7 ms·

The Bitcoin Model for Crowdfunding

108 points by jakobmarovt 13y ago

alaskamiller 13y ago
Micropayments has come to pass. And with that, Charlie Brooker's scifi television show becomes more apparent.
jackgavigan 13y ago
Naval's model isn't a million miles away from ASICMiner's "corporate" structure. It's also a step in the general direction of a commodity future-like cryptocurrency, with computing services as the underlying commodity. A crytocurrency can't succeed, in my opinion, unless it has intrinsic value or exists as a means of exchanging value within a closed ecosystem where fiat currencies are impractical for whatever reason.
- ThomPete 13y ago
  There is no such thing as intrinsic values in any currency Fiat, digital or crypto. The value in a crypto-currency is determined by how much the "nodes" trust the network. This trust takes time to build as we are seeing with the various alternative CCs coming out these days and thats just ok. But keep in mind that the currency is only one way to use the technology. You could in theory have an ebook be based on the technology.
  - minhnt 13y ago
    >> The value in a crypto-currency is determined by how much the "nodes" trust the network. Could someone explain it clearer?
    - Nursie 13y ago
      The value, like with anything else, is simply what someone will give you for it. It's psychology. There is no hard calculation you can do to arrive at the 'value' of a bitcoin. The trust between the nodes and the network may be a factor that informs some people. Some people will use it because they consider it to be free from central control, or anonymous, or because "Hey! Computer Money!", or simply because they have a gut feeling it's the next big thing. HTH.
compare 13y ago
Exactly what I've been thinking over the past week as I've watched some cause-themed coins start to take off. Most people try to squeeze their mental model of what cryptocoins are into something like a currency, but there are really interesting equity / p2p database aspects too.
- panabee 13y ago
  would you mind elaborating?
  - torbjorn 13y ago
    this addresses the p2p database aspect http://expectedpayoff.com/blog/2013/03/22/bitcoin-and-the-byzantine-generals-problem/ http://expectedpayoff.com/blog/2013/03/22/bitcoin-and-the-by...
novalis78 13y ago
Isn't that exactly what Marscoin (www.marscoin.org) does - trying to privately fund space exploration by letting people buy into the altcoin.
mpg33 13y ago
crowd equity will be huge
argumentum 13y ago
I've been thinking about this for a while, particularly with bandwidth as the scarce resource. I don't quite grok the connections between the crypto aspect, the stock aspect and the currency aspect. The problem is that (the way Naval treats them) each of the main variables seem arbitrary, but could easily determine whether the economy you create is viable. > Pre-mine or early-mine Appcoins and keep some non-threatening amount. In Bitcoin, though the system itself is "trustless", participants trust that they are all treated equally according to the protocol & open source code. In the case of a startup raising funds, you wouldn't get the same sense of altruism. The incentives are not aligned for the major players: the startup founders, the protocol developers, the other coin owners/shareholders and the miners. Should an arbitrary pre-mined amount be set (as the founders' equity), and simultaneously be non-threatening, what is to stop the network from invalidating the pre-mined amount at will? If it were instead threatening, why would miners be interested in spending compute power? Naval also writes of supporting the open source developers with transaction fees. Unlike the commodity on which the coins are based, these are not easy values to calculate. Certainly there are a lot of possible new models, and autonomous corporations are very exciting. I just don't see how you can add a founder-controlled, for-profit startup to the other players in a crypto currency ecosystem (the miners, the non-profit developer foundation and the coin owners) and get something that works.
- jamesk_au 13y ago
  > In Bitcoin, though the system itself is "trustless", participants trust that they are all treated equally according to the protocol & open source code. But Bitcoin participants do not have to act on "trust" because they can inspect the protocol and open source code to verify equal treatment. In Naval's system, if the premise for participation (eg equal treatment) is equally verifiable by inspection of the protocol and open source code, is there any material difference between the two? It is true that there is nothing to "stop the network from invalidating the pre-mined amount at will", but participants will only participate in the network if it is easily verifiable that the network gives effect to the premise for participation. > I just don't see how you can add a founder-controlled, for-profit startup to the other players in a crypto currency ecosystem (the miners, the non-profit developer foundation and the coin owners) and get something that works. I think I agree with that statement, but only because of the words "founder-controlled". If a network like this is to succeed, the founders must forfeit control to the network. Given that it is the founders who write the protocol, they should be happy to do that, and then set it free. I don't think it would work if the founders made some attempt in the protocol to reserve to themselves a power to intervene in the operation of the network. Can I offer another interesting hypothetical: Is it possible for a network to incorporate some kind of mechanism for democratically amending its own protocol according to some objective characteristic (or subjective vote) of the participants? If participants are mining 'shares' in the 'company', should they have the power to act as 'shareholders' and to exercise control accordingly? (Assume that some aspect of the protocol means that the controlling majority is always held by nodes that are not cooperating to attack the network, which I think is meant to be the case with Bitcoin.)
orasis 13y ago
You're still paying for the service. Basically this is talking about making free services non-free to support the creation and growth of the service.
- dmix 13y ago
  > this is talking about making free services non-free to support the creation and growth of the service Naval (author of post) already did this with Angellist, in a way. They systematized the introduction of founders->angels. Which was happening freely over email beforehand. The service inbetween can add value over free methods. Nothing wrong with that really as a starting point. Centralization is sometimes needed for trust. The angels may need to trust some escrow, dispute process, or software stability if they want to invest money this way. But agreed it could technically be decentralized/free.
drawkbox 13y ago
As long as the entire internet isn't tolled because it is a new way to tax. Crypto coins have been branded for all types of needs, pay it forward is a big part of many coins. What would suck is if it became pay to use everywhere if biz runs away with it. We might be entering a bad era of tolls and tiers if we aren't smart.
- rolandnsharp 13y ago
  Hopefully it would just require a bit of mining to pay for whatever service you were looking to use. If we are going to have a more decentralized internet we are going to need a lot of people mining the blockchain.
kyledrake 13y ago
This is exactly what I'm trying to do with Coinpunk (in addition to doing a classic crowdfund): http://igg.me/at/coinpunk http://igg.me/at/coinpunk
em3rgent0rdr 13y ago
This idea in this blog post is not novel...it is actually an idea called "Distributed Anonymous Corporation" which was described in this blog post last september: http://letstalkbitcoin.com/bitcoin-and-the-three-laws-of-robotics/ http://letstalkbitcoin.com/bitcoin-and-the-three-laws-of-rob...
jabgrabdthrow 13y ago
This is what Invictus has been doing to raise money for their DACs via AngelShares
quadrangle 13y ago
If this is used for proprietary business models, that's completely backwards. The future involves recognizing that digital works are NOT scarce, only development time or server bandwidth is. Paying this way for server bandwidth is fine. Otherwise, this is about excluding poorer people from accessing resources, just like the traditional broken proprietary business model. I hope this idea dies quickly. We don't need anything that further extends proprietization, we need systems to fund Open projects.
- rayiner 13y ago
  If digital works are not scarce, where are all the great public domain licensed movies, TV shows, and video games?
  - quadrangle 13y ago
    It's copies that aren't scarce.
devx 13y ago
That's how Ethereum will be launched, too, and once it's launched thousands of others can do the same on top of Ethereum, without having to reinvent their own "coin" from scratch. Building their own DAO's will also be much easier. https://www.ethereum.org/ https://www.ethereum.org/
DennisP 13y ago
He mentions FastCoin as a fast-clearing currency. Bitcoin's confirmations are slow for the sake of security. There's a new method that makes it possible to get fast confirmations with good security, but I don't see any indication that FastCoin is using it. For details and a link to the academic paper, see here: https://bitcointalk.org/index.php?topic=359582.0 https://bitcointalk.org/index.php?topic=359582.0 Ethereum is the only new coin I know of that's planning to use this protocol, though I'm sure there are others.
- Nursie 13y ago
  Bitcoin's confirmations are slow because it takes several new blocks to be generated before a transactions is considered really confirmed. A block takes about 10 minutes. If you speed up the block time, you speed up the confirmation time, no?
  - maxerickson 13y ago
    The value of the confirmations roughly corresponds with the amount of computation wasted on them. (or whatever word you want to swap in for wasted; it's the difficulty of matching the computation that is interesting, not the number of blocks)
    - Nursie 13y ago
      Ah, fair enough. I had assumed it was to do with having a few block set in stone and propagated around the network, but it sounds like its more entwined with the 51% question and that sort of stuff...
      - maxerickson 13y ago
        I think it's one reason we won't really see a huge proliferation of alt coins (even here you regularly have dreamers posting 'there should be cryptocoin for that').
      - DennisP 13y ago
        Max is correct, but the new idea is basically to incorporate all the computation that goes into side branches that end up abandoned, so you get equivalent security in a much shorter time.

108 points by jakobmarovt 13y ago

Micropayments has come to pass. And with that, Charlie Brooker's scifi television show becomes more apparent.

Naval's model isn't a million miles away from ASICMiner's "corporate" structure. It's also a step in the general direction of a commodity future-like cryptocurrency, with computing services as the underlying commodity. A crytocurrency can't succeed, in my opinion, unless it has intrinsic value or exists as a means of exchanging value within a closed ecosystem where fiat currencies are impractical for whatever reason.

ThomPete 13y ago
There is no such thing as intrinsic values in any currency Fiat, digital or crypto. The value in a crypto-currency is determined by how much the "nodes" trust the network. This trust takes time to build as we are seeing with the various alternative CCs coming out these days and thats just ok. But keep in mind that the currency is only one way to use the technology. You could in theory have an ebook be based on the technology.
- minhnt 13y ago
  >> The value in a crypto-currency is determined by how much the "nodes" trust the network. Could someone explain it clearer?
  - Nursie 13y ago
    The value, like with anything else, is simply what someone will give you for it. It's psychology. There is no hard calculation you can do to arrive at the 'value' of a bitcoin. The trust between the nodes and the network may be a factor that informs some people. Some people will use it because they consider it to be free from central control, or anonymous, or because "Hey! Computer Money!", or simply because they have a gut feeling it's the next big thing. HTH.

compare 13y ago

Exactly what I've been thinking over the past week as I've watched some cause-themed coins start to take off. Most people try to squeeze their mental model of what cryptocoins are into something like a currency, but there are really interesting equity / p2p database aspects too.

panabee 13y ago
would you mind elaborating?
- torbjorn 13y ago
  this addresses the p2p database aspect http://expectedpayoff.com/blog/2013/03/22/bitcoin-and-the-byzantine-generals-problem/ http://expectedpayoff.com/blog/2013/03/22/bitcoin-and-the-by...

novalis78 13y ago

Isn't that exactly what Marscoin (www.marscoin.org) does - trying to privately fund space exploration by letting people buy into the altcoin.

mpg33 13y ago

crowd equity will be huge

argumentum 13y ago

I've been thinking about this for a while, particularly with bandwidth as the scarce resource. I don't quite grok the connections between the crypto aspect, the stock aspect and the currency aspect. The problem is that (the way Naval treats them) each of the main variables seem arbitrary, but could easily determine whether the economy you create is viable. > Pre-mine or early-mine Appcoins and keep some non-threatening amount. In Bitcoin, though the system itself is "trustless", participants trust that they are all treated equally according to the protocol & open source code. In the case of a startup raising funds, you wouldn't get the same sense of altruism. The incentives are not aligned for the major players: the startup founders, the protocol developers, the other coin owners/shareholders and the miners. Should an arbitrary pre-mined amount be set (as the founders' equity), and simultaneously be non-threatening, what is to stop the network from invalidating the pre-mined amount at will? If it were instead threatening, why would miners be interested in spending compute power? Naval also writes of supporting the open source developers with transaction fees. Unlike the commodity on which the coins are based, these are not easy values to calculate. Certainly there are a lot of possible new models, and autonomous corporations are very exciting. I just don't see how you can add a founder-controlled, for-profit startup to the other players in a crypto currency ecosystem (the miners, the non-profit developer foundation and the coin owners) and get something that works.

jamesk_au 13y ago
> In Bitcoin, though the system itself is "trustless", participants trust that they are all treated equally according to the protocol & open source code. But Bitcoin participants do not have to act on "trust" because they can inspect the protocol and open source code to verify equal treatment. In Naval's system, if the premise for participation (eg equal treatment) is equally verifiable by inspection of the protocol and open source code, is there any material difference between the two? It is true that there is nothing to "stop the network from invalidating the pre-mined amount at will", but participants will only participate in the network if it is easily verifiable that the network gives effect to the premise for participation. > I just don't see how you can add a founder-controlled, for-profit startup to the other players in a crypto currency ecosystem (the miners, the non-profit developer foundation and the coin owners) and get something that works. I think I agree with that statement, but only because of the words "founder-controlled". If a network like this is to succeed, the founders must forfeit control to the network. Given that it is the founders who write the protocol, they should be happy to do that, and then set it free. I don't think it would work if the founders made some attempt in the protocol to reserve to themselves a power to intervene in the operation of the network. Can I offer another interesting hypothetical: Is it possible for a network to incorporate some kind of mechanism for democratically amending its own protocol according to some objective characteristic (or subjective vote) of the participants? If participants are mining 'shares' in the 'company', should they have the power to act as 'shareholders' and to exercise control accordingly? (Assume that some aspect of the protocol means that the controlling majority is always held by nodes that are not cooperating to attack the network, which I think is meant to be the case with Bitcoin.)

orasis 13y ago

You're still paying for the service. Basically this is talking about making free services non-free to support the creation and growth of the service.

dmix 13y ago
> this is talking about making free services non-free to support the creation and growth of the service Naval (author of post) already did this with Angellist, in a way. They systematized the introduction of founders->angels. Which was happening freely over email beforehand. The service inbetween can add value over free methods. Nothing wrong with that really as a starting point. Centralization is sometimes needed for trust. The angels may need to trust some escrow, dispute process, or software stability if they want to invest money this way. But agreed it could technically be decentralized/free.

drawkbox 13y ago

As long as the entire internet isn't tolled because it is a new way to tax. Crypto coins have been branded for all types of needs, pay it forward is a big part of many coins. What would suck is if it became pay to use everywhere if biz runs away with it. We might be entering a bad era of tolls and tiers if we aren't smart.

rolandnsharp 13y ago
Hopefully it would just require a bit of mining to pay for whatever service you were looking to use. If we are going to have a more decentralized internet we are going to need a lot of people mining the blockchain.

kyledrake 13y ago

This is exactly what I'm trying to do with Coinpunk (in addition to doing a classic crowdfund): http://igg.me/at/coinpunk http://igg.me/at/coinpunk

em3rgent0rdr 13y ago

This idea in this blog post is not novel...it is actually an idea called "Distributed Anonymous Corporation" which was described in this blog post last september: http://letstalkbitcoin.com/bitcoin-and-the-three-laws-of-robotics/ http://letstalkbitcoin.com/bitcoin-and-the-three-laws-of-rob...

jabgrabdthrow 13y ago

This is what Invictus has been doing to raise money for their DACs via AngelShares

quadrangle 13y ago

If this is used for proprietary business models, that's completely backwards. The future involves recognizing that digital works are NOT scarce, only development time or server bandwidth is. Paying this way for server bandwidth is fine. Otherwise, this is about excluding poorer people from accessing resources, just like the traditional broken proprietary business model. I hope this idea dies quickly. We don't need anything that further extends proprietization, we need systems to fund Open projects.

rayiner 13y ago
If digital works are not scarce, where are all the great public domain licensed movies, TV shows, and video games?
- quadrangle 13y ago
  It's copies that aren't scarce.

devx 13y ago

That's how Ethereum will be launched, too, and once it's launched thousands of others can do the same on top of Ethereum, without having to reinvent their own "coin" from scratch. Building their own DAO's will also be much easier. https://www.ethereum.org/ https://www.ethereum.org/

DennisP 13y ago

He mentions FastCoin as a fast-clearing currency. Bitcoin's confirmations are slow for the sake of security. There's a new method that makes it possible to get fast confirmations with good security, but I don't see any indication that FastCoin is using it. For details and a link to the academic paper, see here: https://bitcointalk.org/index.php?topic=359582.0 https://bitcointalk.org/index.php?topic=359582.0 Ethereum is the only new coin I know of that's planning to use this protocol, though I'm sure there are others.

Nursie 13y ago
Bitcoin's confirmations are slow because it takes several new blocks to be generated before a transactions is considered really confirmed. A block takes about 10 minutes. If you speed up the block time, you speed up the confirmation time, no?
- maxerickson 13y ago
  The value of the confirmations roughly corresponds with the amount of computation wasted on them. (or whatever word you want to swap in for wasted; it's the difficulty of matching the computation that is interesting, not the number of blocks)
  - Nursie 13y ago
    Ah, fair enough. I had assumed it was to do with having a few block set in stone and propagated around the network, but it sounds like its more entwined with the 51% question and that sort of stuff...
    - maxerickson 13y ago
      I think it's one reason we won't really see a huge proliferation of alt coins (even here you regularly have dreamers posting 'there should be cryptocoin for that').
    - DennisP 13y ago
      Max is correct, but the new idea is basically to incorporate all the computation that goes into side branches that end up abandoned, so you get equivalent security in a much shorter time.