Why would the world need this wonder currency? Aren’t credit cards, PayPal, and ACH/SEPA, etc bank transactions just fine? The second question especially is one that bitcoin fans were never able to answer to our satisfaction. The only real advantage of Bitcoin is its semi-privacy that makes it somewhat practical if one wants to obscure ownership and transactions.
Our ideal digital currency has two technical benefits: One – unlimited scalability to cope with world needs and Two – no transaction fees. PayPal charges €0.35 plus 3.4% per transaction. Credit cards on average 3%. Bank transfers for businesses cost up to €1.50, internationally much more. Western Union charges between 2 and 10%.
All of these transfer methods prohibit sending small amounts of money. You can’t send smaller amounts than 35 cents with PayPal, and practically every transaction below €5 is not economic.
Having a zero-fee currency makes micro-transfers possible if we achieve the first benefit of unlimited scalability. We believe that the first economic activities around the Buzzcurrency will be based on micro-transactions. Let’s look at some applications:
Micro-transactions for authors/publishers
Millions of people create content on the web every day. They use YouTube, their own blogging websites or blogging platforms like medium.com. They publish in digital newspapers and magazines and in audio streaming services, on Facebook, Instagram or Twitter. Today there are only two monetisation schemes for authors and publishers: advertising and paywalls. Both come with flaws that leave a huge market unaddressed.
Advertising is met with fierce resistance by the growing use of adblockers (over 20% of users now). Additionally, the advertising revenue has to be split between the advertising network (e.g. Google AdSense), the publisher and the author. This leaves the actual content producer in the weakest position with the lowest revenue.
Paywalls have a hard time to gain traction and for good reason. Most people consume dozens of sources, say The Guardian, The New York Times, Medium.com, several YouTubers, a few private bloggers, and one or two specialty magazines. How many publishers would they be willing to spend $5 per month for? One, maybe two? The financial value of information and entertainment on the internet is so low that $5 a month is just too much. Especially since people usually only consume a tiny fraction of the content on offer.
Pay per view
If a YouTube channel is allowed to participate in ad-revenues (YouTube doesn’t allow everybody), then one can earn about $2,000 per 1 million views. This equals to $0.002 per view or 1 cent for every 5 views.
Imagine you have a pay-per-view model. A user has $10 in her wallet and every time she watches a video, a fraction of a cent is transferred to the author of the video. The user can watch 5,000 videos for these $10. If we double the price to $0.004, both the author and the platform can have their revenue without the nuisance, wasted time and used bandwidth of advertising.
Micro-donations
Pay-per-view might be too forceful. Why not start with a donation service? If you like particular content you can send the author 1 cent, 10 cents, $1. The Tendereconomy will start with a (already developed) micro-donation app called Thank-U that content creators can integrate through simple text-code in any platform (YouTube, Facebook, Instagram). In the first phase, users install a browser extension and can then transfer their donation with one single click. In the future, there will be a phone app that acts as a browser.
If the service gains traction, we expect some publishers to integrate it into their platforms. Since they don’t have to pay any fees, publishers/aggregators have nothing to lose. Platform and authors can come to an agreement for sharing the donation revenue.
Nobody controls the underlying currency and the Thank-U app produces no direct revenue for its creator. That makes implementing it a win-win for authors and platforms.[3]
Thank-U will have a mechanism that allows users to partake without ever touching a cryptocurrency or using a crypto exchange. The mechanism will be discussed in a different document.
Smart-likes
Let’s take the idea of micro-donations for content creators to the next level. Every rating system on the web – from Amazon to TripAdvisor to Facebook likes – is worthless. They are supposed to give an indication of the quality of what was rated and thus help people navigate products and content. But all of these systems can be easily gamed. We know about fake 5* ratings on Amazon and Facebook click farms where you can buy 1,000 likes for $20.
These rating systems have no value because they have no price.
Now imagine if an author could decide to show her donation tally to the public. If the author can show that she received $50 from 120 people then we know that her content is so good that people honour the effort with money. A “like” must cost money in order to have value. This is a system that is much harder and more expensive to abuse[4].
Even if the Smart Like application doesn’t sell the user data of donors, the collection of donation data is of course very valuable. Publishers learn which content is really valuable. Today the only data point they have is how popular it is and that is subject to quantitative factors that don’t necessarily correlate with value.
Popular content is often “click-bait” with headlines that lure readers to click. In a publishing world that is dictated by advertising and thus page views, getting people to click is worth more than giving them valuable content. An honest rating system based on micro-donations could incentivise authors to produce more valuable content.
Spam-free emails
The Nigerian prince, Penis enlargement and cheap Manolo Blahnik knock-off spam work through numbers. Spammers have to send millions of emails to score once. And they do since sending emails is free. The same is true for hackers, phishers and virus programmers. Especially in an enterprise environment, spam and security leaks through email are an expensive threat.
There have been applications that have tried to market email-systems that required users to pay in order to send a mail. The rationale is the same as with rating systems. If it cost you $0.001 per mail you can send 10,000 for $10. But for a spammer or a broad virus distributor, sending email suddenly becomes too costly.
None of these applications got enough traction. Maybe it is time for a new attempt, finally creating a technology that can handle micro transfers without additional cost.
Streaming money
Bitcoin philosopher Andreas Antonopolous coined the term “streaming money”, describing what it does and also saying that this is so revolutionary that we don’t yet understand all its potential. One idea: Once an employee logs in to her work computer, she earns by the minute or the second. Why wait a full month before she gets her paycheck when technology can pay her instantly. Why doesn’t this already happen? Because bank transfers cost money[5]. This excuse is gone with streaming money.
With this technology, you don’t have to pay a full hour for a rent-a-bike but exactly the minutes and seconds you used it.
The rest
These are all applications that demand zero-fee microtransactions and are the first candidates for the Tendereconomy. But then you have all the other use cases that can profit from the currency and the surrounding economy. Take the example of a lottery or betting operator. With both, there is an issue with trust. Punters don’t know if the mechanisms are rigged in favor of the house. They often are, as the many thousand victims of fraudulent gambling can tell.
Blockchain-like technology offers transparency. The gambling mechanisms can be public for all players to see. This creates trust in an otherwise shady business. The catch is that while there are many gambling and betting apps on the blockchain, none use the transparency feature. Because no blockchain can yet handle storing every played game in its database. Blockchain is too slow and expensive. Tendertechnology solves this and opens the gate for fair gambling.
The applications are many. The benefits are as well.
[3] Thank-U will neither aggregate and sell user data nor charge fees for use. It will have an indirect benefit to Pacio by creating demand, liquidity and velocity of the currency. This is needed to kick-start the community aspects of the economy and enables network-effects.
[4] Since transactions are free, an author could send money to herself repeatedly and so increase the like-counter virtually. The only way to make that abuse vector unsustainable is by subtracting a small fee. The collected fees can be spread over the network or be distributed as a lottery.
[5] Not to forget that employees give their employer a zero-interest loan for up to a month.
