The Surface 2 With AT&T LTE Inches Closer To Release

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Last October, Microsoft announced that it would roll out an LTE-enabled Surface 2 for AT&T’s network. Sometime. The announced time frame was early 2014, and, sure enough, the device has just been found in the public FCC database, which means it’s nearing release. This will be the first Surface tablet that ships with built-in cellular connectivity.

When a device hits the FCC database, it often means that it has passed the commission’s battery of testing to make sure it’s safe for consumers. Among other things, the FCC tests devices that transmit wirelessly. Some of these documents are released while others, often the docs that contain specific information, are held under confidentiality agreements for several weeks until the device is officially released or announced.

Around the announcement of the LTE Surface 2, there was talk of a so-called Surface Mini with a 7- to 8-inch screen hitting the market in early 2014, as well. Info on this model is still MIA. Chances are, with a device of that significance, Microsoft isn’t going to let it hit the FCC database and ruin the surprise.

Venmo Now Lets You Find And Pay Other Nearby Venmo Users

Nearb

Nearb Venmo, the mobile payment app, has had a wild few years. They shook up their industry so hard that they were acquired twice within 4 years of launch; once by Braintree for $26.2M, and again when Paypal acquired Braintree for $800M.

Their trick? Make paying your friends easy and (mostly) free. Today, they’re making it even easier: you don’t even have to be friends with the person you’re paying, anymore. Just stand near them.

As it stood before, you could only pay other Venmo users if they were your “friend” on the service — a process which, though pretty quick, still required a bit of manual setup. You had to know their name, email, or phone number, for example.

As of today, you don’t need to know a damned thing about the person to pay them (that is, as long as they’re on Venmo, too.)

With the introduction of a new (aptly-named) Venmo Nearby feature, you just open the app, swipe to the left, and find your new friend amongst the list of Venmo users within a few dozen feet. Venmo says it’s finding other users over both Bluetooth and WiFi, calling on the same tech that powers Apple’s nascent iBeacon system (alas, that means the feature is iOS 7-only, for now. Sorry, Android users.)

Need to pay back your friend-of-a-friend-of-a-friend who was cool enough to put down his card for the bar tab, but can’t remember his name? Just swipe open the Nearby drawer, tap his face, and send a few bucks his way.

And if you don’t want random nearby weirdos to be able to throw cash your way? You can, of course, disable the proximity features.

Entrepreneurship Barbie Isn’t A Bad Idea Actually

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It’s 1992. I am ten. I want to be an advertising executive when I grow up. I am watching a TV news segment about Barbie, “Teen Talk Barbie” specifically. Teen Talk Barbie says “Math class is tough” among other things like “Will we ever have enough clothes?” and “I love shopping!”.

In that TV news segment I learn that math class is supposed to be tough, and that I should care about fashion. Mattel eventually pulls that specific phrase from the 270 that Teen Talk Barbie can say.

“In hindsight, the phrase ‘math class is tough,’ while correct for many students both male and female, should not have been included,” Mattel president Jill E. Barad says in a statement at the time. “We didn’t fully consider the potentially negative implications of this phrase.”

We’ve come a long way.

It’s 2014. Sheryl Sandberg has written “Lean In.” I’m co-editor of a tech blog. The background on my smartphone says, “keep calm and love math.”

Barbie no longer hates math; in fact she too has a smartphone, and a tablet, which she keeps in her laptop case. Barbie is mobile first, because Barbie is an entrepreneur, Mattel’s “Career of the Year.” Entrepreneurship, whatever that means, is everyone’s career of the year.

My tech blogging team makes jokes about entrepreneurship (startup?) Barbie. Like, alternate names considered: ‘E-commerce fashion aggregator app’ Barbie, ‘Searching for a technical co-founder’ Barbie and ‘Isn’t sure if this is a VC pitch meeting or a date’ Barbie.

The jokes are very funny. They involve “day and night phones.” I’m glad people are talking about this in a humorous way. Things are funny because they are true.

In an article in The Economist, female entrepreneur Tory Burch emphasizes the economic necessity for closing the entrepreneurship gender gap, saying it would increase global income per person 20 percent by 2030. She brings up the fact that there are 126 million women starting new businesses and another 98 million who lead established ones to date.

Despite these gains, the entrepreneurship myth is still largely male. We have no female Jeff Bezos or Steve Jobs. Our closest female candidates, Marissa Mayer and Sheryl Sandberg, are torn apart by the media on issues a man would never have to deal with. So cool, at least the next little girl who aspires to be a boss has Barbie to look up to.

We still have a long way to go.

Image via WhoTrades

FCC Won’t Appeal Net Neutrality Ruling, Seeks Diplomatic Way To Keep Internet Open

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The Federal Communications Commission is seeking comment on how to keep the Internet open and accessible to all. The agency’s outreach is in response to a recent U.S. circuit court decision that threatened a law (“net neutrality”) that prohibits Internet Service Providers, such as Verizon, from charging Internet companies for faster websites.

The law is of paramount concern to the web industry, especially Netflix, which fears that forcing websites to pay more money for faster service will both raise costs on multimedia websites and prevent savvy startups from competing with their well-funded established competitors.

Today, the FCC announced it will not appeal the court’s ruling, nor will it immediately exert its controversial authority to reclassify the Internet as a type of “common carrier,” which would have allowed it to maintain net neutrality. An aggressive move to reclassify the Internet as a kind of household utility would exacerbate an ongoing war with Republicans who think the federal agency is overstepping its authority.

Instead, it’s seeking open comment and researching a new way forward.

Civil liberties organization Free Press is concerned that the agency isn’t taking a more urgent approach to preserving net neutrality. “Pretending the FCC has authority won’t actually help Internet users when websites are being blocked or services are being slowed down,” said president and CEO Craig Aaron in a statement.

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Image from the Free Press website.

FCC Chairman Tom Wheeler’s detractors give a good indication of the partisan tug-of-war he’s caught in. Commissioner Ajit Pai wrote: ”FCC Chairman floats a plan for rules regulating Internet service providers’ network management practices instead of seeking guidance from Congress.”

Commissioner Michael O’Reilly likewise had harsh words: “It appears that the FCC is tilting at windmills here. Instead of fostering investment and innovation through deregulation, the FCC will be devoting its resources to adopting new rules without any evidence that consumers are unable to access the content of their choice.”

Today’s news is little more than a glorified request for comment. The chairman isn’t ruling out reclassifying Internet services and is openly seeking input from concerned citizens. If you think that anything other than aggressive action is the path forward, you might want to be concerned at the diplomatic approach. Otherwise, it’s still an open question about the future of net neutrality and whether it will survive.

[Image Credit: Flickr User AlicePopkorn]

With Funding From BMW And Khosla Ventures, InstantCab Rebrands As Summon

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San Francisco-based InstantCab has raised some new funding, which it plans to use to expand into new markets. But first, the company has rebranded its service as Summon, and is announcing a new app and lower-cost pricing scheme for rides from “personal drivers.”

Summon is one of the newer on-demand transportation startups that have emerged over recent years, competing with companies like Uber, Lyft, and SideCar. Launched in the San Francisco Bay Area, its differentiating factor was a sort of hybrid approach that combined the ability to hail either a taxi or a peer-to-peer ride share driver.

The company has closed a new round of financing that was led by Khosla Ventures, with participation from BMW i Ventures. While it isn’t disclosing the amount raised, existing investors like Initialized Capital, Beenos Partners, and Greg Kidd also participated in the round.

Summon is currently available in San Francisco, the East Bay, and parts of the South Bay. But with the funding it’s looking to expand, with plans to launch in cities like Los Angeles, Boston, and New York over the coming months.

When it looks to launch in those cities, it’ll be offering a bit of an alternative to existing services that operate there. Summon users can e-hail either a taxi or a so-called “personal driver” depending on how long they’d like to wait, how much they’d like to pay, and what sort of experience they’d like to have.

For taxi rides, Summon charges a $1 fee over the amount that a ride usually costs. But personal drivers cost up to 30 percent less, based on per-mile and per-minute rates. That price comes after the company issued a pretty significant fare reduction for personal rides a month ago.

One other way that Summon hopes to differentiate is a lack of surge pricing on its rides. While Uber recently lowered rates, regular users have noticed that there are significant increases in the cost of fares during rush hour and other peak times. Even Lyft has implemented its own version os surge pricing, which it calls Prime Time Tips, to have more driver supply on the road during peak times.

With all that in mind, the company has recently tripled the number of drivers available and hopes to continue to add more to meet passenger demand.

CRYPTODISRUPT! We’re Now Accepting Bitcoins For Disrupt NY

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So this is a fun little bit of news: we’re now officially accepting Bitcoin for TechCrunch Disrupt in New York, which will be held May 5-7, 2014 at the Manhattan Center. We are working with Coinbase to accept the coins and we’ll be accepting the real time exchange value so when you buy, your purchase price is locked in.

If you started mining years ago, this may be your chance to rock out at Disrupt for free. And if you’re one of those paranoid types, this is a great way to hide your tracks until you arrive at the event, at which time you’ll be wearing a name badge anyway, so all bets are off. That said, we hope this helps more people attend Disrupt and we’ll be accepting bitcoin for events for the foreseeable future.

You can buy tickets with Bitcoin right here. See you at Disrupt!

Our sponsors help make Disrupt happen. If you are interested in learning more about sponsorship opportunities, please contact our sponsorship team here [email protected].

Keen On… Big Bang Disruption: How The Innovator’s Dilemma Has Become The Innovator’s Nightmare

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A couple of years ago, I had Clay Christensen from Harvard Business School on the show talking about his famous theory of the innovator’s dilemma. But just as Christensen’s theory suggests that companies become prisoners of their own innovation, so this theory itself has just been blown up by Accenture’s Larry Downes and Paul Nunes in their controversial new book Big Bang Disruption: Strategy in an Age of Devastating Innovation.

According to Downes, the innovator’s dilemma has now been replaced by what he calls the “innovator’s nightmare”. Today’s new technology products are so much better and cheaper than legacy products that they can literally wipe out old industries overnight. Startups, Downes says, can become mature companies very quickly and entrepreneurs need to not only to prepare themselves for overnight success but also to sell out quickly before they are inevitably overtaken by a revolutionary new product (Snapchat might take note).

Given the revolutionary speed of today’s tech market, Downes says, established companies need to focus on acquisition rather than in-house development of new products. Presumably then, Downes would approve of Google’s recent buying spree of artificial intelligence companies like Boston Dynamics, Nest and DeepMind. And he’d probably also encourage Apple to seriously consider acquiring Tesla so that it can continue to maintain its role as the biggest bang disruptor of them all.

Location Services Company Skyhook Wireless Gets Acquired By TruePosition

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This morning TruePosition and Skyhook Wireless announced that the former has acquired the latter. Skyhook is best known for providing location services to top mobile firms, including Apple and Samsung. TechCrunch has covered the company extensively throughout its life.

Skyhook is embroiled in legal action with Google over alleged anticompetitive behavior. The legal struggle, started in 2010, is expected to go to trial this year. Parallel lawsuits in two states were combined last year, at Google’s request.

The gist of the suit is that Skyhook feels that Google pushed smartphone manufacturers to abandon Skyhook’s technology in favor of its own. Given Google’s considerable influence in the mobile market as creator and manager of the Android operating system, it has clout. Patents and business practices are involved.

The price of the acquisition was not disclosed.

As part of TruePosition, it isn’t out of the question that Skyhook would have greater resources to combat Google. As for the lawsuit, it appears that things will continue as before. In a comment provided to Recode, Skyhook said that, “As for the litigation, we don’t expect any impact.”

Large technology firms attract lawsuits of all sorts, so why does the Skyhook suit matter? It has seen all sorts of Android secrets spill forth. Hundreds of pages of documents have been released, and Google’s consternation involving certain third-party mobile decisions laid bare. Given the already existing tension in the market concerning Android and its openness, the suit has provided Google with more than a headache.

It’s taken years to get where the legal tussling is today. Expect no quick conclusion.

IMAGE BY FLICKR USER DANIEL OINES UNDER CC BY 2.0 LICENSE (IMAGE HAS BEEN CROPPED) 

TC Droidcast Episode 22: Nokia Goes Android While HTC Plays The Customer Care Card

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On this week’s Droidcast, me and Chris Velazco get tough on smartwatches, but first we discuss Nokia Android “Nokia X” device plans and other infertile hybrid animals, and HTC’s renewed commitment to customer care and how that might affect its fortunes. Finally, we talk a bit about Chromecast, Google’s mobile-to-big screen media streamer and its new SDK.

Long story short, we know a lot about Nokia’s unreleased Android phone except for why it exists; HTC made some promises to customers in an AMA recently; and Google has made the Cast SDK part of its most recent stable release of Google Play services, so we should see a slew of apps offering up support for that home theater companion.

We invite you to enjoy weekly Android podcasts every Sunday at 4:00 p.m. Eastern and 1:00 p.m. Pacific, in addition to our weekly Gadgets podcast at 3 p.m. Eastern and noon Pacific on Fridays. Subscribe to the TechCrunch Droidcast in iTunes, too, if that’s your fancy.

Intro music by Kris Keyser

Direct download available here.

Stack Overflow Goes Down, Programmers Around The World Panic (It’s Back Up Now)

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Stack Overflow, the coding-focused Q&A site that’s proven to be an essential tool for professional and amateur programmers alike, had an approximately hour-long outage Sunday morning that affected a number of users.

According to Stack Overflow’s parent company Stack Exchange, the cause was a DDoS attack against its network provider. The issue has been “partially mitigated” and the site is back up and running now, Stack Exchange says.

Reports of Stack Overflow’s outage started to hit Twitter and Hacker News at around 11am Pacific Time Sunday, and continued for about an hour. The panicked (and often humorous) notes of programmers who were unable to access the site during their planned Sunday coding sessions show just how valuable the service is for so many people:

Stackoverflow.com down. http://t.co/TcnZNAjeon
NerdSchnupperluft (@1337luft) February 16, 2014

Well, stackoverflow is down. Might as well pack it in and take the day off.—
  (@pickett) February 16, 2014

Stack Overflow being down reminds me how badly I need Stack Overflow in my life.—
Adam (@adamjstevenson) February 16, 2014

stackoverflow is down. my career is on hold.—
John Rodley (@rodley) February 16, 2014

Came to work on a Sunday and Stack Overflow is down EVERYBODY PANIC—
Vineet Shah (@vineetshah) February 16, 2014

Now that the site is back up and running, though, anyone who was secretly relieved at the prospect of getting a “snow day” away from coding will probably have to find another excuse.

#StackOverflow is back up – I guess that means I need to go be productive again ;(—
Undo (@Undo_SE) February 16, 2014

We’ve reached out to Stack Exchange for more details on the DDoS attack and the resulting outage and will update with any information we receive.

An iPhone Loyalist’s First Few Weeks With Android

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Editor’s Note: Semil Shah works on product for Swell, is a TechCrunch columnist, and an investor. He blogs at Haywire, and you can follow him on Twitter at @semil

A year ago, I wrote a post titled “Silicon Valley Slowly Awakens To Android.” Recently, I purchased a Nexus 5 as we develop and begin the early tests of Swell for Android, and I wanted to share some of my initial user experiences carrying phones on both mobile platforms. What I want to focus on in this post are the elements of the Android experience I enjoyed and the elements of the iOS experience that I missed — what I don’t want to focus on is the “Android is better” or “Android sucks” debate. Now, with that disclaimer out of the way…The last time I really spent time on Android was in the Spring of 2011. That was a frustrating experience for me. Now with a brand new Nexus, it’s a new world.

Here’s what I like about having a Nexus 5 so far: The larger screen is enjoyable for reading Pocket and watching YouTube videos. Notifications are easier to digest. The integration of Google Services makes things significantly easier. I found it easier to multitask and switch apps on Android. Having Google Now just up and running is obviously nice. I have SwiftKey but haven’t fiddled enough with it yet. My personal favorites so far are products which can only be built on Android: Cover and Aviate. Cover, as many of you already know, is a lockscreen app which leverages sensor data from the handset and predicts which apps users may want at specific times. It’s surprisingly good at presenting me with the app I want to use at a given time. One of the great attributes of Cover is it reduces the time to get into an app and the cognitive load of sorting through apps. While our phones are cluttered with apps we rarely use, Cover intelligently elevates the apps we engage with most-often. As Cover spreads, it will reward apps with organic daily active engagement. Aviate is similarly elegant, a new homescreen interface with tons of cool options. (I’m also excited to try Ingress, Agent, Cogi, and any other apps you could recommend.)

Now, here’s what I missed not using iPhone all the time: The slightly-smaller form factor for typing. The retina screen, of course. The responsiveness of the touchscreen glass. There are many apps (especially from startups) that just won’t be on Android for a while, as it’s more efficient for small companies to build new products and experiences going iOS-first. I also like that there’s no “back button” on iOS — that was a confusing element for me on Android, as I don’t think of going back to a previous screen on mobile (seems more like a browser), though I can see how some may like this.

I’ve been carrying two phones for the last few weeks, largely for work but I’m enjoying experimenting with the new device and operating system. Recently, I started to think — what would it take for me or other iPhone users actually switch, to actually give away or sell my iPhone and just carry around this Nexus 5. Here’s what I came up with: Some will bolt for Android out of curiosity for something new, some will prefer cheaper and/or more flexible data plans, some will find all the apps they need on Android, some will want a bigger screen, or the ease of Google’s integrated services, or and so on.

However, what will get people moving en masse? That’s a trickier question to answer, and it’s also not clear that’s in Google’s best interest.

As killer apps like Google Now improve, these type of native anticipatory services may be enough to bring iOS users into Android. Or, since Android provides developers with more root access and data collection capabilities, app makers may create an entirely new mobile experience that’s both not possible on iOS and also vital to users. (That said, with hardware advancements like M7 and TouchID in iOS, the same could be said of Apple’s mobile platform — and, therefore, what we’re more likely to see is increasing divergence in the type of mobile experiences between Android and iOS.) Now, assume Google Glass becomes a consumer-level success – that entire phone-to-glass experience could end up being better powered by an Android, though Google can continue to write great iOS software and expand their reach across platforms, even if the functionality is limited or not as well-integrated within iOS. On Twitter last night, @robustus suggested Android’s killer app opportunity may be Bitcoin wallets after Apple’s moves to block some Bitcoin apps, though wallets could be open to more attacks. It’s a provocative thought, no doubt, and one that we shouldn’t dismiss. Or, maybe this isn’t about one platform versus another, but more about two platforms peacefully coexisting and preserving choice and competition for the benefit of consumers. Let’s hope that’s the case.

Google Acquires SlickLogin, The Sound-Based Password Alternative

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SlickLogin has been acquired by Google, just five months after launching at TechCrunch Disrupt.

Word of the acquisition is confirmed by a notice on the company’s site, where they say that they’ll be joining Google in their efforts to “make the Internet safer for everyone”. We’ve also confirmed this news with Google.

Exact details of the deal are still under wraps. As always, we’re digging for more.

The idea behind SlickLogin was, at the very least, quite novel: to verify a user’s identity and log them in, a website would play a uniquely generated, nearly-silent sound through your computer’s speakers. An app running on your phone would pick up the sound, analyze it, and send the signal back to the site’s server confirming that you are who you say you are — or, at least, someone who has that person’s phone.

Or, to get slightly more wordy… here’s how I put it back when the company first launched:

As a user, you’d go to whatever SlickLogin-enabled site you’d like to log in to. Tap the login button, hold your phone up close to the laptop, and you’re in.

SlickLogin can use a bunch of protocols to start verifying your phone’s position: WiFi, Bluetooth, NFC, visual markers like QR codes, and of course, GPS. Their self-dubbed “secret sauce”, though, is their use of uniquely generated sounds intentionally made inaudible to the human ear. Your computer plays the sound through its speakers, while an app on your smartphone uses the device’s built-in microphone to pick up the audio.

The service was built to be used either as a password replacement, or as a secondary, Two-Factor authentication layer on top of a traditional password. The company rolled their product into a small, closed Beta after debuting it at Disrupt, and hadn’t yet opened it up to everyone when they were acquired.

So who are these guys? What about security — if you managed to record someone else’s login sound, could you login as them later? I answered all that and more back when the company first launched, so check out our original article for that.

Kickstarter Coins

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Editor’s note: Adam B. Levine is the Editor-in-Chief of the Let’s Talk Bitcoin Network, an independent, original content platform focused on the future of money. He is also the Chief Visionary Officer at Humint.is, a consortium working with brands and individuals to build customer cryptocurrencies for good. Contact Adam here and follow him on Twitter @GamerAndy.

Crowdfunding has become increasingly popular over the last few years and the market somewhat saturated. One of the problems of crowdfunding is if you don’t need or want the reward offered in exchange for your donation, there isn’t much incentive to support a project. This is a problem we can change, and by doing so reinvent cryptocurrency as we know it. I’ll also describe “The Startup” that I believe many people will eventually create to provide the services described. Please steal the idea.

There’s No Reason

Why are cryptocurrencies valuable? In the case of Bitcoin, because it was the first and is by far the largest, receiving the majority of monetary and media attention, with the one harmoniously building the other. Look at the second most popular coin, Litecoin, and the value is not as clear. The technical changes made compared to Bitcoin are slight. Unless you really value a larger monetary base (4x more than bitcoin) or faster confirmation times that provide illusory benefit (you just need 4x more of them for the same amount of certainty), there isn’t much you can do with Litecoin that you can’t do at far more places or with far more people than Bitcoin.

This is because the only reason to buy Litecoin is an expectation that its value will increase over time due to more people buying them speculating the same thing. Lacking a good reason or first-mover and earned-press advantage, you’re relying on the greater fool theory of investing which is a recipe for long-term disappointment. Indeed, the great hope for Litecoin or any standard alt-coin (any cryptocurrency that is not Bitcoin) is to find its way to an exchange that benefits from easier trading than in forums or chat rooms, where trust can be hard to find.

The thing we’re missing is a reason. The greater fool suffers from there always being a limit to the number of fools before the gains start to slide and buyers turn to sellers trying to lock in gains. Once upon a time the value of dollars was secured by gold. You could trade in a minimum amount with the issuer of the currency (the federal government, or private banks depending on the time period) and this secured the purchasing power of the dollars. Fixing a price to gold isn’t because gold is the only thing you can peg it to, but rather because it’s thought of as something valuable and can be universal in nature. But not everything needs to be universal in nature, and some things that are universal in nature don’t need to be valuable themselves as money.

Goods and services are valuable in monetary terms but not in a monetary sense. By fixing issuance of a custom cryptocurrency to a good or service, with a company ready to accept it at a fixed or floating rate, a single individual or group — even only capable of local distribution — can support a globally tradable cryptocurrency should the story be compelling enough or the private issuance small enough.

Why We Mine

So the question is, why mine alt-coins instead of just creating them and selling them into the market? Because of the excitement of the gold rush. The people who mine the first of your currency will be your distribution channels and have a huge incentive to sell them for as much as possible. It’s easy to mine in the beginning, that’s the elegant way it sucks in those who become the biggest advocates as they have the most to gain from mass adoption. In the case of greater-fool investing, this leads to dishonesty. But for genuinely useful things it’s fierce and unapologetic advocacy and education.In a deflationary currency with a predictable rate, everyone gains and so there is incentive to tell everyone you know and get them involved. The more of us in, the more valuable each one is.Unlike a currency, you want to issue new alt-coins fast: two months with difficulty scaling based on the number participating. After all have been issued, you want a period of time where they are tradable but not redeemable so the future value can be speculated on. After a certain point they should become redeemable at a fixed high rate that drops over times.

This means that even in a currency with the entire money supply in circulation, you can have a long-term controlled deflationary trend simply by lowering the exchange rate at predictable intervals allowing people to buy or sell in advance of the change based on their situation.

So mining really is a marketing decision; you pay the price of not being the first seller of the currency, instead relegating yourself to 50 percent while allowing those doing the work to run away with wild profits. They’re the ones who get to tell everyone how great it was doing it.

Backed Company Cryptocoins

Take any freemium software-as-a-service company; for premium features they could accept U.S. dollars as happens now. They could also issue their own cryptocurrency, a token that offers savings when used with the company it is associated with. The service would accept at 20 percent off the U.S. dollar prices for all their services. It would start off mined, and 50 percent of the block reward would go to the company, with 50 percent going to the miners.

The miners have a coin that has real value because from minute one, you can use it to purchase these particular services. And yet as a cryptocurrency, it is tradable for Bitcoin, on exchanges, etc. The network will initially start because computational power is cheap and early adopters are more inclined to devote CPUs to mining cycles than they are to dollars on a service they might not even want.

If your company only accepts dollars, there’s no reason for your customers to care about the company once their needs have been met. With a proprietary cryptocurrency, simply holding some of their value in your coin means they profit from the growth of your business and future price increases in the cryptocurrency value.

This can be done naturally by adjusting to the market over time. Or it can be done via a long-term schedule published in advance to allow the market to price in the information and bias the customer’s mental math toward holding your coin for future gains. Since a project’s coin is really just a claim on future value from that specific project, anyone holding your coins is a stakeholder vested by their actions whether mined or purchased on a market. If more people are interested in your project or product later, a fixed-supply token will, seeing more demand and no change to supply, become more valuable both for the company and any users holding it.

One of the most appealing things about cryptocurrencies like Bitcoin is their rules-based nature. The rules are set out in advance and apply to everyone evenly because the protocol simply has no capacity to accept anything outside the rules or to deny anything within the rules.

Ideally this would be done on a schedule that causes slow, steady deflation in the currency over time. Each token becomes more valuable because fewer tokens are required to pay for the service that still costs the same amount of U.S. dollars.

Once a customer spends the coins with the company, the coins don’t need to be destroyed; as the company receives them they should be sold back into the market. SaaS is an exceptional early use-case for this sort of proprietary-token service. Unlike most businesses, cost is primarily front-loaded with only maintenance and R&D as primary costs after the initial launch.

Because of this, the per-user cost of providing premium features on SaaS is basically a rounding error rather than a relevant factor determining the sale price. The company could sell them back into the market to take profits in Bitcoin or another currency of choice.

At the point you wish to stop trading with them (which should be at least five years in projected duration), there should be a final turn-in period either done surreptitiously, where received stock is simply not sold back onto the market, or be announced, which might lead to a rush against the price. If built on one of the upcoming Metacoin platforms like Counterparty, these tokens can be made “callable” at a contractually specified price on a contractually specified day. So where every Cryptocurrency used to live on forever once it was created, experiments and mistakes can now be unwound.

Once the market is mostly cleared of the legacy coin, a new one can be launched and the cycle can start over again.

Assets, Crypto or Otherwise

You can create a price with anything simply because someone, somewhere is willing to trade something else for whatever you have. Obviously some assets are better than others, but instead of thinking about raw goods, let’s update our mindset.

Any product, good or service offered by a company can be physically backed by a product, and the more popular the product the more attractive it is as a good to hold. With a blockchain-type product, messaging, financial or otherwise, the course is simple; it’s a rotating option that grants whomever holds the “share” (see Stan Larimer and Daniel Larimer) a copy of the new blockchain product on a set date at a fixed rate.

Even after a company has exhausted their potential ideas and abandoned such a coin, the very fact that it is so inexpensive could be its resurrection. Another company could opportunistically buy those very cheap and abandoned shares, then announce they’ll be honoring them for their service or product with the rate of exchange being the characteristic that defines the intrinsic value since they are one and the same.

With physical products, you have the liability of existence, and that means the equation is different. You must project production and determine your monetary base based on a multiple of that number, with again a gradual increase in value over time to promote users to spread out spending over a slope rather than piling in all at once.

Let’s say I can produce 10,000 high-quality rare wood-cutting boards in a year and I want to start redeeming at 100 woodcoins per cutting board, with each cutting board going for $50 when paid in dollars. That gives us 1,000,000 Woodcoins for a total money supply once mining is completed. Your production is such that you would rather ship more at the end of next year than the beginning, say because you need to ramp up production.

Every month, you lower the price a little bit in woodcoins. These planned price drops are points around which the value of Woodcoins rise in advance because they will be able to buy more in the near future.

Aside from reference products, in this case a cutting board, an entire offering could be built around this with the prices scaling to suit those with small amounts and those with large amounts. As you collect woodcoins in exchange, you have the ability to either sell them back onto the market, which lets you capture the market price they now represent, or hold onto them and draw down the money supply to further increase the value.

woodcoins-border

How Is This Crowdfunding?

The crowdfunding connection is inherent because a coin can be introduced, mined and traded in advance of the product being ready. The market price is derived based on the expectation of future value of the project the currency is built around. When the currency can be redeemed per the social contract by the issuing company for the product, the promise is fulfilled to those who bought the currency to pre-purchase the good or service.

This allows people who don’t want the eventual reward to still purchase, evangelize and participate in your project. Even if they don’t want it, the more successful the project is, the more valuable the currency that interacts with it is and, therefore, they gain financially even if they don’t give a shit about the project themselves. It turns crowdfunding from something where you buy merely to support your passion into something you also buy because you speculate that lots of people will be passionate about it, therefore increasing the value when you buy early.

Create This Ecosystem

So who can do this? Just about anybody. And anything that people pay dollar bills for can be used to imbue a company cryptocurrency with value. It is still decentralized, it is still out of the control of the company once created and it is definitely possible to fail with market forces at work. But it does change the way one thinks about crowdfunding projects. There’s no need for Kickstarter at all if the right pieces can be brought to bear.

Pick Your Platform

While many companies create products, very few create cryptocurrencies. The most common way a cryptocurrency is created is by forking another cryptocurrency, nearly all of which derive from Bitcoin. Bitcoin is a revolutionary and incredibly powerful tool for P2P monetary transactions, but its development legacy and the need for a continuous blockchain from its first launch means that it has many legacy issues and duct-tape fixes. Lacking knowledge and appreciation of these complexities, many talented developers find themselves running into repeated frustrations. Furthermore, Bitcoin is an all-in-one client which means individually desired functions can not be easily separated out.

The startup will offer alt-coin creation services and economic consulting to best determine the fundamentals of the new coin and implement the vision. To that end, it would be desirable to use one of the metacoin platforms that can be easily modified and have a clean development history free of the legacy issues from coins developed early in the cycle. The whole ecosystem is open source so there is a wide array of tools to choose from already and many more on the horizon.

Example platforms include NXT, Bitshares, Ethereum, the CounterParty Protocol and the Mastercoin Protocol.

The Results

Results include a reinvention of crowdfunding and the ability for any industry from software as a service to brick and mortar to create a class of enthusiastic and invested consumers incentivized to grow your brand. It’s a way to leverage into the Bitcoin ecosystem, and it’s a reason to own an alt-coin that’s not the expectation of more fools piling in.

And we’re just getting started.

Lead illustration by Matt Innes; additional illustrations by Bryce Durbin

Daemon And Influx Author Daniel Suarez On Why Innovation Has Stalled

Daniel Suarez

Daniel Suarez self-published his first novel, Daemon, in 2006. The book and its sequel Freedom™ chronicled the rise of a botnet that uses self-driving cars to kill humans, crashes the stock market, and creates a new society in its own image. His next novel, Kill Decision, published by Dutton in 2012, was about aerial drones that could decide when to use lethal force independently of any human.

After reading his books, you could be forgiven for thinking it was time for someone — the government, maybe — to put the brakes on technological progress for a while. But he wouldn’t agree with you. In fact, his latest novel, Influx, explores the idea of trying to control technological progress. And it’s just as scary as his previous stories.

Influx, which will be out next Thursday, is the story of Jon Grady, a physicist who invents a machine that can reverse gravity. But before he can share his work with the world, a secret U.S. government agency called the Bureau of Technology Control seizes it and arrests him. He soon learns the BTC has seized many other inventions, including cold fusion reactors and quantum computing systems. Using the technology it’s stockpiled, the BTC has become more powerful than any government. And it’s completely out of control.

I interviewed Suarez about Influx, the real reason that technological innovation has slowed down and why he has reservations about Bitcoin.

TechCrunch: Your previous books focused on the dangers of certain technologies, particularly artificial intelligence, robotics and drones. But your new book focuses on the dangers of withholding or restricting technology. What made you decide to change direction?

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Daniel Suarez: I’m not sure I would say that it’s a change of direction. Let me revisit how you describe what I do. I actually love technology. I worked for 18 years as systems analyst in technology. If we are going to be addressing the very major problems that you see before humanity, it is going to be technology that’s going to rescue us, basically. We are going to have to think our way through this and that’s going to involve obviously a lot of people and all these conflicting ideas.

That’s why I push back when people describe my books saying that I’m showing the dangers of technology. Not just the dangers.

I think that for all of the dangers of technology spreading, I think it is more dangerous in some ways that it doesn’t. My simple reason for that is we’ve got 7 billion people on the planet and we have these very serious problems and I think we don’t know who’s going to have the answers to the problems that are coming around the bend. That’s why we really need everybody thinking on it. We need every Einstein on this planet to help us.

Who’s going to have the idea that modifies a technology that brings it to the next level or combines it with another technology? I think in the long run we’re going to be better served by sharing knowledge as opposed to creating silos of it.

The role I see for my books is trying to think through the consequences of various things because a lot of the issues around technology and the nuances in it are not usually widely appreciated. That’s how I view my writing as I sort of explore this terra incognita ahead of us in an effort to try to understand where we might be heading. And I do that using the thriller genre because I think it’s a useful way to explore the territory in a realistic way without boring the crap out of people.

TechCrunch: You wrote this book before the Edward Snowden NSA revelations, but you’ve said that the Snowden revelations weren’t that surprising given the leaks that had come before. Did you have the NSA in mind when you wrote the book?

Suarez: Well, it’s funny that I showed them in the book as sort of hapless victims in a way of the BTC. There was something appealing of course about seeing the NSA being tapped and helpless, trying to figure out how to resist a technologically superior foe. I thought that that was an interesting way to look at things. It’s not just the NSA, but any unseen and unaccountable concentration of power that I’m trying to portray in this story. And right now that might be the NSA, but over time it might change. And I wouldn’t really put a specific nationality on it. It’s a story about progress and an effort to try to retain advantage.

So, yes, it was partly about the NSA but then it’s also partly about the broader issues — the broader issues of control and transparency.

TechCrunch: It feels like the power imbalance isn’t just a political power imbalance but it’s also the lack of understanding and awareness on the part of the public as to how these things work.

Suarez: And possibly interest. It’s been mildly infuriating to me to speak with even friends and people I know who shrug and say “Well, you’re not doing anything wrong, why should you worry about surveillance?” And of course you and I would probably say well, actually, it’s not just people doing things wrong. For example somebody running for Congress 20 years from now I think is going to have a very detailed record to have to defend. “Why were you standing next to this person every day for five years and this person later turned out to be a criminal?”

I think that is why these revelations were powerful. I don’t think that many technology or IT people were surprised by this, but I think it became much more personal with Snowden. Now, it’s dying down again but I think there will be more revelations that hopefully wake people up. We can’t just be passive. Being a citizen in a democracy really does require some interest.

TechCrunch: Were you also thinking at all about the power imbalance between a wealthy nation and a poor nation, both in terms of their military might as well as just access to healthcare or plentiful food?

Suarez: Well, that certainly is part of it. Although I would say that a billionaire in a third world nation lives very much like a billionaire elsewhere. I mean they create an enclave, and they have satellite uplinks and they have jets and things like that. So, yes, the great majority of people in underdeveloped countries would live a much more technologically backward life, although it’s a mix. Again, they might skip the hardwire telephone networks that we have. I’ve never been to Africa, but a number of people that I talked to who have been to various places in Africa talk about how great the cell service is. And here I am in a first-world nation having to seek a hill top to talk to you on the cellphone.

I think technology is spreading and I think one’s experience of technology is going to relate increasingly to class, not so much to country. There are areas in parts of this country that look very technologically backward and abandoned by society in general. I wouldn’t say that they resemble the third world exactly, but they are not experiencing technology and its advantages like the rest of the country.

TechCrunch: If there’s not somebody out there like the Bureau of Technology Control inhibiting progress, what if anything, do you think is actually slowing down scientific progress? Or has progress actually slowed down?

Suarez: I definitely, for the record, don’t believe that there is a BTC squelching progress. But to me it was a fun thought for a story.

Back when I was a kid, the space shuttle was going up. We were going out into space, we were going to do these big things. Everybody assumed we’d have fusion and things like that by now. I think the difficulties of those tasks were certainly underestimated, but I think it is a function of a couple of things. One, I think there is sort of a cosine wave of innovation. I think a new field of innovation will occur, and then a whole bunch of technologies will spring up around that.

You see the long mark of the internet and how it’s really starting to pay off and change society now. We probably thought it was doing that in the 90s, but it really kicked in just recently. But I think a lot of the innovation in Silicon Valley, sort of the venture-backed innovation is more incremental. And I think that’s because investors are looking for returns.

Let’s say a new idea for a company is founded it kicks off rapidly. Very often what happens is a larger player purchases that company and then the founders work at the new subsidiary for a little while, and then they leave and then they start their own ventures that are typically variations on the big idea that they had. And then venture capitalists start investing in variations of that idea. Social media is a great example. There are hundreds and thousands of these social media startups. So I think a lot of this is chasing the same sort of incremental innovation.

In that sense I do think that government, that nation states serve a really vital interest in innovation. The BTC that I was depicting in Influx is really a distortion of it, a sort of a cancerous growth. It’s something that was allowed to get out of control because it was secret. But investing in just pure research and development, the US government, pretty much every major government, has been doing this for a while, and of course these are the types of things that result in the Internet. These things where we don’t see a pay off immediately, so venture capitalists are likely to put the money in.

Low earth orbit, getting into space is another great example. I don’t think you would have seen a lot of companies investing in it in the 60s and 70s unless the government was investing in it. It was incredibly difficult and very expensive thing to do. We didn’t do it just for economic gains. We did it for prestige. We did it for the challenge. And also for strategic importance. And it was only decades later that we started to see venture capitalists talk about going to space. But I think that’s because the big, big problems were being solved at a governmental level.

Now, why aren’t we seeing these huge things solved? It may be part of the innovation cycle, that the next things we’re trying to solve will require either some greatly increased computing power to model these things, some barrier beyond which when we cross it there will be another flowering of real serious innovation akin to the railroad or something like that.

Just a few years after the invention of the piston engine, the Wright Brothers invented the airplane that actually flew. What I think it required was some form of energy that would be light enough to push airplanes into the sky. And almost the minute that was available suddenly that innovation started occurring. So, I think it’s going to be one of these keystone type technologies that opens up a whole new avenue that will result in innovation.

TechCrunch: What’s your research process like? Did you have the idea for the gravity mirror and then research how that could be possible? Or did you get the idea for the gravity mirror from the research that you were doing?

Suarez: The idea came first, and then I had to justify it. That’s not always the case. And of course it changes from book to book depending on how much I know about a topic. For instance cybersecurity I knew quite a bit about. But with Influx, the gravity mirror was really a component of the bigger idea which was the BTC, the idea that you have that we’re really 60, 70 years more advanced than people commonly know, that technology is more advanced and how that would happen and coming up with an innovation that would really, really change things and modifying gravity came to mind.

TechCrunch: Did you have a lot of knowledge about physics before you started researching the book?

Suarez: Not a lot. I’ve always been interested in it just as a curiosity. As a kid I read Cosmos, watched documentaries. I’ve always been interested in science. Space exploration in particular. I’ve written software before that modeled orbital mechanics for various games and things like that. I’m aware of how gravitation projects outward, some of the formulas. But understanding how it might fit into the various models of the universe, string theory and brane cosmology, all those things, I wasn’t aware of those things prior to researching this book. Now that I’ve done it I’m more interested in it than ever.

TechCrunch: When you research a book, do you do the research and then write the book or is it a concurrent process or a little bit of both?

Suarez: Yeah, it’s a little bit of both. If you ever do [write a book], be aware of this trap. Research is fun and you can spend an endless amount of time on research. After I wrote Daemon I was writing Freedom. I spent a bit too much time on the research. I probably had twice as much stuff than I could actually use. Research is a blast being able to go and pursue and learn something just because you want it because it’s part of a story.

What I’ll try to do is block out the story and then I’ll see where my weak spots are in terms of my knowledge of various subject. And it’s not just technology. It could be knowledge of a country or culture that’s going to be part of the book. And then as I learn those things sometimes the story will change. Actually, pretty much every time the story changes simply because in doing the research I find something really interesting that I want to incorporate more fully or weave into the story. I’d say the research component is probably 50% of the book writing process. For me anyway.

TechCrunch: Are you still doing a lot of IT consulting or are you a full-time writer now?

Suarez: I’ve been full-time writing for a number of years. And it’s been quite a change because I used to work with teams of people on a very knotty, very complex technology problems and that was kind of cool in a way. I really miss that social element.

I sort of mothballed my business a few years back just because the writing turned out very well. There’s a part of me that I do want to keep my hand in the game and of course I’m constantly learning about software and development tools but not in the same way that I did before, to solve a real meaty enterprise level, mission critical problem. It’s because I want to keep up or I see something interesting and I play around with new tools. I don’t actively consult right now, but I do keep up with these things.

TechCrunch: Was that a goal for you, to be a writer? Did you just kind of come into writing on accident or was it something you always wanted to do?

Suarez: Something I’ve always wanted to do. I have an English literature degree, and of course when I was young I wanted to be the next great American novelist. And then I just got busy doing other things. Life intrudes. I tried to write a novel early on. I think I didn’t have the discipline at the time.

I had wide-ranging interests. I was always interested in technology. As a society, America was just trimming every ounce of fat from our communications, transportation, logistics and other networks, that I started thinking of it that it’s becoming a monoculture. A lot of the same machines hooked together.

When we saw things like Conficker sweep through, or Slammer sweep through all these systems, it started making me wonder whether or not we were building a house of cards, a very lightly constructed, not very resilient infrastructure. But if I wrote a whitepaper about that, who the hell would read it? So I started thinking, “Y’know, I’m going to write a thriller.” Because I liked entertaining stories. I would read thrillers occasionally and I thought that that was the best form to really explore the issue and popularize it. And thankfully it worked out pretty well.

TechCrunch: What do you think of Bitcoin? It actually sounds like it was something that would be out of Daemon or Freedom.

Suarez: Yeah, I’ve been watching this pretty closely. I don’t mind Bitcoin. The idea I like very much. But one thing that concerns me is the idea that you are burning a valuable resource to create this fiduciary fiat currency. It is using electrical energy to create this artificial thing that doesn’t have inherent value. It has perceived value. If such a thing could be connected to something that represents inherent value, then I’ll be really, really interested in it. Like maybe it represents joules of electricity or whatever. Something that represents energy available to do work or something like that.

I don’t have any carefully thought out solutions as the people who designed Bitcoin, but I wonder where that’s going to head because let’s say another Bitcoin-like currency were developed once Bitcoin tops out. I wonder if burning all that energy will somehow cause issues later on.

TechCrunch: So, what’s next for you? Are you working on another novel or do you have to do a book tour? What’s on your agenda?

Suarez: I’m going to be going to various locations up north and pretty much west coast. I do a very abbreviated book tours. I’m going South by Southwest in March, I’m going to be on a sci-fi panel there that MIT Media Lab is hosting.

And yes, I am working on another book. I never really talk about the books that I’m working on. It’s something I’ve always not done. But yes, I’m working actually on several books. I don’t know exactly which one I’m going to dedicate all my time to just yet. I’m at a crossroads there.

But there are also other mediums that I’m looking into right now. I’ve done a couple of film deals now for my books and I’d like to try to pursue that as well. I love books, and yet I’m looking at the changes in the publishing industry and I’m thinking I may want to be in other mediums as well. Not exclusively in other mediums because I always love books, but I might try to branch out a little.

Photo by Joi Ito / CC