Tipping culture is broken. Many would argue its original purpose is distorted beyond recognition, tipping today feels ‘dehumanized’.
What are the reasons and why is it such a divisive topic? Can Bitcoin and Lightning present a solution?
Let’s take a look at what tipping is and why tips sent over the Lightning Network could be much better than traditional tips.
A short history of tipping
Americans today aren’t fans of tipping. According to a Bankrate survey, 66% of U.S. adults don’t like tipping. And yet, service workers make a living from it and presidential candidates are proposing to end the tax on it.
If you have worked in hospitality, behind a bar or in a restaurant, you might have earned a good amount of money from customers who left you a tip.
But where does tipping actually originate?
Tipping has a long history dating back to the Middle Ages in Europe. Initially, it emerged as a practice among the aristocracy, where wealthy individuals would give extra money to staff for exceptional service. This practice was termed “gratuity” and was a way to incentivize good service – and say “thanks”.
(You can already imagine in a near bitcoin-future, a wealthy multi-coiner would send a good chunk of sats as a gift to someone who’s delivered quality service.)
In today’s world, tips are the standard. Americans are used to tip between 10% and 30%. In many countries, restaurants automatically deduct a “service charge”. It can be contended that “Peak Fiat” has left a mark on tipping culture.
The Problem with Today’s Tipping
In today’s fiat world, where wages become worth less, many feel that tipping culture has been “raped”.
According to the Bankrate survey, people don’t like how tipping has developed in recent years; they believe “businesses should pay employees better rather than relying so much on tips.”
Instead of being a bonus on top, tips often have to buffer low salaries. As inflation dilutes the value of wages, tips have become “life support” for underpaid workers.
The result is a broken and distorted “tipping culture”.
Instead of tipping from the bottom of the heart, customers get “emotionally blackmailed” to tip.
If you also wondered “who actually receives the tips at Home Depot or Walmart” you are not alone. Why are you even asked to tip in these places?
Tipping as a human expression of gratitude and respect
Back in the ol’ days, tips were given in cash directly to a person – peer to peer. Today, most of the tips are not given to an individual but are processed jointly with the order of the customer through a digital payments system.
Today’s digital tipping is in stark contrast to the original idea of tipping, which is a voluntary value exchange from one person to another or, from a person to a team or group of people.
Surely, charging a tax on tips, adding a default “service-surcharge” and merging tip payments with order payments, defeat the idea of peer-to-peer tips.
This begs the question: can we restore a sound tipping culture?
As Jeffrey Tucker shares in his wonderful speech “Capitalism is about Love”, both the customer and the merchant thank each other after a successful trade. “Thank you for selling me these goods that I need”, “Thank you for shopping here”.
When we work, we sacrifice our time. As most people have to work some form of job, we can all relate and therefore appreciate other people at work and their respective time sacrifice.
Tipping is based on the same principles of gratitude and appreciation for someone’s time and service. We give tips because we want to express that gratitude.
Tipping is more than saying “thank you” and paying the bill. It’s a voluntary bonus the buyer adds to affirm his appreciation.
With default service surcharges and digital payments, tipping has been de-humanized, degraded. It’s a generic, robotic and anonymous “necessity” and nobody really “cares” anymore.
Could bitcoin and the Lightning Network fix tipping?
Understanding Lightning Network Tipping Fundamentals
With Lighting Network payments, an entire universe of payment innovation has been unlocked. Pandora’s box is open and we can imagine entirely new forms and methods for payments and for tipping.
Three properties of the Lightning Network are important to highlight:
1. Peer to Peer: Transaction directly between two people
2. Open and permissionless: universal, global, opposing surveillance
3. Programmable: promoting innovation and collaboration
These unique properties are fundamentally changing the technology and utility of our money. Tipping is becoming decentralized, censorship-resistant, peer-to-peer and dynamic.
Cash Tips vs Lightning Tips
As you might know, Bitcoin is described as “peer-to-peer cash” in the original white paper. The idea is that just like cash, Bitcoin could be transferred directly from one person to the other, similar to handing over a dollar bill. With Lightning tips, the peer-to-peer aspect of tips can be lived.
While cash is peer-to-peer, not everyone likes cash. Many Bitcoiners think of cash as dirty, outdated money and a symbol of a broken system. Still, in many commercial interactions the credo “cash is king” is alive and well. Cash is a bearer instrument that allows the exchange of value peer-to-peer, without middlemen. Well, as long as government doesn’t print to much, of course.
Cash tips have useful properties such as:
– Instant settlement
– Easy for smaller transactions
– Doesn’t require recipient to have a bank account
– Protects financial privacy
– Quick to transact/send
The downside of cash is that it is indeed “broken money” and doesn’t serve us as it should. If you’re receiving cash as a barista, you’re probably trying to convert the small (and dirty) notes into digital money or spend it as fast as possible.
The negative list of cash tips:
– Inflationary currency, loses value
– Takes time to count and split
– Hygiene issues with dirty bills and coins
– No innovation, not programmable
– Young generation doesn’t like it
If you work in a cafe at a good location you may receive a total of 100-300 USD in tips during your shift. A large junk of that will be 1 dollar bills (this could be different in high-end establishments). Counting that many bills might take you anywhere from 10 minutes to 20 minutes depending on your skill. Then you also have to split it up so that your co-workers get their equal share. You might be busy for 45 mins for a repetitive task that you don’t get paid for.
With Lightning Tips, counting and splitting is done within a matter of minutes. It can even be fully automated.
Lightning tips are like cash but digital, combining the benefits of cash tips with the convenience of digital tips. Lighting Tips allow tipping without tradeoffs.
Instant Tipping over Lightning
If you’re young, chances are you prefer digital tip payments over cash. The speed at which tip earnings are credited to the bank account takes precedence over having a human interaction as with cash tips.
Customers select the tip amount on the screen and the chore is done. You don’t see what they tipped, you don’t have to say thank you because you don’t witness it, the money will just appear on your bank account, minus tax. Is the convenience worth it?
Lightning tips combine the best of both worlds. They are instantly available and can be split easily as they’re digital. Unlike other digital payments they can re-humanize tipping culture with innovative feedback and incentive mechanisms.
There is no requirement to own a bank account and no need for middlemen. The value exchange happens instantly and is peer-to-peer. Lighting grants a higher level of financial privacy than digital dollar payments and users can be in full control of their money.
With Lightning, tipping is fun, fast and human.
But how do you tip your hotel’s room service after you leave? This scenario is indeed one where cash tips are hard to beat. Leave a bill on the desk and the maid can pick it up. Lightning tips can only work here by either having a QR code of the the maid available in the room, or by leaving a redeemable bitcoin voucher on the desk. With vouchers like Azteco the second option is realistic but you have to be prepared.
Or simply wait until you meet the person you want to tip face-to-face and install a wallet on the spot.
Lightning Tips: Giving the best form of money
Lightning tips resemble cash tips as they’re given from one person to another. But are Lightning tips better than tips in dollars?
Let’s assume the following two premises:
1) Everyone is looking to to keep “good” money and get rid of “bad” money
2) We should treat others as we want to be treated ourselves
Perhaps at some point you had a number of dollar bills (or any other currency) in your purse. Some of the notes were relatively new and some were dirty or broken. Have you caught yourself spending the “dirty” money first and holding on to the notes in good shape?
You see, even though all notes are equal in value, our intuition is to preserve value and hold on to the more clean and fresh notes.
Assuming that economic theory is correct – and money which is scarce and hard to produce, is better than inflationary money – then Bitcoin is the best money.
Bitcoin is the natural evolution of money and it can’t be debased. It provides seamless value exchange with “just scales” for all of humanity.
Now if we want to treat others like we want to get treated ourselves, we should consider changing our tipping behaviour; we should zap, tip and gift with the best money — instead of the worst.
In the case of dollar bills, this would mean to give pristine bank notes out first and keep on to the dirty ones. However, this creates a conflict between our part-egoistic part-altruistic human nature. Naturally, we can’t be good samaritans all day long.
Bitcoin and Lightning fixes this dilemma. All Satoshis are of equal value at all times and in all wallets. Nitpickers and bean counters who would typically hold on to their best fiat bills, can now relax. 1 sat is always 1 sat, there are no differences in quality. Once you’ve decided that you’ll give your sats to others, you don’t have to waste a second on deciding which stash to use, they’re all the same.
If you believe Bitcoin is the best money, you may as well use it as your preferred method of tipping. If you truly appreciate the people who service you, give them the best money.
Gamifying Lightning Network Tips
You’ve probably seen when tips were turned into mini-competitions. For example, letting men and women compete about which gender is more generous with their tips.
Now this works really well with Cash tips, as the jars fill up and provide visual feedback.
With Lightning Tips, a similar app could be programmed and animated to give an even greater visual reward for each tip.
Online Lightning Tips
Paying a software developer a coffee for a useful open source tool? Traditional tools require to enter card numbers or necessitate an account with PayPal Et al. Not very straight forward. But with Lightning Tips that’s the easiest thing in the world. No need to enter credit card details or log into Paypal, just pay with your Lightning browser wallet – done.
To receive online Lightning Tips there’s no need to integrate a payment processor, pay hefty fees or exclude people without paypal accounts, just post your Lightning Address and you’re done.
Other options are using payment providers like BTCPayServer or Pay With Flash which provides a widget that can be added on any webpage.
Meanwhile, on the social network protocol Nostr, Lightning Tips are baked into the protocol directly. People tip or “zap” each other every day.
Through nostr, zapping has already become a permanent piece of online culture. People tip and zap all day, not because they are emotionally blackmailed and have a choice between 10%, 20%, 25% tip but because they appreciate the thoughts, ideas and content from others.
“We are truly living in the best and weirdest timeline; a timeline where posting on the internet can buy you lunch and dinner” writes Gigi.
Programmable money makes innovation quick. A single developer can vibe-code a new app in a few days. With permissionless innovation new user experiences can be imagined. Use a meme or image to send a tip? Reward an incoming tip with a cool animation or music?
Everything is possible. Two great examples for payment confirmation animations on Lightning are CoinCorner and Bitcoinize POS at the Bitcoin Beach Brazil.
The coincorner wallet shows a flashy 3D Lightning motion design. Bitcoinze plays jukebox music upon successful payment. How cool is that?
Ideas like these could change the tipping experience. We can easily anticipate that future apps will compete to create even more interesting and exciting Lightning tip features.
Creators can also enter the Value-for-Value economy and join ecosystems like nostr, streaming services like wavlake and fountain, browser extensions like alby and chat bots like Lightning Tip Bot.
Permanent Lightning QR Codes for Tipping
A permanent lightning address allows for another cool Lightning innovation: Unique QR codes to receive tips. A great example of this has been found in Honduras, on the Island of Roatan. The Bitcoin Center Roatan has printed QR codes for each staff member of the cafe.
Needless to say that any street musician can easily print his Lightning QR code and receive tips. Many artists have gotten used to digital tips and QR codes from providers like cashapp, paypal, venmo or pix. Lightning works just the same.
Conclusion
Cash tips are great because they are instant, peer-to-peer and private. If you want to leave the maid in the hotel a tip, simply leave a banknote on the desk and that’s it.
Lightning Network Tips require the receiver to be educated and prepared. Once a wallet is ready, Lightning can refresh our tipping culture with new ideas and innovation. By being peer-to-peer we can tip in a human way and express gratitude genuinely.
The fact that Lightning is programmable and permissionless opens the door for boundless features and ideas that individuals, product managers, users and business owners can experiment with. It lets us all rethink what we want to get out of tipping. Through Lightning, the art of tipping can be reimagined and reinvented.
If you want to join the Lightning Tip revolution it’s easy to start. Just get your favorite lightning wallet setup today. If you enjoyed this article you can leave the author a tip here.
