US social media giant Twitter is expanding its Tips feature to include the leading cryptocurrency, bitcoin.
Twitter, which has over 200 million users, introduced Tips in May.
“We’re making it easier to support the people driving the conversation on Twitter – whether you want to support a content creator, help someone fundraise, tip someone who just needs some help or thank someone for making you laugh,” Twitter said at the time.
Twitter said it was introducing Tips initially for a limited group of English-speaking Twitter users around the world. This group includes creators, journalists, experts, and non-profits, Twitter said.
Tips is currently restricted to iPhones users, though Twitter said it would soon be introducing an Android version.
Yesterday, Twitter announced it was extending Tips from dollar-only payments to include bitcoin, via a collaboration with Strike, a payments app built on bitcoin’s ‘Lightning’ network.
Lightning is a layer of technology built on top of the bitcoin network to enable cheaper payments. On bitcoin’s base layer, the cost of a single transaction was $20-30 for an extended period earlier this year.
However, making bitcoin payments cheaper by using Lightning comes at a cost.
Payments on bitcoin’s own blockchain can be conducted by anyone running a node on the network.
But the cheaper payments available on Lightning come at the expense of risk exposure to the operator of the Lightning node, such as Strike.
“We’re making it easier to support the people driving the conversation”
Twitter’s Tips feature currently uses several other third-party payment providers, including Bandcamp, Cash App, Patreon, PayPal and Venmo.
Twitter takes no cut from payments sent as tips, the social media firm said.
Strike, which was launched last year, has been closely involved in the recent move by El Salvador to make bitcoin legal tender.
In June, Twitter’s CEO, Jack Dorsey, told the Bitcoin 2021 conference that bitcoin could offer the ability to store value to the world’s unbanked and under-banked. He also reiterated his commitment to the leading cryptocurrency.
“For me, bitcoin changes absolutely everything,” Dorsey said. “What I’m drawn to the most about it is the ethos, what it represents… Whatever I can do, whatever my companies can do to make [bitcoin] accessible to everyone, that is what I will do for the rest of my life.”
Twitter users able to accept tips and wishing to do so in bitcoin will need a Strike account, according to a report in the Block.
However, Twitter users tipping somebody else will be able to use any bitcoin Lightning wallet to send tips to someone’s Strike account, the firm said.
The social media firm’s reliance on third parties like Strike to process payments leaves it exposed to increased financial crime risks, according to David Gerard, a widely followed cryptocurrency commentator.
“You will absolutely get the people who currently run bitcoin scams using this functionality,” Gerard told New Money Review.
“Twitter will then claim they had nothing to do with it,” he said.
In a company blog, Twitter said users of Tips would be subject to third-party payment platforms’ terms and conditions.
These include observing the ‘know-your-customer’ (KYC) and anti-money-laundering (AML) rules set by the world’s financial regulators.
“Because we allow users to interact with both fiat currency and bitcoin, we are required to comply with KYC/AML laws,” Strike CEO Jack Mallers said last year when launching the service.
The popularity of tip-making apps has soared in the last decade, making them an area of focus for the social media giants, many of whose previous attempts to get into money have stumbled.
Facebook was last year forced to dial down its attempts to launch a global currency called Libra, though it has enabled payments via its WhatsApp messaging app.
“Every major social media platform has attempted to launch a payments component in the last ten years. Almost all of them have been unsuccessful,” media scholar Lana Swartz told New Money Review last year.
“But one that has taken off in the US is [tipping app] Venmo,” she said. Venmo is owned by PayPal.
“All kinds of new social practices have emerged with Venmo,” Swartz said, “for example, ‘penny poking’, or sending your friend the exact amount of money they need for a coffee or cocktail.”
“It is only a matter of time until all this is enfolded into one of the major social media platforms,” Swartz said.
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