Cryptocurrency Microtransactions

What is the future of Cryptocurrency? Microtransactions

When the world of Bitcoin and Crypto more broadly came onto the scene, the commotion may have seemed like a fad to many. Nevertheless, the support for these systems and technology persisted, and cryptocurrency continues to be an exciting and important conversation alongside related ideas like microtransactions and the sci-fi-like concept of the metaverse.

As these concepts continue to expand and be implemented, it’s both interesting and important to know where the conversation is going. Specifically, let’s take a look at the future of cryptocurrency, at microtransactions, and what this means for the metaverse.


What are Microtransactions?

As with many of these terms, a “microtransaction” is rather loosely defined. Essentially, a microtransaction refers to a small virtual payment. Small, here, is relative to transaction fees. As quick, convenient, and largely universal as swiping your card is, it isn’t free. Usually, the vendor fronts the cost of this transaction with the intention of making that money back with the sale. When the purchase is small enough, though, the revenue generated by the transaction might not be enough to significantly offset the transaction cost at all.

These small transactions are most commonly found in virtual settings, especially with free-to-play games and apps that include in-game purchases. An extra life or an extra item in your favorite app might just cost you a few cents, but fulfilling these small purchases without operating at a loss quickly becomes an interesting and tricky problem. Hence, the microtransaction.


The Metaverse and Microtransactions

The most common solution to this microtransaction problem is simply avoiding microtransactions altogether—sort of. If you recall, you usually can’t make 99 cent payments directly on your favorite mobile game. Usually, you have to buy larger packages of your in-app good, such as a $5 or $10 package or bundle. This way, the app avoids the problem of the micropayment, and you still receive in-game currency that you can use as you’d like. The problem with this, of course, is that most people don’t need $10’s worth of in-game currency in the first place.

As a conceptual merging of the real world with the virtual, this problem of microtransactions extends into the metaverse. If the point is for users to behave in the metaverse similarly as they would in their real lives, then this workaround solution to microtransactions seems silly. You wouldn’t buy a $10 gift card every time you want a pack of gum at the store, and so this shouldn’t be how transactions work in the metaverse, either. Fortunately, however, a solution seems to be in the works, and it has everything to do with crypto.

Although this blockchain capacity is still somewhat on the horizon, in theory, the decentralized construction of crypto transactions has the potential to make virtual transactions virtually costless. In a meta-world, this would be a perfectly elegant solution, making microtransactions both efficient and conveniently integrated in the environment.


Different Coins to Keep in Mind

As far as seamless integrations go, Decentraland is a project to keep an eye on. Following the meta-effort to bridge reality with virtual, Decentraland is a virtual reality experience that incorporates MANA, its own in-environment cryptocurrency. Inside this virtual world, MANA can be used to purchase LAND, which represents partial ownership of this virtual environment. Both this virtual world and these virtual investments show promising futures as serious financial investments, especially as companies become interested in joining these spaces promotionally.

One drawback of many cryptocurrencies is still the computational and environmental toll of running the blockchain, and Solana is a coin to keep in mind if these are the issues that keep you up at night. Solana ranks highly among popular cryptocurrencies, so it isn’t a big value tradeoff, and its blended proof of history and proof of stake algorithm makes it one of the greener options.

As seamless as an implementation like MANA is, running on top of Ethereum can make it an environmental concern for many. Perhaps the future of crypto, microtransaction, and the metaverse will see a blend of this seamless virtual reality with the low-cost efficiency of coins like Solana.

Living Pono is dedicated to communicating business management concepts with Hawaiian values. Founded by Kevin May,  an established and successful leader and mentor, Living Pono is your destination to learn about how to live your life righteously and how that can have positive effects in your career. If you have any questions, please leave a comment below or contact us here. Also, join our mailing list below, so you can be alerted when a new article is released.

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