San Francisco based social media tipping service announced they raised $3.5 million in their seed round of funding from various seasoned bitcoin venture capitalists.
Bitcoin focused venture capital firm, Pantera Capital led ChangeTip’s seed round but other prominent investors included 500 Startups, Crypto-Currency Partners, and Bold Start Ventures.
The nearly one year old company will use the capital to further develop their platform and product, and grow its user base. A few weeks ago the company announced its user base had grown to 30,000 users but that number has already increased to nearly 45,000 users. Its service is available on more than 35 social media platforms including Twitter, Reddit, and Youtube. Almost $75k worth of tips have been sent with the service.
The announcement of the closure of the seed round lands on Tipping Tuesday, a day very important to bitcoin tipping and ChangeTip. Tipping Tuesday is a day where bitcoiners go “spread the wealth” to content producers and other social media users. Using ChangeTip’s service bitcoiners participating make a extra effort to tip people on social networks such as Tumblr, Reddit and Twitter. They enjoy rewarding people for their content and hopes it helps spread awareness of the crypto-currency. The weekly event started a month ago in the bitcoin subreddit, /r/bitcoin, but has quickly spread to other social media platforms, like Twitter.
“The social media phenomenon of ‘tipping’, or expressing one’s appreciation over the Internet with small monetary or other digital gifts, is building momentum,”
said Nick Sullivan, ChangeTip founder and CEO. “With ChangeTip, a million users can tip $0.01 and the content creator can collect his $10,000 – an impossibility in a legacy payments world.”
ChangeTip brands itself as the “love button of the internet.” The company allows people to send pennies worth of bitcoin to anyone on any supported social media platform, even if they don’t have a bitcoin wallet or address. Tips are given through commands sent as comments or replies, or a one time custom made url where a tip can be collected.
Pantera Capital thinks micropayments (payments of $10 or less) will be the catalyst for mass adoption and ChangeTip will be the one who get bitcoin there. Pantera Capital’s Chief Executive Officer, Dan Morehead said in their daily newsletter,
“Micropayments are likely to be Bitcoin’s first killer app – seamlessly integrated into social media, enabling people to send money in a free, fun, instantaneous way, without borders or minimums. This could have a huge impact on Bitcoin adoption. Years ago I received my first bitcoin from Gavin Andresen’s Bitcoin Faucet. When we look back in a year’s time, there is a good chance that the majority will have received their first bitcoins free via ChangeTip.”
They view tipping as the highway of online bitcoin commerce with wallets like Circle or coinbase being the on ramp and payment processors like Bitpay or GoCoin being the off ramp. But tipping, according to the firm, is only the tip of iceberg when it comes to online micropayments.
“Bitcoin micropayments allow for new, better opportunities wherever there had been a clunky payment arrangement between a consumer and merchant and every situation where fractions of dollars could not be viably accepted by merchants.”
-Pantera Capital’s Newsletter
ChangeTip is not the only bitcoin tipping service. Last month, Bitcoin wallet and merchant service Coinbase, launched their own tipping service last month. The service allows users to send tips from their Coinbase account with just one click.
The service launch with many content producers already signed up and integrated in blogging and social media platforms. Adam Carolla, Beacon Reader, Jupiter Broadcasting, Tand he Morning News are some of the producers tippable with Coinbase’s new tipping app. The blogging platform, Svbtle, as well as the bitcoin social media network, Zapchain, both integrated Coinbase’s tipping button into their platforms.
Coinbase co-founder Brian Armstrong thinks micropayments will be a increasing use of bitcoin,
”We believe there is a new micropayments economy, the beginning of which you’re just seeing and I think it’s significant because this business model just wasn’t really possible before bitcoin.”
Written by: Guilherme Fernandes
Imagesources: Pantera Capital