ChangeTip is hoping to drive mass adoption of micropayments on the web by using Bitcoin plus existing social networks as the medium to deliver feeless micro donations to content creators. Which means part of its mission is “to spell the end of clickbait“. And that’s something anyone who spends time online should really be rooting for.
Those who want a better business model for online content, i.e. one that isn’t based on increasingly invasive surveillance and increasingly insidious advertising, have long held up the hope that micropayments could power an alternative rewards-based system, where the cumulative act of lots of users donating small amounts to the services they use and love adds up to something substantial. It’s a great idea in principle but in practice there are ongoing barriers to creating a web powered by micropayments — transaction fees being one of the biggest.
The closest we’ve yet come to a functioning, mass adopted micropayment model is arguably app stores, where the mobile device user has attached their payment credentials to their device account or carrier — allowing them to purchase apps for small amounts of money with a few clicks. But that only works within a particular walled garden, be it Apple’s or Google’s. Appreciating content all over the web regardless of device used or OS favoured is more difficult.
There are startups trying to tackle this problem, such as, for instance, social micropayments service Flattr. But Flattr still involves a 10% cut creamed off your donations. Which, when you’re talking small amounts in the first place, is rather a large proportion of your tip not going where you’d like it to. Because it’s using Bitcoin as the donation medium, ChangeTip can offer micropayments that don’t come with a fee-shaped chunk cut out.
On the ease of use front, ChangeTip’s tipping system works by mentioning the person you want to tip in a tweet or other public social missive (the service currently supports tipping on Twitter, StockTwits, Reddit, GitHub, YouTube, Google Plus and Tumblr), the amount you want to tip them (which can also be a generic term like ‘beer’ — which ChangeTip has assigned a dollar value to) and that’s it. ChangeTip handles the transaction and the creation of the Bitcoin wallet when the tip collector logs in to pick up a tip. Tips that aren’t claimed are returned to the sender within seven days.
“We’re building a micropayment infrastructure for the web. Micropayments have been talked about for a long time, clear back to [this] in 1999. Digital currencies like Bitcoin make now the right time because they have low transaction fees, they allow for pseudonymity, and they act as currency neutralizers,” says founder Nick Sullivan, a serial entrepreneur with an engineering background and an interest in Bitcoin (he’s an active partner in the largest Bitcoin syndicate on AngelList).
“ChangeTip aims to help drive the mass consumer adoption of Bitcoin by creating a micro transaction platform for the web. Circle, Coinbase, Bitpay and others are working on the on-ramps and off-ramps, we are building out the tools to move money around online on the main highway of the Internet: social media.”
ChangeTip works by transacting tips off-blockchain — until the point when any money is actually deposited or withdrawn.
“We’ve built an off-blockchain ledger, which makes sending and receiving tips free and instant. We only do a Bitcoin transaction when you deposit or withdraw funds. The analogy here is that you wouldn’t have a gambling site do a credit card transaction for every blackjack hand, only when you sit down and leave the table. And of course our users don’t have to worry about the particulars of the tip transactions themselves. We’ve built out an extensive set of social network integrations, where we monitor for mentions of @changetip and then react with a set of robots that parse the tip, notify the recipient, and perform the transaction.”
In terms of rivals, Sullivan identifies DogeTip as most similar but notes that that service only works with the DogeCoin cryptocurrency, making it even more crypto-fringe than Bitcoin.
He also argues that ChangeTip’s focus on “enabling a new set of behaviors” sets it apart from others in the space. “Bitcoin tips are sent instantly and without a fee, allowing for micro-payments of less than a penny. This effectively changes the concept of a ‘share’ or ‘like’ into financial appreciation, which can quickly add up to substantial amounts of money,” he adds. “Once you’ve become the easiest way to move money around online, there are a lot of interesting use cases.”
Among the potential use-cases Sullivan envisages for ChangeTip are tipping on Quora for “high quality, thoughtful answers” — so perhaps micropayments could fix bad comments and tame trolls too? (Here’s hoping…); donating to content creators on services such as YouTube, SoundCloud and Instagram to reward quality; viewing blogs ad-free for 30-days by donating directly to the blogger; skipping pre-roll ads on YouTube by paying a tenth of a penny per video watched; social gifting to friends and family; and rewarding a Github user who contributes a patch that fixes your problem.
ChangeTip launched its service back in February, with support for Twitter, StockTwits, Reddit and GitHub, adding YouTube, Google Plus and Tumblr earlier this month. In terms of usage, it’s got “tens of thousands of users” so far who have linked their social media accounts to ChangeTip and sent “tens of thousands of dollars worth of tips”. The startup itself has raised $750,000 in funding to date from what Sullivan terms “strategic angels” — i.e. who have expertise in payments, fin-tech, bitcoin and the consumer web. ChangeTip investors include Gil Penchina, Howard Lindzon, Brock Pierce and Adam Nash.
In terms of its own business model — given that it’s not taking a cut of tips — Sullivan takes a big picture view, seeing potential for the ChangeTip micropayment infrastructure to both disrupt existing large players on the web and create new revenue streams based on encouraging new behaviors.
“In the former category, PayPal, Western Union, and Visa/MC for person-to-person payments. In the latter, disrupting the online advertising ecosystem sounds fun. We would love to spell the end of clickbait,” he says, adding: “We call ourselves a Love Button for the Internet. We aim to revolutionize appreciation and giving. Our hope is that these small tokens will add up to a fundamental change in the quality of content that is available and prevalent on the web.”
To make that grand vision happen ChangeTip is going to need other startups and businsses in the Bitcoin ecosystem to flourish in tandem, to act as additional emollient to grease the wheels of its vision of easy-peasy micropayments. Safe to say, there is not much about Bitcoin that has been easy to date.
One big blocker to ChangeTip adoption — beyond the huge shift in online mindset that currently says content must be free — is that tippers still need to buy some Bitcoin to tip, and those who receive tips will probably want to exchange their tips for fiat currency so they can actually buy that beer they’ve been tipped (unless they find a watering hole that accepts Bitcoin).
“You’re right to point out that the process of buying and selling Bitcoin is still non-trivial,” adds Sullivan. “Circle, Coinbase, and others are working hard with well-funded companies to solve that problem, and they are making great progress. We’re watching their progress closely and integrating where we can. We are also exploring other options for making it easier for ChangeTip users to top up their wallet, such as with a credit card or ACH.”
But the idea of the tipping going on regardless of whether a tip receiver has a Bitcoin wallet yet is one way to encourage people to think different — i.e. if they get to see ChangeTips flowing around their social media sites, they can start to imagine what online life would be like if more people got involved with micro donations for great content.
Shifting attitudes — and online business models — is the core change referenced in ChangeTip’s name. So the strategy they’re going for amounts to let the social tips flow for micropayments to grow. I for one will be watching keenly to see whether they can build momentum.