The concept of micropayments, where small online interactions are monetized at a fraction of a cent, has struggled to gain traction since Nick Szabo's 1999 paper highlighted the challenge of mental transaction costs. These costs refer to the cognitive burden of deciding the value of tiny payments, overshadowing technological advancements like the Lightning Network and AI solutions. The continued relevance of Szabo's insights underscores the complexity of adopting micropayment systems and raises questions about whether emerging technologies can finally streamline this economic model for mainstream usage.
Customer mental transaction costs will soon dominate the technological transaction costs of the payment system used in the transaction (if they don't already), and micropayment technology efforts which stress technological savings over cognitive savings will become irrelevant.
Despite advancements in AI-based agents and Bitcoin's Lightning Network, the obstacles posed by mental transaction costs still hinder the widespread adoption of micropayments.
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