Joining a startup is like signing up to be a contestant in the Movie “The Running Man”
You run around a wasteland filled with obstacles and hunters out to get you. It’s designed so you fail and 99.9% of the time you do fail. Fin Tech, particularly Bitcoin is even more hazardous as the hunters really are out to get you, ask Charlie Shrem. You only shot is agility and to keep moving.We just got a doozy of an obstacle thrown our way and it is something we all must deal with.
The Bit License is a long list of rules and prerequisites. They all add up expenses in time and money that few startups can handle yet among them all o Section 200.10 A stands out as a deal breaker.
Section 200.10 Material change to business
(a) Each Licensee must obtain the superintendent’s prior written approval for any plan or proposal to introduce or offer a new product, service, or activity, or to make a material change to an existing product, service, or activity, involving New York or New York Residents.
Is there any startup that could function like this?
The moment a startup agrees to this it ceases being a startup and is simply a dumb node in a network of giants. Innovation and the possibility of exponential value creation basically become impossible. Providing reports and strict KYC we can live with but anything that would utterly eradicate our one advantage and crush our best chance at realizing the vast society transforming potential of bitcoin we cannot abide by.
Section 200.10 is one ugly mofo and we simply cannot “grow into it” or work with it and contribute positively to the space. It would effectively snip a startups hamstrings, cut their achilles tendons and render them a gimped dwarf among giants.
The Value of Startup Agility
Startups get a lot of glory these days but the truth is the exact opposite of the romantic vision most have.
Running a startup is often a series of nightmares, depression and out right horror day after day and that is if you’re lucky. The only advantage a startup has is agility and in a land of corporate giants and entrenched competition a startup must be able to pivot on a dime and start from scratch at the drop of a hat to have any chance of success.
A startup must be even bolder if it is to create the kind of value that defines a space and uplifts an eco system. Bitcoin is still so new that the usual agility isn’t enough. Even the standard issue crazy as loons founders must be a few orders of magnitude crazier to even think of being a part of a system that would replace the worlds financial network. The Bit License has made this all but impossible in New York State.
The Bit License has effectively outlawed the startup spirit and that is a deal breaker. We don’t declare “deal breakers” easily. My first startup was the Napster of Ringtones, back in 2002. As scared as people are of the law now people were even more scared of being sued into oblivion by the record labels after Napster went down. I still remember sitting in a meeting with the top music publishers in the country and having one of the demand to be paid every time a ringtone went off or the deal was off… That is impossible to this day but I still found a way to make it work. Yet with roughly 8% of Paxful’s user base being from New York State we still cannot accept the Bit License…
Escape from New York
Leaving New York State was not been an easy decision.
I’m a native New Yorker. A bagel in the morning with some garlic lox and coffee, while checking my email and watching the sun rise over Roosevelt island is my idea of heaven. Leaving my family and friends isn’t cool either. 911 and Gulliani killing the nightlife wasn’t enough to get me to go but New York isn’t the only town in the world and some things are even more important than bagels, coffee and beloved routines.
It isn’t easy to get a New Yorker to leave his town but in the end we had to ask ourselves, are we building this to be upstart money changers or are we trying to actually change the world? We’re here to change the world folks, not in a Fight Club kinda way… We’re not out to “take anyone down” or “stick it to the man”. We’re out to make enough little changes to help people do something so much better that the world just runs a lot smoother. That’s how real change happens. Real change does NOT happen when we sit around and feel sorry for ourselves and look for boogey men.
Lawsky is not the bad guy.
A lot of people like to demonize Ben Lawsky for creating the Bit License and then standing to profit from consulting startups on how to best use it. Let’s not be so quick to judge Ben because it could have been a lot worse and this is America after all. He has to be careful not to step on the toes of some very powerful people and that can’t be easy. I’d have a drink with the guy and I hear he’s a pretty chill and a straight shooter, so lets lay off Lawsky.
The real issue here isn’t Lawsky or the even the Bit License. We as the community and as a people need to come face to face with the question that has defined the modern era. It is a question no one has been asking and no one has even seen the value in asking it.
What is money?
Remember when going to your banker was a customer service experience? They’d sit you down, knew you by name and even served lemonade and crackers. Crackers for goodness sake! They did that in New York at smaller banks up to the eighties. The lemonade and crackers are long gone, banks aren’t about customer service anymore, they’re kinda like churches in their own right, ones without any real competition, then bitcoin came around.
Now we realize that those bankers aren’t really doing much work anymore. The ACH system is fifty years old and ancient. Credit Debit is over forty years old and not suited for the internet. That’s not even mentioning the fact that banks can basically magically loan out nine dollars for every ten you deposit with them and if they lose it, and they always do, the government bails them out with our tax dollars.
Money is work and work sets a man free. Bitcoin showed us that a bunch of average geeks could build the worlds most powerful super computing and use it to power a three billion dollar economy. The bitcoin network is faster than the next 500 super computers combined. The bitcoin network is 142024 times faster than the worlds fastest super computer Tianhe. That kind of computing power and the electricity behind it represents real WORK and that work is setting the entire world free.
The question is just how do we set the world free? Bitcoin is still a three billion dollar economy. Visa does sixty nine times as much volume as that every single day. Bitcoin is still basically a hobbyist tool. Crypto geeks use it to stretch their dollar and earn profit helping other people get bitcoin for whatever they may need it for, which is quite limited now. The banks aren’t scared because they know that bitcoin brokerages and exchanges must work with them. So what is it going to take?
Enter the BackPage Effect
A month ago our young stealth mode startup was slammed with a flood of traffic and new buyers.
We spent the next five days without sleep and answered every call we got. We walked people through on the phone to buying their first bitcoin in a genuine peer to peer transaction and sending it from their wallet. Sounds easy enough but when you consider that most of them also had to be taught how to copy and paste along with the most very basic internet skills such as filling out registration forms, the job became a Herculean test of patience. Our intern had to leave after this week as it was to much for her to handle.
I took those calls myself and for the first time we saw bitcoin through the eyes of a complete beginners. The pain, frustration and even fear they were feeling had emotionally drained me to the point of exhaustion. The lack of sleep was one thing but hearing these poor women desperately begging us to take their credit card numbers so they could put up an ad to feed their families changed everything. We has to grow up real quick and admit to ourselves that Bitcoin had a long way to go before even thinking about challenging Visa and MasterCard.
The information we got all went into our product. We are building the peer to peer money marketplace for the masses and it is powered by bitcoin. The flood of new buyers and their intense dedication to mastering this process has been the single greatest gift Bitcoin has had in a very long time. They showed us every hole in the system and exactly how we can fill it. Fill it we must because peer to peer marketplaces is how the mainstream will get their bitcoin. The brokerages cannot give people bitcoins the way they need them, instantly, privately and in small amounts, peer to peer markets can.
It’s coming together
We’ve got a community of some of the smartest and most passionate people in the world. We control the worlds most powerful super computing network that could one day run the internet itself. We’ve got visionary high elf mages like Vitalik Buterin building the decentralized App Store of the internet in Ethereal, we have grand masters like Marc Andreessen going to bat for us and putting in millions of dollars. Now we have the average every day Americans joining the bitcoin family and showing us exactly what we need to do to invite them to the party.
We’ve got this one. we’ve already won. We just need to keep both eyes open.
New York state is the financial capital of the United States and the entire world. In time the Bit License will spread to the entire United States, this we know. Our mission remains the same and we are taking this opportunity as a few extra coals on our fire. We will race ahead as fast as we possibly can to bring bitcoin to the mainstream.
While we cannot abide by the letter of the Bit License we do share a similar spirit in regards to keeping the white hats in the lead. We hope that one day soon we will have innovated enough such that their is no friction between the letter of the Bit License and the spirit of bitcoin and every startup that seeks to bring value greater than the sum of it’s parts.
We haven’t even officially publicly launched our service but we knew we had to make this decision. We have complete confidence in the FACT that bitcoin will win in the end and in a far shorter time than any of us can imagine.