Coinbase, the bitcoin wallet and exchange payment processor, has announced that it will begin processing off-block chain microtransactions. These transactions will be free for users, and once a user has accumulated 0.01 BTC they can withdraw funds, which then incurs the normal block chain fees.
The new microtransactions are handled internally at Coinbase and are instant. For instance, you can even send a unit as small as a Satoshi (0.00000001 BTC).
This will be a useful feature for Coinbase users because while miner’s fees are relatively low for most transactions, they become significant with very small transactions. Therefore in the case of bitcoin dust, the transactions are proportionately high. Indeed, the way in which bitcoin users can avoid fees rules out sending microtransactions with the 0.01 BTC limit.
Economist and bitcoin investor, Tuur Demeester, told us: “In the same way the internet user today rarely has to pay for the bandwidth costs he’s incurring on his favourite websites, bitcoin users can be offered free transactions on their favourite commercial platforms in return for the chance that they’ll also make use of the non-free services offered. That is the strategy I see Coinbase developing. I think this shows us the way to the future of bitcoin, in which small or even larger transactions are facilitated off the block chain for free by private parties that have gained the trust of the public. The ultimate clearing of transactions, cryptographically secure and publicly verifiable, will of course always be done by the bitcoin miners.”
Bitcoin entrepreneur Darragh Browne praised Coinbase for developing the new processing facility: “Coinbase are continuing to innovate in the payments space by being one of the first companies to truly enable micropayments on the web. The idea of grouping many micropayments together into one larger (0.01 BTC) transaction has been explored for some time now and it’s fantastic to see Coinbase bringing this feature to end-users!”
Currently Coinbase is only available to US customers.