it costs me near double the end value to buy bits, which is exactly why dsp wants tips, he can bypass the twitch fee on bits
$1.40 to buy 100 bits and give Phil $1 via bits.While I can understand that argument, I don't believe that's how most people actually purchase bits, and I don't believe Phil benefits from it in any way at all aside from getting the money "now".
It would make sense for people buying bits to buy a bunch at once with whatever they're willing to spend on them at the time, and then use those bits over a period of time until the reservoir is empty and needs to be refilled if they want to buy more bits. I don't think very many people go into streams with an empty Twitch wallet and decide to buy bits because they want to give a specific amount to a streamer -- those bits are already in their wallet before they get in the stream. They're not going in with the mentality of, "Okay, I want to give him $5 worth of money, so here's 500 bits," versus, "Okay, I'm going to give him $5 worth of money, but since it's a tip instead of bits, I can give him $9 instead." They're going to give him $5 because they want to give him $5 and that extra money has already been spent last payday when they refilled their Twitch wallet.
It's like grocery shopping or filling your gas tank. You don't buy enough just for what you need right now. You fill the tank up or get enough food that will last for a bit until you feel like refilling it again, or until the food spoils and can't be used anymore. Sure, Twitch is full of speds, but I don't see any reason for their thinking to operate differently just because it's a virtual currency.
$1.34 to tip Phil $1 after Paypal processing fees.
$126 to buy 10,000 bits and give Phil $100 via bits
$103.30 to tip Phil $100 after Paypal processing fees
The overall fees are smaller by tipping, and he gets it immediately, so it benefits both parties.
The only upside to using bits I can think of is that you can earn bits by watching ads, but those pay out like 5 bits as a time from what I've experienced, so I'm sure most people are just outright buying them.
Here's a tool to calculate Paypal fees