[kseudo]

I think on a very low scale this is what Youtipit does(http://www.youtipit.org). People deposit their coins, tip them internally and this is handled by our bookkeeping system. If someone wants their coins out they simply withdraw them and the transaction goes out to the block chain. This has many of the advantages that you have stated (also tips are instantaneous, no need for confirmations)

If you give it a look I would like to hear your opinions on it.

[omouse]

So you basically have an internal currency that just happens to be bitcoin? Kinda like when you store $$ in a PayPal account?

[kseudo]

You make it sound like a bad thing...But yes thats exactly what we have :-). Except with us there are no fees: no deposit fees, no withdraw fees, no fees to tip. If you can get over the fact that it is bitcoin based, its probably the cheapest way to reward someone online. This would not be possible without bitcoin. In fact we built the system to use USD and EUR initially but eventually realized that financial/legal costs were making the project totally unviable. Changing to bitcoin allowed us to continue and play with this idea of the 'Online street performer' and develop it somewhat.

I think what we do shows that there are some positive applications for bitcoin and it does open opportunities for online business. Unfortunately most of the press dwells on 'bitcoin for drugs' stories, why cant they to story about Youtipit!

... probably because there are far more people interested in buying drugs than tipping online :-0