VandyILL

Project I’ve been following for years. CEO (main presenter in this video) went through ycombinator and got acquired by Radix.

In an interview last we he stated that his next company would be vertical take off supersonic electric jet, if he decided to start another company. He said he's not likely to start another company any time soon.

A problem I see is that companies would have to spend time defending legitimate patents just because consumers want the technology to become widely available. The scheme could cause business to waste money litigating defensible patents just because there's enough stir / money behind advocacy for opening up the idea.

Why not Eminent Domain for patents then?

I really don't understand what you're advocating or what mechanism you hope to develop.

You basically want to put out bounties for law firms to take cases against patents? What patents would they target? What adversarial setting would they defend / attack patents in? Couldn't this result in a race to the bottom about what things people want in the public domain - ie. a bunch of people petitioning to have a law firm attack Amazon's One-Click patent? Basically if someone made something desirable enough, then an efficient market would funnel enough money into trumping their patent through your concept, destroying whatever incentive the company had to make something valuable.

I could be off on what your suggesting, so i apologize.

While there are lots of flaws & advantages in the patent system, one major opinion I have is that there should be some sort of use/active-pursue requirement. Ie. you can't claim property ownership over an idea unless you're actively putting it into product / trying to figure out how. Or maybe a shorter length of the patent (ie. 5/10 years), unless you're actively pursuing it.

This would be similar to adjustments in other types of property law. Ie. a lot of property law is based on incentives to define ownership / acquisition in a means that most benefits society. For example in the old property case Brazelton, they didn't award ownership to the person who found a sunk ship & squatted on it, but rather awarded ownership to the person who came later but actually had the technology to lift it.

Doubt it's about his talent (even though he is very talented). Think it's more of a PR move. It'd look pretty bad for Mayer & Co if he ditched Yahoo in a couple months, and a ton of people would notice / company would get bad press. Keep him & you never have the negative press. Plus the scope of the negative press would dwarf the type of press this blurb is getting.

Question is, is the difference between the $81 million and the amount they would have paid him strictly for talent over the course of the contract justifiable on those PR grounds?

I don't think it'll work.

The NRA & the gun industry have successfully marketed a product, and the NRA has successfully marketed itself as the means of protecting customer's rights to that product.

Note, the NRA doesn't have to be the one that markets gun ownership as a positive - that can come from any number of sources, inside and outside of the gun industry. The NRA just has to give the image of being the political outlet to protect that right. Thus the media and/or possibly the gun industry can throw gas on the fire to show that guns are a necessity of American life and in turn because of it's perceived credibility on the issue people vote according to what the NRA says.

Now, presently I don't think either the NRA or the industry really has to do much work marketing guns. All they have to do is hold back the tide whenever a tragic event happens and forestall action when the willpower to change is present. Then, when election season rolls around, they just remind their members how to vote.

In the case of privacy there is #1 no product, and #2 no clear "defender" of our right to privacy. Further, given the nature of privacy, I don't think there will ever be a clear product or defender for/of that right. Without that, there's never going to be the approach that markets the product as a necessity or a group people will pay attention to when voting.

Just think about the ACLU - part of their mission is privacy. But yet I'm sure half the people who care about internet privacy don't even like much less trust the ACLU. EFF - majority of the population hasn't heard of them. It's just too sensitive of an issue to have a blanket organization representing everyone's interest.

Finally, as a side note, I think I would pay for an email service like this: free email, with conditional payments. Whenever the service receives and refuses a government request, it charges a very small fee (couple cents or even a penny - will wait till x amount has accrued before charging card). Then in turn, the payment fee goes to the campaign of a pro-privacy candidate or organization like the EFF etc.

One of my takes on it is that it has to be some sort of land/underground interconnection between cities.

My reasoning behind this is that he is open sourcing the designs. My guess behind this is that if it is a ground based system that requires right of way/property access etc. then there is tons of transaction costs & government regulation that would prevent copy cats from destroying the first mover's capital investments that would normally be protected via IP law.

If it didn't have these high transaction costs associated with it, then any actor could come and undercut your system after the tech behind the open source designs becomes cheaper. Traditionally this would be protected because of IP laws. However, he's dismissing this route & letting anyone up to the challenge take on the construction challenge with him. I'm guessing this is likely because the government won't eminent domain/allow/permit etc. extra routes between SF & LA etc. if there's already a hyperloop.

haha. I might do something like it again, so keep an eye out i guess?

I'll probably come back & post more on this later, but one thing to note is that it is not the law schools denying admission to the bar, its the bar denying admission to people who have not gone to law school. Also, it's not illegal to practice law without the education - it's illegal to practice without the bar. The ace card isn't really the law schools so much as it's the bar associations. Meanwhile the bar associations are filled with attorneys who have JD's and want to keep the value of that degree up, so they have a vested interest in requiring JD's for admittance into their profession. It's kinda a circular & self reinforcing system, but like Mark Twain said, every profession is a conspiracy against the world.

I think the focus on legal education should not be getting online right now, but to change the JD to a 2 year degree, or start offering LLM's or something equivalent without the need for a JD and allow people to practice with those degrees. I've heard many law professors talk about how the final year of law school is pointless. Unfortunately, making a JD take 3 years is like Alka-seltzer coming up with the ad where they put in 2 tablets instead of one -- they're making money off it because people think it's needed.

Law schools are over priced, but they're also producing more than enough lawyers, so I don't really see accessbility as a bottleneck that needs to be solved, which is what most of the MOOCs are solving. Price is an issue that needs to be solved, but given the self perpetuating old boys network that is the legal profession any changes need to come through slow reforms, not major disruption.

Finally, firms & government agencies aren't going to hire people with online degrees even if they are admitted. School's name recognition carries more weight than it should (in my opinion) in this profession. It will be extremely hard for grads to gain the skills and prove themselves when they're not able to plug into existing networks after taking an online degree.

Talk about it with people close to you and seek professional help.

From my perspective there doesn't seem to be any one field that combines all of them, but there do seem to be many permutations popping up that combine multiple fields - ie. the rise of Behavioral Economics (mostly just psych + econ). It seems like most of the cutting edge research in any given social science field that I read about is usually just a mashup of two previously divided schools of thought.

I think a more interesting discussion would be one concerning what impact the opinions on the markets is having on startup investing. I wonder if people's current distrust of the general stock market & fear of volatality may encourage investors to do more deals with companies that aren't publicly traded because the value of the company is isolated from the whims of the market etc. This would push people from the traditional markets into less liquid markets such as equity deals with pre-ipo companies.

Thanks for the great input, especially the chargeback question. It seems like it should be at the top of the list but this is something I honestly didn't think of (although I was aware of general potential for fraud I wasn't dipping too heavily in the specifics).

I don't see how the company would be able to establish credibility without having some sort of chargeback policy, but right now I haven't done enough research to discuss a coherent and effective anti-fraud policy. I think it would definitely be a large upfront cost or burden. A shitty way to handle it off the top of my head would be to just issue more currency to reimburse people, but this makes the system as a whole look less credible and would also gradually weaken the currency. It may just be a way of spreading the cost of a warranty over the population of users just like insurance, but at least doing it according to that method would be terrible PR / image.

For the merchant fee, I think it could actually be less. Paypal/square etc. are just conduits to transmit standard currency from one institution to another. In this case, since the currency is always transmitted via the same institution I believe the compan could charge less. It wouldn't have to make as much from an individual transaction because the company has a monopoly over all future transaction. The exit fee on currency can also be though of as a deferred transaction fee - ie, if a company is breaking the currency out of it's self contained loop, then they suffer a penalty fee.

The fees may add up, but hopefully less so than using something like paypal. That being said it would probably be less than cash.

However, this is still more effective than directly investing in a pro-environment ETF because your committing your disposable income to the ETF & securing commitments from sellers etc. that they will continue committing the money to the ETF. It's utilizing a resource that you could not previously invest because you needed the liquidity/actual purchasing power to buy goods. I think the bigger threat of high fees adding up is that if it trades at a discount then you aren't using your money effectively. But then again if a company does vary its price based on what currency you use & doesn't accept it at face value then they are also expressing that they do not care about your values / participation in the system the currency is trying to fund. -- Compare to Berkshare, a complementary currency in the US -- if a company required Berkshare customers to pay more than they would signal that they don't really care about keeping wealth in the local economy.

Thanks for the resources, the legal issues are the area that I'm spending most of my time on, but nothing is simple in this area as that post says. I looked through the posts but haven't clicked on any of the links within the post you referenced. It'd definitely on my to do list. Now, I never planned on flagrantly ignoring laws, but sometimes because of the adversarial nature in this country you have to actually do something and cause a conflict before you get any interpretation on whether something is legal. Regulatory agencies are supposed to be more proactive with guidance etc. but that's not always the case.

Also, despite my own research I have not taken any bar exams yet and may even delay taking one based on where this idea is come November/December. Thus I will definitely need to talk to some lawyers before advancing the idea. Further, even if I was a licensed attorney already I would still likely seek outside advice.

Oddly, I'm actually working literally next to some financial crimes enforcement attorneys this summer but haven't brought up any issues with them yet. Didn't occur to me until recently to talk to them about this idea. Probably because I'm pretty confident they mostly focus on counterfitting.

By funding do you mean intitial funding or how the company is going to make money / sustain itself?

Originally I thought it would be possible to run the company based off a share of the gains from the investments, like a mutual fund management fee. For various legal reasons this turned out to be fairly complex, but I've gone back to the drawing board and this idea may work.

In reality though the company would be funded primarily by the transaction fees although there is the potential for other sources of income but those are slightly farther down the road before they become viable & need at least some circulation of the currency to work.

For organization of the company I'm trying to figure out how the currency is supposed to function before I figure out how to structure the company to facilitate it. Slightly chicken before the egg dillemma, but I think figuring out what the currency is supposed to accomplish and how it is supposed to function comes first.

I think one of the biggest concerns is that there may have to be a subsidiary in the company to split the finances. Ie. there is one part of the company that handles all the money that can be recalled by the users -- the money that is invested in the ETF etcs. The second part of the company would be the company that actually manages the exchanges & facilitation of everything. This is similar to how Kiva is structured - they have a separate subsidiary that manages all the finances for their operations & keep all the money they manage for the loans compeletely separate, even if the money isn't currently invested in the loan. This dichotomy would likely be necessary for the company/currency to have any credibility.

If it goes the route of being something like just swapping equity in kiva-like microloans, then yeah, I see it as a nonprofit. But realistically, if the company is going to develop products consumers actually want to use as a payment mechanism then the company will likely have to be a for profit company to keep up with other competitors in the bitcoin / traditional payment / traditional money transmitter space.

Unfortunately because of the regulatory issues it would likely need some funding from VCs in order to scale. That in addition to actually setting up the trading account / system etc may need some funding just for other financial actors to take it seriously. That being said a way to scale this idea without a lot of funding may be to just start it as a "amazon coins" type deal for a small group of participating environmentally friendly / socially responsible companies. Meanwhile instead of any of the pariticpating companies holding onto the deposits in the "coins"/gift card the desposits just remain with an environmentally friendly bank. I assume the regulatory path in addition to the expected costs could be estimated by looking at the initial steps Greendot went through when establishing there payment systems, but have a restriction on parcipating merchants. Of course at some point the company would diverge from this path as it starts to switch from a closed circuit glorified credit card into a currency that any merchant can opt to accept.

Also, I think there is room for profits to pitch to VCs. The payment space has tons of competitors and is a huge market. However in the financial world there's a lot of protest / disatisfaction but few real world alternatives (it's just a matter of how/who you pitch it to - ie. an environmentalist, someone who hates fiat currency, someone who hates the idea that their purchasing power is tied to the economy as a whole & wants to opt out & have his money tied to a specific sector that thinks long term... & so on). The potential market for this is anyone that bitches about the economy or politics but still wants to spend money.

As for the demo/prototype I agree. Over the next 6 months with my limited coding skills I could probably built a crappy mock app that really just looks a little like a starbucks payment app, but wouldn't survive a second in the real world. It would absolutely suck in comparison to every other app on the market & wouldn't really sell the idea because the whole idea is how the money is managed on the other side of the app.

There are API's from Ameritrade & other brokers that could facilitate all the trading the company needs to do, but chances are they wouldn't sign off on letting someone work off their system just to build a mvp to pitch to investors. They'd probably want more credibility / financie behind it. Could also just lie about what I want to use the account / API for, but that's just something I'm not willing to do & burns too many important bridges & is just plain stupid. Plus with credibility / trust being such an important element to this it would be an even more moronic way to start.

Thanks again for continuing this discussion.

Due to the Norquist pledge this has about 0% chance of happening just because of the word tax. Realistically the people opposed to the tax would probably prefer the freedom to adapt that a tax offers compared to the small command and control regulatory comprimises congress has been making on the issue, but that type of debate is too deep for people that campaign on silly pledges.

The app I wish I had in a college setting was a simple way of letting people know that I'm open to doing certain things at a certain time.

The best example i'm thinking about is like a pre-checkin feature for something like foursquare so friends can see I'm open to going to a bar/movie/dinner etc & they know it's worthwhile to call me, instead of having to do a bunch of back & forth messages to see who is up for any given thing at a time. Maybe this is because so many of my friends want to know "who else is interested" before they even express interest.

Maybe a more objective search engine. It'd be better for researching ideas than popculture or really ordinary questions. But for people trying to answer more in depth questions it would be great if the search engine 1) didn't base results partially on your own preferences / likes etc. & 2) found a way to index ideas based on their referenes. Ie. if you're searching for articles on a topic bring up the ones that have been peer reviewed the most. Similarily if it's just a blog post post the ones that reference credible sources higher than the ones that don't cite credible sources or don't even cite anything.

Also, if you have access to them, look at systems like WestLaw & Lexis and how they index information in various ways. Incorporating some of these ideas could be very helpful if made to the public - ie. the key system for indexing topics, history systems to see where ideas/articles are drawing their precedence from & how they have been used after publication.

Fair. I guess my statement was way too generalized, but was meant to be reflective about a slower shift over time. There's still nails around today but also many other moving parts & sometimes it feels like the approach hasn't fully adapted.

Was hesitant when I clicked on this article because of what "revolution" the author could be reffering to. Luckily he seems to realize that Bitcoin is an excellent accounting system rather than some miracle way of opting out of the financial system as a whole. Not to discredit other motives for using Bitcoin, but this article seems to be one of the more realistic evaluations of the currency's potential in my opinion.

Agreed, although they're not mutually exclusive. Just happens the way America has exercised it's hard power has diminished its soft power. We've been a hammer since World War II but nobody else has even been using nails.

The frustrating thing that I've picked up on in law school is that the adversarial nature of our law system makes lawyers ask what is instead of what can be.

They have to resolve conflicts as they occur within the existing paradigm & very few seem to have any sort of acknowledgement that those paradigms can change and ask questions / seek answers within the existing framework.

This reaffirms my belief that the US chasing Snowden is a bad idea solely because it demonstrates the lack of soft & hard power the US has on the international stage these days.

While people may not notice this small act I feel it's kinda what the US deserves in this instance.

Yeah, but what specifically are they going to do to help the "internet community."

Is it giving low costs loans to people who want to start businesses that happen to use the internet, or is it going to give loans to businesses that help facilitate internet infrastructure.

The website made it look like they'll give a low interest loan to anyone who simply uses the internet & the only reason that condition seems to be there is because you have to use the internet to get to the credit union. More likely just low cost loans to whoever is a member of the Internet Credit Union. Doesn't really seem to have any cooperative aspect to it about promoting the internet as a community.

Interesting idea, but without a physical locatiin I wonder if they'll be able to compete with the online products people would expect from an online bank.

Also, usually credit unions are linked to a small commub you etc & help finance things in that community. Is there going to be a specific focus for this bank?

I think one of the approaches to encourage this is to rethink ideas about property given our ability to monitor space, time, energy etc. almost instantly. A basic example of this is real time metering which varies the price of electricity over the course of a day. A hypothetical is to do a variable payroll tax adjusted over the course of the day to influence traffic patterns. In the past we couldn't do things like hourly flexing of a payroll tax, nor variable energy prices. However, now that we are able to capture so much more info, we need to think about constructive ways to manipulate those elements.

I reference property above because this is the area of law thy seems most similar. Property law is not based on absolute principles. Rather, considering the circumstances the requirements for things like first possesion or ownership vary. When deciding these elements the judges look at what facts are available, then decide which ones are relevant for establishing a a certain right based on what factors a judge/society wants to promote.

So then all good ideas should have already been done?

Stephenbez,

Thanks so much for your feedback.

The post was meant to put as much information on the table as possible to solicit as much criticism as possible. Definitely not trying to sell someone on the idea right here / right now. More of enticing people to collaborate.

If I had to do an elevator pitch it would probably be along the lines of "A mobile app that allows people to trade securities for goods & services instead of cash. This lets people without disposable income for investment have a chance to participate in the market, it helps isolate people's money from risky parts of the market they dislike, it helps shift investment towards areas traditional investors may discredit but consumers advocate for, and puts something tangible behind the currency your exchanging."

Thanks for posting the Credit Theory of Money Article. I definitely agree with parts of this theory & that money is just a way to account for debts owed & credit extended. Another way I envision it is similar to PG's discussion of wealth and believe that money is just a ledger to facilitate the exchange of the wealth.

This system kind of branches off from the Credit Theory though in that the currency would not be just a representation of credits and debits, it would be backed by securities/investments in companies that have actual value. (Of course, these instruments are all just other forms of credit/debt, but at least in this case there is some form of physical / intellectual property/value at the end of the chain as opposed to fiat money).

The thinking behind the Credit Theory does seem to help explain my line of thought behind the flexibility & subjectivity of money.

For the legal/regulatory aspects, I've been researching the compliance issues. Like I said in the original post though, there are many ways to do this, but each brings with a separate set of regulatory burdens though. For example, one way that I've thought about doing it would be through a Mutual Fund where you simply exchange shares of the mutual fund. This likely creates too many tax issues for potential users. Another option would be making a company and then doing a direct public offering. This would let the company sell and advertise its own stock plus put restrictions on how it could be sold. However, there's caps on how much money you can raise, plus there's SEC guidance on what exchanges run by the company itself can actually do (pretty much all you can do is put up a buy bulletin board & a sell bulletin board). So the DPO method would require a separate company to operate the exchange, along with a separate company to act as a clearing house, plus the DPO idea would ring the bells of fraud agency in the country.

The best way I see how to do it would be to try and divorce the currency from the assets so that they are not easily classified as securities. This has the unfortunate benefit of decreasing the "this currency is backed by X asset" claim, but if done in the ways I'm working could potentially only require the company to operate according to banking / FinCen laws among other regulations but not necessarily a lot of the SEC requirements & some tax issues.

On thoughts as a potential user:

Yea, it is a way to improve the environment, by giving more leverage to consumers who do not have the ability to exercise power in financial markets. It can also attempt to right other discrepancies between them such as the general shortsightedness, or how much of the investing does not go to thinks that actually improve the "real economy."

As for donating to charity, I consider this as part of the shift to more entrepreneurial philanthropies that encourage changing environments and lives so that they become more self sustaining & can help themselves, rather than just giving them supplies. Also, in the context of climate change, donations are not going to accumulate the wealth necessary to finance what the world needs.

Finally, part of the point of this is that you are not financing a charity with money you never get back, you're financing projects while maintaining spending power. Imagine if you decided to hold your money in an endowment for the Rockefeller Foundation, and they let you withdraw it to spend whenever you want. But, this comes with the condition that whoever receives the money immediately redeposit it with the foundation. It's a way to support your causes w/o hampering your wallet.

Now, onto the negatives.

No new currency being used 5 years from now: Possible. At the same time even Alan Greenspan has said he expects private currency markets to develop in the 21st century. http://p2pfoundation.net/Complementary_Currencies_in_Japan?t...

Also, complementary currencies are already being used in various areas. Check out LETS, Berkshares, Ithaca dollars among other examples. However, these are generally defined by geography, not ideology.

Now, I believe you meant a global or national "new currency" in your statement. So, my previous point may be irrelevant in establishing precedent for that, but I'll just say the role of new currencies in the future is something that we can disagree on as a matter of opinion.

Regulatory Risk: Yeah, it's possible the government could shut it down, especially if rent seekers in various markets see it as a threat. Some people may even feel the government is a rent seeker in the current world of fiat currency, so they may even want to shut it down.

Transmitter laws. Yeah, this is a problem, but may just have to do a break it & ask for forgiveness approach like paypal.

For the ETF problem, we would not create a new Exchange Traded Fund. There are already ones that exist on the market that suit the currency's needs. The fact that there is a price set by the market would reduce the chance of fraud in this regard. The way it could be a scam is if the company claimed to be buying these ETFs & was spending the money on something else, which would be blatant securities fraud and would take about 1 for an investigator to prove.

The auditing idea is a really good idea. An effective and credible audit may be too expensive for the company in the beginning, but this could be balanced out by strictly trading in one ETF which means that it would be easy to determine the Net Asset Value based on the market price for shares of the ETF.

Hacking is a concern. I am not going to pretend that I am the one that can explain solutions to this end, and this may be a silver bullet argument. However, any bank / paypal / payment service runs the same risk.

It would be a centralized currency. If you look at the FinCEN regulations on virtual currencies, this would be a case in which the company was both the administrator and exchange for the currency. Kinda like Lindenlabs is for their in game currency.

The tax implications vary depending on how the company is structured. If the currency gets classified as a security, then there will be more tax issue for the users. Likely, the company would have to measure the gain / loss in value of units traded each time someone makes a trade so that the company can provide the users with a statement to include in their tax returns. This is definitely too complicated which is why making sure the currency is structured as a currency and acts more like a currency / social contract than a security is important.

As for dividends, there are dividend ETFs & regular ETFs. For simplicity's sake we'd probably go with regular ETFs. This would mean that the value you gain is from the rise in the price of the stocks within the ETF between your buy and sell times.

If we went for a dividend ETF, the company would probably just reinvest the money in more ETF shares. Since the # of units of currency in circulation would not rise as a result of this, each unit would become more valuable and that's how the user would benefit. Also, not receiving the dividend may differentiate the currency from securities.

Finally, I agree there are many moving parts. The side I would show to consumers would be much simpler, but right now I'm trying to flesh out all the answers to questions I may not think of on my own. If there weren't 20 moving parts behind the scenes of every startup and company you see then everyone would have already done these ideas or would be jumping on the bandwagon with copycats.

Thanks again for reading the post and putting in your very thoughtful feedback.

I'll keep you updated about the giftcard come 8/1.

I'm a middle class kid that managed to go to under grad & grad school on scholarships. I've lived an extremely privileged life.

My opinions are formed by the life I have lived as it is the only life I will ever experience. I guess my interpretation of awesome is more in line with inspiring awe.

Depending on her background, her situation could very well inspire awe and be something she never thought possible. From my experiences, her examples of "awesome" in other posts are what I would consider "Sweet" even though she has several things I wish I had. If you measured everything in the world on a scale of awesomeness, rather than believing something has to hit a threshold of actually inspiring awe, then her life would be well above mine.

For more common forms of awesome, things like watching my younger brother with autism be able to take my dog for a walk is pretty awesome given everything else I have gone through with him. Living in the suburbs though, getting a piece of plastic that extends credit to me is not awe inspiring.

I agree on both points.

Welp, I'm a doofus.