Earn $4 in bitcoins for any commit to sferik/t, a command-line Twitter tool

There are really no "Bitcoins", there are only a very long series of inputs and outputs to various Bitcoin addresses, all recorded on the shared block chain. Inputs (Bitcoins) come in to the system through mining, and then they are traded out via outputs and in via inputs.

The smallest value for an input/output is 1 Satoshi. 1 Bitcoin equals 100,000,000 Satoshi. So a Bitcoin is just a convenient measurement of inputs minus outputs.

When you make a purchase from an address, the client adds up your inputs and outputs at that address, and if you have a positive balance, you can send any portion of it as an output to another address (as long as you have the private key to verify that you own the sending address). It is recorded on the block chain as an input to that receiving address records, and the miners (eventually) confirm that transaction by including it in a block -- each time that happens is 1 confirmation (mining is another whole can of worms).

When you make a purchase that is less than the total number of inputs minus outputs at the address you're spending from, you can receive the difference via an input to either the same address or another, new address, depending on the Bitcoin client used.

Does that make sense? It's all just a shared accounting system.

EDIT: Clarified role of block chain.

Our initial idea was that each donation pays for 30 days of tips (and rewards depended on interval between commits, see http://blog.anonymousads.com/2013/10/tip4commit-first-bitcoi...). But that idea appeared to be more complicated and a bit unfair (consecutive commits could receive very different amounts). So we switched to a simpler one. Yes, mathematically speaking, there will always be some money in our wallet. But we don't expect to have huge amounts of money there since donations are never stable and some projects have dozens commits daily.

Projects like these is where Bitcoin can really shine.

Maybe Bitcoin will conquer the world, maybe it won't. I have no idea.

What I do know is there is real utility in being "electronic petty cash" which Bitcoin can easily become.

Imagine: Alice sends Bob a few bitcoins after Bob writes a particularly insightful comment on HN. Bob then comes across a great blog post by Charlie and sends him a few bitcoins. Charlie then finds an open-source project by Diane that will save him hours of work and sends her a few bitcoins. And so on.

It rarely would get converted to USD and wouldn't amount to much when it did. Instead, people would just earn a bit here and spend a bit here.

Bitcoin enthusiasts miss that USD works fine for most people. But right now it's really hard to do the above scenario using traditional banking. I don't want to connect my bank account to some website to send a someone a few bucks. It's just not worth the hassle/potential risk.

I can't be the first person to think of this. But I'm just not seeing much movement in this direction. Am I overlooking something? Or do I just need to be patient?

What you describe kind of sounds like a universal karma system (yay internet points!). As stackoverflow and similar sites have shown, people will do quite a lot to accumulate internet points.

That's right.

We made this project as a part of Rails Rumble contest and are using a limited-time free server offered by them.

So we need to collect money to move to a new server, to cover transaction fees and to continue development of this service if it is demanded.

Maybe we should remove the fees, go opensource and crowdfund ourselves. We were discussing it but haven't made such decision yet.

We don't expect to hold large amounts for a long time because large amounts should attract dozens of commits every day (and thus will turn into small amounts quickly).

If it doesn't happen then we will probably introduce a fixed minimum size for a tip or some other mechanism to solve this problem.

Probably it is good to hold money for some time and to smooth the tip rewards thus placing authors of commits into nearly equal position.