Reddit calls Tuesday \"Tipping Tuesday\" now, and we're diving into one of Bitcoin's newer applications: the simple act of tipping. Content drives marketing, but turning that content into revenue has
Reddit calls Tuesday "Tipping Tuesday" now, and we're diving into one of Bitcoin's newer applications: the simple act of tipping.
Content drives marketing, but turning that content into revenue has stumped the web. Thousands of dollars flow into content creation every year at small companies with disappointing returns. Google demands constant improvement and fresh material, forcing businesses to spend more without clear paths to profit. Writers who blog on the side face the same problem: they want to earn from their work but won't sacrifice their audience by plastering ads everywhere.
Some Bitcoin-focused companies are attempting to solve this by bringing micropayments and cryptocurrency into everyday use. ChangeTip operates a tipping service. A single button allows Bitcoin users to send money to writers and creators they enjoy. Coinbase, which primarily offers wallet storage, launched its own tipping tool. For Coinbase, tipping is secondary. The wallet remains the center of their business.
ChangeTip brands itself as a Bitcoin "love button." The mechanics are simple. You write a comment mentioning a specific amount, and the ChangeTip bot transfers those funds to the original poster with a message explaining the source. The bot grasps standard currencies and numbers. It also understands shorthand like "one beer." Users can invent their own shorthand with attached values, making the service flexible across different languages and websites. A $25 ceiling exists by default, but people can change it.
The recipient must accept each tip. Unclaimed tips revert to the sender. Adoption benefits from a built-in social component. For the payment to trigger, the sender has to make a public comment naming ChangeTip and the amount. This public mention creates space for organic sharing. The service works across Facebook, Twitter, Digg, and expanding elsewhere. Tip containers existed before, and PayPal created Donate buttons, but those don't demand public acknowledgment. ChangeTip does. That distinction matters. The company constructed ChangeTip atop Coinbase's API.
Coinbase follows a different path. The company unveiled its tool last week. It supplies an insertable button comparable to ChangeTip's comment system but aimed at websites rather than social platforms. Website owners can implement the button directly. Tippers can use a Coinbase account or another wallet. Coinbase selected 300 bits as the default, approximately 10 cents USD, and a single click completes payment. For established Coinbase users, this removes extra steps. Coinbase carries weight as a known company, and that recognition lends legitimacy to Bitcoin micropayment concepts.
Neither service charges fees. ChangeTip runs transactions off-chain, separate from the Bitcoin network itself. This avoids blockchain fees and accelerates transfers. People fund a ChangeTip wallet from Coinbase or elsewhere, then distribute tips from that pool. Coinbase follows the same pattern, drawing from Coinbase accounts or alternative wallets. Fee elimination matters for micropayments. Fees ordinarily destroy the economics of tiny transactions. ChangeTip plans to impose a 1 percent withdrawal fee beginning in early 2015, though the service must generate income at some stage.
Will adoption happen? Bitcoin veterans tolerate higher fees without complaint, so 1 percent shouldn't deter them. Trust stands as ChangeTip's primary challenge. Most tips equal a few pennies, and recipients must create an account with an unfamiliar service to obtain a wallet they didn't expect to acquire. Coinbase cuts through this obstacle. Current Coinbase users require no additional signup. Your existing Coinbase wallet works with the tip button. You can also point it toward other wallets if you store coins elsewhere. Coinbase's button lacks the ingenuity of ChangeTip's mention approach, but the company's reputation adds substance.
Room exists for both. They operate on distinct models. Enthusiasts and content creators will use both and tip often. ChangeTip is pursuing Reddit as a growth target. Broader adoption demands that regular people accept Bitcoin as a standard payment mechanism. Worries about security and regulation could stall the expansion until that acceptance grows. As these obstacles recede, expect additional companies to pursue this path in 2015.
