Why isn't bitcoin used for memberships, subscriptions, and other recurring payments?

-"Have you seen any solutions for using crypto to pay for membership payments, recurring payments, subscriptions, and the like? Is there a philosophical issue that needs to be discussed, or are we just waiting for technology to catch up?" What a great question asked by patron Yes2Crypto! And it's one that really is at the heart of my business. As you probably know, my work and that of my team is funded entirely from voluntary donations and subscriptions, through platforms like Patreon. And a lot of people question why I wouldn't use crypto instead. Now, I also accept crypto donations, but that's beside the point. It has to do with this.

Push vs pull payments

It has to do with the fact that it's not easy to do membership and subscription services with crypto, and the fundamental issue is a philosophical issue or rather a design issue that comes to the core of the philosophy of crypto systems. And that is that all crypto systems are push systems, meaning that if you want to make a payment, you have to push that payment. Now this seems like an obvious thing, but if you think about it, bank accounts, credit cards, debit cards and things like that are all pull systems; meaning that somebody else reaches into your bank account and pulls out some money. And most of the time they pull out the amount of money that you authorized, but sometimes they pull out whatever amount of money they want because it's not your money. It's the bank's money that they're holding on your behalf, and might eventually give back to you. So one of the problems with pull systems is that you do not control who has access to your accounts. If anyone can pull money and then pull it again and then pull it again, hey, have you ever tried to cancel a gym membership? Mm-hmm, yeah? Three years later you've never been and they're still billing you $29.99 a month or $99.99 a month, and you can't cancel that thing? Well that's the problem with pull systems. And the myriad other problems with pull systems. Crypto is more like cash or a check. If I write someone a check, that does not authorize them to then dip into my account and take money again and again and again. If I give someone cash, that does not give them a way to reach into my wallet and take some more whenever they please. And crypto uses that mechanism, it's a push mechanism.

What you need to set up recurring cryptocurrency payments

So in a push mechanism, if you wanted to set up a monthly subscription, you would have to have a wallet that basically every month sends, automatically, to a destination. And now we run into other problems because in order to do that, that wallet would have to be one, either a custodial wallet, which means you do not control your keys, or two, it would have to be a hot wallet, which means that the keys are online so that the server, or desktop or laptop application, can execute a transaction once a month. And of course that's problematic because we don't keep crypto online, at least we only keep small amounts of crypto online because we don't want it easily stolen.

Using the Lightning Network for subscription based services

However, if you do keep a small amount of crypto online and you do want a system that can do these kinds of automated payments, here's an interesting thing, the Lightning Network and layer two networks like that which involve smaller payments, and they involve hot wallets that are online so you can do interactive payments, you can do micro-transactions, you can do very fast payments, are actually ideal for these kinds of subscription services and for the kind of pay-for-a-service instantaneously thing that you might have when you're reading an article or trying to do some kind of micro-payment. So I anticipate that we are going to see subscription based services built on top of the Lightning Network where your Lightning wallet will be hot, and you can have it loaded on your desktop or browser all the time, and then you can have it automatically push a payment to a subscription service every month. Thank you! If you enjoyed this video, please subscribe, like and share. All my work is shared for free, so if you want to support it, join me on patreon.com/aantonop Thank you!