Well, we all know about the word scuttle, and we also know what a butt is, so...
...hmm...actually, I think this approach might be going to lead us in the wrong direction...
Let's start again.
One of the meanings of the word scuttle is to sink a ship, and the scuttle of scuttlebutt is indeed a nautical term. It's nothing to do with making holes in the bottom of a ship so it sinks, though, because on a ship a scuttle can also mean a hatch, or its cover, and in scuttlebutt it means the place where the cask of drinking water is kept - or, nowadays, it'll probably be a drinking fountain (actually, nowadays, it'll probably be fenced off with hazard warning tape).
Yes, a scuttlebutt is an old form of water-cooler.
And both, pleasingly, are known as fountains not only of water, but of gossip.
Word To Use Today: scuttlebutt. Here the word butt meaning large cask is nothing to do with the word butt meaning backside...at least, there is a connection but it's coincidental. Butt meaning backside is related to the Old English butuc meaning end or ridge, but butt meaning cask comes from the Old French botte, goes back to the Latin buttis, cask, and before that perhaps it's something to do with the Greek word butīne, which means chamber pot.
The word scuttle in this sense comes from the Old Spanish escotilla, a small opening, from escote, an opening in a piece of cloth.