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Bitcoin Businesses The Almighty Buck News Technology

Bitcoin Mining Startup Gets $500k In Venture Capital 381

Posted by Unknown Lamer
from the coinlab-partners-with-slashdot-to-improve-your-d2-experience dept.
Sabbetus writes "Seattle based Bitcoin startup CoinLab secured a $500,000 investment from various investors such as Silicon Valley firm Draper Associates and angel investor Geoff Entress. CoinLab is an emerging umbrella group for cultivating and launching innovative Bitcoin projects. CEO Vessenes said 'if there is a currency that can trade around the world, it's semi-anonymous, it's instant, it's not controlled by government or bank, what's the total value of that currency? The answer to that is, if it works, it's gotta be in the billions. It just has to be for all the reasons you might want to send money around the world.' This type of talk is common from Bitcoin enthusiasts but apparently seasoned investors are starting to agree. Forbes explains the details of their business plan but in short it has to do with tapping the GPU mining potential of gamers, more specifically gamers of free-to-play games. This would add a new revenue stream for online game companies that are trying to provide free games profitably."
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Bitcoin Mining Startup Gets $500k In Venture Capital

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  • by Trepidity (597) <delirium-slashdotNO@SPAMhackish.org> on Wednesday April 25, 2012 @11:24AM (#39796175)

    In the 21st century, humans have invented fake mines to work in, and fake mining companies that mine in them.

    Not fake mines likes the ones in Minecraft that might actually be interesting, of course. And not a side-effect of something else, like WoW's "gold farmers". Fake mines that exist solely and purposely to be tediously mined by fake mining companies! Now that's creating value. Value that's "gotta be in the billions".

  • by Bill, Shooter of Bul (629286) on Wednesday April 25, 2012 @11:28AM (#39796231) Journal

    Yeah, I'm sort of amazed that its on forbes. You'd expect them to do a little research and at least address the built in deflation in a story.

  • by OzPeter (195038) on Wednesday April 25, 2012 @11:28AM (#39796239)

    'if there is a currency that can trade around the world, it's semi-anonymous, it's instant, it's not controlled by government or bank, what's the total value of that currency? The answer to that is, if it works, it's gotta be in the billions. It just has to be for all the reasons you might want to send money around the world.'

    It's also going to be top of the list of every law enforcement agency across the globe. Governments tend not to like their citizens taking part in transactions that don't have a paper trail.

  • by h4rr4r (612664) on Wednesday April 25, 2012 @11:30AM (#39796265)

    Why does this amaze you?
    What are the odds either the writer was paid, Forbes was paid or one of the two have people involved in both?

  • Trojan (Score:5, Insightful)

    by girlintraining (1395911) on Wednesday April 25, 2012 @11:30AM (#39796273)

    Forbes explains the details of their business plan but in short it has to do with tapping the GPU mining potential of gamers,

    So 'in short', they're going to trojan a video game and turn a bunch of PCs into a botnet to generate bitcoins. But because it's a business doing this, and not some teenager in his mom's basement, they're going to make billions instead of go to jail? That sound about right?

    If any other kind of software you ran was doing something in the background other than what you wanted to do, it would be called malware.

  • Bitcoin haters (Score:5, Insightful)

    by Anonymous Coward on Wednesday April 25, 2012 @11:32AM (#39796299)

    never seem to understand the advantages of it is a form of exchange and yet they will cry and moan every time the government takes another one of their freedoms, another step into their privacy, another step towards authoritarianism.

    Bitcoin is an incredible idea: decentralized exchange, totally anonymous, no central body to print it out of existence, no government to track who your exchanging with and for what, a limited stable inflation on the money supply with no one to dictate that "the crisis would end if we just gave the banks more money".

    Would I want to store all of my wealth in bitcoin? No. Do I like the idea of being able to convert my money into an exchange medium that is untraceable? Of course.

    How many stories have we read of governments steering us towards a cashless society where all forms of exchange are withing their monitoring (not to moention all forms of communication.)

    To me bitcoin is the currency equivalent of TOR and shouldn't be hated on.

  • by TheRaven64 (641858) on Wednesday April 25, 2012 @11:33AM (#39796305) Journal
    It's probably quite interesting to watch from the inside too, if you're one of the people who got in early on the pyramid scam.
  • by SaroDarksbane (1784314) on Wednesday April 25, 2012 @11:35AM (#39796333)

    Now that's creating value.

    I realize this is snark, but having a currency that is semi-anonymous, convenient, and resistant to meddling by central banks would be quite valuable to some.

    The value you place on such a thing is probably not very high, but value is entirely subjective, and can only be shown on an individual basis by what that person is willing to trade to acquire the object (or information) in question.

  • Re:It has to be? (Score:4, Insightful)

    by Archangel Michael (180766) on Wednesday April 25, 2012 @11:35AM (#39796335) Journal

    You don't understand the nature of fiat currency. Money (most currencies anyways) has a value because people want it to have a value. Bitcoin is no different.

  • Re:Trojan (Score:5, Insightful)

    by h4rr4r (612664) on Wednesday April 25, 2012 @11:36AM (#39796353)

    They will disclose it in the EULA, that no one reads.

  • by Dan East (318230) on Wednesday April 25, 2012 @11:38AM (#39796375) Homepage Journal

    The next time you're playing a free solitaire game online, and your CPU fan is going wide open, your gpu fan is wide open, the room feels hot and stuffy all of a sudden, and the lights dim, just seek solace in the fact that you're making someone else fake money.

  • Re:Bitcoin why? (Score:5, Insightful)

    by Anonymous Coward on Wednesday April 25, 2012 @11:56AM (#39796673)

    Creating numbers and telling people they have value is not being a producer of value.

    The work that went into the crypto behind bitcoin was useful skilled work, that created value for society. Running a bitcoin mining operation is not.

  • Re:Bitcoin why? (Score:3, Insightful)

    by s73v3r (963317) <s73v3r@gma[ ]com ['il.' in gap]> on Wednesday April 25, 2012 @12:07PM (#39796841)

    This must be the source of most of the Bitcoin hate.

    Not necessarily, but it is the source of why most people realize it is a scam.

    To people who do not have any appreciable skills to sell on the open market would naturally see only this because the concept of being a producer of value that other people want to trade for just doesn't exist in their mental vocabulary

    What? Being the creator of a scam now is something to be valued?

    If the creators of Bitcoin truly wanted to create some kind of new currency, they should have set it up in such a way that they didn't get the lions share of the bitcoins right away, signalling to everyone else that it's a fucking scam.

  • Re:Bitcoin why? (Score:5, Insightful)

    by pla (258480) on Wednesday April 25, 2012 @12:33PM (#39797203) Journal
    What? Being the creator of a scam now is something to be valued?

    C'mon, seriously, how hard did you need to try to miss that point?

    The GP pointed out nothing more controversial than saying that the mint doesn't give your money its value, the fact that you can use it to buy bread and gasoline, and pay your rent and taxes, does. If you want to disagree with that, I can't stop you, but it just sounds deliberately obtuse at this point.

    You guys need to go back to calling it a Ponzi scheme, at least then we can consider you legitimately ignorant about what that means.


    If the creators of Bitcoin truly wanted to create some kind of new currency, they should have set it up in such a way that they didn't get the lions share of the bitcoins right away, signalling to everyone else that it's a fucking scam.

    You mean, exactly like they did?

    The Bitcoin block chain has exactly one "pre-mined" block, which remains unredeemed; and even if Satoshi himself someday shows up to claim it, at this point a mere 50BTC would have no effect whatsoever on the stability of the Bitcoin economy (currently with 8.8 million BTC in circulation).

    You personally had just as much chance (adjusted for hardware) at mining every... single... block generated since that origin block, as all those who did so instead of whining about fairness; and your ongoing failure to do anything about it except sow FUD about the entire concept doesn't inspire sympathy.
  • by repapetilto (1219852) on Wednesday April 25, 2012 @12:36PM (#39797249)

    It is becoming more and more obvious who is on which side of the bitcoin "debate". This thread honestly isn't even worth reading, everyone who knows what they are talking about is spending all their time explaining the most basic info to idiots. Admittedly there are a few lazy, but intelligent sounding posters mixed in, but this is mostly just troll FUD. 95% of normal people either think it is interesting or just don't care.

  • by mathimus1863 (1120437) on Wednesday April 25, 2012 @12:49PM (#39797419)
    Yes, there's a lot of people who are in Bitcoin because of become-a-billionaire-overnight fantasies. Yes, they are silly. But you remove all that and you're left with a really fascinating system that should appeal to everyone on Slashdot. It's a mix of cryptography, freedom of speech, computing, networking, finance, economics, and even politics -- most of us here dig that stuff.

    Get over the hype and take Bitcoin for what it really is: a fascinating experiment that has, so far, withstood the amazing barrage of publicity, hacking attempted, legal uncertainties, and remains valuable for reasons completely contrary to everyone that says it's worthless. It may become worthless one day, but consider the possibility that Bitcoin is disproving all your wildly oversimplified assumptions about what makes something valuable. It is completely different, and there's plenty of reasons to believe that it could succeed as much as it could fail.

    I like to think of Bitcoin like gold. Nothing is backing gold. It's a material for which there is a limited supply in the world, and which is universally regarded as value because of various properties it has: perhaps beauty, fungibility, density, etc. Bitcoin is really the same, with a limited global supply, except that it has different properties, mainly ease of transfer over the internet, fungibility, storage efficiency, near-anonymity and built-in escrow.

    I don't think it's any more ludicrous for Bitcoin to have value than it is for gold to have value. And in the end, when I want to sell WoW weapons, buy webserver space, or play a few games of poker online, why would I use gold, cash or paypal, which all require me to remember log-in creditials, give away information and/or a bunch of third party fees. There's plenty of value in being able to pay people across the world, instantaneously, without sacrificing your privacy, and without paying any fees. Why is that not valuable? Seriously... quit focusing on the get-rich-quick kids, and start appreciating Bitcoin for it's unique properties and philosophy.
  • by Anonymous Coward on Wednesday April 25, 2012 @01:12PM (#39797773)

    Well, bitcoins is not actually a real scam... it might have been in the beginning... But as soon as people are paying to get bitcoins and you can sell your bitcoins you can start making money....

    Just as an example... Store X sells a product for Y bitcoins and can then sell those bitcoins for Z amount of your local currency it becomes a quite valuable way to do transactions...
    No cost for making a payment.. compare that to Mastercars/Visa etc where they take a 2% cost.. maybe even a fixed cost per transaction... This is actually a very nice way for micro-transactions...

    So i would say the idea, and actual implementation here is quite good, and you also have to remember that the mining will just work for a limited timespan and then no more mining is possible since all the currency has been generated..

  • by nedlohs (1335013) on Wednesday April 25, 2012 @01:24PM (#39797955)

    Most people care about prices not the money supply.

    Most people expect population and economic production to increase over time.

    Thus most people see a stagnant money supply as price deflation.

  • by tqk (413719) <s.keeling@mail.com> on Wednesday April 25, 2012 @02:16PM (#39798631)

    So instead of accepting real money minus a transaction cost, I could take fake money for free.

    Are you calling those slips of paper with pretty printing on them "real money?" I think you've been hoodwinked.

  • by Anonymous Coward on Wednesday April 25, 2012 @02:26PM (#39798759)

    Do you really think investors like Tim Draper are that stupid? As someone who has raised multiple rounds from top tier angels in the Pacific Northwest, let me assure you that these guys are not idiots. They're very experienced, and only invest in a tiny fraction of the opportunities they see each month.

    Bitcoin has gone through a process known as "the hype cycle," which probably peaked last June when the Bitcoin price hit $30 (http://en.wikipedia.org/wiki/Hype_cycle) Social networks went through this too -- in 2003. You could argue the Internet went through a hype cycle in the late 1990s, which produced lots of crazy investment profits for a very short time. But the real money gets made later, after the hype cycle is finished.

    If you look at the Bitcoin computation graph (http://blockchain.info/charts/hash-rate), this shows clearly the Hype Cycle, followed by a trough, and then a resumption of slower growth. Bitcoin mining is tightly controlled by the profitability of mining and the interest that miners have in obtaining the currency. Therefore, I think it provides the most direct measure of the global interest in Bitcoin as an investment or currency.

    I think we're in between the hype cycle and are entering the early stages of the "slope of enlightenment". This investment in CoinLab by Draper and others indicates that - the hype cycle being behind us - it's now time to take Bitcoin seriously as a venture investment.

    Does venture mean it's for sure? No. Of course not. But if you don't invest before something is really successful, you'll never get the kind of return that investors in the Internet, for example, enjoyed (at least, those who hung on through the depression after 2000).

  • Determination. (Score:4, Insightful)

    by zAPPzAPP (1207370) on Wednesday April 25, 2012 @03:52PM (#39799851)

    Spending 500k$ just to troll Slashdot hard.

  • Re:Bitcoin why? (Score:4, Insightful)

    by Nursie (632944) on Wednesday April 25, 2012 @09:14PM (#39802555)

    Awesome, so this guy has grabbed about 7% of all the currency there ever will be, and is sitting on it.

    This gives me all sorts of confidence and reason to love bitcoins, oh yes.

An inclined plane is a slope up. -- Willard Espy, "An Almanac of Words at Play"

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