Crypto-currencies go mainstream with new Facebook tipping apps

By Michael Carney , written on June 6, 2014

From The News Desk

Crypto-currency tipping may be about to go mainstream. This as developer Alejandro Caballero posted to the r/Dogecoin subreddit late last night that Facebook has approved a pair of dogecoin and multicoin tipping apps (inspiringly named The Doge Tipping App and Multicoin Tipping App). The developer called it a “double hit!”

The latter app will support 14 altcoins, including Dogecoin. Caballero explains the decision to incorporate more than a dozen less mainstream coins as “the most pure spirit of shibing,” in a nod to the Shiba Inu dog which has become the unofficial mascot of Dogecoin.

Caballero writes:

Some days ago we got The Doge Tipping App being the first of its kind. Some adjustments where [sic] made during the review, but it was already approved.

When we submitted the Doge-only app, the Multicoin Tipping App was also submitted. But we needed to change several things to have it finally approved, which happened a few minutes ago. It’s unclear what exactly the change entailed, but it’s a fair bet they had something to do with user privacy and security.

Tipping, and micro-payments in general, are among the more interesting and unique applications of crypto-currencies. By virtue of existing outside the traditional banking system, bitcoin and its brethren are able to avoid the vast majority of payment fees levied by legacy financial institutions. Whereas a $0.25 cent credit card payment may cost the recipient $0.35 cents in fees, and thus be uneconomical, when sent with crypto-currencies, those fees shrink to almost zero.

With these new economics, a whole new world of applications becomes possible. For example, the Chicago Sun Times became the first major publisher to test a micro-payments paywall, partnering with BitWall for the service. Rather than paying several dollars per month to subscribe to the newspaper, readers could for the first time pay a few pennies to read a single article of interest.

Dogecoin has grown almost entirely through tipping pennies or fractions of a penny online to reward users for posting insightful or funny comments, sharing valuable information, or otherwise contributing to the community. In the past, Dogecoin tipping has been largely confined to Reddit and other crypto-currency forums. Caballero’s apps could change this by bringing the practice to Facebook’s more than 1 billion global users.

The most interesting aspect of this news is that it potentially offers a practical, utility-based entry point for everyday consumers to begin using crypto-currencies. Many users will likely receive their first coins through tips, rather than proactively going out and buying them. But through either curiosity or pay-it-forward thinking, it’s likely that these coins will be put back into circulation through future tipping. It’s not hard to imagine how this phenomenon blossoms. A similar motivation underlies the MIT Bitcoin Project, which gifted $100 in bitcoin to every undergraduate student in an effort to seed the community, spread awareness, and drive usage.

The Dogecoin and Multicoin tipping apps apps aren’t the first to bring crypto-currency payments to Facebook, but they are the first to focus solely on tipping. Last month, QuickCoin released its own Facebook wallet app allowing users to send digital currency to among friends on the social network.

Caballero’s Dogecoin and Multicoin are limited, in somewhat quirky fashion, to tipping by members of approved Facebook groups. But as soon as a user joins one of these groups, they can begin tipping non-group members across Facebook, even those with whom they are not friends. Caballero explains that this functionality “promote social interaction without messing with user's preferences or security,” a key reason Facebook approved the apps. Further, users must update their Facebook privacy and security settings to approve other users tagging them in posts, a key element of the tipping process, otherwise attempted tips will fail.

Approving these app is an interesting move for Facebook and may signal a shift in policy. The social network’s TOS currently read:

Games on or Mobile Web must use Facebook Payments as their sole and exclusive payment method for all virtual goods and currencies made available to users within the game. All other payment options are prohibited within games on or Mobile Web unless they go through Facebook Payments rather than directly through that payment option. By "Payment Method" we mean any method that allows a user to complete a transaction in a game that is on or Mobile Web, including, without limitation, by exchanging monetary value for virtual currency or virtual goods, whether directly at the time of purchase or via any previous transaction such as the user’s earlier purchase of a prepaid gift card or electronic code.
Caballero hasn’t explicitly stated whether his Doge and Multicoin tipping apps use Facebook Payments, but the mere fact that Facebook is now embracing crypto-currencies is a notable development.

Of course the major limitation of these apps is that they don’t support bitcoin, which is by far the largest and most ubiquitous of all crypto-currencies. Tipping hasn’t really caught on among bitcoin users to the degree it has within many altcoin communities. But a simple, mainstream application could go a long way toward changing that. Bitcointip and other applications already allow tipping within Reddit, but Facebook is obviously the 800,000 pound gorilla of online communities.

Going forward, Caballero and his team plan to extend these apps beyond Facebook to create similar plugins across other online networks including WordPress, Drupal, Joomla, Xenforo, PHPBB, and others. The broader vision is to create a universal tipping platform that would function across the Web.

For crypto-currencies to jump the divide between geeky underground technology and mainstream financial instrument, there needs to be greater awareness, easier access, and more utility based applications. At least in concept, Facebook tipping apps would seem to check all three boxes. In other words: this could be big.