Open Building Institute: building under construction

A man, a plan, a red flag: examining the claims of the Open Building Institute

This post is an edited collection of my responses to James Corbett’s interview of Marcin Jakubowski and Catarina Mota of the Open Building Institute.

“You wouldn’t download a house, would you?”  So goes the tongue-in-cheek rhetorical question from James Corbett in his recent interview of Marcin Jakubowski and Catarina Mota of the Open Building Institute (OBI).  The couple’s organization aims to provide free construction plans for modular homes, available on their website.  They claim substantially reduced costs versus traditional construction methods.  Marcin previously headed Open Source Ecology (OSE), a compendium of open-source plans for various construction machines, which has now been merged with the OBI project.

Too good to be true

I like the idea of do-it-yourself and open-source, but we have to be careful about people seeking to capitalize on this trend just by uttering the right buzzwords. Some big red flags stuck out to me about this couple’s presentation:

Open Building Institute: construction workers

Open Building Institute: the secret is free labor

1. Free labor – a large part of construction cost is labor, yet they are getting it for free or even charging people for “immersion” workshops – in other words, trainees build their houses. This doesn’t sound sustainable or scalable at all. It also strikes me as a bit like a cult, where a bunch of people put in free work to build up assets for the dear leader. Marcin owns Factor e Farm, which is the site for these model structures.  At the very least, it is a misrepresentation to the consumers of the real costs of this process, since presumably the people paying for this “immersion” training expect to eventually be paid for their labor.

2. Asking for funding for a large, ambitious, complex project with ill-defined scope. To fund the OBI goals of an economically transformative construction methodology, Marcin and Catarina held a Kickstarter, raising over $115,000.  Unfortunately, this overly-broad goal is a recipe for misaligned expectations and failure to deliver. Every project faces risks, yet their approach multiplies the risk factors of a typical project by orders of magnitude. Better to start small and grow incrementally, before attempting a world-changing goal all at once.

Open Source Ecology: brick press

Open Source Ecology brick press: $5K to build, worth $50K. Only 10 built worldwide.

3. Unexplained failure of previous project. Failure is part of business and is a necessary component of learning about market demand, that ultimately can lead to success. However, they do not give an adequate explanation for why their previous project, the brick-making machine, which was the OSE flagship machine, did not get any adoption. The ostensible reason is that they need to build houses in order to make the machines useful. But, they also mentioned that the market price for these devices is $50k and they are producing them for $5k. If this is true, they should have been able to sell them like hotcakes. It doesn’t add up and is not a good sign for pursuing an even bigger project when the smaller project was not completed to expectations.

I’m very wary about these people, their business model doesn’t make sense to me, there are too many unanswered questions, and not enough critical questions posed to them in this interview at least. This modular home / eco home / tiny home fad is a magnet for hucksters spewing the right words.

A history of deception

Open Source Ecology: workers with machine

Snapshot of life on Factor e Farm

I have researched Marcin Jakubowski and his organization seems to be a scam under cover of a utopian cult.  So far, OSE / OBI seems plagued by failure to deliver, low quality, high turnover of staff, dictatorial management style, and outright fraud. I’ve included the links below, in which these issues are discussed by former volunteers and P2P community members.

“Is there a crisis in Open Source Ecology?”

“Problems with Open Source Ecology: A Perspective” (Google Group discussion thread)

“Open Source Predator: Marcin Jakubowski” (Facebook Group discussion thread)

“Tripping Over Our Bootstraps: Open Source Ecology and the Promise of Liberational Technology”

Marcin Jakubowski trademark registration for “Open Source Ecology”, in his own name – very odd for a supposed “open source” organization.

The ideas of P2P, open-source, DIY, etc. are all good and valuable ideas that should be explored. However, scam artists can also use those buzzwords to take advantage of people.  I am very skeptical of these people and will do further research on their project – I feel like I have only scratched the surface.

Bitcoin broken

Bitcoin is a ponzi scheme

All “cryptocurrencies” based on artificial limits are inherently pump-and-dump schemes.  If they were true free market currencies, the money supply would grow with demand. Instead, they are artificially restricted.  Why?  To create the illusion of limited supply and therefore expectation of future scarcity and speculative profit.

Bitcoin price chart 2017They are fiat currencies, based on nothing but this speculation.  The Bitcoin price chart shows this.  Bitcoin fanboys point to the skyrocketing price as a badge of honor, but all it shows is that it is a speculation, not a store of value.  It has no price stability, and cannot be considered a “currency”.

In the short term, the price will keep going up for various reasons.  Mining is getting more expensive and less profitable, driving out miners and restricting supply.  Use as a pseudo-anonymous money transfer scheme is increasing on the dark web.  A method of circumventing Chinese capital controls.  An investment vehicle for Chinese with not enough local investment options.

But eventually, people will realize NOTHING holds up the value of Bitcoin.  No petrodollar, no USG taxation.  And it will collapse, as will the rest of the currencies that will inevitably fork off this one.  This is even ignoring the major security and regulatory issues that plague Bitcoin.

Currency is a form of social credit.  It’s an implied debt, that someone will pay off with goods & services in the future.  This should be the basis of any cryptocurrency, not arbitrary and artificial limits on supply, and fancy math for its issuance.

growing stages

WANTED: Liberty entrepreneurs

Money is a dirty word in the liberty movement.  Ironic, for a pro-free-market and free trade ideology.  But when theory becomes reality, many recoil at the idea of bloggers doing sales or advertising.  Why?

Spending time to make content or technology means taking time away from other activities, whether business or leisure.  That time has to be compensated.  Yet some act like entitled socialists, expecting this work to be provided for free!

To be fair, some monetization strategies are obnoxious or spammy.  But all that means is we need better monetization options.  Better technologies.  Better feedback and suggestion from audiences of what works and what doesn’t.

For the liberty movement to survive, much less thrive and change the world, it must be economically self-sufficient.  If you can’t feed yourself, you can’t change the world.  If our activities in pursuit of liberty are not profitable, but only financial drains, we will never grow and advance.

We need more business models around advancing liberty.  We need more content, more media platforms, more technologies.  With the fake news media collapsing before our eyes, there has never been a better opportunity than now.  There is so much pent up demand and very little supply.

We need more liberty entrepreneurs.

Not just from an economic perspective, but from a psychological one as well.  It can get depressing focusing only on what the poweful are doing to us.  Who wants to be on a constantly losing team, with a victim mentality?  It’s time we recognize our own power, take responsibility, and become agents of change.

I am working on several media technology projects with a group of liberty-minded developers and creators.  Want to join the effort?  Email me at apollo at apolloslater dot com and let’s get to work!

South Park - La Resistance

“Fake news” hysteria is a huge opportunity

It is an auspicious time for independent media.  The Fake Media’s “fake news” hysteria has capped off this year’s apotheosis of undisguised propaganda.  Now we learn that the US government will directly fund domestic pro-government propaganda in the press and on social media, with $160 million.  Let me explain why this is amazing news for independent media.

The media world has supply and demand, just like any other market.  There is a demand out there for real information and it is up to the media to satisfy that demand.  The more the media avoid this, and publish lies and hoaxes instead, the more business opportunity there is to fill the void.  This is how Fox News became such a cable news powerhouse.  Due to the “fake news” hysteria, the big platforms Facebook, Google, and Twitter are censoring alternative voices.  This creates an opportunity for a Fox News of social media (perhaps many!).

The government’s funding of propaganda reflects a fundamental misunderstanding of media.  It is treating the internet as an “enemy weapons system“.  But media consumption is not a win-lose, zero-sum game.  All this does is crowd out existing journalism and reduces the supply of real information.  But the demand remains the same.  That means there is now an even greater business opportunity for free speech advocates than before.

We have a real, tangible, action plan to dismantle the establishment’s hold on power: Start new media platforms and especially new media technologies.  Let us create independent media content, independent social networks, independent ad networks, independent video sharing, … independent everything!  The opportunities are boundless.  I myself am working with a group on such a project in the media tech space.  If you are interested in learning more about our effort, please email me at apollo at apolloslater dot com.

Vive la resistance!

Bitcoin electronic currency

The Bitcoin mirage

This post is an edited collection of my responses to James Corbett’s interview of Ken Shishido on Bitcoin.

Bitcoin was an interesting experiment in digital currency, and there will be many more, with improvements. It is definitely not a real currency though. The recent Bitfinex hack, wiping out 36% of account balances, on top of many previous hacks, show it’s less safe than even a fiat bank account.

Ken Shishido’s recommendation to put into Bitcoin “what you can afford to lose” is a reminder that it’s a speculation, not money. Still, it’s definitely worth keeping an eye on developments with blockchain technology and new Bitcoin-like instruments that perhaps address the past issues with Bitcoin.

Bitcoin, exchanges, and security

Hacker in hoodieSome make the distinction that hacks have targeted exchanges or warehouses, not Bitcoin itself.  While the distinction between Bitcoin itself and exchanges or warehousers is important, the average person trying it out won’t necessarily understand this or its security implications. To them, the end-to-end process constitutes the solution, and most likely that will include an exchange.

You can get Bitcoin either by mining or by buying them on an exchange. Since mining is now incredibly expensive and technically challenging, the vast majority will buy on exchanges, which is a security risk, even if you don’t warehouse your bitcoin. In addition, most retail merchants accepting Bitcoin immediately liquidate receipts into dollars, making much of the market value of Bitcoin dependent on exchanges.

Even if you avoid exchanges altogether, you are still affected by these hacks. Since Bitcoin’s value depends so heavily on exchanges, a loss of confidence leads to a massive loss of value in the currency itself. This indeed happened after the Bitfinex hack.

There are also issues with the security of storing Bitcoin yourself, of transmitting them, the questionable privacy of a public transaction ledger (blockchain), and many other issues that the average person frankly will not understand or have the time to study. For the average person, the most secure currency is paper dollars, or gold/silver as a small inflation hedge.

There’s a lot of potential in cryptocurrency, both on the central bank side and the peer to peer side. I just don’t think Bitcoin is a particularly good solution, except maybe in certain use cases like international money transfers, that are plagued by high fees. But it’s a lot less than its hype.

Inflation Hedge vs Paper Money

One hundred billion mark note, Weimar Republic

One hundred billion mark note, Weimar Republic

In comparing Bitcoin to fiat or paper currency, Bitcoin advocates point to the inflationary history of paper money and its control by central banks. However, most modern currencies do not hyperinflate. Zimbabwe, Venezuela, the Weimar Republic, etc. are outliers due to unique political circumstances. Of course, that may change and eventually the US dollar will hyperinflate and collapse. But the key word is “eventually” – it may not happen for a very long time (or it may happen next year).

There are three things working against a dollar collapse, no matter how much they try to destroy it: 1. the oil market is priced in dollars, 2. it is required to pay US gov’t, fed./state/local taxes, 3. it is legal tender for the private US economy. So we’re talking about a backstop of many trillions of (current) dollars in value, something no other currency or country can match. So it’s unlikely to “collapse” anytime soon.

If we talk about collapse, Bitcoin lost 80% of its value in 2015, then recovered a bit, then recently lost 25% of its value. That’s a much bigger loss of value than is likely in the dollar, whose deprecitation is pretty stable over time. Bitcoin’s price may stabilize later on, but it’s not ready for prime time and definitely not a stable store of value.

Anyway, let’s be real. For most people these currency hedges don’t matter, because they don’t have much money to begin with. Liquidity is more important, to pay the bills, so dollars (or your local currency) are best. If you do have a lot of money, then sure, have some small hedges with precious metals, a little with Bitcoin, maybe some art, etc. They all carry their own risks. There is no such thing as a risk-free store of value.

UPDATE 08/19/2016: Bitcoin.org has warned that the code for Bitcoin itself may be hacked by government agents.  Not even the currency itself is entirely secure!