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Ron Rivest Suggests Probability-Based Micropayments
Karl J. Smith writes "Rivest has solved the micropayments problem with encryption and statistics. You throw away some transactions so that you don't have to pay bank fees, and process the rest. Hiawatha Bray has written an article and Rivest's new company is PepperCoin."
Not so, the customer is always charged the $0,50 (in this example). It is the shopowner who will get $10 or nothing. If he sells a lot of items, probability dictates that his average take will still be around $0,50 per item.
I suspect that on the customer's end they will solve the micropayment problem by forcing the customer to deposit a minimum amount (say $10) into his Peppercoin account, rather than charging every nickel and dime he spends separately. The customers will not mind if they expect to be able to spend these Peppercoins on many goods and services. Thst is where the chicken&egg problem comes in: if there are only a few sites accepting these coins initially, no one will want to depost the minimum $10 to activate his account.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...