Jun 14

Why Traction is King

Traction is King

Traction is how investors who don’t know a space get comfortable enough to invest.

In Early Stage VC there is a ton of risk and if you’re not an expert in a space then traction is the best way to know if an idea is any good. The market has spoken.

If a VC or Angel is an expert in a sector then they can get comfortable without that traction.

Last night I was discussing this with another investor who pointed out that even when you’re an expert you may not be able to pick winners in a crowded market, so in that case traction is important even for an investor who knows the space. An example of this is when there were dozens of photo applications; it wasn’t until Instagram started to pull away from the pack that investors knew who to put serious money behind.

Ultimately this means that having traction will get you a higher valuation since it brings more investors to the table, which creates competition, and that drives up your valuation.

Jun 14

The Darker Side of Cypherpunks

A few days ago I made a very disturbing discovery; After I posted about PayPub, the project to allow people to get paid for leaking information,  I wanted to see if anyone had created another Cypherpunk thought experiment, an assassination market:

An assassination market or market for assassinations is a prediction market where any party can place a bet (using anonymous electronic money, and pseudonymous remailers) on the date of death of a given individual, and collect a payoff if they “guess” the date accurately. <via Wikipedia>

Turns out, there is one running on ToR and it has a list of people and payouts.

The List

Who Country Status Pool size
Eva Carin Beatrice Ask Sweden Alive 1,016.15 mBTC
Jyrki Tapani Katainen Finland Alive 1,000.00 mBTC
François Gérard Georges Nicolas Hollande France Alive 1,000.00 mBTC
Barack Hussein Obama II United States Alive 40,259.82 mBTC
Ben Shalom Bernanke United States Alive 124,219.73 mBTC
Keith Brian Alexander United States Alive 10,493.83 mBTC
James Robert Clapper, Jr. United States Alive 1,973.20 mBTC

I assumed, like PayHub, it would be a proof of concept, but this purports to be real and it is funded. The way it works is people pledge money in Bitcoin to a pool, and you may “guess” the date of a person’s demise to win the money. According to Forbes it was started in July of 2013 and started with modest amounts for rewards:

For now, the site’s rewards are small but not insignificant. In the four months that Assassination Market has been online, six targets have been submitted by users, and bounties have been collected ranging from ten bitcoins for the murder of NSA director Keith Alexander and 40 bitcoins for the assassination of President Barack Obama to 124.14 bitcoins–the largest current bounty on the site–targeting Ben Bernanke, chairman of the Federal Reserve and public enemy number one for many of Bitcoin’s anti-banking-system users. At Bitcoin’s current rapidly rising exchanges rate, that’s nearly $75,000 for Bernanke’s would-be killer.

At first I thought the ransom on Bernanke today was close to $80M, but that was before I learned that mBTC is a thousandth of a Bitcoin, so it is actually around $80,000. Still, that is money that people have pledged for the death of another human being; even as a political statement I think that’s messed up.

Jun 14

BlackNet Lives, Sell Your Secrets Here

In my post about the Cypherpunks I stated that some of their ideas, like ransom publishing and digital currencies, had finally come of age. Well another one just came to my attention black market information bizarres.

On the Cypherpunks list Tim May described BlackNet:

BlackNet is in the business of buying, selling, trading, and otherwise dealing with *information* in all its many forms.

Well, now there is PayPub, a system that allows a leaker to get paid as they anonymously release data:

Trustless provably fair information marketplace ========================================

“PayPub: Trustless payments for information publishing on Bitcoin” Scheme by Peter Todd Code by Amir Taaki

This is just a proof of concept prototype, but the code is out there for anyone who wants it.