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Bitcoin might not be considered a currency in some circles and, right now, government agencies are starting to look at it as more of a speculative asset.

Although BTC is highly divisible, it has yet to take off as a method of microtransactional payments – a fact not helped by bitcoin's potential to skyrocket in price due to hoarding by speculators.

Dogecoin, however, has emerged as a favorite microtransaction method on reddit. In fact, most people get their first dogecoin via tipping on the community-oriented site. And that's all because of Dogetipbot.

How it works

Dogetipbot interfaces with the reddit API to facilitate transactions on the site. When someone makes a comment, a reply can be made that includes a command to tip someone an amount of dogecoin:

dogetipexample

Fifty DOGE is worth around two US cents. That may not be much, but it’s the denomination that is enticing.

A comparable bitcoin valuation for the same two cents is 0.00004512 BTC, which is a bit hard to wrap your brain around and just looks messy. So what would people rather receive, 0.00004512 in BTC or a 50 DOGE tip?

And the process is simple. A message in a user's reddit inbox gives someone the option to accept or decline a tip.

Said Josh Mohland, the co-founder of Dogetipbot:

"Most of the time, people receive a tip, and all you need to do is respond with 'accept'."

Dogetipbot by the numbers

Mohland provided some statistics to CoinDesk to show how popular the Dogetipbot service is on reddit:

"We've got over 32,000 users with a balance higher than zero. The average transaction is $0.25. We’re averaging a little over a million in dogecoin tips per day."

A million of anything usually sounds like a large number. In the world of doge, that's about 1 BTC, however. Mohland says, though, that when there are fundraising efforts or charity drives, the amount can jump drastically.

Dogecoin has quickly overtaken bitcoin as a tipping method on reddit. Source: CoinSummit
Dogecoin has overtaken bitcoin as a tipping method on reddit. Source: CoinSummit

He said that there have been days, such as April Fools', when the number of DOGE tips are the equivalent of 10-15 BTC in one day:

"[The average] 3,000 active users a day, can jump up to 5,000-10,000 based on the level of activity. There’s quite a few ‘power users’, I should say."

Mohland adds that Dogetipbot is approaching a total of 150m DOGE tipped via reddit so far.

Donation driving force

After tipping, donations are one of the biggest drivers of dogecoin's transactional nature.

Some of the best known examples of this include raising money for Indian Olympic athletes, the Kenyan water crisis and an accidental circumstance that led to a NASCAR driver getting 20m DOGE in race sponsorship.

In the latter instance, Alex Green – founder of Moolah, a cryptocurrency payments platform – typed in a 20m DOGE donation, instead of the two million he meant to send for Joe Wise's No. 98 Chevrolet sponsorship campaign.

Moolah also helps with donation campaigns, and although many larger donations come in directly through the Dogecoin protocol, Dogetipbot plays a big part according to Green:

"A lot of the shibes with smaller amounts of coins to give tend to tip to the donation address on reddit via Dogetipbot."

The term 'shibes' is a dogecoin community term for people active within their sphere, and references the Shiba Inu dog type that is the coin's mascot.

Green says that the tipping culture inspired Moolah to create Mootip, a micropayments platform that went live on image hosting service Imgur. With Dogetipbot's plans to move to other social networks, Green has decided to focus Moolah on other things:

"With the great work that Josh [Mohland] is doing with Dogetipbot, have decided to pull out of that sector and leave it to his more-than-capable hands."

Growth plans

Mohland says that reddit is just the beginning for Dogetipbot.

Twitter and Imgur are the next steps for Dogetipbot social media integrations, and he is considering other services as well. However, there have to be modifications to how the bot performs on certain services, he said:

"The Twitter API – there’s certain things we can’t do, like unsolicited direct messages. Their API rules are pretty restrictive."

Tipping and donation campaigns have been significant in helping the reddit community increase the general acceptance of cryptocurrencies.

Mohland says, however, that some social media or community-powered sites make it downright impossible for Dogetipbot to function the way that it does on reddit:

"Facebook and YouTube, I’d say, are the two biggest ones we have requests for. But their terms of service wouldn’t allow it, unless we had a special exemption. Reddit’s been very positive on our end."

Off-blockchain

Dogetipbot 2.0, the newest version of the software, has its own internal ledger that calculates account deposits and withdrawals. So when people send or receive a tip, it’s off the block chain. Only when coin is moved to an external wallet is the dogecoin block chain used.

The message that Reddit users get when they receive a doge tip.
The message that reddit users get when they receive a DOGE tip.

Dogetipbot 1.0 was simply a fork of a tipping client called altcointip, but that software was unable to handle the sheer mass of transactions through the tip bot.

Said Mohland:

“We were processing so many transactions a day that it just got to the point where it was testing the limits of what [altcointip] was capable of.”

This is the reason why Dogetipbot keeps an internal ledger of account deposits and withdrawals – to reduce strain on the system.

"We were using the dogecoin daemon for the longest time with version 1, but on the new version we have an internal ledger," said Mohland.

Mining origins

Mohland was initially a litecoin miner. When he heard about dogecoin, though, he pointed his scrypt rig in its direction and his wallet was soon bulging with DOGE.

"I thought [dogecoin] was hilarious, so I decided to point my miners at a dogecoin pool and got about three million dogecoins," he said.

30-day DOGE/BTC trading. Source: Cryptsy
30-day DOGE/BTC trading. Source: Cryptsy

It was the viral aspect that got dogecoin itself to where it is today, something that many startups pine for.

Said Mohland:

“It kind of just spread virally.  At the time [dogecoin] was still considered a joke. It wasn’t worth anything at all.”

Mohland said that Dogetipbot just happened – there wasn't a whole lot of planning, and people in the dogecoin subreddit were asking for it. So he forked the altcointip client and then posted what he had done on reddit back in December 2013.

He didn't expect any sort of traction for Dogetipbot in the beginning. Now, it's a full-time thing for Mohland, as he has since started a company called Wow Such Business, Inc. to run his tip bot:

"I forked altcointip, and got that up and running. I went to sleep and woke up the next morning and my post had got on the front page of reddit. So it kind of just happened overnight."

Coins into hands image via Shutterstock

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