In 2013, a bitcoin tipping service was started by the for-profit company ChangeTip (similar name — not ChainTip). They were extremely popular, experiencing a viral phase where over 10000 tips were processed in a single day. ChangeTip enabled Bitcoin tipping on Reddit, Twitter, Facebook, GitHub, Slack, Tumblr, Twitch, email, and text messaging

Unfortunately, their business model failed to sustain operations. In November 2016 they announced their shut down, asking users to manually reclaim their funds.

Almost two years prior, Emin Gün Sirer foretold their fall within an excellent critique of their mode of operation.

Enter ChainTip…

ChainTip moves away from an exchange-type model where users deposit and withdraw money from a central server that holds all user funds.

Rather, it adopts an on-chain model where tips pass from one wallet to another. After each tip, users remain in full control of their funds since the private keys are stored in their wallet on their device.

The name ChainTip was chosen since tips are made on-chain. That is, all tips from wallet to wallet are transactions recorded on the block chain. This is in contrast to the exchange-type model, where tips are user balance alterations on the tipping server’s database.

Only in the case of tipping a new user, is a tip temporarily held by ChainTip. If not claimed within 7 days, this tip is returned to the tipper using the address they linked with ChainTip. See this flow diagram for a more detailed view of how ChainTip works on reddit.

This tipping model shares some similarities to the model used by ShapeShift to allow users to convert between cryptocurrencies on the fly while protecting them from the custodial risk of storing their cryptocurrency on an exchange.

By adopting this on-chain model, ChainTip seeks to address the following problems highlighted in Emin’s critique:

ChangeTip can’t monetise so may have to sell user’s data to monetise

- The singular maintainer of ChainTip will never need to monetise the service. ChainTip would rather be closed down than become a middleman. Current operating costs are $20 per month. These costs are projected to remain constant even in the face of significant usage growth. Tipping should be as frictionless as possible and when you tip on-chain, you already have to pay a tiny fee to the miners. If you would like help with running costs of the service, please donate Bitcoin Cash here. Users link the usernames of their social media accounts on the ChangeTip platform. This sensitive information should not be collected by anyone

- When you use ChainTip on each platform you link a different address. This naturally results from the way wallets generate new receiving addresses. The conversation is spammed by tipping bot responses

- ChainTip limits its response to a single line so as not to take up conversational space. There is also the option to send a private tip for those that don’t require the public display of generosity. Storing all user funds on a single server creates a centralised risk as a hacker or a malicious service operator could steal everyone’s money

- on-chain tipping distributes risk. Tips always make their way into a user controlled wallet where the user holds the private keys. Your keys, your bitcoin, not your keys, not your bitcoin. A hacker or malicious service operator can, at most, only take future tips, until someone realises. Tips accumulate on the ChangeTip server. Many users do not interact with their tip and there is no way to get this money back to anyone

- on-chain tipping means that each tip remains as a single unspent transaction output until it is either sent back to the tipper, or forwarded on to the tippee. ChainTip does not want tips building up on its servers with no automated way to return them. ChainTip could shut down at any time, and any temporary holdings for new tippees can be returned to the tipper.

So, why use Bitcoin Cash?

Bitcoin Cash (BCH) is the fork of Bitcoin that continues the original vision of Bitcoin as peer-to-peer electronic cash. BCH functions the same way Bitcoin did from 2009–2016; the Bitcoin Core fork (BTC) does not.

The Bitcoin Cash community is dedicated to maintaining BCH as a efficient medium of exchange through on-chain scaling by steadily increasing the block size limit. BCH is thus a perfect candidate for an on-chain tipping service.

From a long history of personal experience, ChainTip’s maintainer is of the opinion that Bitcoin has now been co-opted. Occam’s razor would suggest a greed motive: that the Bitcoin developers with commit access have colluded in an attempt to profit from their control over the Bitcoin code base. BlockStream, the for-profit company they founded, had more power to block a consensus change in their advantage than to enact one. The obvious target was the 1 megabyte block size limit that Satoshi inserted into the code in 2010 to prevent a chain split. Satoshi himself said that this limit could be increased when needed:

Satoshi on the blocksize limit

By limiting the size of the blocks, user’s transactions are forced off the BTC block chain onto secondary layers where fees can be extracted. The Bitcoin Core developers failed to realise that, unlike gold, which holds a unique position in the table of elements, there is nothing at all special about the BTC token. Before the hard fork that created BCH in August 2017, Bitcoin was first and had the largest network effect. Now, the BCH fork is just as old as the BTC fork and its coins are just as fairly distributed. Also, since the realisation of the artificial fee-market in 2017, where average fees rose to upwards of $50 per transaction, BTC’s network effect has been decimated with market dominance dropping from 86% in February 2017 to 38% today.

ChainTip’s maintainer believes that cryptocurrencies will compete for dominance and that everyone will be better off if one of them becomes dominant through long term economic consensus. When one currency becomes the agreed upon store of value, medium of exchange, and unit of account, people will be able to rely on it when saving for their retirement or funding their children’s education. They’ll lose no sleep over confiscation, quantitative easing, or another cryptocurrency becoming more dominant.

It is now extremely unlikely that BTC will turn out to be this dominant cryptocurrency with an unstoppable network effect. Even the long-awaited lightning network will not save it.

Thankfully, BCH managed to survive the hard fork in August 2017 and is the Bitcoin ChainTip now supports. Even though a flippening is now necessary, and will destroy some short term confidence in cryptocurrencies as a store of value, it will be worthwhile long term.

Trade-offs

For the increased control over your funds, there is a small usability trade-off: you have to take out your wallet to send a tip. The same effort is required when exchanging cryptocurrency through ShapeShift. If you think that is going to be too much effort, please reserve your conclusions until you’ve tried using the service. Multiple people have been surprised at how little effort sending tips with ChainTip is, contrary to their initial expectations!

reddit user on UX

tippr (reddit/twitter) and tipmebch (telegram) are other great Bitcoin Cash tipping bots that use an exchange-type model.

Next time you think about tipping someone on reddit or GitHub, give ChainTip a go. It may be easier than you think. It is definitely more secure to hold your own keys! Happy tipping!

Usage instructions: reddit | GitHub