Micropayments Inched Closer to Mainstream in 2018
12.26.2018

Anyone watching crypto’s spectacular crash this fall could be forgiven for wondering, Who would even want to use cryptocurrency when the prices are so volatile, and currently so low? 

You’d think no one, but it wouldn’t be true. Visual artists want to, and amateur buyers. Musicians and their fans. Operators of platforms that can’t make money online any other way. And notably, people who want to donate to children’s cancer research.

Unlike the largely (and in many cases, rightfully) maligned crypto buyers and spenders, the people who use the likes of bitcoin, ether, and XRP to send micropayments generally have good intentions. They want to support small-time artists or make it easier to donate to charities. In 2018, use cases for micropayments began to gain a bit of momentum even as the price of cryptocurrencies tanked. One of the most notable uses was the XRP Tip Bot.

Wietse Wind, who lives in the Netherlands with his family and two parrots, got into Ripple in 2016 after seeing an interview with David Schwartz, the company’s CTO. Wind was impressed with the technology’s speed and the lack of fees associated with sending money. Inspired by Reddit, which is full of bots that do things like flag possible advertising content, and offers virtual coins to purchase Reddit silver, gold, and platinum awards, Wind saw a potential use case for Ripple. “I thought it was a nice idea to build a tip bot where people could fund their accounts with their own ledger transactions and send small tips to other users by just sending a reply,” Wind told BREAKER over video chat.

Wind launched the XRP Tip Bot in the XRP and Ripple subreddits in November 2017, as cryptocurrency prices climbed. He eventually added the tip bot to Twitter and Discord. Wind had no idea that his modest invention would end up raising thousands of dollars across multiple charities. He had very few expectations at all.

As of November 8 this year, tip bot users sent a total of 93,763.28 XRP (worth $31,156.84 at time of writing). The vast majority of these micropayments, about 63,000 XRP, took place on Twitter, where users can send a maximum of 5 XRP at a time (Wind has also created an XRP Tip Bot app where users can send up to 20 XRP, making it more like Venmo). The average tip amount sent on Twitter, according to Wind’s November statistics, was 1.24 XRP, currently worth about $0.36. More than a million people globally used the tip bot between mid-October and mid-November, though most tips came from the U.S.

 

Darker areas show greater concentration of XRP Tip Bot use. Image provided by Wind

TheChain: Image

People use the bot for a variety of reasons. Taxi drivers in the U.S. and Dubai take advantage of the app version to get tips from passengers. People send their friends tips on their birthdays, or use the bot to applaud good content, like by tipping the writer of a well-executed Twitter joke. One person sent tips to an XRP user who was in the hospital and hated the meals so he could buy better food. Others use it to “spread the word about XRP,” said Wind, who receives plenty of tips himself for creating the bot. He forwards most of those to “other developers or charities.”

Funding charities has emerged as the XRP Tip Bot’s most significant use case, thanks in part to a Texan named Cyle Moore. In 2017, Moore, a director of enterprise resource planning at an aviation services company, started learning about cryptocurrency. That summer, he found the XRP Tip Bot. “I was like, wow,” he told BREAKER. “You could really use that for microdonations for charity.”

Two of Moore’s sisters died when he was young, and he’s been a longtime donor to St. Jude Children’s Research Hospital. When he came across the XRP Tip Bot, he knew he was onto something, so he contacted its creator. Wind helped him set up a website for a St. Jude-specific XRP Tip Bot application. Since then, Moore’s efforts have raised a total of 23,083.04 XRP (at the time of writing, around $8,200.00) for St. Jude.   

A data visualization of the Twitter accounts that have sent tips to St. Jude. The largest, kingblue_XRP, belongs to Moore.

TheChain: Image

It was relatively easy for Moore to tap into what he described as the “super strong” XRP community to get donations for the research hospital. “I didn’t even start on Twitter until seven months ago,” he said, but he quickly accumulated over 2,000 followers and got traction for his project. He now works actively with St. Jude’s SVP of products, architecture, and delivery David Jacques (who happens to be an ether miner) so the hospital can manage its own XRP microdonations. 

Moore’s work has inspired others to use the XRP Tip Bot for charitable donations. Twitter user @WanderingWare has started the XRP Tree Project, which uses the tip bot to get funding for planting trees. There’s also an effort to raise money for children’s coats and one that aims to bring better water filtration to locations in Africa. The IRS has classified cryptocurrency as “property” for federal taxes, meaning they aren’t taxable income for nonprofits, which could further encourage nonprofits to add crypto-friendly tools to their fundraising arsenals. 

In addition to seeking direct XRP tips, Moore also uses Coil in his St. Jude funding. A startup founded in May by Stefan Thomas, former CTO at Ripple, Coil lets people who install its code in their websites make passive money from visitors. If someone with Coil enabled visits the St. Jude funding page, the hospital gets tiny amounts of XRP sent to it every few seconds. “If a website gets a lot of traffic,” said Moore, “they could end up getting two to five XRP per day.”

Coil and the XRP Tip Bot weren’t the only micropayment applications introduced in 2018. Bitcoin-based Blockstream released its micropayments processor, Lightning Charge (which works with the company’s Lightning Network) in January. Since Lightning Charge is open source, Blockstream isn’t tracking exactly how it’s being used. However, Daniel Williams, community manager at Blockstream, told BREAKER the smallest payment made through Lightning Charge this year was one Satoshi (currently $0.000032). The sender used it to paint a single pixel on the collaborative website Satoshis.place.

Williams noticed people making cryptocurrency micropayments even during the massive price drop this year. “I think people are excited to use this transformative technology as it opens up many more use cases for bitcoin,” he said.

That might be true, but micropayments aren’t generating impressive results just yet. Imogen Heap’s Mycelia project aims to create a sustainable ecosystem for musicians using micropayments, but her initial trial with the funding model netted her only $133.20 for the song “Tiny Human” in 2016. DADA, which aims to one day provide a basic universal income to artists who create and sell digital works on its platform, so far has paid out about 15 ether (then equivalent to about $10,000) across 26 artists in the first half of 2018. Buyers spent an average of $50 in ether on the platform this year, according to DADA cofounder Judy Mam, while the average price for a “digital print” was just $15.

Some efforts that wanted to make micropayments work didn’t even make it to the money-making stage. Blockchain journalism project Civil depended in part on micropayments to fund its newsrooms, and ended up instead with a bailout from backer ConsenSys. Its business model—a mélange of micropayments, crowdsourced fact-checking, and a network of independent newsrooms—proved too confusing for those who might otherwise have invested. To have a stake in Civil’s governance and pay creators of good journalism, users had to buy CVL tokens with ether—a hard sell for people unfamiliar with cryptocurrency, like most of Civil’s target demographic. One takeaway: for micropayments to really catch on, they have to be straightforward to use, like the XRP Tip Bot.

Maybe cryptocurrency micropayment models aren’t ready to save entire challenged industries (like media) or build sustainable income streams for artists, but if interest is wide enough—for something like funding a popular charity—this year proved there are practical use cases. 

Moore’s “longterm goal” for the St. Jude tip bot is lofty. He wants to raise a total of $1 million worth of XRP for the research hospital. “The idea here is the more XRP I can collect and the quicker the price goes up, the shorter that goal is,” he said. “I’m keeping a running tally right now. I need $44 per XRP for [St. Jude’s XRP holdings] to hit a million.”

With the price of one XRP currently hovering around $0.36 and the tips coming in such small increments, it might be quite a while until he reaches that target. But that’s the nature of micropayments, and that’s likely how we’ll see their adoption in 2019. Cryptocurrency micropayments don’t bound toward goals; they inch toward them.