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Are there specific, unique business models that have been made possible by the invention of Bitcoin? And if so, what are they?

Edit:

I seem to be getting a lot of answers about the areas of industry that people hope and or predict Bitcoin will be great for. That's all well and good, but it's not what I'm asking in this question. What I'm curious to find are specific, unique-to-Bitcoin business models that did not and could not have existed before. David Schwartz suggest there may be none (and he may be right), in which case there shouldn't be any answers here. Please don't upvote answers which don't answer this question!

As a simple clarifying analogy, consider this question asked of the internet. We can answer with things like "Pay per click advertising", MMO gaming, etc. because these things are specific, unique compared to anything that came before, and only possible due to the internet. True, these have become entire industries, but they are industries that didn't exist in any form before the internet. All I'm wondering is if anyone knows of any comparable things for Bitcoin. I don't know of any, and I'm a fairly Bitcoin-aware guy. That's why I asked. Hopefully this clarifies the question.

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Please don't upvote answers which don't answer this question! I'm downvoting your question because of how silly your criteria are. MasterCard didn't "enable any new business models"; it just brought down the costs for business models that already existed -- in many cases bringing them down enough that it went from being a cottage industry to a serious business. It's silly to expect any payment technology to make possible what was previously 100% impossible (rather than merely just-barely-profitable). Also, your title does not match your question ("enabled" != "unique-to-bitcoin"). –  eldentyrell Sep 19 '11 at 19:44
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@eldentyrell you seem to misunderstand the question--perhaps as meaning to measure Bitcoin by the answers received or not received? In actual fact, I can think of new business models enabled by the invention of credit cards, such as selling items over the phone. As a unique, innovative technology, it occurred to me that there might be similar things for Bitcoin: and after a little clarification, we now have some actual examples (Smart Property, an auditable lottery, and mine-per-view) of what I was looking for. I imagine that's why 13 people found this question useful. –  eMansipater Sep 20 '11 at 3:02
    
I am not providing a useful answer I know, but I want to know if the final answer is the best answer or not. Another note: decentralization in Bitcoin is opening new innovation doors for other applications; I am working on my master research in which I am trying to address some issues in specific system challenges which may be solved by adopting a fully decentralized model that meets privacy requirements, to encourage adaptation to the system that was not effectively enabled by some parties due to privacy and security considerations. –  user1203 Mar 23 '12 at 18:44
    
@eMansipater Are you talking about the BitCoin system as a whole or "parts" of the BitCoin system like the invention of the block chain? –  Pacerier Jun 18 '12 at 6:16
    
@ThePiachu The models I discussed are avoiding all third parties for payment systems, instead allowing a direct commerce between two or more entities no matter the goods or physical location or country. This allows businesses the freedom to provide goods or services free of restrictions placed by governments or monopolies or financial institutes, without the loss of portions of income in bank fees, taxes, or costs for transfers of differing currencies. The model I was referring to isn't the particular businesses per se, but rather a significant shift in commerce as a whole that obsoletes entir –  user3011 Feb 22 '13 at 15:27
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6 Answers

up vote 23 down vote accepted

The only thing I can think of is Mike Hearn's idea for Smart Property. This would allow the ownership of physical assets to be digitally exchanged and stored in the block chain. Other than that, I think Bitcoin mainly improves the efficiency of many, mainly digital, business models.

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bitlotto.com uses the blockchain to provide a cheat proof lottery which has never existed before.

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Cheat proof lotteries could have existed before Bitcoin simply by publishing a salted hash of the winning numbers before selling tickets, then revealing the salt after the end of the game so people can check. –  Chris Moore Mar 24 '12 at 18:23
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pre-determined results with a published hash would be vulnerable to the lottery owner letting his best buddy win, forcing any actual winner to cut his share of profit in half. –  Metal Mar 25 '12 at 6:57
    
@Jim well "cheat proof" - you still have to trust bitlotto not to take the money for itself. –  nightcracker Apr 11 '13 at 12:37
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Selling electricity over the Internet. I am operating a quite powerful solar array in a sunny region where the connection to the grid is rather poor and does not allow me to feed back much. By placing some mining rigs there, I'm able to simply "sell" my excess electricity over the DSL line.

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@:Noah Brilliant. –  Pacerier Jun 18 '12 at 6:19
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Any business model that requires micropayments is made a reality by Bitcoin (ie - tipping an artist for a song, buying an indy video game for $1, placing small bets on event prediction markets (betsofbitco.in), etc.

Furthermore, any business model that accepts high risk payments is helped by bitcoin, as chargebacks are impossible.

Various gambling systems can now occur without regard to arbitrary national laws.

Remittances are made vastly easier... send money without fees, forms, or time delay to any person anywhere in the world.

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Hi Erik! These are some general areas where we can predict Bitcoin might have an impact. I'm looking more for specific and unique business models that have been concretely enabled. –  eMansipater Sep 15 '11 at 21:03
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@eMansipater By "enabled", do you mean "has been created due to Bitcoin" or "could be created due to Bitcoin". If you mean the latter, then I believe that the micropayments part of this is a good answer. –  David Sep 15 '11 at 21:18
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@eMansipater: It's too early for any significant business models to be enabled by Bitcoin. For example, the lack of long-term, proven reliability makes it almost impossible to build a business around Bitcoin .... yet. –  David Schwartz Sep 15 '11 at 21:55
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@David and Erik: There are already functional micropayment systems though (like Flattr). I'm not sure bitcoin does much in that specific regard. –  lemonginger Sep 15 '11 at 23:24
    
@David "have been made possible by the invention of Bitcoin." So business models which have not been possible before Bitcoin and (whether they have launched or not) are on track to actually exist because of it. If, as David Schwartz suggests, it's too early, then there shouldn't be any answers on this page. I'm scratching my head a little as to why answers that are general (not specific), not overly unique, and definitely not unique to Bitcoin are getting 6 upvotes. Perhaps people aren't reading carefully? We need to only upvote answers to the actual question asked, not just ones we like! –  eMansipater Sep 16 '11 at 15:12
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Business models which are prone to "chargeback fraud" or in which it is hard for merchants to know if the credit card being used for payment is stolen (if it is, the merchant loses out).

I have a friend who runs a VoIP origination/termination outfit that's pay-as-you-go (i.e. pay per minute) rather than monthly subscription. That industry is absolutely inundated with chargeback/credit-card fraud; apparently one of the first things people do with stolen credit cards is make lots of VoIP calls. The crazy (and often illogical) checks they have to put in place to minimize this are a gigantic inconvenience for their customers and a major expense for the company. I think bitcoin will bring non-bulk-purchase per-minute VoIP rates down considerably.

Paypal was like this in the early days too -- a magnet for fraudsters. The only way they brought it under control was to implement the (obnoxious) "security" measures that are in place now.

Basically any business where you aren't shipping a physical object to a physical street address is at risk of this kind of thing. The steps that merchants need to take to minimize the level of fraud are byzantine, expensive, and cumbersome. Bitcoin does not subject the merchant to these costs. BitcoinTorrentz is another example; if they used credit cards it would be way too easy for somebody to pay for their service and then just issue a chargeback through their credit card company. The sums of money involved are small and it's hard to prove to a bank that the service was actually delivered to the customer, so they'd likely lose every case (or spend more money fighting the case than it's worth).

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Despite the fraud, though, people are still running VOIP companies. So while Bitcoin might improve these businesses, there's no unique business model being created due to it. BitcoinTorrentz is close, but it seems to me that torrent downloading services already existed before Bitcoin as well. –  eMansipater Sep 16 '11 at 15:15
    
@eMansipater, most VOIP companies are monthly subscription. Finding a pay-per-minute VOIP retail (not bulk) provider is not as easy as you think. For a very long time there were exactly zero of them that supported fax-over-IP (many people complained about this). –  eldentyrell Sep 19 '11 at 19:37
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Hmm, I think the new business models enabled by Bitcoins would be the following:

  • Providing paid content on a website in exchange for using the customer's computer to mine while he or she is on the website. Imagine mining during the countdown on sites like Rapidshare used to generate revenue.
  • Providing both hardware and support for certain businesses in exchange for running mining software on the provided machines. Imagine providing a restaurant with a computer that runs their menu system. It is a simple operation that can be done entirely on a CPU. If you provide them a normal computer to run that, you can always install a good mining GPU in there, or an FGPA module. Your software can then run the miner in the background and generate you revenue. They are connected to the internet anyway (credit card processing), and you probably can request them not to turn their computers off (for night maintenance), so you effectively have a 24/7 miner.
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Since the first is actually in development/use you get an upvote--I had forgotten about that. The second seems to be forgetting that the main cost of mining is electricity--or is this one also actually in use? –  eMansipater Sep 19 '11 at 15:33
    
This needs to be upvoted, as it is the only answer that mentions the borrowing of idle processing power remotely as compensation for content. –  Griffin Jul 13 '13 at 1:47
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