StormX, a blockchain start-up has recently won a patent for a micropayment blockchain solution. United States Patent and Trademark Office (USPTO) has awarded them this patent in May 2019.
With this patent, StormX, a blockchain-powered gamified microtask platform is now in a position to improve micropayment transactions with blockchain. The company can now address the scalability issues that plague this use case.
Micropayment transactions are not as easy to execute as other payment transactions since 3rd party service providers charge a higher fee for these transactions. Micropayment transactions involve small amounts by their very nature. Transaction fees can make these transactions unviable.
Blockchain and cryptocurrencies can help in making micropayments easier. Ideally, blockchain platforms with their decentralization and crypto tokens can reduce, or even eliminate the transaction fees.
However, the blockchain promise of decentralization is yet to be fully realized. Popular cryptocurrency networks like Bitcoin or Ethereum don’t scale well enough.
Bitcoin or Ethereum users need to work with miners to get their transactions through, and the process takes time. There is a transaction fee, and the lack of scalability increases this fee further.
As a result, despite its promises, blockchain isn’t quite the enabler as far as micropayment transactions are concerned. This is where the patent from StormX assumes importance.
Addressing the scaling challenge
StormX is a Seattle, USA-based blockchain-based adtech platform where users join in to perform various microtasks. The company offers microtasks from companies like Uber and Airbnb on their iOS and Android apps. Users can get micropayments for performing these tasks.
StormX was founded in 2014, and initially, they had tried to use the Bitcoin network for micropayment transactions. Bitcoin had a serious scalability challenge, therefore, StormX transitioned to Ethereum in 2017. They also created their STORM crypto token shortly afterwards.
While Ethereum scaled better than Bitcoin, the transition didn’t fully help StormX. Around a million micropayment transactions in a month had caused congestion to the Ethereum network, moreover, StormX needed quicker transactions.
This is the backdrop of their patent, which they had filed in March 2018. Their patented solution involves on-and-off-chain transaction processing, and it uses batches of transactions.
Settlement of micropayment transactions take place in batches, whereas the batches are distributed in a distributed ledger. The periodic settlements of batches are reflected on-chain, and not every micropayment transaction in a batch.
Micropayment blockchain use case: Bracing for better days
Industry-watchers find micropayment as a key blockchain use case, however, the scalability challenges stand in the way. The new patent by StormX will likely pave the way for more efficient micropayment transactions using blockchain.