Changetip to Abandon Centralization, Move Tipping to Sidechain or Payment Channels

By Kyle Torpey Mar 19, 2015 7:00 AM EDT

Although it’s one of the most popular bitcoin apps currently in existence, there are plenty of individuals in the bitcoin community who have nothing but nasty things to say about Changetip. Some bitcoin purists are not fans of the tipping company’s use of off-chain transactions, and others have even claimed that the company’s customer transaction data could eventually be sold off to the highest bidder. In a recent episode of the Bitcoin Knowledge Podcast, Changetip CEO Nick Sullivan articulated his strong stance on privacy and stated that he is ready to put his money where his mouth is when it comes to finding lower trust options for online tipping via bitcoin.

A reluctance to move to off-chain, centralized tipping

Near the end of Sullivan’s discussion with host Trace Mayer, the conversation moved towards the perceived issues with Changetip that are sometimes brought up by certain members of the bitcoin community. Sullivan made it clear that the current setup implemented by his company is not something that was done by choice. He claimed:

“Ideologically, I’d love for Changetip to be a truely decentralized application that performed all of its transactions on the blockchain; in fact, we started out that way. We had to go off-chain because we realized that in architecutral review there was no way the bitcoin network — at least as it’s conceived today — was going to be able to support the kind of volume that we needed. And then, the transaction fees would be too high.”

Sullivan then compared his service to a gambling website where you wouldn’t have a credit card transaction for every single bet; rather, you’d have larger deposits and withdrawals before the user “takes a seat” at the table. This is similar to how Changetip’s transactions only hit the blockchain when users make deposits or withdrawals. This is what allows tips on Changetip’s platform to be free and instant.

[Read More: Opinion: It’s Important to Know the Difference Between Bitcoin Banks and Wallets]

Are sidechains a proper solution?

Changetip Nick Sullivan

Changetip Founder and CEO Nick Sullivan

After providing an explanation of why Changetip uses off-chain transactions, Sullivan went on to claim that the company is willing to “contribute development resources” to finding a solution that brings tipping back to the blockchain. Although he did not give any specifics away as to how it would work, the first possible solution that Sullivan pointed out was the idea of creating a sidechain for tipping. Sullivan said, “[There’s] a tremendous amount of potential [with sidechains], and we’re aligned with [Blockstream] to help execute. We’re willing to donate resources, and we’re willing to use Changetip as a notable first use case.”

What about payment channels?

In addition to sidechains, Sullivan also mentioned payment channels as a possible solution. He explained that sidechains may be possible as an added solution in the future, but “payment channels could happen today.” As a short explanation, payment channels are basically a way to process many smaller bitcoin payments between two parties as one larger transaction on the bitcoin. If this were implemented at Changetip, the tipping service would never have control over user funds.

[Read More: Demo Sidechains to Be Available in ‘A Few Months’]

As one of his final points, the Changetip CEO claimed that the company “reluctantly” moved to an off-chain. centralized system in its early days, but he’d like to bring tipping back to the blockchain. On top of that, he noted, “I’m throwing my money where my mouth is for Changetip and its development resources to make it happen.” It seemed that Sullivan was the real deal as he also mentioned one of Changetip’s employees, Richard Kiss, is being freed up to go out into the bitcoin development community and turn these implementation ideas into reality.

You can follow @kyletorpey on Twitter.

  • Milly Bitcoin

    Yes, they would only use it if it turns out to be less expensive than what they use now. Another case is when one or both of the parties cannot use other methods because of some restriction.

  • Could you give some specific examples of some use cases? I just don’t see the point of using bitcoin when a less decentralized system could be faster and not involve a new currency (bitcoin).

  • Milly Bitcoin

    Because it may be cheaper than the systems they use today. However, as Tim Swanson points out banks already agree to nonrefundable transfers in the current systems they use but I think bitcoin may turn out to be a better option in some use cases.

  • Why would banks use bitcoin instead of Ripple or some other less-decentralized system?

  • Milly Bitcoin

    That is the main aspect and my main point of interest. It is a shift in power away from central authorities and centralized controls. It can be used to put pressure on centralized systems to force them work better. It does not mean that I think all centralized systems are bad but the availability of decentralized systems will force their hand in some situations.
    I has a discussion with a mod at Bitcointalk who pointed me to a video about the Waco incident that discussed all types of problems with the FBI. The vid was actually done by someone I knew personally and who was and FBI agent turned whistleblower. The Bitcointalk mod could not understand why I agreed with the video but did not automatically agree with the entire anarcho-agenda. Any system has problems and merely pointed out problems does not mean the entire system is flawed. I also am sure the FBI whistleblower does not agree with the anarcho-agenda either. He was a bomb technology expert who went into risky areas of the world to collect evidence. He did not start an anarcho-organization, he started with the settlement money he got from the FBI.

  • I agree that Ripple are two completely different systems (actually working on a piece related to that right now), but the point of bitcoin is decentralization. Perhaps I’m reading you incorrectly, but you don’t seem to have a huge amount of interest in the decentralization aspect of bitcoin. I guess my real question is what do you see bitcoin useful for when decentralization is not necessary or wanted? What are the use cases for bitcoin that you’re excited about?

  • Milly Bitcoin

    Ripple is an exchange platform which is not the same thing as Bitcoin so it is not really choosing one over the other as they both can used. The XRP “currency” is really a chit used to facilitate transactions on the Ripple network and is essentially a centralized coin like Amazon coin. The point of ‘destroying’ XRP’s during a Ripple transaction is to allow the Company running Ripple to collect transaction fees without doing it directly in an attempt to avoid regulation that would otherwise make their business plan impractical (by ‘destroying’ XRP’s during a transaction the hope is the value of the remaining XRP will be more valuable and the company sells XRP’s to finance their operation). Mike Hearn said he got involved in Ripple before Bitcoin.

  • Serious question: Why don’t you prefer Ripple over bitcoin?

  • vortex

    If you are an old bitter statist anti freedom loving bitch, then you might say something like that.

  • Milly Bitcoin

    If you are a cultist nut job I am sure you think trace is great.

  • Milly Bitcoin

    You can always tip the Trace Mayer Bitcoin endowment over at the Lifeboat Foundation. They are studying ways to protect the earth from Black holes and aliens. Anything put out by these crazies has nothing to do with “knowledge.” Try signing up for the free Princeton university class rather than listening to podcasts from these people who use Bitcoin to promote other things.

  • Don’t think so, but you can tip this episode of Trace Mayer’s Bitcoin Knowledge Podcast here:

  • Earl Fox


  • vortex

    Excellent article, look forward to the end of centralized corruptible services.

  • vortex

    Disqus does not yet support btc tipping, I don’t understand why when both reddit and youtube do.

  • Good interview. Can I tip on Disqus? 🙂

  • Sam Jones

    This is refreshing. Keep up the good work. I use changetip often.

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