The blog post goes a long way in hinting here and there, but leaves lots of unanswered questions. I'll give it a shot for you if you'd like.
The underlying idea is interesting. At its core mining bitcoin represents an opportunity to earn money for proof of work, and work is done by electricity going into hardware. If everyone has hardware, then that means you can run a payment system on electricity. And that's hugely powerful and exciting. Want to your fridge to stock some Chicken? Well it's plugged into the socket, just turn electricity into money, and let your IoT fridge order chicken, an Amazon drone will deliver it, all paid for with bitcoin, automatically, without humans involved.
It's a slightly crude example but it hints at interesting opportunities. Have a lightweight computer at home and want to render a 3d model? Simply turn electricity into digital money, and pay a cloud computer to do it.
Electricity as a payment channel. Anyone you have power, you have access to internet and financial networks.
But that's kind of where it all breaks down. The economics make very little sense. You can't have local consumer grade mining hardware mine bitcoin to pay for cloud computing, without at the same time living in a market in which these cloud computers can mine the bitcoin themselves, much cheaper, with industry grade hardware and access to cheap electricity rates and cheap cooling in places like Iceland.
Mining is a zero sum game. Every 10 minutes 1 person wins the lottery, and the amount of lottery tickets depends on how big your hardware is, and how efficient it is in turning electricity dollars into tickets. Because industry grade hardware is more efficient and electricity is cheaper for industrial purposes, the professional miners mine at below average costs, the consumers at above average costs.
It follows then that it's cheaper for a consumer to simply source or license mining power in the cloud, or indeed, simply purchase bitcoins from professional miners, for less than it'd cost them to mine them themselves.
And it's no surprise this has been exactly the way of bitcoin for the past few years since professional mining took over in full.
And if bitcoin is ever to become truly mainstream - if not, this entire venture of putting chips in millions of devices is irrelevant to discuss - then purchasing and using bitcoin should be as easier or easier than sending an email. Making it trivial to finance your IoT devices with bitcoin without having to mine it, too. Indeed already using Circle you can instantly buy bitcoins at 0% commission, not much harder than signing up with Gmail.
And this is just one of the various fundamental issues. The other one is that mining very rapidly increases in scale. If you'd have had a smartphone that had a mining chip in 2011 that used bitcoins to get service, it'd now be defunct as its mining output dropped by a factor of a million or some crazy amount like that. Mining output and difficulty is unpredictable, yet constantly growing. It's as if you had a smartphone charger that charged 80% less a year later. It's not practical.
Beyond that, the whole idea of discounting consumer devices to recoup revenues in mining requires serious technical challenges to be solved. i.e. forcing devices to mine continuously after purchase, and worse, forcing humans to charge and turn on their devices long enough to spend their electricity on paying back the proverbial debt on their discounted purchase. It's a business model which is not quite a no-brainer.
Lots of unanswered questions. There's genuine IoT potential and it's very interesting to think about, but so far only in the realm of sci-fi ideas whose economics make little sense.
Ignoring the mining bit for a moment, you're left with bitcoin wallets on IoT hardware that happen to not mine, but that can receive and spend money.
And that's hugely exciting. Send your router or PC $10 and it'll automatically add small pieces of bitcoin to http requests and you could create a different payment model besides ads and subs. Send your driverless car $100, and it'll drive to the nearest charging station at night and charge itself, then while driving on the highway while late for a meeting, pay $1 to any driverless cars configured for 'not-in-a-hurry- in front of it to move out the way, creating a real-time market based VIP lane for you that more efficiently dedicates scarce lane space to priority users. (it has flaws, but it's an enticing example).
I'm hoping they're looking to spearhead this and that the mining bit isn't as big as it's made out to be.
Examples like that can't be done through traditional banking systems like ACH or SWIFT. You want digital payments, even creditcards are slow to clear. Paypal could work, but it's proprietary, similarly we don't like to run the internet on proprietary protocols and platforms, either. Bitcoin is an open protocol and can be built on top of with fast or slow transactions, cheap or expensive etc. It's a unique platform to make global, plug & play, open-2-all IoT platforms possible.
Thanks! I found out a little bit about the founder(I think)--forget his name, but he seems legit. He's a founder of vagabond.something, and was a player in Skype. I listened to his podcast, and he was pretty grounded in reality. I heard he was given 5 million a few years ago to get this thing started; which doesn't seems like enough to manufacture your own chip? After every job posting, the company is offering a Mac book pro retina as an incentive to join the company. For some reason I started to laugh, but you need a laptop to work, and why not a Mac book pro retina? What I got out of the podcast is the TV show Silicon Valley just might be a documentary. I guess I didn't realize just how important Silicon Valley has become, and seems akin to an amusement park in some ways. No wonder rents in the Bay Area are beyond staggering. The podcast I watched was about vagabond.someting--not this company.
As for Skype... the company is backed by VCs like Andreessen Horowitz and Peter Thiel who all invested in Skype. Don't know any other connection to this company.
As for your comments about Silicon Valley, yeah it's pretty crazy. The basic idea is that companies like Google, Apple or Facebook have millions or even billions of customers/users and are some of the biggest companies in the world. Meanwhile they have very few employees because their product is mostly software, and 1 guy can code a program that a billion people use, unlike say a barbershop where 1 person can only cut a few thousand people's hair. Which means that the potential reward for the very best programmers (a small team of whom can build products used by millions) can go through the roof in a free market.
Which is why you get wages of $100-200k for solid programmers. And something like a free Macbook Pro then is not a big deal. It costs $1500, it's used for 3 years, so the cost is $40 a month, peanuts for someone whose wage is already $10k a month. It makes sense to spend an extra 0.4% for one of the best laptops available allowing your employees to be productive anywhere anytime they want.
And if a $50 gym membership & free lunch makes people happier, more productive and absent due to illness, to the extent they're only 5% more productive, you get an additional 5% of $10k of 'work', or $500, so it makes sense to give employees free gym memberships that cost you $50.
If you run a private bus service with wifi for employees and pay $500 for a private bus driver for a day moving around 100 employees who don't have to take a crappy bus, and those 100 employees are 5% more productive because they can get to work sooner (or leave home later and more rested), and work on the bus because it has wifi and is spacious etc, or because they can have breakfast on the bus, that 5% productivity gain nets $50k in total for the 100 employees, and costs a fraction of that.
etc etc. That's the kind of reasoning going into making it an amusement park. It makes a lot of economic sense to spend a lot of money to make employees a bit happier, more productive, less absent and reduce employee turnover, when these employees already cost $200k and in small teams build large software products. It also makes sure talent is attracted to work at your company specifically, and is less inclined to leave once they get there.
All of which can make for some amazing working environments, and also very silly outcomes (as well as friction in communities where people live that don't have any of those benefits but work just as hard, and have to see things like awesome private buses for some citizens, while they have to take shittier public transport, for example. There's been quite a bit of controversy in Silicon Valley about stuff like this the past few years)
Well here's my take. Although they said 'cloud computing' I don't think they mean spinning up an AWS instance to do computation on your device. Rather what they want is the client to 'power' both sides of a computation. So you build bitcoin into the http and use the power in your battery for your device and to pay the server costs at the same time.
Sure it'll be cheaper to preload with bitcoin but at least you can always burn your battery to get access to whatever site you want.
The blog post goes a long way in hinting here and there, but leaves lots of unanswered questions. I'll give it a shot for you if you'd like.
The underlying idea is interesting. At its core mining bitcoin represents an opportunity to earn money for proof of work, and work is done by electricity going into hardware. If everyone has hardware, then that means you can run a payment system on electricity. And that's hugely powerful and exciting. Want to your fridge to stock some Chicken? Well it's plugged into the socket, just turn electricity into money, and let your IoT fridge order chicken, an Amazon drone will deliver it, all paid for with bitcoin, automatically, without humans involved.
It's a slightly crude example but it hints at interesting opportunities. Have a lightweight computer at home and want to render a 3d model? Simply turn electricity into digital money, and pay a cloud computer to do it.
Electricity as a payment channel. Anyone you have power, you have access to internet and financial networks.
But that's kind of where it all breaks down. The economics make very little sense. You can't have local consumer grade mining hardware mine bitcoin to pay for cloud computing, without at the same time living in a market in which these cloud computers can mine the bitcoin themselves, much cheaper, with industry grade hardware and access to cheap electricity rates and cheap cooling in places like Iceland.
Mining is a zero sum game. Every 10 minutes 1 person wins the lottery, and the amount of lottery tickets depends on how big your hardware is, and how efficient it is in turning electricity dollars into tickets. Because industry grade hardware is more efficient and electricity is cheaper for industrial purposes, the professional miners mine at below average costs, the consumers at above average costs.
It follows then that it's cheaper for a consumer to simply source or license mining power in the cloud, or indeed, simply purchase bitcoins from professional miners, for less than it'd cost them to mine them themselves.
And it's no surprise this has been exactly the way of bitcoin for the past few years since professional mining took over in full.
And if bitcoin is ever to become truly mainstream - if not, this entire venture of putting chips in millions of devices is irrelevant to discuss - then purchasing and using bitcoin should be as easier or easier than sending an email. Making it trivial to finance your IoT devices with bitcoin without having to mine it, too. Indeed already using Circle you can instantly buy bitcoins at 0% commission, not much harder than signing up with Gmail.
And this is just one of the various fundamental issues. The other one is that mining very rapidly increases in scale. If you'd have had a smartphone that had a mining chip in 2011 that used bitcoins to get service, it'd now be defunct as its mining output dropped by a factor of a million or some crazy amount like that. Mining output and difficulty is unpredictable, yet constantly growing. It's as if you had a smartphone charger that charged 80% less a year later. It's not practical.
Beyond that, the whole idea of discounting consumer devices to recoup revenues in mining requires serious technical challenges to be solved. i.e. forcing devices to mine continuously after purchase, and worse, forcing humans to charge and turn on their devices long enough to spend their electricity on paying back the proverbial debt on their discounted purchase. It's a business model which is not quite a no-brainer.
Lots of unanswered questions. There's genuine IoT potential and it's very interesting to think about, but so far only in the realm of sci-fi ideas whose economics make little sense.
Ignoring the mining bit for a moment, you're left with bitcoin wallets on IoT hardware that happen to not mine, but that can receive and spend money.
And that's hugely exciting. Send your router or PC $10 and it'll automatically add small pieces of bitcoin to http requests and you could create a different payment model besides ads and subs. Send your driverless car $100, and it'll drive to the nearest charging station at night and charge itself, then while driving on the highway while late for a meeting, pay $1 to any driverless cars configured for 'not-in-a-hurry- in front of it to move out the way, creating a real-time market based VIP lane for you that more efficiently dedicates scarce lane space to priority users. (it has flaws, but it's an enticing example).
I'm hoping they're looking to spearhead this and that the mining bit isn't as big as it's made out to be.
Examples like that can't be done through traditional banking systems like ACH or SWIFT. You want digital payments, even creditcards are slow to clear. Paypal could work, but it's proprietary, similarly we don't like to run the internet on proprietary protocols and platforms, either. Bitcoin is an open protocol and can be built on top of with fast or slow transactions, cheap or expensive etc. It's a unique platform to make global, plug & play, open-2-all IoT platforms possible.