Category Archives: Alt Coins

Freelancers are the Future

One of my more frequent comments on Bitcoin is the need for a ecosystem and a reduction on the reliance of BTC<->fiat transactions. Those sorts of transactions are a drag on Bitcoin’s widespread adoption, especially when the transactions are easy one way but hard the other. Unfortunately, companies such as BitPay, in their zeal to drive merchant adoption, have created just this sort of scenario. It’s easy for merchants to accept Bitcoin without actually accepting Bitcoin. The opposite is not true. In other words, it actually fairly difficult to get Bitcoin. Let’s look at people’s options

1) In the golden old days of Bitcoin (just a few short years ago), you could start mining Bitcoin, essentially turning your electric bill into a Bitcoin exchange. The days of hobbyist doing that are long gone. A few enterprising entrepreneurs set up Cloudmining operations to allow the average user to essentially purchase bitcoin through group mining pool, but I dare say with the rush to gold, the mines are running dry at the moment.

2) You could purchase bitcoins through Coinbase, Circle or a few other companies that allow you to directly obtain Bitcoins through your bank account. However, this works only well for those in the U.S. with banks (and possible good credit). Anyway, isn’t the idea to use Bitcoin to get OUT of the traditional banking system?

3) You could steal Bitcoin. Did I mention this blog is not to be construed as legal advice?

4) You could use an exchange such as Mt Gox, Bitstamp, etc. But they are typically not easy to get money into or out of and they have a bit of a reputation problem.

5) You could meet people locally to purchase their bitcoins or sell yours. Just be careful who you interact with.

6) You could use a Bitcoin ATM…. if you can find one….and you can get it to work.

7) or …you could earn Bitcoin. This is one of the reason I accept Bitcoin for legal work (I’ve had one client pay me twice). It is also the reason I launched 1ncemail.com which provides disposable email aliases to protect your privacy, mainly because I wanted a way of earning Bitcoin rather than buying it.

This problem of getting Bitcoin into the hands of people has perplexed me for quite some time. Many people attribute the downward price of Bitcoin to the ease of exit but difficulty of entry. Unless we, as a community, start solving this problem, Bitcoin may not succeed. I’ve been puzzling over this issue for quite some time. Consumer adoption of Bitcoin is one of the reasons I’m co-organizing the Atlanta Bitcoin Consumer Fair in April, 2015. I want to see Bitcoin get widespread adoption.

If you think about it, how do must people obtain money? That’s right, they earn it. I’m encourage that some companies are starting to think about paying employees in #bitcoin. You’ve got Bitpay offering it’s payroll service. Bitwage has an innovative idea to earn your pay per hour, not every 2 weeks. Overstock.com ever on the forefront, is now offering to pay it’s employees in Bitcoin.

I’d like to suggest that while laudable, these efforts are negligible. We need a much bigger target. I would like to suggest that target is the freelance community. I use freelancers all the time. A freelancer built my 1ncemail app. A freelancer wrote my press release for my privacy consulting business. A freelance designed the graphic for the Bitcoin Consumer Fair. Freelances are working on multiple aspects of my Bitcoin related startup, Microdesic. I primarily use elance.com but recently learned the fivver.com takes Bitcoin. Unfortunately, my first experience using their Bitcoin interface was anything but pleasant. However, I will persist.

There are some 53 million freelancers in the United States. Hundreds of millions more worldwide. For reasons that I’ve elucidate elsewhere, such as reduced transaction costs, I feel the future of work is through freelancing. Freelancing seems to be a natural fit for bitcoin

1) Irreputability means once paid, the freelancer doesn’t have to worry about charge backs.

2) Suited for international payments.

3) Low transaction costs.

4) The ability to escrow funds vis-a-vis a multi-sig wallet.

The closest thing I could find was bittask but it doesn’t quite¬† operate like the freelance sites elance.com, freelancer, oDesk, etc. I’m not the first person to think of this. See this article on CryptoCurrency News but I haven’t seen any movement in this space. The comments mention dogerr.com but that’s a centralized service and only for Dogecoins, an altcoin derivative of Bitcoin.

Bitcoin and Recurring Billing

I had a discussion a few weeks back with one of the team working on SexCoin, one of the myriad of alt-coins flooding the market. They definitely have name branding right but still miss the boat in the overall justification section.

Litecoin recently tanked after one holder dump his/her holdings.

DogeCoin took a similar dive, recently.

The problem with the alt-coins is there is no reason to use them or have them, other than speculation. When that is the only value, you end up with another tulip bubble. Currency (or money) gets its value from its useability in commerce, but the level of commence for the alt-coins, let alone Bitcoin, is negligible. Unless an altcoin can be used in a very closed loop, closed community, with internal circulation, participants are just as well off using Bitcoin. In other words, A pays B in sexcoin, who pays C in sexcoin, who pays D in sexcoin, which eventually gets back to A. The circulation might not be exact and some in and out exchanges can occur but it won’t work if A pays B in sexcoin who sells it for Bitcoin to pay her rent. (Use of her pronoun is ONLY coincidental, right?). Seriously, though the same problem plagues Bitcoin because right now, people are buying Bitcoin to purchase stuff and then Merchants are cashing right out. This is unsustainable and will eventually make Bitcoin useless as a currency. The transaction costs are just too high to make this viable.

However, my post today is not about the viability of alt-coins or Bitcoin even, but about the notion of recurring billing. You see, in discussions with the sexcoin promoter, he admitted that most adult oriented websites wouldn’t touch it (or Bitcoin) with a 10 foot pole. Why? Well because they can’t do recurring billing. A typical adult website pays about $30-40 per signup in acquisition costs (advertising, promotions, etc). The average consumer who signs up ends up paying $29.95 per month for THREE months (before they realize they are still being billed). Some cancel after a month, some longer but the average is 3 months. [The actual numbers may vary but they are made up here for illustrative purposes]. The point is, the cost shift the costs of providing the service to those to unaware to cancel the recurring billing on the credit card.

Unfortunately, Bitcoin doesn’t have this capability. It’s more akin to cash, you pay it, can’t get it back, but also the merchant can’t get more of it than you authorize. And it isn’t just porn companies doing this. Many mainstream services do recurring billing onto people’s credit cards. I recently had a case of Blizzard Entertainment (the producers of WOW) doing the same to my credit card on an annual basis. I notice a charge fro $74.74 from Blizzard on this month’s CC statement. I called to cancel but this was actually a 2 year old service I signed up for my then girlfriend. She no longer used the service but I was still getting billed. How many people are blissfully ignorant of Blizzard’s billing practices as they fail to notice the charge on their CC long past their active uses of Blizzard’s services?

This is the dirty little secret of Industry, they often do cost shifting with low usage users footing the bill for high usage users. Can Bitcoin help stall that? Some companies like Coinbase are trying to replicate recurring billing, but for that to work they actually have to have a coinbase account, which is tied to a bank account or credit card.