Experiment: Can emerging payment methods (bitcoin and ChangeTip) be used on an existing social platform (Twitter) to reward and encourage quality content

Sample Size: 12 Recipients

Total Pool ($USD): $25

Duration: One Work Week Beginning June 8

Results: 3/12 Acceptance (25%)

Background

My professional career has been spent in traditional finance and investing. Increasingly though, I am intrigued by the promise of the blockchain, bitcoin and FinTech innovation in general.

And what is that promise? Nothing less than nearly free, nearly instantaneous payment and settlement of transactions b/w anyone anywhere at anytime. The tech is not remotely there yet but that is the goal.

Once that is established, myriad other applications will capitalize on this new infrastructure. The three that are the most exciting:

- Mircropayments

- Smart Contracts

- Tokenization

This experiment was run to test the promise, in a small way, of the first one.

How It Works

Bitcoin is meant to solve this micropayment problem: there is a great deal of content on the Internet that has small value but is impossible to monetize. The culprit is minimum transaction fees (~$0.30 plus 3%) which make small payments impossible.

A great deal of content may be worth $1 to $2 to users, but if it’s not on an existing commercial platform (iTunes, etc.) it is trapped and thus worthless.

For one, the hassle of paying for it (the actual sending of $) is a turn off to the consumer. And the fees, as % of transaction value, become egregious to the seller.

But bitcoin’s fee structure is percentage only (it varies but should be less than 1%). And off-chain transactions can be totally free b/w users with existing accounts. All of the sudden payments, even for the most de minimus of values, become viable.

Cool!

So what applications/uses might this facilitate?

- One time access to walled garden content

- Monetizing quality internet comments/jokes/suggestions/whatever

- Rewarding stranded but high quality content like essays, songs, videos, etc.

- Walling off Comments Sections (via a small entry toll) to discourage trolls (a Troll Toll!)

- Crowdfunding microamounts from a large group so that the total is meaningful

- And many other things I cant even think of

This specific experiment was meant to test out micropayments on Twitter using bitcoin and ChangeTip.

How ChangeTip Works

ChangeTip has a clever method to facilitate micropayments. The service uses simple instruction codes that are NATIVE to the platform host, including Twitter, Facebook, GitHub etc. This service allows users to freely exchange money (in $BTC form) instantly and for free.**

For Twitter, the command is simple. In a tweet say: “@changetip send [value amount] to @[recipient]”

That’s it. Pretty neat.

The above command summons the @changetip bot which then checks the sender’s account balance and, if the balance is sufficient, immediately credits the sender and debits the recipient the named amount. If the recipient doesn’t have an account, one is made for them.

This happens instantly (well, maybe 10 seconds) and for free.**

Very neat!

ChangeTip also has preset monikers with ascribed values, e.g. “cookies” are worth $1.50 and “beers” are worth $3.50 (not NYC prices but you get the point). You can also make your own monikers of any type and with any value.

I funded my account with $25 worth of bitcoin that I sent via Circle (an excellent, intuitive wallet provider & recent recipient of a $50mm fund raising led by Goldman).

The Experiment

I primarily follow finance folks on Twitter, the so called “FinTwit” crowd. There are a number of users who tweet frequently and post quality content including; breaking news, excellent observations, interesting links, thoughtful commentary, funny jokes, etc.

And they do it all for free. So how about some $BTC for good tweets?

To begin, I noticed that @modestproposal1 went to the trouble of writing his first blog post. It can be found here: https://medium.com/@modestproposal1/irreconciliable-difference-why-tech-and-public-markets-can-t-and-won-t-get-along-51573de7962

MP is a high quality follow for anyone on finance twitter and often has excellent & interesting things to say, especially i/r/t TMT matters. And so to thank him for the inaugural blog post, I sent him a “beer”.

Response: None.

Oh well.

One issue is that the @changetip notification can appear as “spam-y”.

Or perhaps it just strikes the user as weird and/or annoying.

After two days and several more tips, I eventually got my first response!

@skelecap favorited a tweet in which I sent him a chicken wing ($0.75). Unfortunately, I think @skelecap autofavs every mention so that doesn’t really count.

On Tuesday evening, I decided to up the volume and I spammed @the_analyst and @marketplunger with tips.

This time I got a real response.

Not especially encouraging but a start.

On Thursday, I tipped an excellent FinTwit user and got a “thanks but no thanks” response. I asked why and received this thoughtful email with the following reasoning:

that’s part of it. maybe if ChangeTip were a part of Twitter, rather than peripherally related, I might think differently.. at the most basic level, I don’t really want to give some company i don’t know or understand access to my Twitter account.. and then I’m guessing I have to set up a BTC wallet, etc, which is where all of the other fraud/security concerns multiply. if I were a BTC user/interested party, I’d do it… but I’m not. let me know if you have more questions — I scrolled back through a day or two of your tweets and noticed that you were saying your efforts to give BTC via ChangeTip were a failure so far, which is why I wanted to explain my own view…

Well said and valid views.

The experiment wrapped up on a positive note with good engagement from FinTwit powerhouse, @BarbarianCapital

Conclusions

While the conversion rate was low, I am still encouraged. There remains a great deal of consumer trepidation involving bitcoin. It started as a medium for illicit trade and still has some growing up to do. Consumers need to understand the use case and feel comfortable transacting in it. This will take time.

And the ChangeTip infrastructure is a bit clunky and not terribly intuitive. But it is a promising start.

Infrastructure issues are technical and will be resolved with time and money.

And ultimately I am an optimist. The potential is enormous and the size of the untapped consumer surplus is many billions of USD.

I am already planning the next round of experiments …

Thank you for reading!

** There are some material slippage fees/issues but I won’t get into that matter here. This slippage should be resolved over time once the user base grows.