> For the complete documentation index, see [llms.txt](https://cvnnt.gitbook.io/documentation/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://cvnnt.gitbook.io/documentation/introduction/why-use-covenant/stateful-bitcoin-micropayments.md).

# Stateful Bitcoin micropayments

An exciting thing Covenant system enables is verifiable, stateful real Bitcoin micropayments - small payments like buying a cup of coffee without high fees.

Imagine Alice, who loves fresh espresso ☕ from her favourite local shop. She wants to pay for her daily cup with BTC, and the shop (run by Charlie) is happy to accept Bitcoin.

The problem? As Bitcoin’s value rises, sending tiny amounts (micropayments) directly on the Bitcoin network becomes expensive due to fees. A $5 coffee might cost at least $2-$3 in fees - not worth it!

Covenant solves this.

### Stateful BTC micropayments use case:  Paying for your daily coffee with BTC

Here’s how it works:

1. Alice channels some BTC to Covenant. Alice channels some amount of her BTC (say $50–$100 worth) to her address on the Covenant system once. This gets turned into channeled BTC on Covenant - now she can make many small payments quickly and cheaply.
2. Charlie sets up wallet on Covenant for his coffee shop. Charlie creates a simple wallet/address on Covenant so he can receive and manage these payments.

Now Charlie has a practical way to collect and use the real BTC from customers like Alice:

* Alice pays Charlie 0.00005 BTC (assuming \~$5) for her coffee using her channeled BTC.
* Now Charlie is the owner of this amount of real BTC in Alice's channel.
* Charlie can't take more BTC from Alice's channel and Alice can't move the paid BTC amount because the Charlie' ownership is stated in her channeled BTC, meaning these BTC are programmably and statefully locked and verifiably owned by Charlie's address.
* Several customers (Alice + others) buy coffee throughout the day using their channeled BTC.
* All their small payments collect in the Charlie's account on Covenant.
* At the end of the day (or when convenient), Charlie triggers one single algorithmic transaction to release the total accumulated BTC directly to his Bitcoin wallet. 
* One Bitcoin transaction instead of many expensive ones. The BTC Charlie receives is exactly the real BTC paid by his customers - no middleman, no wrapping, 100% verifiable and deterministic throughout the process.

However, Charlie would prefer to collect payments in his own channel using the Covenant BTC pool:

* Alice pays Charlie in BTC for her coffee using her channeled BTC.
* Almost immediately, Covenant system mints (adds) equivalent amount of pooled channeled BTC to Charlie’s Covenant address.
* The Alice's payment will further go to the Covenant BTC pool (a shared, 1:1 backed vault) during the validation master nodes rotation.
* When withdraw, Charlie receives his accumulated real BTC from the Covenant system pool to his Bitcoin wallet.

With Covenant, Alice enjoys her coffee without worrying about high fees, Charlie gets paid deterministically and cheaply in real BTC, and both keep full control - no trusted party or gatekeepers are involved. Bitcoin with Covenant system is a practical reliable everyday payment system, even for tiny amounts.