Almost one year ago, ChangeTip CEO Nick Sullivan gave an interview on the Bitcoin Knowledge Podcast where he discussed the philosophical beliefs of the company and a desire to move back towards a more decentralized model. It now appears those desires have turned into action. ChangeTip Wallet will be demoed at the Satoshi Roundtable this weekend, and the new application will give ChangeTip users complete control over their private keys.
How Does the New Wallet Work?
ChangeTip has been a useful tool for making payments via social networks, but one of the main criticisms of the platform has been its reliance on a centralized model. In the past, users have deposited their bitcoins with ChangeTip, who essentially acts as a bitcoin bank. ChangeTip’s new wallet app will keep users’ private keys on the client’s end, which means people who use the platform to send tips via Twitter, YouTube, and other applications will have complete control over their funds.
Since ChangeTip is no longer a custodian for bitcoins owned by users of the ChangeTip Wallet, they’re also allowed to provide more financial freedom to their customers. Speaking with CoinJournal, ChangeTip CEO Nick Sullivan stated, “The sending limit is lifted for ChangeTip Wallet users. There are no limits to ChangeTip Wallet transactions. It is bitcoin.”
Although ChangeTip will still need to hold funds of users who wish to have their balances denominated in USD in the near term, the startup is also looking for a workaround on this front. Tether, which is a USD-denominated colored coin on the Omni platform, and various hedging mechanisms are currently being researched by ChangeTip as possible ways to give users more control over their USD balances.
ChangeTip plans to run their Pockets platform in parallel with Wallet before eventually moving all Pockets over to the new system.
Lightning Network Coming Soon
The move to give users full control over their own funds will not be without its drawbacks. Since ChangeTip Wallet’s transactions take place on the Bitcoin network rather than a centralized server, users will have to pay fees on their transactions. Settlement of transactions will also now depend on Bitcoin confirmations rather than ChangeTip, which means payments will be made in minutes rather than seconds.
Although sidechains are also mentioned as a possible solution to these issues, ChangeTip seems more bullish on the Lightning Network. A successfully implemented Lightning Network could allow users to enjoy much lower fees and instant confirmations (essentially) while still retaining control over their private keys.
Although some users may be wary of attaching their public Bitcoin addresses to social media accounts, Nick Sullivan made it clear this is not the kind of wallet you use for privacy or protection of one’s life savings. Sullivan noted:
“People should use ChangeTip when they want to: appreciate content online (like a blog post, Reddit comment, or Tweet), pay back small debts to friends, give props to people they know, or introduce someone to Bitcoin.”
Sullivan added, “There are many more use cases, but these are the ones we see the most, and how we’d guide people to make use of the platform.”
ChangeTip Wallet is currently available in closed beta.