This is an editorial by Ram, a twenty-year-old student, soldier, and storyteller.
To understand why The New York Times made so much money in the past year, it’s worth considering micropayments in the context of the Lightning Network.
We usually think of Lightning as a Bitcoin scalability solution because it makes everyday payments in Bitcoin viable. Basically, Lightning is a protocol built on top of the main Bitcoin network, and here the transaction costs are much lower and payment speeds are much faster. In fact, lightning is very important Even more efficient than Visa and Mastercard.
“the network (Lightning) It can also process millions of transactions per second (TPS), which is much more than Visa’s capacity of around 25,000 TPS. Solana, another competitor in the fast and cheap payment space, can only cost 60,000 TPS. So Lightning has a huge advantage here.” — Nat Ellison
And Lightning still has plenty of room to grow. While this technology is still in its maturity stage – for example, in terms of security, privacy and reliability – it shows very powerful network effects: as more people start using it, cheaper and faster payments will come. And remember: it costs just a part of a penny previously!
One of the most exciting things this unlocks is micropayments There hasn’t been enough talk about how exciting this prospect is, both economically and culturally.
It is impossible to send very small amounts of money in our traditional central payment systems. Depending on the service you’re using and where you’re sending, you won’t even be able to send a 10 cent digitally. And that’s for good reason: very small amounts don’t make sense because the transaction itself may cost more than the amount you’re sending.
On the other hand, Lightning allows these small amounts to be transmitted digitally. And since it’s a technology that showcases network effects, costs will come down even more as more people start using it. You can digitally send fractions on your coin today via Lightning, and you’ll likely be able to send smaller amounts in the future.
Now, let’s move on to the New York Times. To understand why the New York Times can generate 50% more profits from a lightning strike, let’s do some simple math.
Some direct facts:
- The post made $76 million in adjusted operating profit in the second quarter of 2022.
- Let’s estimate that the New York Times made about $25 million in profits in one month in 2021.
- it was there 125 million per month Global unique visitors to nytimes.com in 2021.
- was around 9 million subscribers in the third quarter of 2022.
- Hence, let’s deduce that, on average, there were 115 million visitors each month to the New York Times who were not subscribed in 2021.
- Non-subscribers can read max Five articles Per month.
(I’ll be conservative with the math so as not to overstate how much the New York Times will earn in a scenario where the Lightning Network is a mature network.)
Of those 115 million visitors, some read two articles, and some read a maximum of five. On average, each of those visitors end up enjoying one article each month, and since it’s easy and simple to send small amounts of money to the New York Times thanks to Lightning, each visitor might end up sending 10 cents that month. So that month, the New York Times would have made $11.5 million more. This is 46% more in profit.
Mathematics is elementary and imperfect, but it expresses the point: Micropayments open up a lot of potential. And its benefits don’t just end in helping content creators. They can also perpetuate cultural shifts and more, some examples are given below:
- Ordinary people being charitable.
I think many people, even if they struggle themselves, would be happy to give $0.01 to a disabled child playing the clarinet in the street – if such a giving was appropriate and possible.
- Tipping bus drivers who are particularly nice.
- Teachers send small amounts of money to students in the class who raise their hands and try to answer questions.
Kids who are honestly trying to get a dime, even if their answer is wrong. If the child understood it correctly, congratulations! He gets five cents. (Remember that teachers give out chocolates to students who have the right questions? Well, they can’t have chocolates all the time, so small payments might be viable alternatives!) You might end up seeing more hands in the air!
So, now try to extrapolate the number of industries and sectors from which such small payments and subsequent contributions to GDP can benefit. Imagine New York Times employees seeing their salaries go up. Imagine them and then spend that money on new things. Then imagine that the salaries of the people who bought them are also on the rise. And the process repeats, and here, we see the multiplier effect that economists love, which is staggering for economics.
Micropayments prompt spending in a whole new way, so for Bitcoin: Next time you explain Lightning, don’t forget to talk about micropayments! It’s probably easier to digest than “scalable”.
And for Bitcoin-skeptical economists: I think you’d love something like this because it encourages spending. So, are you getting softer on Bitcoin yet?
This is another guest post by Ram. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
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