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Meet the Trader 06: Active Grade

Meet the Trader is a series of interviews conducted to explore the people behind the Bitcoin economy.

Episode 06:  Michal Eynon-Lynch of ActiveGrade.   Michal co-founded Active Grade with two other educators six months ago and currently has seventy five paying customers.  Their company is bootstrapped and profitable.  Recently, Active Grade began accepting Bitcoin as a method of payment.

Active Grade and Bitcoin

{ Introduction }

The number of websites offering goods and services in exchange for Bitcoin has roughly tripled since the beginning of March.  Services listed on the English-speaking trade page have risen from 65 to well over 200 (not including charities or obscene businesses).  The BTC-Economy database has indexed ~6000 items for sale from approximately 100 websites.

Cool and useful services have begun arriving at the Bitcoin economy.  The Bulletin’s next interview will be with Wuala‘s CTO, Luzius Meisser, whose affinity for Bitcoin comes from its “its anarcho-capitalistic nature.”  Most growth in “services offered” has not been from BTC-exclusive websites but from more established companies adopting the currency as an alternative method of payment.

Active Grade is one of those companies.  This start-up is offering a super slick web app built for grade-school educators.  As you will read below, the co-founders happened upon entrepreneurship from their day jobs and have gotten their company off to a quick start.   Not only has the company begun accepting BTC payments (very recently), but it has found competition within the Bitcoin economy and education space in Project Fedena, which also accepts BTC.

While the Bitcoin economy is still atomically-small in comparison to e-commerce at large, there has been steady growth in the variety of services.  The volume of consumer to business trades may be low (as opposed to OTC), but it has had little effect on the positive maturation of Bitcoin’s usefulness.

Michal Eynon-Lynch:

______________________________________________

{ Interview }

Spencer: So in the school of a Bitcoin economy can the bully still steal the lunch money?

Michal: Hmm, I guess it depends on how computer savvy the students are and if they are allowed to have their portable devices with them all the time.  At a school we would run, they probably wouldn’t be allowed these devices, especially not at lunch where we would expect students and staff to engage in conversation with each other, so there couldn’t be much stealing.

If there were though, that student would see reflected in their ActiveGrade gradebook that though they had a high proficiency in adding and subtracting, they had a low proficiency in being decent to others.

Spencer: What’s the story behind Active Grade’s founders, and what roles do they have within the company?

Michal: T’was more than 12 moons ago when Riley and Michal were both teachers at a small, boarding high school.  Michal was always searching hither and yon for interesting, engaging ways to assess students’ abilities.  Riley became inspired by the Professional Learning Community (PLC) they were a part of that was focusing on assessment.  He began to learn more about Standards-Based Grading and decided to start a blog to focus his thinking about the methods he was using.  When he tried something in his classroom, he would write about it and get feedback from other teachers from distant lands.

Riley began developing excel sheets to handle his new grading method.  Michal began developing rubrics to better deliver the newly articulated expectations to her humanities students.  Both came home every night frustrated that there wasn’t a better way to keep track of all this information.  Riley said, “by gosh Michal, am I computer programmer or what?”  “Quite right,” replied she.  With that, they decided to leave their teaching positions and forge their own way through the world.

After Riley crowned himself Chief Programmer, he went in search of a designer, someone who could turn his code into beautiful pictures.  He didn’t have to look far to find Dan, a designer and teacher at the University of Iowa.  At first Riley assumed he would just contract Dan to do a little work, but it soon became clear that Dan’s beautification techniques were indispensible, his sage advice necessary, and his home brew delectable.  Dan, for his part, was strangely drawn to this new endeavor and decided to sign on as Designer Extraordinaire.

By this spring it became clear that Michal could no longer dally in other interests.  She joined on fully as the Director of Outreach. There you have it – the story of ActiveGrade LLC.

Spencer: Your story sounds so perfect – prototypical of the way a startup should be done.  Tell us what was out of the ordinary or not traditional about the company’s beginnings.  What were the early challenges or unconventional methods used in getting off the ground?

Michal: We are not business majors or serial entrepreneurs so some of the business end has caught us off guard.  Like many start-ups, we had a good idea and passion, but we didn’t necessarily get in it to be business managers.  Because there are so many awesome, cheap tools for programmers, we are hoping to get this off the ground without a serious cash infusion from investors that might have certain expectations about our growth and strategies.  The underlying values of our product are really important to us and we don’t want to have to compromise those in any way.

Spencer: I love how your company is built to sell — a simple service that’s not free. How have the first months of revenue been?

Riley: We have 75 individual customers using the beta version right now, but our business plan calls for sales to entire schools and districts, and that will be possible for the first time in the 2011-2012 school year.  We’re encouraged – several schools and a few entire districts have contacted us already, so we think we’ll have some larger customers next year.

Ad-supported business is not for us.  It’s too indirect, and the expense of the middlemen/women is too great.  We’re lucky to be in an industry in which it’s customary to pay for services!

Spencer: I am interested in the fact that Active Grade hosts a topical blog on education.  From an inbound marketing perspective, has it been worth it?  Has it helped you acquire new users?

Michal: Well, ActiveGrade was actually born out of Riley’s teaching blog at larkolicio.us/blog. He started writing it to focus and improve his teaching skills.  When we decided to start ActiveGrade he had about 500 readers, so the transition was natural.  Our blog is not primarily a marketing effort; it’s more valuable as a place to hone ideas and get feedback before spending a month developing a feature.  It’s also important to us as a place that teachers can find and give new inspiration, and as a contribution back to the blog network that inspired Riley to improve his teaching and ultimately to create ActiveGrade! That said, aside from the 20 clicks we got from $100 adwords credit, all of our outreach has been through the blog and other free networking avenues, so… yes, it’s definitely helped us acquire new users.  It was gratifying when over 200 people signed up for our beta test without a lick of formal advertising!

Spencer: How do you tap into the education community and stay accessible?  Do you have plans to attend any education conferences or trade shows?  So far for your product has good old word of mouth been more important than blogging and Internet ad campaigns?

Michal: A lot of friends and contacts are in education so we stay up-to-date on the issues facing educators.  Twitter has proven to be an excellent platform for meeting other passionate educators looking to improve their teaching.  A lot of word of mouth has been generated through tweets.  One teacher who found us this way, likes us so much he just spoke about ActiveGrade at a conference.  Our two blogs, Riley’s personal blog, and the ActiveGrade company blog, have both been very useful in generating interesting conversation around teaching and learning.  We hope our blogs can be places of spontaneous community where people come to discuss ideas and be re-inspired.

We only briefly dabbled in internet ads and it wasn’t nearly so successful as the word of mouth.  In the next year we hope to exhibit and or present at educational conferences but we are not yet sure which ones.

Spencer: The Active Grade product seems to have a focus on simplicity (in the vein of a product like Basecamp). What kind of design philosophy exists behind the user-interface?  Does the designer have any personal rules of thumb or is it all intuition?

Dan: Simplicity is key. Your product is only as good as the user’s experience with it so it is important to keep the interface elements meaningful and immediately understandable.

There is nothing more frustrating than encountering a piece of software, knowing what it is capable of, but being unable to understand how to accomplish that thing. Ultimately we strive to make interfaces intuitive to the point where–to the user–the UI disappears, and he or she is able to get their work done efficiently and with confidence.

Spencer: What do you think the most intelligently designed feature is within your product?

Dan: In the current product, the solution for adjusting the color levels and grading scale for standards is a very efficient and intuitive method for what could be a mind-numbingly tedious and repetitive task.

Active Grade - Standards Scaling

In the next major release of the product, the user is working with an entire school (or district) full of teachers, students, and classes.  The new features for comparing data inside the Gradebook are going to turn some heads.

Spencer: In your minds, how do you frame the competition?  Do you throw darts at a poster of Blackboard or admire something about them.  Who is your real competition, anyway?

Michal: Dartboards, definitely.  Mostly we invite our competition over for dinner and then insult them subtly all night long.  No, not really.  Our competition is different from us.  A lot of them are large companies offering full Student Information Systems (SIS).  We don’t have any plans to offer discipline reports, or bus route schedules, etc.  This is a disadvantage for us because a lot of schools want one connected program to handle all their different administrative systems of which grading is just one.  For us, we are excited about the feedback, communication, and learning, so we don’t know that we’ll ever try to compete with SISs.  Some of these products are PowerSchool, Infinite Campus, and SnapGrade.  Whereas some of these products have added on a Standards-Based Grading (SBG) component, our whole focus is on SBG, which allows us to do it really really well.

Spencer: What is Active Grade’s typical development cycle?  I’ve picked up on some hints that suggest new features are implemented at the end of semesters.  Does this allow for larger, more impressive updates or customer frustration?

Michal: We launched the service in November of 2010, so I’m not sure we can call any development cycle “typical” yet.  The upcoming update is a big one, with a fundamental change that allows schools to share data across classes.  We maintain our code in several branches, so we can release big updates like this one (months in development) and also small, 10-hour features.  So, we can also be very responsive to customer ideas and complaints.  Our average response time from complaint to live fix is four hours, and several feature ideas have been up within a day of the suggestion!  ActiveGrade is hosted on servers around the world, but thanks to the excellent design of our infrastructure (Google’s AppEngine) we can release an upgrade with zero downtime on every single server in about 25 minutes.  Since our launch we’ve put up over 50 changes (bug fixes, interface enhancements, and major features like report generation) with ZERO downtime.  100.0% uptime!

Spencer: Google’s App Engine really strikes me as something that’s a great deal for a startup (with its pricing, speed benefits).  Have you seen any drawbacks from launching on this platform?   If you have had a good experience with Google App engine, could you sing its praises?

Michal: There are a few drawbacks. It has a low guaranteed uptime (95%), but in practice its uptime is much higher than that. There is a learning curve.

I frequently sing its praises, though! The price is affordable, and since it’s free ‘til you’re successful, Google absorbs a lot of the risk for you.  The promises of automatic scaling are irresistible.  They’re set up to take you from a tiny startup to a huge operation and they can provide it at an incredible price.  The developer community around appengine and GWT is helpful, and the tools are rich, easy to use, and, somewhat shockingly, also free.

Spencer: How did your team hear about Bitcoin?  Were you all in agreement to add Bitcoin as a payment option?  Active Grade receives subscription payments, which there currently isn’t a Bitcoin service to provide for. Will this affect the pricing scheme for BTC customers?

Michal: Riley heard about Bitcoin on Slashdot in February, and was taken with the idea.  He’s actually the one taking Bitcoins, and will transfer the appropriate amount of cash to ActiveGrade whenever someone orders.  A payment mechanism is something we could definitely use – Mt. Gox has something that looks usable but it doesn’t support subscriptions yet so direct transfer is still the easiest and cheapest option.  We’re hoping Google Checkout will add bitcoin support!

Spencer: (To the developers) Do you have any insight into learning from user behavior?  Any cool tools you’ve used to learn more about your customer?  (User Testing or Mechanical Turk, for example)

Developers: We use GetSatisfaction.com to collect feedback.  We chose it because it allows users to talk to each other, as well as to us, and since ActiveGrade arose from a sense of communal learning and improvement (there’s a very rich teacher blog environment) it’s important to us that our customers be engaged in the philosophical underpinnings of the gradebook.  It’s got a design pretty drastically different from our competitor’s, so we think that sense of self-improvement in the teachers is almost a requirement.

Spencer: What sets the pilot school product apart from the original version?

Michal: For starters, the Pilot Program is cheaper.  We do not charge pilot schools any of our service/support fees because the feedback we will get from these early adopters is more valuable to us.  We will work closely with schools to develop features they want.  Our sincere hope is that ActiveGrade is useful and effective so it just makes sense to work with excited teachers and administrators to make it fit actual needs.

The flip side of that is that there are important features we have not created yet because we want to create them in conjunction with schools.  Also, since it’s brand new, it’s still in a beta version.  Pilot schools get a reduced price because there might be some bugs and because it won’t have all the bells and whistles at the beginning of the school year.

Spencer: So how would you explain Bitcoin to a class of 3rd graders?

Michal: Step 1: Find a situation to which they can relate:  “Have you ever traded part of your lunch to a friend in exchange for part of their lunch?”

Step 2: Ask questions:  Why did you do it?  Why did you trade your potato chips for fruit snacks?  Did you want the fruit snacks more?  So it was worth it to give up the chips because you wanted the fruit snacks?

Step 3: Describe bitcoins simply:  Bitcoins are similar.  I can trade US dollars for a bitcoin because the bitcoin is something I want more than US dollars.  But there’s a little difference. At lunch, once you trade your chips for fruit snacks, that’s the end.  You probably can’t trade back unless you both change your mind.  But once I have traded dollars for bitcoins, I can trade them back for US dollars.  What’s even cooler is that if I keep the bitcoins for a while, other people might decide they want bitcoins too and they might be willing to give me lots of dollars for them.  This means I could trade my bitcoins and get more US dollars than I had originally.

Step 4:  Make the analogy: This would be like you trading your chips for fruit snacks and suddenly 10 other kids really want them too.  One offers you his chewy granola bar. “No” you say.  The next offers you her yogurt and a piece of candy.  Finally, someone offers you a granola bar and his chocolate bar.  This is too good to pass up.  You started with a bag of potato chips and now you have a chewy granola bar and a candy bar.  On the other hand, it’s possible that the bitcoins will lose value.  This would be like you trading your chips for fruit snacks and then all of a sudden the fruit snacks turn in to dust.  You have nothing to eat and nothing to trade.

 

-End

If you would like to be interviewed, please contact me here.

For those of you that have yet to build your service, remember to tell me when your finished!

Upcoming: Bowling for Bitcoins: Meet the Trader 06

Update: Some real life stuff has slowed me down, but the article is currently in the works.  It will arrive soon.  – Spencer

The next installment of Meet the Trader will be with the young and successful start-up ActiveGrade and its co-founder Michal!

Michal and his team have built a really slick web-app for educators, described as a “standards-based gradebook that empowers students and teachers by making feedback the start of the conversation.”  In keeping with the Bulletin’s tradition, tough questions will be asked, tears will swell, and we’ll all have fun!   The answers are in, and the interview will be posted on Thursday, May 19th!

The Bitcoin Effect (aka Reality Distortion)

Geeks get excited by the same things.

Bitcoin encapsulates most of those things… programming, the internet’s “anything goes” mentality, open source, computer hardware, and a community filled with other geeks…   Add an affinity for disruption, and few of us can escape Bitcoin’s pull.  When geeks have their first encounter with the topic, the phenomenon usually induces giddiness and profound question forming.

Geeks have so much to internalize and mull over that deep questions are asked of the community (ranging from technical inquiries to endgame extrapolations and conspiracy theories).  When geek-celebrities are drawn into orbit, their fascination manifests itself in their audiences’ imagination–the ultimate halo effect.  I have Steve Gibson to thank, while others (like Robert Scoble) have @Jason.

I can say judging from the Bulletin’s analytics, this conversation is happening in over a hundred other territories around the world.

What does all of this mean?  It means that smart people are very susceptible to joining the project on impulse.  So many interests are represented under the Bitcoin umbrella, and each acts as a separate honey pot.

Take Gavin Andresen as an example.  He pushed all in on Bitcoin and related projects (with a two year runway).  The reason he got involved?  Because he was interested in cryptography, economics and open source projects (among other things).  Basically, he got very excited by what Bitcoin was and believed that it had a fighting chance to affect the world, so he decided to wed his fate to that of Bitcoin’s.

This is the Bitcoin effect at work:  personal immersion in topics that leads to euphoria and dedication to the project.  Its akin to the way individuals learn to love Linux.

Many believe that Bitcoin isn’t a tempest in a teapot, but something permanent or inevitable.  Time will tell if they are right, and history will judge its effects on society.  In light of other forces at work, the outcome may be a needed and positive one but with interesting consequences.

I’m glued. euphoric. geeked-out.

(I don’t own hundreds of Bitcoins, I’m not interested in the narrative because of a financial investment of any kind.  The Bitcoin effect nabbed me.  I do plan on buying some Bitcoins in the future, however, as BTC’s liquidity is an issue I’d like to cover firsthand, and I plan to write about that experience here at the Bulletin.)

Beta Web Services: Bitcoin Economy

We have set out to properly index what can be purchased with BTC.   We are basically indexing the economy.  Right now our database can be viewed via this web plugin, which will remain on the front page of the Bulletin.

Please offer any feedback or ideas for features at this forum post.

Depending on the level of interest, Search functionality will roll out sooner or later.

As indexing websites takes a terrifying amount of bandwidth, please show your support by donating to this Bulletin’s address so we can keep this service up:  1JSv4mydZJoQ9wjXeFau9AmpofcHrsMFvW

Any help is greatly appreciated.

The Gold Standard comparison is invalid

Never have I written a blog post with so little preparation, but in the wake of reading this steaming rant about Bitcoin (which was upvoted gratuitously on HN), I was compelled to do my worst.

Fact #1 – Bitcoin ≠ the Gold Standard.

Is Bitcoin a deflationary currency?  Yes.  That’s where the similarities end.

I cringe when people make these kinds of historically inaccurate comparisons.

What was the Gold Standard?  It was a system in which one currency was tied directly to a finite resource.  There was no choice in how one could pay, payments were made in a vacuum.  All transactions had to be made in a currency backed by gold.  That meant that any abuse of the Standard could affect the economy negatively and runs on banks were almost inevitable.

Bitcoin’s contribution to “capitalism” is choice, not control.  Having choice is antithetical to any form of Standard.  Let’s keep it that way.

Fact #2 – Bitcoin is a convenient solution for web transactions

Anyone who’s interfaced with the Bitcoin client will tell you that it is a brilliantly written program that can be controlled easily via JSON-RPC.

It’s not “a stupid inconvenient currency that’s worse than paper” like gold.  That guy really took the whole Bitcoin = Gold thing way way too far.

Fact #3 – Unlike w/Paypal, floating cash is not at risk of being frozen

As scores of entrepreneurs will tell you, Paypal is notorious for taking action without warning, especially when thousands of dollars are at stake.  As the vast majority of online transactions rely upon a few trusted third parties, this makes “choice” even more relevant.

Fact #4 – Cool, mainstream services use and accept Bitcoin

My next two interviews are with www.ActiveGrade.com and www.Wuala.com for example.

The bigger problem is that services accepting BTC are hard to discover.

Fact #5 – Bitcoin is highly international

This only enhances the point that it’s not a standard.  How could something so distributed (distanced from a fiat currency) be considered a Standard?

Update: Bowling for Bitcoins: Meet the Trader

Hey guys, Spencer here.  Despite there being an initial interest in doing an interview pertaining to MtGox (an interest that was shared by the site’s operator, Mark Karpeles)–and despite preparations being made on my end to facilitate that interview–it appears that it’s not going to happen.  Hopefully, an interview with Mark will be made available at some later date.

Doing an interview is an involved process that takes time, and occasionally the process falls through.  In this case it did.  It’s been a tough week for MtGox (with crippling Denial of Service attacks, a busy feature-roll out schedule, etc.), and in no way will I fault Mark for putting his service and users first.

That having been said, I feel that the questions which were prepared for MtGox were relevant, and I hope that he or another MtGox representative decides to answer them at some point in the future.

In the meantime, I have two stellar interviewees lined up and am in the middle of the interview process with one of them.  I will wait to announce those interviewees until I can be sure that a post will be made.

Upcoming: Bowling for Bitcoins: Meet the Trader

The next installment of Meet the Trader will be with the popular exchange MtGox and its operator Mark Karpeles (aka “MagicalTux”)!   The MtGox exchange has, from the very beginning, played a critical role in improving the state of Bitcoin’s liquidity as a currency.  The features in store for the service promise to mature Bitcoin’s financial markets (“Margin Trading” and “Options” are in the works.)    In keeping with the Bulletin’s tradition, tough questions will be asked, tears will swell, and we’ll all have fun!

The interview will be posted in one week on Friday, May 6th.

Bowling for Bitcoins – Bits and Pieces

Here are some assorted links that may interest the Bitcoin crowd:

1. Ray Kurzweil from the Singularity Institute. Podcast on TWiT.

2. What needs to unfold. A consumer rebellion.

3. If you get caught on the Silk Road…

4. PI’s are sneaky.

5. Meet the Alpaca’s next of kin, the Ibex–youtube.

6. Hardware seizure and techniques to detect botnets.

7. Use Android?

8. Feds have actual success against a Botnet “Coreflood.”

The sketch was done by me for 1 BTC.  I’d like to have a sketch for each Bits and Pieces post.  Please let me know if you have a funny idea here on witcoin!

Meet the Trader 05: Gavin Andresen, Clearcoin

AndresenMeet the Trader is a series of interviews conducted to explore the people behind the Bitcoin project.

Episode 05:  Gavin Andresen of ClearCoin, Bitcoin Faucet and Bitcoin.orgGavin studied Computer Science at Princeton and started his professional career in Silicon Valley.  ClearCoin is an escrow service that helps to mitigate the risks involved with Bitcoin transactions.

{ Introduction }

No matter how you look at it, Bitcoin is an interesting topic.  The currency has unique properties that threaten multiple paradigms, and its momentum as a store of value is undeniable–as the unit-value has risen astronomically over the last year.

That’s not to say there aren’t significant challenges.  While the young protocol seeks legitimate recognition, it is also firmly rooted in an open source community of developers that may not appreciate that level of formality.  As a project, Bitcoin is just now hitting adolescence and is in need of a parent.

Gavin entered the fray last June.  He now heads Bitcoin.org as a man of the people–one whose reputation was formed by checking in at Github and validated when he earned the trust of the legendary Satoshi Nakamoto.   Beyond being an advocate for Bitcoin, he has founded a company that has a revenue model aligned with the fate of Bitcoin.

His company, Clearwing, hosts two essential services:  The first is a non-profit endeavor called the Bitcoin faucet, which donates a few bitcents to those new to Bitcoin.  (Donating to the faucet is as easy as sending coins to the address at the bottom of its page.)

The second service, Clearcoin, addresses a pressing need within the Bitcoin community: the need for escrow.   That is to say, how can commerce flourish when a seller isn’t sure if the buyer actually has the money for the transaction?  (…until after his goods are shipped and recieved.)  As you could imagine, without escrow, doing business in BTC is awkward to say the least.

The key behind any escrow service is trust.  Gavin may be a man worthy of it.

Andresen

I know that trust is hard to gain and easy to lose, and an escrow service is really all about trust.  So I suppose I’d say ClearCoin is maturing slowly, in small, careful steps.

Gavin Andresen:

______________________________________________

{ Interview }

Spencer: What’s the story behind Clearwing Software? Is it your livelihood?  Has the ClearCoin offering made an impact on the company’s bottom line?

Gavin: I created Clearwing Software shortly before launching ClearCoin for legal and accounting reasons.  It is a startup, and hasn’t generated significant revenue yet– the entire bitcoin economy needs to grow before there will be enough transactions for ClearCoin to be profitable.  It is my full-time job, but I’m tapping savings from previous jobs and entrepreneurial ventures to pay my day-to-day expenses.

Spencer: Is entrepreneurship in your blood?  Could you share a bit about your previous experiences?

Gavin: Maybe all of the moving around when I was a child made me more open to  trying new things and taking risks.  Working in Silicon Valley for eight years after college immersed me in an entrepreneurial culture, and gave me enough financial security so I could pay off my student loans and start a little two-person software company.

Like most startups, it flopped– we created software for a market that we thought might take off (360-degree-wraparound panoramic photography)… but didn’t.

My next venture was more successful– I joined a Western Massachusetts startup doing an early voice-over-the-Internet application (Roger Wilco), which was sold to a Silicon Valley company before the .com implosion.  After that was All inPlay, a socially-conscious startup that never found a good way to market online games to blind people and their sighted friends and family.

Spencer: How did you get involved with Bitcoin and eventually become the head at Bitcoin.org?  What kind of leader do you aspire to be?

Gavin: I first heard about Bitcoin in May of 2010.  I was looking for a new
project to tackle, and Bitcoin matched several things I was interested
in– economics, peer-to-peer technologies, and cryptography.  I started by reading Satoshi’s paper, all of the messages that had been posted on the bitcoin forums, and even the initial discussions sparked by Satoshi’s announcement of bitcoin on the cryptography mailing list. Back then it was possible to read everything that had been written about bitcoin in a day or two.

I decided the Bitcoin Faucet would be a good, easy first project, so I
implemented it and then spent $50 to buy 10,000 bitcoins and began giving them away.

I submitted some patches to Satoshi for various features that I thought were missing from core bitcoin and started proposing new features on the forums… and then a few months ago Satoshi asked if it would be OK if my email address was listed on the bitcoin.org “Contact Us” page.

I didn’t realize he was planning on removing his email address!  So I became the de-facto technical contact for bitcoin.   I’ve had lots of previous experience acting as the “chief technical officer” for startups, although never for an open source project before– I’m learning as I go.

As for what kind of leader do I aspire to be:  one of many, I hope! When I talk about the Bitcoin project I try to suppress my personal political and business agendas so I give an accurate impression of Bitcoin.  And I try to keep an open mind when presented with new ideas, even if the idea starts with “Bitcoin can’t possibly work because…”  I would like to see Bitcoin leaders from different
countries, cultures, and political philosophies talking about why it is a good idea.

Spencer: I could imagine being the head of an open source project is kind of like herding cats.  How does the heirarchy play out within Bitcoin’s development community?

Gavin: Compared to a business, there is almost no hierarchy; anybody can
contribute code, and my policy on who has write access to the git repository has been “whoever contributes lots of patches and is willing to help.”  With software development it is easy to see who is creating useful stuff– those are the people who naturally become the leaders of the development community.  The “cat herding” aspect comes up when it is impossible to get everybody to agree on which stuff is useful and which stuff isn’t, and that is where the leader or leaders
sometimes have to step in and make a decision so the project keeps moving forward.

Spencer: What have been some of the interesting observations made while operating Clearcoin?  How has the product matured since its debut in December?

Gavin: The most difficult thing for me has been balancing work on core Bitcoin, work on ClearCoin, and work on the business side of ClearWing Software.  I need Bitcoin to be used more for ClearCoin to really be a viable business… but maybe an easier-to-use ClearCoin would help make that happen.  And on the business side, getting investors and seed capital would let me grow the company faster… but maybe I should make the product better while giving the Bitcoin economy time to grow.

I’ve been extremely cautious with ClearCoin, because I know that trust is hard to gain and easy to lose, and an escrow service is really all about trust.  So I suppose I’d say ClearCoin is maturing slowly, in small, careful steps.  I’m in the process of creating an API for it so websites and tools can be built on top of it.  In hindsight, I should have built the API first, because it has been very useful for creating rigorous automated tests to make sure I don’t break anything as I add
new features.

Spencer: Escrow seems especially needed with Bitcoin because of the irreversible nature of the transactions.  So ClearCoin is making Bitcoin a more tenable currency for traders, but there is still a risk that funds won’t be released to the seller.  Could you explain ClearCoin’s “charity escrow” implementation and how it attempts to deal with this risk?

Gavin: The person sending the bitcoins can create “charity escrows” which will donate escrowed coins to charity instead of refunding them if the transaction goes bad.  That gives both people the same incentives and risks– there is little incentive for the sender to try to cheat because they will lose their bitcoins whether or not they release the coins.  And there is little incentive for the receiver to cheat, because if they do they won’t receive the coins, either.

I really like the idea of some good (donating to charity) coming out of a bad situation (a transaction that didn’t go as planned).

Spencer: One of the principle concerns that newcomers have when they learn about Bitcoin is that their wallet files are only as secure as their computers.
Are there any steps being taken to improve the Bitcoin implementation as it relates to this issue?

Gavin: Making the wallet secure from ‘casual theft’ by requiring a password to send coins is high on my priority list for Bitcoin, and Jeff Garzik has an initial implementation to get the discussion going for how, exactly, that should work.

However, there is really nothing anybody can do to prevent a virus or trojan from stealing your coins if a compromised computer is the only device you have for sending bitcoins.  Malware could lie in wait on your system and discover your wallet password the first time you go to send coins.  The only way to solve that problem is to get some other device involved– for example, I could imagine requiring that your computer rendezvous with an app running on your cell phone to send bitcoins, requiring you to confirm the transaction on both devices
before they’re sent.  Assuming the malware didn’t manage to infect BOTH your computer AND your cell phone, that could be secure.

“Rome wasn’t built in a day,” though, and the first step is to at least make it much harder for somebody to sit down at your computer when you’ve stepped away and emptying your wallet by sending themselves your coins.

Spencer: As one who has started a Bitcoin service of your own, how did you frame the pertinent legal issues as they related to your business?

Gavin: I’m reluctant to talk about specific legal issues and regulations,
because I am not a lawyer and I know there are laws and regulations
about giving legal advice.

I think it is safe for me to say that I’m lucky be in Massachusetts
instead of California, because the regulations for escrow companies in
California “requires a manager who possesses a minimum of five years
of responsible escrow experience to be stationed at the Licensed
location.”

Spencer: One could say that you have a finger on the pulse of the Bitcoin economy, as you have a sense for the volume of trades.  What do you regard as the primary impediments to a bustling, high volume bitcoin economy?

Gavin: I think there are three major impediments right now:

First, it is still too hard to purchase bitcoins.  CoinPal is a great service for purchasing small amounts of bitcoins, but we really need a convenient, legal way for new people to purchase several hundred to a few thousand Bitcoins.

Second, it is still to hard for website owners to start accepting bitcoins.  I think that problem will get better soon as people gain experience doing it and, hopefully, hire themselves out so website owners can concentrate on selling their products or services and not worry about whether they should run bitcoind on their web server or which shopping cart interface software and E-wallet service they should use.

Third, Bitcoin has to find initial market niches where it is significantly better than existing solutions.  I don’t think being less expensive than (for example) credit cards will be enough on its own to convince consumers to start using bitcoin instead of dollars, for example.  Maybe one initial market niche for bitcoins will be small business owners who are very aware of how much credit card transactions cost, are tired of paying chargeback fees or bounced check fees to their banks, and so decide to start using bitcoins to pay other small business owners for products and services.  I don’t think there is any way to predict in advance what the “killer applications” for bitcoin will be, so I expect to see a few uses take off while a lot of others don’t.

Spencer: You hit upon an exciting point: there is much room for Bitcoin growth internationally.  To be a global currency, there will need to be “Gavin’s” for the different subsets. Consider you are a member of the press in Brazil and want to talk to a “major participant” of the bitcoin project in Brazil. Where does one even start? Then consider the same question for China, India, Pakistan or any of the 150+ nations that should be getting on board. (Question from Bitcoin News)

Gavin: Martti and I recently set up a “bitcoin-press@lists.sourceforge.net
mailing list for press inquiries, and as we get inquiries we’ll try to figure out who would be good people all over the world to talk to reporters about Bitcoin.  However, the first person to setup an exchange site for Bitcoins to/from Brazilian Reals or who creates a popular Brazilian Bitcoin information web site will probably be the first person reporters in that country talk with, and the first person we’ll direct them to.

Spencer: As far as Clearcoin’s net profits are concerned, it seems like a high margin business with very low fees.  How much will it need to scale in order to be a big money maker?

Gavin: The entire bitcoin economy needs to be much bigger for ClearCoin to
start making money and paying for all the time I’ve already invested–I’d estimate 50 to 100 times bigger, although I have to admit I haven’t bothered writing a business plan with projected growth rates and estimated revenue.  From my experience, and from the research I’ve seen, successful entrepreneurs don’t make grand five year plans; they take advantage of opportunities as they arise.  I won’t be surprised if a year from now ClearCoin looks and works completely differently from the way it looks and works today.

Spencer: What’s the runway look like for ClearWing?  (How long have you given yourself for the service to take off?) Are you in it for the long haul?

Gavin: I will give it two years, and if it isn’t taking off I’ll either gracefully shut down the service or merge with a larger Bitcoin service that could use an escrow solution.  I plan on sticking with Bitcoin-related projects for as long as Bitcoin is taking off, though, so expect to see other projects from ClearWing Software even if ClearCoin isn’t the success I hope it will be.

Spencer: There seems to be quite a bit of academic interest surrounding Bitcoin at George Mason University.  Are you aware of any other recent developments in the academic community?

Gavin: I haven’t heard of anything– I have a Google Scholar alert set up so I’m told when academic papers that mention bitcoin come out, and there have been only a handful so far.  My wife is an academic, so I know how long the academic process can take– create a grant proposal, submit it, wait six months or more for it to be approved (or not), then find graduate students or hire post-docs to help with the research which can take a year or two or four…

Spencer: You talked a bit during your EconTalk Podcast about Satoshi and his “benevolence.” From the community: (Blitzboom) Would you like to meet Satoshi, and what do you think of him as a person?

Gavin: Sure, I’d like to shake Satoshi’s hand and congratulate him on creating what I think might transform the world’s monetary system.  I can’t really speak to what kind of individual he is– all of my conversations with him have been strictly about Bitcoin.  He’s obviously extremely smart and very driven; it is astounding how many details he got right when designing and implementing Bitcoin.

I hope there are projects in the academic pipeline to study Bitcoin that I just don’t know about.

Spencer: Thanks Gavin for doing the interview!

Gavin: You’re welcome!

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I’m proud to announce that comments for this blog will now be hosted at witcoin!  If you would like to leave a comment or help to support this author: Comments.

_________________________________________

If you would like to be interviewed, please contact me here.

For those of you that have yet to build your service, remember to tell me when you’re finished!

 

Meet the Trader 04: witcoin, Necrodearia

Meet the Trader is a weekly interview I have started to help the providers of the Bitcoin economy gain exposure.

witcoin, Bitcoin meets content submission

Episode 04:  necrodearia (aka “mizerydearia”) of witcoin .

This is the story of a unique idea and the person behind its early development.

{ Introduction }

It’s a simple idea: witcoin is a socially driven content site like Reddit, only that when a user “replies to” or “upvotes” content–that user is contributing a fraction of a bitcoin to the author of the post. (It costs a small sum for the author to make the original post as well.)

This way, each community member has a real stake in what he or she says.  witcoin is not a zero sum game because there’s both an incentive for users to contribute quality content and a big reason for spammers/trolls to stay away.

I was drawn to this story because witcoin is a different species of web service.  It exists in this kind micro-micro-payment space.

For example, in replying to a particular post I actually made the smallest transaction of money I have ever made in my life. (Here is the link.)  My experience only validated what I already believed: that witcoin is opening the doors to a whole new arena, lighting the way for what could be the world’s first true micro-micro-economy.

As with any social site, there is the chicken and egg paradox and it goes like this:  to have users, you need content — but to have content, you need users.  witcoin is on its way to overcoming this issue, with hundreds of users, a fundamentally different contribution model, and a lead developer focused on improving the product.  It’s only a matter of time.

A couple final notes on witcoin:  1.)  Its log-in/sign-up implementation could not be simpler or more accessible.  Using OpenID, logging-in (“getting wit it”) is a breeze–the user doesn’t even need a username/password.  Web app developers take note.  Pretty slick.  2.)  It recently added an option to include charities in the distribution of proceeds, an interesting idea in and of itself…

mizery, necro:

The man (or woman?) behind witcoin, “necrodearia” (aka “mizerydearia”), is a creative coding beast, and has churned out so many Bitcoin projects that his servers can’t host all of them simultaneously (lack of resources).

In his own words (from the interview below):

My focus for witcoin is to create a platform that allows users to profit from their participation.  I think that is the next step for community-based sites that we’ll see grow over the next few years.

But necrodearia’s roots extend beyond witcoin into a wide range of other contributions.  There are so many clients/bots/services he’s conceived; one could say that he’s the “baby-daddy” of the Bitcoin community.  It also makes him one of the community’s most dedicated and steadfast contributors.

Necro’s focused to the point of having a lopsided and slightly ironic life.  He’s smart but broke.  He’s socially withdrawn but the operator behind a social content sharing site.  I give you, necrodearia:

______________________________________________

Spencer: So “necrodearia” (aka “mizerydearia”), who the hell are you?  Where are you from?  What’s your background?

Necro: Hmm… I am …  I’m not sure who I am.  This type of question is always difficult for me.  Perhaps I can define myself by my experiences, which happen to be primarily sitting in my room (when I have one, which I do for now) at my computer either working on web development and other developmental activities or idly and enjoyingly surfing the Internet, reading amongst various other user-generated content type of sites.

I am from Milwaukee, WI, which happens to be where I am currently staying, existing, just after living in Appleton, WI for about six and a half years.  My history consists of primarily sitting at my computer desk and actively playing around with scripting, web development and sometimes games.  I used to play games quite a lot as I was younger.  Now I try to focus on more productive things.  I try, but I occasionally fail.  And if I’m not playing a game, I’m instead surfing the Internet for something amusing or entertaining, which has had an influence in my excitement for establishing witcoin as it is.

Spencer: What are your personal drivers?  Monetary gain?

Necro: Hmmm… I am not so sure.  It must be some kind of passion.  I would love to establish success from the site.  However, I kind of strive for a minimal influence of monetary gain by focusing the profit-sharing to include participating users as well as allowing for charitable donations to participating organizations and charities.  I guess what drives me is success.

I would love to become successful and not have to be concerned about struggling, but I don’t want to establish success in a way that stems from or promotes greed, evilness, lying, cheating, stealing, corruption, control, power, slav…oops, I’m rambling.

Spencer: How do you think of witcoin?  A project, a business, other? And how does that fit into your vision for witcoin?

A penny for your ideas.

Necro: Well, before and at the time that I began working on the site, I was working on a few project ideas, primarily dedicating all or most of my time towards working on them.  The same has been true for witcoin, in which I have established more passion and effort to work on and establish.  It is a kind of project that I would like to establish successfully not just for myself, but for the participating community, of which there are about 200 users so far.  In a sense, I consider it as a kind of job or responsibility:  a responsibility to continue establishing and developing the platform so that the community’s investments are worthwhile and beneficial to them.

Spencer: You are a man of many Bitcoin projects (IRC Bitbot, Stats Control Panel, MtGox Market Bot, please.bitcoin.me, and the Bitcoin Gentoo Ebuild).  Two questions:  What got you so involved with Bitcoin?  What caused you to settle down with witcoin?

Necro: Well, as I first encountered an article about Bitcoin, I became instantly excited, participating like many others by running Bitcoin miner and generating Bitcoins.  However, I additionally began using my self-established skills and interests to contribute towards the establishing Bitcoin community in ways that I enjoy.

Initially I established running an IRC bot and combined it with working on a series of statistical and informational web pages. Initially for the IRC bot I expanded developing single-serving pages displaying real-time data which users could monitor in their web browser.  A website allows for the display of more data than is suitable for an IRC environment.

When I first ran the Bitcoin client (I think version 0.2.0) I ran the Windows version using wine.  The Bitcoin client was fairly unstable and occasionally crashed causing wallet file corruption a few times.  I wasn’t able to use the linux binary in my gentoo linux environment.  So, I began learning how to write an ebuild for gentoo portage and came up with this.

After having generated some Bitcoins and also receiving various donations for my developments/contributions, I began playing with the market at Mt. Gox.  I wrote a bot using Snoopy to buy and sell for me, although, it wasn’t very profitable and I ended up losing more than I made.  Until then, most of my ideas and efforts were by myself.

[Critical connections were made that would lead to more projects and then witcoin.]

In September of last year I responded to one of noagendamarket‘s posts looking for someone to help establish a Bitcoin business directory website.  [This led to further project ideas.]  At first the projects were simple kind of like proof of concept types of sites such as http://please.bitcoin.me/ which allows users to edit the content on the page by paying a Bitcoin amount greater than or equal to the last user that submitted content.  Then I began working on a project that was more involved and in depth, Pizza4BTC, which was meant to be a pizza exchange market.  I haven’t finished it yet, but someday I would like to rewrite it.  I had initially established it using Drupal, and have found the CMS to really show how bloated and slow it can be for data intensive types of websites.  At one point and for weeks I had grown quite frustrated from the vps becoming inaccessible due to running out of memory from only about six simultaneous browser tabs to edit content nodes.  I had eventually learned to edit only one or two nodes at a time, but later decided or realized that if I were to establish the site successfully that I would have to prepare a more efficient environment/platform….

Just at the end of last year, “noagendamarket” (IRC nick) blurted out one of his ideas, witcoin.com, and I instantly recognized how exciting and amazing the idea would be.  At first the idea was a kind of question and answer site.  The idea was very similar to one that I had previously, even before encountering Bitcoin.  The idea or focus of the site has since evolved into a user-generated content type of site and I began to establish the idea of rewarding users for their content.  theymos helped me to establish the idea of distribution of profits; e.g. the cost of upvoting being equally distributed to all previous upvoters and the poster.

Armed with that idea and my excitement and determination, I dedicated all of my time to work on the site.

Spencer: In your own words, what does witcoin bring to the content sharing model?

Necro: As a user-generated content site, witcoin brings the opportunity for users to establish profits from participating in trending and hot topics, but also the opportunity to lose from participating in dying or unpopular topics.  This helps to minimize undesirable spam.

It brings in all sorts of things.  [hehe]

Thanks to “noagendamarket” (IRC nickname) for pointing out the recently submitted article on Social networks: “We’ll take data as payment.”  I think there is a noticeable distinction between social networking sites and user-generated content sites.  Both allow for user-generated content, but user-generated content sites focus less on private or personal content and more on providing awareness of trending or hot topics.  I recognize that witcoin’s profit sharing model may help to reestablish using money instead of user data as payment.

Spencer: Do you think of witcoin’s struggle as “Reddit vs witcoin?” How do you frame the competition?

Necro: Not really.  I am a fan of Reddit and also StackOverflow and have allowed their influence to help shape witcoin.  I do not consider or focus on other community sites as competitors.  My focus with witcoin is not to compete with existing sites, although there is some overlap in functionality and style of content which provides that opportunity.  Instead, I am interested in focusing on making it easy for users to profit from their content from within the environment of the site.

Many bloggers or users that submit content on user-generated content sites may not establish any profit or get paid for their submissions (content or writings).  My focus for witcoin is to create a platform that allows users to profit from their participation.  I think that is the next step for community-based sites that we’ll see grow over the next few years.  For now, I don’t think this type of idea exists at other sites.  I imagine at some point other sites will crop up providing similar ideas or implementations and additionally existing community sites will integrate profitability from participation in some fashion.

Spencer: Are you working on witcoin full time?  How is it financed?

Necro: I think it may be okay to refer to witcoin as a job.  Otherwise, I don’t have a job.  I also have no money (other than some bitcoins and witcoins).  And also recently I have been homeless and struggling to continue working on projects, not to mention other things that I normally took for granted.

As stated in my previous answer, working on witcoin, or working on Bitcoin-related projects in general (and currently dedicating my efforts solely to witcoin) must be some kind of passion, because even through struggling to survive, I still managed to find a way to continue working on projects and developing witcoin.  However, currently I am being supported by my Father, but only for living expenses.  I am unsure how much longer that will last though.  The site and projects are funded entirely by noagendamarket.  He has funded all project expenses since I initially contacted him about working on the Bitcoin business directory website.  He is not wealthy though and has his share of struggles as well, thus he has a kind of passion also!

Spencer: For witcoin, what do you need most at this moment?

Necro: On investments: Well, I am not too familiar with investments, venture capitalists and the like, and I definitely do not want to find myself or witcoin being compromised by one or more investors that manage to use their investment as a way to manipulate and gain control over the direction of the site.  Even without any investors other than noagendamarket, I have experienced some rather strong arguments regarding a particular implementation being better or more successful than another implementation.

Their efforts towards stressing the importance and value of their argument were not influenced by any monetary investment, but instead also by a kind of passion that they have for the site to succeed.  I imagine that if they had established offering a monetary investment and were to argue similarly, that it would complicate things and potentially result in an awkward situation, at least initially.  However, it may be useful or beneficial to establish investments.  I’m not sure.  I am inexperienced in the world of business, yet, I don’t want to be taken advantage of, and I feel it’s fairly easy to do so.  So I will probably remain skeptical and inquisitive about any potential investment offers.

On content: The site could always use more content, however, I think more content will come from more users, which will come from the site establishing as a platform that attracts and entices users at their own efforts and interests.  I don’t want to implement the site poorly or prematurely, “spamvertise” it everywhere and expect and obnoxiously strive for more users and content.  That would be obnoxious.  Many Internet users have evolved successfully enough to recognize such obnoxiousness.  However, there are many more that seem to still remain naive and gullible and even argue supportive of their naivety and gullibility not entirely aware of it.  Many times I am naive and gullible too, but if you’re a venture capitalist …..

On translators: Recently I have been looking for translators specifically for the help document that briefly (for now) explains how the site works.  Eventually I will establish better multi-lingual support so that non-English content producers may also participate at the site in their native languages.

I think publicity for the site will come when the site is worthy of publicity.  It is like trending and hot topics that appear at user-generated content sites.  I intend on establishing witcoin as a platform that is worthy of such publicity.  At least, I think I will or that it will be possible.  The site is unique and I believe it is the first to establish a profit sharing model without advertising revenue.

Spencer: Thanks for your time and doing this interview!

Necrodearia (mizerydearia): Thanks for the interview, it was fun answering.  ^_^

– End of Interview

Mizery would like to thank  theymos, noagendamarket, ducki2p, tcatm for their contributions to witcoin, its design, promotion, and underlying ideas.

Personal thanks to: ducki2p and sgornick for help with some of the questions.

If you would like to be interviewed, please contact me here.

For those of you that have yet to build your service, remember to tell me when your finished!