21 Makes Bitcoin Useful to Developers
21.co
21.co
Any business which intends to last longer than a hackathon would get a greater long-term advantage by developing such queries in-house. And most of those example APIs are available for free from IBM Watson/AlchemyAPI/Open Source anyways.
https://medium.com/@21/buy-50-apis-with-bitcoin-in-the-21-ma...
The command line example in that article requires a $400 bitcoin device.
That reminds me of this challenge Heroku is currently facing (http://go.theinformation.com/884b08):
> When an app hits a certain scale, the cost of Heroku can be many times that the cost of cutting out the middlemen and running on AWS directly.
> For that reason, Heroku finds it tough to attract big companies. They know they’re going to operate at a large scale, and they’re open to taking the trouble to cut out the middleman of a Heroku if the savings are great enough.
Because of that it's possible that many people don't consider building them (and some people do it for free, but it's another matter).
If there is a simple system to charge for such services, we might soon see a situation in which there are literally thousands of available services. And it's not a choice between using CC and using Bitcoin, but a choice between using the few services that handle CCs, or a plethora of services that use bitcoin.
In this case, 21 isn't using Bitcoin is some way that makes it substantially different than what could already be done. If a person wanted to, they could create an API marketplace just like this, and charge 1 cent, or fractions of a cent, per transaction. Rather than turn your computer into a bitcoin mining botnet node, you load your account with a larger credit card payment to pay for it. Meanwhile, the marketplace collects the fees and distributes it to the various API owners' accounts, which can then be withdrawn once the account reaches some threshold, say $5.
Here, 21 is essentially doing the same thing. Although they discuss being able to do on-chain or off-chain transactions, putting a tx on the blockchain for every $0.01 zipcode lookup is completely ridiculous and the success of such an application would essentially gridlock the blockchain, so accomplishing these types of micropayments has to be done off-chain. They're ultimately acting as a middle man between payer and payee, just like most fiat marketplaces are.
21's strategy doesn't seem terrible if you make a lot of assumptions about what role Bitcoin will play in our future. I personally think they're substantially off-base and that a world where devices have to constantly mine Bitcoin and send and receive micropayments to accomplish trivial things seems like more of a burden than a benefit.
I should also say that you have to think quite a bit about what 21 is doing and make a lot of additional assumptions on their end in order to even say their strategy looks good. So far, they've released a very expensive Raspberry Pi with a hideous miner attached to it and this API marketplace where their featured API is a $0.01 zipcode lookup. I've been working on a side-project that requires me to do lookups on zipcode data and it took me all of 10 minutes to download that for free from the internet and drop it into a database. I get that they're trying to ship, but why no ship with something people would actually want to use?
Pay attention to these types of offerings that hook revenue up directly to code. They are the future of software development and "self hosting" of applications. I also think they will have far reaching implications on the more traditional VC startup models.
Say you created an API that takes users' data and stores it on S3. Some random user then comes, pays you $10k to store his data, but a week later does a chargeback. You're left to pay the costs to AWS.
Finally, with CCs you need to strike deals with payment processors like Braintree. If you're a private developer it will be impossible. But even as a company - payment processors are not ready to process payments via command line. They will ask you where your terms of service are, what's your website, what's your refund policy and so on.
The threat of chargebacks disciplines the market to provide reasonable customer service.
These models turn existing models on their heads, so be aware of other pitfalls. Productive paranoia is good, but only practice it after you innovate first.
The problem with any "per query" cost is that it's inherently scary due to it's unpredictability - founders end up worrying about covering costs if they grow faster than they can build revenue. Using a service that charges a fixed, predictable amount is more attractive because you can sign up and just forget about it (to an extent).
There could be another company that is in the business of risk management. It could sell unlimited or quotad amounts of api calls for a fixed price. There is no reason for these two to be the same company.
Total hogwash! It's super scary. Variable costs are something you keep to an absolute minimum in a business. A fixed price API (at least for a certain number of calls) is attractive precisely because it is not taking a chunk off your top line.
You want fixed costs to be low as well, but at least your revenue can grow independently so marginal costs decrease with each additional dollar you earn.
> It could sell unlimited or quotad amounts of api calls for a fixed price.
If you are an API provider, it is a great deal to offer fixed pricing. First, you have a more predictable line of revenue. Second, if you are a small player, you are not as exposed to fluctuations in demand. For the latter case, that means you don't need a lot of cash on hand to even out cash flow issues.
> There is no reason for these two to be the same company.
This is a classic middleman business. As the API provider, you need to make sure this does not happen, unless you are having serious sales problems. You'll just get the squeeze as the middleman eats your margin.
Pretty sure you are thinking of variable pricing. Variable costs are different. From Wikipedia: "Variable costs are costs that change in proportion to the good or service that a business produces." https://en.wikipedia.org/wiki/Variable_cost
1. Build Twitter
2. Gain critical mass[1]
3. Place APIs behind Bitcoin transaction[2]
4. Actually have a revenue model and be (maybe one day) profitable, without ever having to sell your users to advertisers?
5. Let others build whatever they like atop your platform without ever being bothered about it threatening your core business?
What have I missed?
Edit: formatting & footnotes
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[1]: or don't wait, and start that way so it's not a surprise to people later
[2]: perhaps swap(2,3)
I value websites with heavy advertising to be less attractive to me and less valuable. As more users get turned off, the websites will be able to get less money from advertisers.
It can become a snowball effect that kills a service.
https://medium.com/@robleathern/people-in-silicon-valley-don...
What makes this more attractive, friendlier, and/or plausible than building a service whereby your users—that is, developers—place a CC on file (via Stripe or whatever), and then just charge them by total monthly API requests in one bill?
Another benefit is that when you do net-30 usage based billing, you always have to be concerned that the card might be maxed out or invalid by the time the bill gets charged. With 21, you can be sure that the bill will get paid since the Bitcoin is locked up in escrow until the transaction is processed.
If you wanted to set up a traditional CC, you'd need to write the whole billing and tracking system, and so on. Managing all this is cost-prohibitive for smaller solutions.
Oh, and with CCs there are chargebacks, so you can never be sure that the money will actually arrive on your account. This virtually rules out any kinds of services where it costs you real money to run. E.g. if you want to create mechanical-turk API, good luck. Someone will pay with a stolen CC, ramp up $10k in bills, and then do a chargeback.
That said, your point about chargebacks is certainly a good one.
http://circle.com or http://coinbase.com for instance.
Also, "The easiest but most limited way to get some bitcoin with 21 is to run 21 faucet, which gives you a small amount of bitcoin to play with."
"The easiest but most limited way to get some bitcoin with 21 is to run 21 faucet, which gives you a small amount of bitcoin to play with."
https://21.co/learn/intro-to-21/#21-faucet-get-bitcoin-from-...
Also, http://www.reddit.com/r/btc is a nice bitcoin community.