verify transactions. In a BlockCypher Microtransaction API scenario, each transaction is recorded on the bitcoin ledger blockchain. Accordingly, the need for a hefty fee vanishes. Soon after a transaction ensues, both sender and receiver can monitor transaction status at live.blockcypher.com by entering an address.
Bitcoin has made a big splash in the currency market. However, the Microtransaction API may have just uncovered a new online transaction previously prohibited by high costs.