TL;DRWe're launching CipherTrade, the new crypto-securities exchange, with the following securities markets: BTC, LTC, PPC, XPM & ANC. We have room for a 6th. Which cryptocoin do you think it should be?
Update on CipherTradeAs you may have heard, a group of us have got together to launch a new exchange which will be called CipherTrade.com. We will be offering coin-to-coin trading, but much more importantly we will be offering multiple securities markets; one for each coin.
We have brought together a power-house of people for this project:
- Kate (me, one of Britain's top ICT entrepreneurs)
- evilscoop (Giles, my right-hand in cipherspace)
- Benny (issuer of BUY-A-HASH)
- Deprived (man behind DMS*)
- krypto (long-term crypto-investor)
- Simon (not on the forum; the entrepreneur behind zone.in, and our lead developer)
- richwest (another of our developers; creator of is.gd, Tweetails & other popular Web services)
- OgonDark (an experienced, CBOT-registered futures floor trader)
We are aiming for a beta launch in mid-December, at which time we will be offering a selection of pre-registered securities (which will actually be treated as contracts, shares in which can be purchased). From early January we will be accepting new contract issuance applications.
A key part of our strategy is to become a fully registered investments securities exchange with HMRC in the UK. We shall operate within the law, and I shall endeavor to work with government to encourage them to be supportive (I have a solid track-record in influencing government policy).
Finally, we shall be offering a range of features unlike any other exchange. I do not wish to give too much away at this time, but one example is that we will be incentivising issuers by sharing trading fees with them.
Giles is heading up operations, obviously full time, and we have an aggressive expansion plan. We currently have over $100k of sales and marketing funding - and that's before we're IPO'd. We are going all-out for large-scale from the outset and, to be blunt, our competitors stand little hope; unless we decide to acquire them of course.
Watch this space, we'll be making more announcements as we get closer to launch. For now though, let's focus on the coins.
The coins / marketsWe believe that, like types of credit card (Visa, Mastercard etc) there is room in the market for a handful of cryptocoins. In determining which coins to choose we used the following metrics:
- Useful, functional differences to its competitors.
- First-mover advantage and a commensurate leading market cap for its coin-type.
- A strong ecosystem of users and developers supporting it.
Based on this, the top 6 cryptocoins which we think most likely to have a future are:
1) Bitcoin (BTC). Bitcoin can be argued to be technically inferior to its newer brethren. However, history tells us that the most popular standard wins out, not necessarily the best (for further reading I highly recommend my good friend and British government Cabinet Office adviser, Simon Wardley - eg.
this post). Bitcoin's dominance is hard to dispute, with a market capitalisation now standing at over $13bn. Bitcoin also has numerous fiat (normal currency) to bitcoin exchanges, such as
BitStamp in Europe and
BTC China, which its younger brethren lack. It is also the most widely adopted coin in terms of merchants who accept it.
1a) Namecoin (NMC). Namecoin and Bitcoin are "co-mined" and thus it does not make sense to separate the two in many ways. It is also technically very different, with its main purpose being to secure and transfer arbitary names / keys without censorship. The intention is also that it wil be the currency for the .bit domain, for which the community is pursuing an ICANN accreditation (it is now possible to create your own global top level domain). However, we are not going to offer a securities market around Namecoin.
2) Litecoin (LTC). Litecoin is the leading competitor to Bitcoin, with its market cap of $900m it is almost as far ahead of its competitors as Bitcoin is ahead of it (in relative terms). It was the first "alt-coin" and the original Scrypt coin - it has the first-mover advantage there. Not only is Litecoin
more secure than Bitcoin, it has other advantages like faster confirmations; 2.5 minutes rather than Bitcoin's 10 minutes. Thanks to its memory-intensive proof-of-work algorithm, it appears to be mostly immune to ASIC mining (unlike SHA256 coins). LTC also has a very devoted community, again second only to Bitcoin. Many merchants do accept litecoin alongside bitcoin, and its ecosystem is growing with services like
Litecoin Local (a location-based in-person brokerage similar to
Local Bitcoins). There can be 84 million Litecoins in existence, four times as many as the maximum possible Bitcoins. This could be significant since the smallest unit of a bitcoin (one 10^8th) is already worth 0.001 of a dollar cent. Charles Lee, Litecoin's creator, views it as "silver to Bitcoin's gold".
3) Peercoin (PPC). Peercoin is technically different again to both Bitcoin and Litecoin. It is designed to be less energy-intensive when mining (something of which I approve) and also more secure than Bitcoin. PeerCoin takes the #3 slot with a market cap of $150m. It also have an extremely voiciferous and dedicated following, at times verging on the fanatical (many believe PeerCoin should replace all others, rather than be complimentary to them as Litecoin's community sees itself). Peercoin uses a "proof of stake" algorithm as well. Perhaps peercoin's most notable difference to its brethren is that there is no limit to the number of peercoins that can exist, though they are still "found" at a constant rate.
4) Primecoin (XPM). Primecoin differs mainly in the way it is mined. Mining Primecoins consists of finding ever-larger prime number chains. In theory this work could be useful. SHA256 and scrypt coin mining is a complete waste of power and computation by comparison. Also, Primecoin can be effectively mined with CPU, which means you can apply spare compute resources to it. CipherMine is successfully utilising the spare CPU resources on
Memset's Miniserver VM hosts to mine Primecoins. Although Primecoin mining is of questionable use, it could in theory be adjusted to be more useful to the scientific community.
5) Anoncoin (ANC). Last but by no means least. Although cryptocoins are designed to be decentralised and thus somewhat anarchic, they can quite easily be traced through the blockchain combined with transmission through the public Internet. Since many of the users of cryptocoins want anonymity, a group of very clever guys created Anoncoin. Its main feature at this point is that it is routed through
I2P, the Invisible Internet. Anoncoin is a scrypt-based coin like Litecoin, so shares Litecoin's advantages over SHA256 coins. We believe that governments will ultimately come down hard on cryptocoins once they comprehend the
threats posed to their existence. Anoncoin therefore fills an important niche. Excitingly, the Anoncoin dev team (who can be found in the #anoncoin room on I2P IRC, and who were recently
in the news) have a longer-term plan to improve anonymity either through implementing
Zerocoin or the
CoinJoin extension.
What we'd like from youSo, that is our starting list. There are now in excess of 100 cryptocoins and we are entirely confident that the vast majority will fail. However, we also believe, as above, that there is room for several to survive and thrive. The upper limit is probably around six or seven, and to that end we are considering an additional securities market for a final pre-launch, sixth alt-coin. We'd like to hear from you, the community, as to which coin you think should be added to our list, and why.
Kate and the CipherTrade crew.
ScorecardI'm going to try and keep a score card matrix to capture your collective wisdom. It is a work in progress.
| Coin | Quark | Megacoin | Feathercoin |
| Votes | 3 | 1 | 2 |
| Technical uniqueness / first mover: | In niche and tech, yes | None apparent (LTC fork) | None apparent (LTC fork) |
| Market capitalisation | $14,139,969 | $47,287,839 | $32,111,689 |
| Unique selling point / niche: | Security | Unclear | "Copper to Litecoin's silver" |
| Community backing: | Very popular at present | Very strong community | Commercial backing, fanatics, and big volumes |
