176 lines
10 KiB
Markdown
176 lines
10 KiB
Markdown
# idea
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A draft scratchpad.
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## Problem statement
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Some people want to exchange Bitcoin and fiat currency in physical cash.
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Why?
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Motivations specific to Bitcoin buyers:
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- Are sitting on large amounts of physical cash and want to turn part of it into Bitcoin.
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Motivations specific to Bitcoin sellers:
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- Want to use their Bitcoin to buy stuff, but can't find the proper shops/rails to spend. Must go through fiat first.
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- Want to keep their Bitcoin selling private to avoid capital gains tax, or simply The Man knowing stuff generally.
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Motivations for any of the two:
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- They want to exchange P2P and don't like going through digital fiat systems.
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- They don't have access to the banking system.
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- Appreciate massively the privacy and are willing to go the extra mile to leave no trace.
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But executing this trade is rather hard. Main problems and frictions:
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- Finding reliable and convenient partners. Topics here:
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- Trustworthy: finding someone who you know won't fuck you over, or someone unknown but under a context where you feel confident they won't fuck you over.
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- Meetable: person must be easy to meet, both in terms of physically going places and also overlapping schedules.
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- Matching trade conditions: you must find a partner who will deal the way you want. Ie:
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- Onchain vs Lightning vs other protocols on the Bitcoin side
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- Details on fiat cash (avoiding large denomination bills and avoiding junk coins mostly)
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- Price and premium
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- These trades sometimes tend to be unprofessional and excessively informal, causing pains and sourness. Common issues:
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- Unclear terms around trading steps (Bitcoin first? Cash first? Same time? Onchain confirmation?)
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- Lack of clarity around price (fixed price? market + premium? what is the reference for market?)
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- Meeting and doing the transaction requires meeting physically. This is troublesome both in terms of arranging time and place, and actually going there.
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## Current solutions
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### Cash by mail markets
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Some of the existing P2P markets such as Bisq, Robosats, Peach, etc. offer cash by mail options as a payment option for the fiat side of the trade.
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The amount of liquidity present for such type of trade is anecdotal. Nobody uses it because it's a pain in the ass.
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Furthermore, all of those P2P exchanges have experiences that focus heavily on digital fiat <-> Bitcoin trades. The specific needs for cash driven trades have been neglected, and their rules and trade protocols are digital first, cash after.
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Finally, they don't do a good work at tackling the trust component. They either resort to inadequate multisig bonds (Bisq) or rely on easily gameable reputation systems (Peach).
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### Vexl
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### Informal networks around meetups and communities
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Informal networks are very hard to assess since no one has a good global vision on them.
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Luckily, I've had the chance to witness and perform myself quite a few trades in the Barcelona community. My opinion is that, once there's a sufficient critical mass of a few hundred people gathered around a community, trade does happen regularly and with decent volume. I have no way to confirm this, but I would bet in the past 24 months, member of the Barcelona community might have traded at least 10,000€ per month.
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Informal networks do a great job in the trust side. The time shared in meatspace together, long-term relationships and shared network of frens both creates a high price for being a bad peer (you will be finger pointed and expelled) and provides security and trust to members of the community.
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Where the informal networks don't shine is in reducing the matchmaking friction. The lack of a formal orderbook means performing a trade requires the initiating peer get in touch with many others to try to assess his options until he finds or negotiates a proper trade with some peer. It's cumbersome.
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Furthermore, trust is not leveraged to the max. There might be members of the community that do not know each other, yet are both reliable and have common contacts that would justify a social bond, thus they would be happy to trade. But, if the social graph doesn't promote them connecting, they will never trade.
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## unaseca proposal
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### General description
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- The idea revolves around a seca.
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- A seca is a web app instance.
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- The web app is a private, walled garden.
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- There is no public access: either you have a user, or you see nothing.
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- There is no public sign-up: accounts are only created through invites.
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- The purpose of the seca is to facilitate bitcoin <> cash trading. It focuses on this and supports no other market.
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- The seca has two types of users: admins and traders.
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- Admins run the place and have ultimate power on certain things.
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- Trades are there for trading.
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- Inside the seca, traders have a user and can:
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- Post offers to buy/sell Bitcoin for cash.
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- Find others offers.
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- Provide feedback (both positive and negative) on other traders.
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- Invite more traders (if allowed by admins).
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- Admins can:
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- Ban traders.
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- Create new generic invites.
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- Provide existing traders with more invites.
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- Top up traders with free memberships.
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unaseca is the name of the software project.
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Different secas would be independent instances that do not relate to each other in any way.
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### Q&A
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- Q: This is centralized.
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- A: Yes. It makes the idea simple and executable. No fancy cryptography, not asking the user to be a sovereign shadowy super coder. Login, check the orderbook, send a message, leave a thumbs up.
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- Q: Law enforcement will want to destroy this.
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- A1: Nothing illegal happening besides not declaring income.
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- A2: the seca would need a significant size and notoriousness before it draws poor attention.
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- A3: private nature keeps it laying low for longer, makes it harder for the wrong kind of eyes to find it.
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- A4: could be, fuck 'em. Nothing lasts forever.
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- Q: This feels very close to Velx.
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- Q: This faces a bootstrapping problem.
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- A: Yes, see section below dealing with the topic.
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- Q: Cool, how do we monetize.
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- A: Couple options, see section below dealing with the topic.
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### Monetizing
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I see four paths to monetizing:
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- Charge for membership
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- Rather simple: want to access the seca, pay.
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- There could be multiple levels of membership with different prices and features
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- Providing free trials at the start probably makes sense to entice users and to let them come in and see what the whole thing is about before deciding if it's worth the money we ask for.
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- Cry for grants
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- Sponsor and promote unaseca as FOSS project that enables communities to organize their trading.
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- Beg for money
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- Provide a SaaS offering to run secas
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- We offer seca-as-a-service to other meetups and communities.
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- Complementary services
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- The seca is a good hub for hardcore bitcoiners. It could be that the seca itself remains free, but interesting services can be built around the community.
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### Dealing with the market bootstrapping
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The biggest challenge for a seca to actually work is bootstraping it. Good old chicken and egg: no users, so people don't want to join, and viceversa.
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How to ensure a critical mass at the start? For Barcelona, I would propose the following:
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- Prepare the secabarcelona instance.
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- Reach all frens and contacts that could be interesting. Explain our plans, get them on board to join the seca and use it. Give them invites for their own frens.
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- Make a select group of frens VIPs and let them join and post offers before launch day.
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- Run a meetup to present the seca in Barcelona. Have the instance ready by then. Align everything to make that day the date of launch. Provide invites to all meetup participants.
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- After launch, post a lot of offers ourselves to give the market some depth.
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- Shitpost and spam in Barcelona channels and communities, reminders to frens.
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- cross fringers and pray the gods of social propagation
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Outside of Barcelona? Hard stuff. Best option is to have straight contact with leadership of a community and earn their trust so that the same kind of playbook can be run with their support and blessing.
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### Why is a seca better than current alternatives
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- Trust:
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- A seca leverages an existing social network where trust is already present.
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- The invite only system prevents spammers to enter easily.
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- Friction reduction:
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- Since the seca is only intended to support cash <-> bitcoin trading, design choices would always prioritise the needs of this kind of trader.
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- Locations by offer, including time availability features, cash preferences, etc. are features that seca can offer that other solutions don't.
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- Forcing users to specify their terms provides other peers clarity (no need to have back and forth to find out what the other peer is willing to do) + makes offers searchable, enabling interested traders to find the most suitable offer in the crowd
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### Rough features&business roadmap
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- Alpha
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- Basic features
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- Only local testing
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- Beta
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- We open it up to 5 frens to have someone else fiddling
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- Apply bugfixes, low hanging fruit feedback from frens
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- secabarcelona launch
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- We prepare a serious, production grade instance
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- We go public big time in Barcelona with a meetup dedicated to present secabarcelona
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- We spam the shit out of everyone we know in Barcelona that is a good candidate with invites and call to actions
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- Milestones to complete before moving on:
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- 300 users have signed up
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- Active users per month is consistently above 30 users after payment subscription kicks in
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- Implement admin features from the learnings of running this seca
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If we get this far, we might be on to something. Options after:
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- launch other secas in spain and run them ourselves
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- offer seca running as a SaaS and promote it hard across meetups scene worldwide
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- try to launch some seca spin-off to tackle cash by mail markets
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- chase grants: make repo public, make brand for FOSS project, make some noise so it catches attention and awareness grows
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### Risks
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- Seca size and sufficient liquidity
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- Users just don't like it / don't feel it's worth what we ask for it
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- Bad rep due to scammers sneaking in
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- 0 grants obtained
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