btcalarm - daily call

Daily journal of the Bitcoin Alarm team. We discuss development of our flagship service, developments within the broader Bitcoin economy and whatever else just happens to be interesting. Feel free to ask us anything!
Who I Follow

Bruce (host of the Bitcoin Show) and Jed (MtGox Founder)

Checkout our interview 10 minutes in at the Bitcoin Conference!  The Bitcoin community is awesome.  Will be working closely with the bit-pay.com over the next couple of weeks!

Making Lean Our Own

The ultimate goal of lean is to get out in front of your customers early and iterate quickly.  Many of the tools and ideas are built around B2C consumer plays.  We learned in week one that a large part of our value at BTC Alarm would come from integration with key infrastructure in the Bitcoin economy.  Without that infrastructure little value could be relayed to end users.  In fact, the Bitcoin community is very much a show me the goods hacker community that doesn’t want to be “marketed” to.  All of our efforts have been focused on creating value and also further introducing ourselves to the Bitcoin community.

Use the right tool

For the purposes of the competition several assumptions were made in terms of what a business would need to engage their customers.  The suggested tools provided are great for web B2C companies.  For B2B, deals are made on the backend and usually without a lot of fan fair that is publicly visible.  The announcements are made when the parties involved are satisfied and the results of the engagement have a positive affect on business.

So first off, don’t be overly public with business deals if doing so will invite external actors to throw in a monkey wrench.  Lean is about engaging your customers.  If those customers are other businesses, be respectful of their timelines and marketing strategy.  Apple is the largest tech company in the world and they keep most things under wraps.  Loose lips sink ships ;)

What’s the lean takeaway?  If you are a B2B play figure out what the best way is to engage your first handful of customers.  For most that is going to be email and the phone.  You will spend your time gathering feedback and developing relationships.  Being a blowhard on your blog isn’t going to inspire confidence. Especially if you’re in a hyper competitive fledgling market, like Bitcoin.

Plan Going Forward

  • Continue making connections on the back-end with key operators for exchanges, wallets, and mining companies.
  • Continue testing of our infrastructure with dev teams across the community.
  • Launch planned at the first ever Bitcoin Conference and World Expo 2011. Tickets and registration are already paid for.  We have a table and major media such as CNN, NY Times, Fortune, Forbes, and others.  Most importantly, all of our B2B customers will be there; we will be announcing partnerships!

This is a reprint from my post on the forum.

Difficulty increases as time marches on and we are fast approaching the time next year when the amount of bitcoins awarded will be half.  Here’s the rub.  There are a fixed amount of blocks and that number decreases by one approximately every 10 minutes (much faster on Deepbit right now).  Every block gone permanently reduces the maximum amount of revenue you can make in Bitcoin.  Also new miners can pile in at any time to make the work you are doing harder if the network has to adjust in an extreme way.  Unless you have significant hashing power and can earn multiple blocks per days solo mining it makes more sense to participate in a pool and get a cut of every block.  As continuous  time spent increases your payout statistically should be what you would be making solo mining minus fees of 0-3% without difficulty risk.  Difficulty risk meaning that in reality your fastest worker in your private pool  contributing to your overall hash rate is way to slow to realistically find a block before the fastest workers in the network.  Slowest workers being CPU miners at around 20Mh/s and fastest being over 700Mh/s.

Bottom-line: For $20K you could build 20 machines to gross 4,345 BTC worth $60.8K@14BTC .  That’s $40K in profit in year one if prices hold, but of course they can go up or down.  So mining is literally a business that runs itself and with significant hashing power that is maintained you can make it Ramen profitable running a shit load of machines.  You can boost profitability and get geometric gains when the market is volatile, but for the majority of Bitcoin’s life it hasn’t been.  The run up to $30 was something special as well as the volatility afterwards that day traders love.  I think for a while we will just be seeing a lot of sideways trends both bullish and bearish.  

In the end Bitcoin is just money.  Build something of value and sell it if you want to make money.  I think the pool providers are an excellent example.  They are selling longterm mining insurance for a 0-3% fee. In exchange I think Deepbit is easily pulling in over $200K/yr conservatively.  I don’t think mining is worth it you can’t afford a hashrate that expects several blocks a day. Most of the professional employed technical guys can make a lot more money just working.  Building out a 50 machine server farm to net $151K for example is a poor allocation of resources.  With that upfront allocation of resources you could build a business that accepts any form of payment and earn a ton more.  

For the record I’m a miner with about 2Gh/s.  I can’t justify the throwing a ton of cash into miners vs buying a ton of Facebook stock when it IPOs.  Going long on mining at this stage is gambling.  I would be interested in a pool where membership requires a 2Gh/s minimum.  That could be really cool and ultra profitable. Like the ladders for Bticoin miners, LOL!!!  See you all in NYC for the conference!

-btcbaby

Overview

Core to the Lean methodology is the concept of Pirate Metrics (AARRR).  These stand for acquisition, activation, retention, referrals, and revenue.  For week one we decided to focused on acquisition.  More specifically we focused on the acquisition of mind share. Our product is focused on a couple of distinct groups:   end users, service providers, and affiliates.  We strongly believe that we don’t have a product if it’s not useful to other service providers.  Of our service providers they mainly fall into the category of mining pool operators and exchanges.  Using forum.bitcoin.org, we reached out to several existing service providers in private.  We also made a public introduction to the community.  We also shared some additional posts on our blog related to our security efforts.  Here is a breakdown of the numbers:

Findings

  • One obvious assumption that we made was that the Bitcoin Forum was the best place for us to connect with most of our stakeholders.  This was indeed the case and in next week we will double down  on our activity on the forum.
  • Existing service providers have a very solid and mature understanding of what the Bitcoin ecosystem needs to succeed.  Ideas about what the MVP should include were similar once I shared more details.  The general consensus:  Get your MVP out before engaging with the greater community.  I agree with this advice based on the high page views, but low response rate for the launch post.
  • I asked about collecting emails as a next step for the launch page and the overwhelming advice was to avoid such tactics since the Bitcoin community at large is pretty cagey concerning privacy issues.  Only after providing value of some kind can I expect to collect anything.  A significant portion of the community is doing some form of technical work with Bitcoin already.  The proof is in the pudding.
  • With so much development happening around Bitcoin if you want to develop a product the forums are a great resource for discovering the pain points.  If you have to do extra solicitation before getting started you are clueless.  Launch your MVP or stop wasting people’s time.

Steps for Week Two

  • Integrate metrics tools fully into blog.
  • Development had some hangups due to bug fixes in the core framework code we’re using.  We are contributing those fixes back
  • We will continue to speak with other service providers and double down on forum activity to connect more with the community.  
  • Launch is the top priority for this week!

If you are going to start a Bitcoin related business on the web HTTPS is a requirement.  Public key encryption (PKE) is a basic technology that has democratized security for the web.  If you don’t know what I’m talking about, PKE is basically the “https://” you see when you’re visiting a secure site on the web.

HTTP over SSL (Secure Socket Layer) is pretty much the gold standard for security on the web and what’s what most people are use to when it comes to securing their financial transactions.  Our first goal at BTC Alarm was to make sure we got our core infrastructure right.  We’ll go more into that in the future, but for now let’s stay on the topic of secure transactions.

So for our first task we wanted to make sure no matter how you come to find out about btcalarm.com online you are forwarded to a secure connection.  There is one ideal way to reach btcalarm.com: https:/www.btcalarm.com (secure web).  Unfortunately here are the other ways that we need to handle; for each on we have to convert to the proper root:

Give it a try yourself.  And share your comments on what you expect in terms of security for Bitcoin related sites?  We are trying to build a secure service that can be leverage by the entire community.  More details on what we are actually building will be shared soon.

The production environment is up and running and we should be opening up our doors to the public some time next week.  We have some exciting news to announce for the greater Bitcoin community.  You can reach us at http://btcalarm.com