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Why I’m interested in Bitcoin

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Some people assume that all Bitcoin advocates are motivated by a libertarian political agenda. That is certainly not my agenda. I’m a lifelong Democrat who supported Obama in the last two elections. I think the Federal Reserve plays an important function, and I don’t agree with people who think inflation should be our nation’s primary economic concern.

It is true that many early Bitcoin proponents were libertarians. But it is also true that almost every significant computing movement had early proponents who were ideologically motivated. The developers of the first personal computers were closely aligned with the 60s counterculture movement. Open source software was originally created by people who believed that all software should be available for free. Early advocates of blogging and collaborative systems like Wikipedia were trying to democratize the production and dissemination of information. This isn’t coincidental: broad-based technology movements have depended on non-economic participants early on since it often took years for commercial participants to get involved.

If not for political reasons, why am I interested in Bitcoin? Like a lot of people, I was disturbed by the aftermath of the 2008 financial crisis. I thought the government did what it had to do at the peak of the crisis but missed an important opportunity afterwards to reform the financial system. It seemed to me that there were two ways to improve the system: from above through regulation (which I support), or from below through competition.

I wrote a blog post about this issue about four years ago. My argument was that if the technology industry wants to change the financial services industry, it can’t just build new services on top of existing financial services companies. That would be like trying to disrupt Google or Apple by building services on top of their platforms. To actually have an impact (and create large businesses) you need to create services that completely bypass incumbent financial companies. I gave a series of examples including payments:

Charging 20% interest rates (banks) and skimming pennies off every transaction (Visa and Mastercard) is a very profitable business. Starting a new payment company that doesn’t depend on the existing banks and credit card companies could be disruptive.

Since then I made a number of financial services technology investments, all of which were consistent with this thesis.

I started getting interested in Bitcoin about two years ago. Like a lot of people I initially dismissed Bitcoin as a speculative bubble (“Internet tulip bulbs”) or a place to stash money for people worried about inflation (“Internet gold”). At some point, I had an “aha!” moment and realized that Bitcoin was best understood as a new software protocol through which you could rebuild the payments industry in ways that are better and cheaper.

The payment industry is a $500 billion industry (or larger, depending on how you measure it). That means banks and payment companies charge $500B per year in fees to provide a service that mostly involves moving bits around the Internet. There are other services they provide like credit, security, and dispute resolution, but in any reasonable analysis these services should cost dramatically less than they currently do. The payment industry should be at least an order of magnitude smaller than it is today.

Another thing that informed my view was seeing what a huge headache payments were for startups I was involved with. Let’s say you sell electronics online. Profit margins in those businesses are usually under 5%, which means the 2.5% payment fees consume half the margin. That’s money that could be reinvested in the business, passed back to consumers, or taxed by the government. Of all of those choices, handing 2.5% to banks to move bits around the Internet is the worst possible choice. The other main challenge startups have with payments is accepting international payments. If you are wondering why your favorite technology service isn’t available in your country, the answer is often payments.

But the most exciting aspect of Bitcoin (and this is admittedly more speculative) are all the interesting new business and technology models that “programmable money” could enable. For example, I am very bullish on micropayments (this is a longer topic which I plan to write about separately). The world recently ran its first large-scale micropayments experiment – so called in-app payments on iOS and Android – and despite some serious design flaws (centralized control, 30% fees), it was a smashing success. I think Bitcoin could enable a micropayment system for the open web, and thereby provide a business model beyond banner ads for many important services such as journalism.

I’m not claiming that Bitcoin (or any new technology) can save the economy or the world. The technology industry is in the business of creating products and services that either enable new activities or make existing activities less expensive. Venture capitalists are in the business of funding entrepreneurs who run experiments to try to create these new products and services. I believe the only way the technology industry can offer meaningfully improved financial services is by building new services that don’t depend on incumbent companies. Bitcoin is a serious proposal for dramatically improving the payments industry. There are plenty of open questions but I think it’s an experiment worth running.

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jamesdavid
3703 days ago
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Chicago, Illinois
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rafeco
3704 days ago
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I liked this post. I'm not sure BitCoin is the thing Dixon is waiting for, but his explanation makes sense.

"Why Bankers Created the Fed"

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Hilarious quote from Daniel Webster in a letter to Bank of the United States President Nicholas Biddle,
"I believe my retainer has not been renewed or refreshed as usual. If it be wished that my relation to the Bank should be continued, it may be well to send me my usual retainer."
Which was mentioned in this Lew Rockwell article.
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jamesdavid
3708 days ago
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Chicago, Illinois
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Exclusive with Ray Niro: The Man They Call the Patent Troll

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On July 1, 2013, I spoke on the record with Ray Niro, who is one of the most well known patent litigators in the United States. Throughout his career he has been a champion for the inventor who was facing long odds due to widespread patent infringement. So loathed was Niro, he was the one who was originally referred to as the "patent troll" by the media due to his representing innovators against giant technology companies. Of course, if you are going to call Ray Niro a patent troll you might want to also point out that he is extraordinarily successful, which means he has been very good at proving that large corporations have infringed valid patents, sometimes on fundamentally important innovations.
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jamesdavid
3865 days ago
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Chicago, Illinois
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Freedom

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I’m going to tell you what freedom is not. Freedom is not having burdens or responsibilities. It’s not having a job you must go to. It’s not having a girlfriend who is expecting you to call, or having a standing date with friends where your absence must be explained with an elaborate excuse. It is not having to give some type of prolonged notice to terminate a contract or job. It is not owning so many possessions that you need a storage unit. It is not having a wallet full of so many cards that your life turns upside down when you lose it.

I’m reminded of my freedom when I’m on a bus to another city. All my possessions, my summer and winter clothes, my dress clothes and two extra pairs of shoes, are in the undercarriage riding along with me. No one knows where I am and no one cares. I’m going to a city I’ve never seen before as a complete stranger, with no obligations to see anything or visit anyone. I have no worries, no bills, and no tasks. I’m reclining on an old chair, but I might as well be floating above the street, with no string wrapped around my neck pulling me back to where I was. I could die on the autostrada, in between villages whose names I don’t know and which are not announced with pleasant signs, and it would take several days for anyone who knows me to find out. Or my bags could go missing and within a couple weeks I could easily have the contents replaced. This is freedom.

I wouldn’t trade these bus rides, of having to answer to no one, for all the money in the world or for all the women in the world. I lay back, close my eyes, and let my thoughts and dreams go wherever they want, with no stress or anxiety disturbing them. There is no rush and there is no hurry. I am free. The whole world can demand something of me and I can laugh them off. My own government can take all my money from my bank accounts but they can’t find me on this bus.

Maybe I will stay a while in my destination or maybe I won’t. Maybe I will invent a new identity with the locals I meet or maybe I’ll be me. Maybe I will get laid or maybe I will work. Maybe I will take a tram or maybe I will walk. I was not free when I lived beyond my means, when I depended on the income that the man would grace me with every two Fridays. But I started to spend less than my earnings, and over the course of years it has given me my freedom. The only person I have to answer to is myself. I can vanish tomorrow, and nothing will happen. If I never check my email, never answer my phone, if I just disappear—I’ll do just fine. If you can’t simply close your eyes, and say goodbye to the world, you are not free.

Read Next: The Most Insidious Method Of Control Never Devised

P.S. My newest book is called 30 Bangs. It's about 30 of my bangs. Click here to learn more about the book.

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jamesdavid
3869 days ago
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Chicago, Illinois
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How To Build Real-Time Location-Aware Applications

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Author: 

One of the advantages of OpenShift or any other Platform as a Service is that it gives developers the power to turn their ideas into applications. As a developer, you are only concerned about writing code and the platform manages and scales the underlying infrastructure for you. I am also a developer and I love to write code.

A few days ago, I came up with a very simple idea to show messages in real-time on a map. A user posts a message via the application user interface, the application captures the user's current location using an HTML5 Geo-location API, and then displays the message on a map. If another user posts a message from some other part of world, the first user will see that same message in real-time. As users start posting messages, they will see all of the messages appearing on the map.

I had already built location-aware apps so I was quite comfortable in writing that part of the application but adding a real-time component was a new challenge for me.

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jamesdavid
3870 days ago
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Chicago, Illinois
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Fremont Knives “Farson” Survival tool

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Here is an interesting blade that you’ve never thought of owning. The Fremont Knives “Farson” Blade. An interesting modern day take on a prehistoric design which was found in the Great Red Desert in Wyoming. This tool was intended to accomodate a variety of tasks such as chopping, cutting, slicing, and skinning. I took it through a bit of field testing to see if it could hold up to it’s claims.

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The factory specs on the blade are as follows…
SPECIFICATIONS:
• Overall Length: 6″
• Blade Length: 3.28″
• Blade Material: Stainless
• Handle : 8ft of Survival Cord
• Nylon Sheath Included

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The blade comes with several warning labels to announce where the sharpened edge of the blade begins and ends. This is clearly intended for military types like me. The finish is a dull satin except for the cutting edge.

There are two holes drilled in the handle to secure the eight foot paracord which is wrapped in a very deliberate manner. There is also a large stamped out hole in the center to allow a hand to wrap around the handle much like a set of brass knuckles.

The nylon sheath is adequate for storage in a bag or something, but if carried on your person, a kydex rig or leather setup along the cutting edge would work better.

The edge is sharp enough to go to work right away, but not razor sharp. This may be an intentional move by Fremont Knives due to safety concerns and sheath design. A better edge could be achieved by a competent user with a sharpening stone.

I started asking myself what a guy like me could do with this particular blade. The design is so unique I felt like I should attend a class on how to use it properly.
Then again, although it is unique, it is brilliantly simple. You can intuitively scrape and shave bark, create kindling sticks, cut carrots, split timber, process a large animal, create a hatchet, and the list goes on.

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This could make an excellent addition to any survival kit or bug out pack because it can do so many things whilst taking up very little space/weight. I love the “tacticool” survival tomahawks by Benchmade, S&W, SOG etc etc, but they can be pricey, hefty and ackwardly shaped for a bugout survival kit. With a street price of $50-60 USD, you won’t feel bad about tossing one of these in your pack.

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One of the most interesting things about this design is that you can Lash it to a stick to make a chopping tool or hatchet. There is a two foot lanyard which comes off the bottom of the handle with two overhand knots in it. If you untie the top knot you can loosen the cordwrap without untieing the cordwrap. You could then slip a stick between blade and cord to create an ax handle, or a section of stick to act as a palm swell for better grip.

This is a thoughtful cordwrap design, but in practice it doesn’t work very well. After three or four chops the wrap will inevitably come loose despite your best efforts to secure it.
The good news is, if you just unwrap the eight foot cord and create a lashing, it holds like a champ. The file work near the top and bottom of the handle bite into the cord well without damaging it.

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I tested the field expedient hatchet on the branch pictured. I was impressed at it’s ability, despite the hasty lashing.

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I also used a large stick to hammer the bottom of the blade to split a piece of firewood. Once again the blade came through on the task. Fremont knives does not reccomend hammering the blade with stone or metal when performing the tasks mentioned above. It makes sense, but then again you have to wonder what metal is used for the blade exactly. The only description is “high quality stainless steel.” A bold assertion if you ask me. Knife nuts would much rather see a designation such as 440C, AUS 8, ATS 34 etc etc… Just come clean with it Fremont.

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I regret that I didn’t have a downed Caribou to test The Farson’s skinning ability. However, based on similarly designed knives by custom makers that I have tested, it would seem the design is capable of such duties.

If you are stepping up your preparedness or looking for a versitile camping/hunting tool for your kit, this may be a feasable option for you.

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jamesdavid
3876 days ago
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Chicago, Illinois
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