

The Time is Now for Bitcoin Startups - Astrohacker
http://astrohacker.com/ahc/time-is-now-for-bitcoin-entrepreneurship/

======
btilly
What bitcoin needs is a killer app.

For instance on April 15 the US government shut down all of the online poker
sites that were letting people play poker for money in the USA. If you look at
the charges, they pretty much all have to do with wire fraud. (The operator of
the site can also be charged, but analyses that I have seen suggest that that
charge may be harder to make stick in the case of poker.) If someone is
willing to not travel to the USA, and is willing to set up a poker site that
does transactions in bitcoin, then all of those financial issues go away. (Or
are subsumed in the inevitable ones that bitcoin will face, depending on your
point of view.)

There are a lot of issues to getting a poker site to work well. (People will
let you charge surprisingly high fees if in return you do a lot of policing to
eliminate people running bots and who are engaged in various kinds of
cheating.) However there are a lot of online poker players suffering serious
withdrawal in the USA. The market is there. And the online poker market in the
USA until a month and a half ago was well over an order of magnitude larger
than the current bitcoin economy.

So there you have a realistic company which could be built, now, using
bitcoin. You can generally count me as a bitcoin skeptic, but if someone can
get traction with something like this, bitcoin may indeed have a nice future.

~~~
adrianwaj
Public companies have their financial records available. I wonder if it'd be
possible to work out how much they pay in transaction, chargeback and credit
card fees.

Startup: "Dear Amazon (or any Fortune 500 company,) you pay $xx in transaction
fees annually, install our system to cater to the $xx-sized bitcoin economy,
and save about $xx in fees."

Even Square: "2.75%. [But] if you enter credit card numbers manually, Square
costs 3.5% + 15¢ per transaction." <https://squareup.com/pricing>

Can that be beaten with say an android client: <https://github.com/bitcoin-
labs/bitcoin-mobile-android> and a printed qr code?

Philosophizing more, in the larger scheme of things, perhaps Bitcoin can
remove the notion of socialized losses from society which has devastated the
economy.

~~~
btilly
Unfortunately the entire bitcoin economy isn't big enough to represent an
interesting line of business for Amazon. Certainly not enough to have to keep
track of exchange rates and offer pricing.

But I wonder if there is a role for an affiliate that actually makes the
purchases and sends them to people. That is they make the purchase on Amazon
on their own account, and have it shipped where you want it shipped. They
accept bitcoins from you, pay dollars to Amazon, and trade back bitcoins for
money on the exchanges. Their profit margin comes because they are an Amazon
affiliate, and put their affiliate code on all of their purchases, so that
they get the affiliate fee.

Something like this would not really need much cooperation from Amazon. Heck,
you could just have a browser plugin that recognizes Amazon, and gives the
user the option to make a bitcoin purchase instead of using your credit card.

~~~
adrianwaj
This is a good idea, but the key is in making the browsing and selection of
items as transparent as possible. It's another layer. Some type of price
comparison engine would work really well: browse on Amazon, buy on xxx, pay
with Bitcoin.

add:

the other short-term use case for bitcoin and say Amazon is giving refunds in
bitcoin given the reach of bitcoins is low right now. Refunds are a push to
market, as opposed to a pull. Typical cc chargebacks can be expensive too, and
so refunding in bitcoin avoids it.

------
wmf
I don't see the opportunity here.

 _It is very easy to transmit Bitcoins across the Internet._

It seems cumbersome to me, what with having to use client software, having to
wait 10 minutes, etc. I guess Bitcoin is the easiest _totally paranoid_
payment system, but that's not saying much.

 _There is no Bitcoin bank_

Because the point of Bitcoin is that there is no bank. If you're going to
trust a Bitcoin bank, you might as well trust Paypal instead.

 _So long as your business is solid, it will scale with the Bitcoin economy._

As opposed to a normal startup that can scale with the Internet economy, which
is much larger.

 _Bitcoin will probably succeed in some form or another... If it succeeds, it
will probably be huge._

Obviously this is a matter of opinion, but given its selling point of
paranoia, I see Bitcoin getting to the size of e-gold, maybe a little bigger.
(If you haven't read about e-gold, I think it's instructive.) And if it gets
that big, the US government will try to shut down all USD-BTC exchanges.

------
rick888
The time is right now, because the government will most likely kill bitcoin as
soon as it even gets close to becoming mainstream.

~~~
noonespecial
_the government will most likely kill bitcoin_

Which one?

~~~
Udo
All of them, together. There are already lobbyists at work to criminalize the
use of Bitcoin. And they will succeed.

~~~
adrianwaj
Why are you so sure? There'll be a counter-movement.

<http://en.wikipedia.org/wiki/Pirate_Parties_International>

"The party strives to reform laws regarding copyright and patents. The agenda
also includes support for a strengthening of the right to privacy, both on the
Internet and in everyday life, and the transparency of state administration."

~~~
Udo
I'm not so optimistic anymore. They(TM) believe we already have too many
liberties because the internet is largely uncensored. Now Bitcoin comes along
and it further undermines governments by providing an untraceable shadow
currency - and currency is one of those things where they take their
monopolies _really_ seriously.

Bitcoin is also very vulnerable to FUD attacks, not just because it can easily
be used for illicit purposes but because statements about the flow of money
are impossible to verify. I can see the headlines now: "Millions of BTC used
for drug trade" and "96% of Bitcoin economy based on illicit activities" or
"The majority of BTC go towards supporting child pornography". It's
ridiculously easy to make these statements and they're impossible to disprove
(not that it matters once these headlines air on Fox News).

Killing Bitcoin is a lobbyist's wet dream to begin with. When lawmakers and
bankers get wind of this it will be the censorship shitstorm of all time. It
might even turn out to be the one vehicle they need to finally reign the "free
internet" in once and for all.

That said: long live Bitcoin! I'm actually a big fan, just not very optimistic
about our future in general.

~~~
adrianwaj
You may have overlooked the rough diamond: the fact that auditing can be
easier. Tax departments can just ask what addresses a person used to send and
receive btc. People have to declare income already (and people hide income),
and now people will have to declare bitcoin addresses! It's all online for
governments to check. So a DNS-like system over bitcoin addresses is the
answer.

~~~
Udo
Users can generate as many of these addresses as they like- it's all
completely anonymous. But even if Bitcoin had features that allowed this sort
of tracking, it would still be a non-governmental free currency that is
fundamentally at odds with how the old world works.

On a technical note, this is what the content of a block address looks like:

[http://blockexplorer.com/address/1PbLcpBhxrMvgdcjwSgBatg1JiF...](http://blockexplorer.com/address/1PbLcpBhxrMvgdcjwSgBatg1JiFiNy5kAe)

~~~
adrianwaj
Couldn't the client software just keep track of addresses sent and received in
a log file, and when you submit a tax return, you send them that file? They
then determine how much tax you owe (either a consumption tax or wealth tax,)
and you pay it in bitcoin. The government can then inject or withdraw bitcoins
from the money supply as it sees fit to promote or ease inflationary pressure.

So the government has two sets of transactions: those accounted for, and those
unaccounted for.

~~~
Udo
In theory, a government-approved client could be implemented that is
restricted to _only_ send BTC to other government-registered addresses. There
would have to insane restrictions on using and authenticating to the client
software. And they would probably require the implementation to safeguard
against unregistered addresses sending you money as well. All in all,
shoehorning this into something approaching legal compliance would require
stripping away every single point that makes Bitcoin worthwhile for end users.

------
sokolski
"I give failure the somewhat low but still significant probability of 25%. ...
According to my estimation, there is a 75% ..." Where are those numbers coming
from? Does it mean that the author believes 1 out of 4 virtual currencies
fail? Or that only 3/4 of cryptography algorithms are secure?

~~~
Astrohacker
They're Bayesian probabilities, not frequencies.

------
adrianwaj
I definitely think there can and will be some massive bitcoin startups on
YouTube scale. So what. All startups have obstacles to overcome. It can base
itself wherever it needs to.

------
jnhnum1
In my opinion, there's too much uncertainty about the legality of operating
with bitcoin, especially if you're a startup without a serious legal team.

------
dreamdu5t
Based on what business model?

What demand for what service exists for bitcoin?

The "e-wallet" / PayPal model is based on transaction fees, which the bitcoin
protocol seeks to eliminate. There is no need for a middle-man?

~~~
icefox
First disclaimer: Before doing any of these see the appropriate legal rules
around this as at least in the US dealing with 'alternative' currencies are
not exactly looked positively on.

First ideas that just push bitcoins around:

0) Another exchange, but nicer than what we have today. The top exchange is
pulling in ~30K+ a week.

1) bitcoin arbitrage bot. Connect to the various exchanges and make trades.

2) future trading. Miners who are buying 8 gpu's would be willing to buy
future sales of bitcoin at todays prices so they can 100% be sure to pay back
their gpu costs.

Actual bitcoin item:

1) Sell physical 'bitcoins' read-only usb sticks tied to 1 bitcoin that can be
returned at any time for 1 bitcoin or some other form of physical bitcoins
that be traded around.

2) A debit card backed by bitcoins. Like a UK debit card that can be use in
the states, but converts on the fly this would deduct from deposited bitcoins.

Software/hardware:

1) Turn-key software mining solutions. Plop in this linux live cd into your
gpu computer and it will generate you bitcoins!

1b) Turn-key mining solutions. We mail you a tricked out box

2) Linode for mining.... Rent a box and generate your own coin and slightly
less than the current rate.

Other:

1) Auction site that takes bitcoin 2) Really any service that would take local
currency, but use bitcoin. The real kicker would be to find a service that is
used all over the world where having one currency would be good. Games and
app-stores (android porn based app store?) come to mind.

~~~
wmf
_Sell physical 'bitcoins'_

<http://bitbills.com/>

 _A debit card backed by bitcoins._

Like <https://www.bitcoincashout.com/> or <https://www.bitcoin2cc.com/> (but
there's definitely room for improvement here)

 _Turn-key software mining solutions_

People are working on this; I think it's going to be free.
<http://forum.bitcoin.org/index.php?topic=7374.0>
<http://forum.bitcoin.org/index.php?topic=9917.0> (A better model might be an
easy-to-use miner that participates in a high-fee pool, so the developer would
get a cut of all mining proceeds.)

 _Turn-key mining solutions. We mail you a tricked out box_

<http://www.bitcoinrigs.com/>

 _Linode for mining.... Rent a box and generate your own coin_

<http://forum.bitcoin.org/index.php?topic=8523.0> (Of course, if you buy such
a contract, it means you think BTC is going to be worth more than he does. I
hope you know something he doesn't know.)

