The news: Twitter users from the US (except Hawaii and New York) and El Salvador can now tip fellow tweeters with Bitcoin, per Finextra.
Here’s how it works: First launched in May, Twitter’s Tip Jar lets users send fiat money and now also Bitcoin via third-party payment services, like PayPal, Cash App, Venmo, and more. Twitter does not earn any revenues, but the third-party firms may charge transaction fees.
Why add Bitcoin?
The cryptocurrency is an efficient additional payment option to power its global platform.
- Twitter founder Jack Dorsey previously described Bitcoin as the internet’s “native currency” which, can reach every single person on the planet much more easily than building infrastructure to process fiat currency in each local market.
- Blockchain can reduce the time for cross-border payments from days to four to six seconds on average while also reducing transaction costs, per Insider Intelligence’s Blockchain in Payments report.
It’s part of a broader crypto ecosystem Jack Dorsey is trying to build.
- Bitcoin tipping helps boost Twitter’s crypto plans chances of success by letting more users become comfortable with using a crypto wallet before introducing other features.
- For example, Twitter will soon enable NFT creators to share their NFTs on Twitter by connecting their crypto wallets.
- Dorsey’s digital payment platform Square is working on a platform that lets developers create DeFi solutions on the Bitcoin blockchain. Though no details are known yet, we could expect these solutions to be accessible via Twitter.
The bigger picture: Twitter isn’t the only social media company looking at adding cryptos to encourage user engagement and facilitate payments on their platforms.
- Last May, Reddit launched a beta test for two Ethereum-based tokens, which members of subreddits r/Cryptocurrency and /r/FortniteBR can use to vote and tip content creators. It’s now scaling the solution.
- Meanwhile, Facebook’s digital currency, Diem, is still in limbo amid regulatory concerns, but its eventual launch could provide billions of people with a way to buy goods and services and tip influencers across Facebook properties, including Instagram and WhatsApp.
Bottom line: Twitter’s announcement is a bellwether signaling that more of its peers will incorporate cryptos. They may be pressured to do so if new social media platforms born directly on a blockchain become popular: Last week, Andreessen Horowitz led a $200M funding round in DeSo, a decentralized social network that aims to make social media monetizable by anyone—not just by the platform itself.