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Tipping with cash or cards is second nature to most. But what if you could tip using Bitcoin—instantly, globally, and with minimal fees—via the Lightning Network? In this article, we explore how Lightning could revolutionize the tipping experience, examining its unique advantages, the friction points, and whether it truly offers a better alternative
Everyone is used to tip with cash and cards. But what about tipping with bitcoin over the Lightning Network? What are the benefits and bottlenecks, can Lightning enhance our tipping experience? Let’s find out in this article.
Many people aren’t fans of tipping anymore. According to a Bankrate survey, 66% of U.S. adults mislike 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.
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?
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.
As Jeffrey Tucker shares in his eye-opening 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 this miserable situation?
With Lighting Network payments, money is changing. We can now program money and design features that were impossible before.
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 changing the ways we use money. New forms of transactions and value exchange can be designed and engineered. Hopefully with human in mind.
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 the government doesn't print too 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 quickly 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
- As a tipper you need to have the right bills
- Young generation doesn't like it
While cash is indeed useful for tips, there are a number of drawbacks too. Most importantly, many people don’t like carrying it around anymore and prefer digital forms of payment.
If you're young, chances are you prefer digital tip payments over cash. Just receiving tip earnings on 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, minus processing fees. 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.
Or simply wait until you meet the person you want to tip face-to-face and install a wallet on the spot.
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.
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.
Digital dollar tips are the standard but they lack a meaningful human intention, they feel more like “emotional blackmail”.
Lightning Network tips solve many of these issues. However, they require the receiver to be educated and prepared.
Once a wallet is ready, Lightning can refresh our tipping culture with new ideas and innovation. Being peer-to-peer, Lightning enables tipping in a human way and to 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 download Blink
