Defi and blockchain smart contracts offer a new way to pay people for services.
Currently, if you hire someone (or are hired) for a specific service (e.g. babysitting), there are three options for how the payment happens
1 - You pay in advance
2 - You pay after service is rendered
3 - Funds are given to a 3rd party to be held for later payment (escrow)
#3 isn’t used much in everyday life, so most people use #1 or #2.
However, there are some drawbacks, and trust required on both sides.
Getting paid upfront doesn’t work if you aren’t sure how long the service will be needed, so in many cases, that isn’t an ideal option.
Getting paid after can be financially challenging for people who really need the money, and can’t wait until a contract is complete (e.g. babysitting for an entire week and getting paid at end of the week).
So, now there is a new option - streaming payments via smart contracts. The babysitter could now get paid every hour, or even every minute based on the agreement (contract).
If it was unclear how long the babysitting was needed, the streaming payments options is like a faucet that turns on and off as needed.
Where else could this be used?
1 - Internet access. Instead of having to pay for an entire day of access, you just pay for the seconds, minutes or hours that you use
2 - paid parking. Instead of guessing how long you will need to park, you pay for the time you use. Some parking garages charge you afterwards for how long you park, but most bucket you into tiers (<1 hour, 1-3 hours, 3-12 hours, etc.) and not actual usage
3 - Live concert access. Pay an artist for the time you spend listening to their streaming concert. Sort of the iTunes idea where you pay by the song, but in this case, pay goes directly to the artist
4 - consulting agreements. Tired of getting paid Net-60 for your consulting work? Negotiate a streaming payments agreement to avoid having to wait months to get paid
5 - Renting space. Pay for space (office space, event space) while you are using it, and once you are done, leave. Not an ideal option for every type of space rental, but could change situations where you aren’t sure how long you need the space, and don’t want to overpay for what you don’t need.
6 - Subscriptions. No need to pay for an entire month of gym membership. Stream the payment throughout the month.
No middle man (agent, bank or 3rd party) is necessary for streaming payments. Therefore, this is particularly attractive option to cost conscious people who don’t want to pay a premium, but want the benefits of this option.