David Karp signed off on his official Yahoo!-tumblr buyout letter with “Fuck yeah, David”. Excellent.
Why do corporations feel the need to buy out every fucking thing. Are they not happy enough with 80 million dollars a year…they just want more and more and more.
Because people are willing to sell.
There are only a few revenue streams and there are even fewer exit strategies for start-ups. Building a product that’s targeted at an established company with the hopes that they will take notice and offer you a buy out is an entrepreneur’s dream.
David Karp, who’s already wroth $200+ million, is going to triple that with the stroke of a pen on Monday. He can retire at the age of 26, if he wanted to (probably doesn’t want to.)
Seems like a great thing that giant corporations are willing to buy out start-ups.
Bitcoin Investment and Profitability.
Bitcoin has been building up quite a head of steam lately and I’ve decided to pay attention. I’ve been doing a lot of reading and the idea seems sound, to a degree. I haven’t looked too much into the programming and I probably won’t since I don’t speak that specific dialect of nerd. But one thing I have looked into is the profitability or value of converting or at least investing in some Bitcoins.
Last night I was doing some crude math with bitcoin values just trying to see where bitcoin is and where it can end up. . It’s probably safer to assume that bitcoin, if successful, will only be one of a number of major currencies in use (I can best imagine a scenario or 3 or 4 different currencies at play). It’s also highly likely that bitcoin will fail. There are some programming or coding weaknesses, especially in privacy/anonymity, and other issues regarding government intervention and regulation, outlawing and so on. For simplicity’s sake, I’ve assumed that bitcoin will eventually replace the entire US currency system but not the entire world’s system. I’m sure if I my intrigue of bitcoin grows a little more, I’ll probably build a few models, factoring in growth, size and risk factors but for now just plain crude math.
Here’s some simple numbers:
- There will only ever be 21 million bitcoins created
- Each bitcoin is currently valued at around $75 a coin (3/25/2013)
- In 2009 there was about $8 trillion US dollars in existence.
- Since 2009, the Fed has significantly increased the world’s US Dollar supply, but I don’t know the exact number. Let’s leave this figure at $8 trillion for now.
I won’t try to calculate bitcoin’s value based on the world’s total money value because that would first of all be beyond optimistic, even more so than this post is already and secondly bitcoin is supposed to bring about a new revolution in money where people have competing, free market currencies, so it would be pointless to assume bitcoin will hold a monopoly on the world’s currency. It was never supposed to do such a thing.
So, what happens if bitcoin replaces the US dollar completely? Well, it would have to carry the weight of the value of those dollars, or come close to doing so. But for the sake of simplicity, let’s just say that it would have to replace the dollar completely.
This means that 21 million coins would have to hold a value of 8 trillion dollars.
That’s an absurd amount. How absurd?
Well, each bitcoin is currently worth about $75. There are 10 million or so coins currently in circulation. Let’s assume that the total value of bitcoins stays static until 21 million coins are released. Each coin would be worth about $36.
That’s about 0.01% of what a bitcoin would have to be worth for it to replace the US Dollar. If you’re not good at math, that means that each of the 21 million bitcoins would have to be valued at $358,000 each. That’s an increase of over 4,700%.
Just to bring some gravity to the situation, this is all calculated on extremely gracious assumptions. There are still very real risks in investing in bitcoin.
The price needs to stabilize for the currency to become something more than just an investment. If the price keeps climbing people will only invest and hoard bitcoin. Very few will be willing to pay with or trade bitcoins out of fear that they might lose out on the next price jump. Some of this is due to the fact that some “investors” still look at the dollar as their main currency and see bitcoins as investments. Others because bitcoin isn’t accepted as a payment method in the overall marketplace. Unless people start to openly accept bitcoin, there’s no real way to obtain or capitalize on the value of bitcoins short of “cashing out”.
Here’s where competing with governments hurts bitcoin. Governments can still step in and make it illegal to buy, sell or hold bitcoins. This would mean that unless you can use bitcoins to buy things, there’s no way to extract the value and the investment is now useless.
There are other real fears with bitcoin; The whole thing could be a big scheme by early adopters to pump and dump. The code can theoretically be hacked or manipulated at some point. Electronic records are much more potent that standard paper keeping. In the electric world no one is really anonymous, some just do a better job of hiding their tracks.
It’s safe to say that it’s probably worth investing $100, $500 and maybe even a $1,000 in bitcoins, if you can afford it just for the fun of it. It will make for a good story, if nothing else.
I’m personally still holding out but watching with a curious eye and a fist full of money to invest.
You Do Not Own Your Labor
“This line of argument is confused because of an over-reliance on vague metaphor. We have to stop thinking of contract as binding promises or obligations. We have to think of it, as Evers and Rothbard argue, as transfers of title to owned resources. And we have to recognize that these owned resources are only scarce, physical goods—not “labor.” You do not own your labor. You own your body. That gives you the right to perform actions (labor), but you do not own your actions. If I perform an action that you like, and pay me for, you do not own my action. You do not even “receive” my action. You simply prefer that I engage in it, for a variety of reasons.
In other words a labor contract may be viewed as an exchange only economically, but not legally. Economically, the employer gives up title to money, in “exchange” for you performing some action. But legally, it’s not an exchange at all, it’s just a one-way transfer of title: a conditional transfer of future title to future money, conditioned on the occurrence of a certain event happening (namely: that the “employee” does a certain action). That is, if you mow my lawn, then title to this gold coin transfers to you. Again, the transfer of title in this case is both expressly conditional and future-oriented. Title to the coin transfers only if the lawn is mowed, and I still own the coin.
The performance of the action triggers the transfer of money from the employer, but the action is not literally “sold” because the employee did not “own” his labor, and the employer does not own it after it is performed. We have to stop thinking sloppily and overusing metaphors.”
— Stephan Kinsella, A Libertarian Theory of Contract
One caveat I would add is that employers pay you to perform an action and this is a one way transfer but they do so with the expectation that your performance will result in a 3rd party transferring them some sort of payment, and usually greater than the original payment for your action.
If that second transfer isn’t possible or relied on or there is no expectation of a reciprocating action/reaction then most, if not all, employers would not initiate the initial action of transferring payment to you in the first place.
The secondary action can even be a negative. For example if you pay someone to stand guard as security on your property, your expected reciprocation from 3rd parties is that they will NOT bother you or enter your property.
You’re therefore paying for an action and expecting non-action in return.