Open Source Hardware Hackers Start P2P Bank

Getting a business loan in this economy can be more difficult than landing a reservation at French Laundry in Napa, California. Now try selling the loan officer on an open source hardware project where the blueprints will be given away.

That's why the hardware hacking community is turning inwards to fund its ideas. Two open source hardware enthusiasts, Justin Huynh and Matt Stack, have started the Open Source Hardware Bank to fund hardware projects such as the microcontroller board pictured above.

The fledgling bank is funding only open source hardware projects using capital raised from other hardware geeks. It's like a community of Facebook friends borrowing and lending among themselves — a peer-to-peer bank.

"This speaks to the rise of the do-it-yourselfer, someone who is not just a consumer but also a producer, inventor and investor," says Huynh. "But someone also ought to be thinking about the money problem when it comes to open source hardware and we are doing just that."

The open source concept has traditionally been applied to software, but open source hardware is rapidly gaining ground. A fast-growing community of inventors is publishing the specs for a wide range of hardware, from CPUs and graphic cards to MP3 players and even a laptop. The idea is to let anyone take the designs, build on them, and profit from the work of the group — while contributing enhancements back to the community at large.

But open source hardware requires more financial investment than open source software. It isn't as easy as downloading a few open source programs on to your existing computer, explains Stack. "With open source hardware you don't get a finished product until you have put in some money," he says. For instance, there's the cost of the printed circuit boards, the solder and the components.

"To build open source software you just need to set up a project on Sourceforge," says Huynh. "But if you get open source hardware wrong, it burns a hole in the wallet."

The Open Source Hardware Bank, which isn't yet fully up and running as a federally regulated lending institution, allows those interested in open source hardware to make investments in specific projects, then (hopefully) reap returns ranging from 5 percent to 15 percent from the successful sale of the projects. For the creators, the bank offers funding that could bring down the costs of their project and give them the stimulus to try out new ideas.

"The way the bank works is the more you build, the cheaper it gets," says Stack, who in the true open source spirit first laid out the idea on his blog.

Open Source Hardware Hackers Start P2P Bank | Gadget Lab from Wired.com