Litecoin being pretty much pegged to Bitcoin, it is like a proxy currency that allows late adopters to gain ownership in mainstream cryptocurrencies.
As the most liquid cryptocurrency after Bitcoin, it also occupies a place of its own in the Bitcoin economy.
Topic: Ownership as a critical feature of CPU Coins (Read 1301 times)
I've noticed that in the debate between CPU versus GPU coins (and perhaps even between the various alt-coins) there has been very little said about the concept and importance of the coin's participants sense of "ownership" in their respective coin (although I haven't dug deep into the archives).
I think one could define ownership as a participants sense of belonging, contribution and therefore investment. I think the success of any of these coins, and thus their legitimacy among those who use them, depends in great part to each participants sense of ownership in their coin.
Crypto-currency has won a great deal of followers through it's ability to make it's participants feel as though they are each a functional and contributing member of a community and an idea. The real genius of bitcoin is the idea that each participent can mine which simultaneously acts as providing critical support and digital infrastructure for the coin while rewarding the miner with coins.
Of course this sense of ownership (as in mining coins) is time-limited as eventually either the difficulty goes up astronomically, or all the coins get mined. It will be interesting to see how people feel about bitcoin once there are no more coins to mine.
Bitcoin started from nothing, the sense of ownership was high and it grew slowly and then exploded (in both participants and value) as the press finally took notice and the numbers of participants reached some sort of "tipping point". People got involved because the idea appealed to them somehow, and more then that, they could participate by mining. A large number of people got involved and then for a variety of reasons the value dropped (perhaps participants as well), which brought with it a new wave of press coverage decrying the death of a pretty cool idea.
Of course, Bitcoin is nowhere near dead- and I would argue it's penetration into mainstream society, if at least as an idea, is at an all time high. (That all time high meaning most people still don't know about it)
At the same time however, the difficulty of mining skyrocketed to the point where it's all but nearly impossible for a beginner to get involved without some serious up-front faith in the project (and a big pocketbook) and with the coming FPGA miners the barrier to entrance looks to get even higher. One could say that as those who mine Bitcoin have an ever increasing sense of ownership as the complexity or shall we say "craftsmanship" that goes into making coins increases. But for people who are just entering crypto-currency now thanks to the press that the "Rise and Fall of Bitcoin" and similar press articles have generated, the barrier to entry poses a formidable quandary.
The response of course has been, "You can just *buy* the coin" if you can't mine. True enough, but the sense of ownership that comes with purchasing something is far less then the sense of ownership that comes from building something. Any of us who were around durring web 1.0 remember flooz, beenz, and all other forms of digital e-currency that required you to exchange your real trusted dollars for digital nonsense and subsequently failed.
I would argue that a significant threat to the future of bitcoin is that the sense of ownership is very high among those who already are involved, but that this ownership is relatively concentrated. There are enough participants in Bitcoin to fuel it's development and get it to the stage where it is at currently, but perhaps there are not enough participants, (or bitcoin can not continue to recruit enough participants, IE: continue growing) to fulfill it's future purpose. In one sense, perhaps the sense of ownership of the coin is now so highly concentrated that there isn't enough to attract or hold onto new users. An argument could be made that the speculative boom and subsequent crash could be related to an undue number of users without a sense of ownership just purchasing out of speculation. Had all those new investors had a greater sense of ownership, perhaps the confidence shaking events that took place might not have affected the price or value of the coin so dramatically. Newcomers would have would have hoarded more and volatility would have been muted.
CPU based coins seems to have an obvious advantage at this point. They are young projects already benefiting from the experience and development of Bitcoin. They are also benefitting from the press that Bitcoin has already received. Currently, because the difficulty is low CPU alt-coins like LTC are also benefitting from having a large reserve of 'potential ownership' to distribute. It would seem to me that the greatest advantage of the CPU based coins is what many consider the sense of "fairness"- a word I have seen mentioned many times in the discussion. I think what the developers maybe really had meant was greater equality in "ownership". Because the difficulty of CPU coins will (hopefully) rise slowly, and because they benefit from a greater level of awareness thanks to Bitcoin, CPU coins have a chance to recuit a greater user base of people who feel a sense of ownership in the 'greater good' of the project. Additionally, if the difficulty rises as slowly as hoped, CPU coins can continue to recruit new users for a greater amount of time. In some sense you can say the 'potential ownership pool" in CPU coins is larger. LTC for example does not have necessarily have a faucet to promote development but it does have large 'ownership' reserves. Meaning even if you were to get involved in the project a year from now- you hopefully would still have a reasonable chance at being able to mine, and thus feel involved.
It's this greater sense of Ownership that I feel is so important to the CPU coins. With a larger number of people able to participate and for a longer time, it's conceivable that greater 'real world' penetration of the coin can take place. Mining is a fairly simple process and the client, although a little rough, is fairly easy to use. Getting LTC without needing to purchase them is a fairly simple process- meaning anyone can get involved (much like the early days of bitcoin), this recruitment process is critical to expansion and development and the longer it can be prolonged the better. One of the greatest dangers to any coin is lack of volume. Security, efficiency, and other qualities will count for nothing in the long run if there just isn't enough movement of money and in large volumes. If there isn't enough to circulate and hoard at the same time it's a collectors item.
In summary, that which some consider to be CPU coins great weakness (IE: being CPU) I think may indeed be the greatest strength. Implementations to spread ownership over an ever wider user base depend critically on the 'fairness' of mining. Web based miners, such as Litecoinpool.org offer a genuine chance at promoting LTC into spheres such as online game development or replacing advertising in such a way that the use of LTC could potentially take off on its own (Imagine if Farmville used LTC for example). Bitcoin had similar potentials as well but the advent of GPU mining made any entrance into Bitcoin other then exchanging fiat for coin impractical to all but the die hard "craftsmen of coin".
Ownership is critical to the success of alt-coins. As long as the coin has still not reached some level of sustainability, volume and penetration, it remains critical that it continue to recruit new users. Individuals who simply "Buy in" are dangerous because of their speculative propensity to "cash out" which promotes volatility, fear, uncertainty and doubt. The philosophy behind the alt-coins is a powerful one, but individuals in the development phases need to have a sense of ownership so as to ensure the coin has a continuously growing supply of motivated individuals committed to promoting, developing and investing in the coin.
I think one could define ownership as a participants sense of belonging, contribution and therefore investment. I think the success of any of these coins, and thus their legitimacy among those who use them, depends in great part to each participants sense of ownership in their coin.
Crypto-currency has won a great deal of followers through it's ability to make it's participants feel as though they are each a functional and contributing member of a community and an idea. The real genius of bitcoin is the idea that each participent can mine which simultaneously acts as providing critical support and digital infrastructure for the coin while rewarding the miner with coins.
Of course this sense of ownership (as in mining coins) is time-limited as eventually either the difficulty goes up astronomically, or all the coins get mined. It will be interesting to see how people feel about bitcoin once there are no more coins to mine.
Bitcoin started from nothing, the sense of ownership was high and it grew slowly and then exploded (in both participants and value) as the press finally took notice and the numbers of participants reached some sort of "tipping point". People got involved because the idea appealed to them somehow, and more then that, they could participate by mining. A large number of people got involved and then for a variety of reasons the value dropped (perhaps participants as well), which brought with it a new wave of press coverage decrying the death of a pretty cool idea.
Of course, Bitcoin is nowhere near dead- and I would argue it's penetration into mainstream society, if at least as an idea, is at an all time high. (That all time high meaning most people still don't know about it)
At the same time however, the difficulty of mining skyrocketed to the point where it's all but nearly impossible for a beginner to get involved without some serious up-front faith in the project (and a big pocketbook) and with the coming FPGA miners the barrier to entrance looks to get even higher. One could say that as those who mine Bitcoin have an ever increasing sense of ownership as the complexity or shall we say "craftsmanship" that goes into making coins increases. But for people who are just entering crypto-currency now thanks to the press that the "Rise and Fall of Bitcoin" and similar press articles have generated, the barrier to entry poses a formidable quandary.
The response of course has been, "You can just *buy* the coin" if you can't mine. True enough, but the sense of ownership that comes with purchasing something is far less then the sense of ownership that comes from building something. Any of us who were around durring web 1.0 remember flooz, beenz, and all other forms of digital e-currency that required you to exchange your real trusted dollars for digital nonsense and subsequently failed.
I would argue that a significant threat to the future of bitcoin is that the sense of ownership is very high among those who already are involved, but that this ownership is relatively concentrated. There are enough participants in Bitcoin to fuel it's development and get it to the stage where it is at currently, but perhaps there are not enough participants, (or bitcoin can not continue to recruit enough participants, IE: continue growing) to fulfill it's future purpose. In one sense, perhaps the sense of ownership of the coin is now so highly concentrated that there isn't enough to attract or hold onto new users. An argument could be made that the speculative boom and subsequent crash could be related to an undue number of users without a sense of ownership just purchasing out of speculation. Had all those new investors had a greater sense of ownership, perhaps the confidence shaking events that took place might not have affected the price or value of the coin so dramatically. Newcomers would have would have hoarded more and volatility would have been muted.
CPU based coins seems to have an obvious advantage at this point. They are young projects already benefiting from the experience and development of Bitcoin. They are also benefitting from the press that Bitcoin has already received. Currently, because the difficulty is low CPU alt-coins like LTC are also benefitting from having a large reserve of 'potential ownership' to distribute. It would seem to me that the greatest advantage of the CPU based coins is what many consider the sense of "fairness"- a word I have seen mentioned many times in the discussion. I think what the developers maybe really had meant was greater equality in "ownership". Because the difficulty of CPU coins will (hopefully) rise slowly, and because they benefit from a greater level of awareness thanks to Bitcoin, CPU coins have a chance to recuit a greater user base of people who feel a sense of ownership in the 'greater good' of the project. Additionally, if the difficulty rises as slowly as hoped, CPU coins can continue to recruit new users for a greater amount of time. In some sense you can say the 'potential ownership pool" in CPU coins is larger. LTC for example does not have necessarily have a faucet to promote development but it does have large 'ownership' reserves. Meaning even if you were to get involved in the project a year from now- you hopefully would still have a reasonable chance at being able to mine, and thus feel involved.
It's this greater sense of Ownership that I feel is so important to the CPU coins. With a larger number of people able to participate and for a longer time, it's conceivable that greater 'real world' penetration of the coin can take place. Mining is a fairly simple process and the client, although a little rough, is fairly easy to use. Getting LTC without needing to purchase them is a fairly simple process- meaning anyone can get involved (much like the early days of bitcoin), this recruitment process is critical to expansion and development and the longer it can be prolonged the better. One of the greatest dangers to any coin is lack of volume. Security, efficiency, and other qualities will count for nothing in the long run if there just isn't enough movement of money and in large volumes. If there isn't enough to circulate and hoard at the same time it's a collectors item.
In summary, that which some consider to be CPU coins great weakness (IE: being CPU) I think may indeed be the greatest strength. Implementations to spread ownership over an ever wider user base depend critically on the 'fairness' of mining. Web based miners, such as Litecoinpool.org offer a genuine chance at promoting LTC into spheres such as online game development or replacing advertising in such a way that the use of LTC could potentially take off on its own (Imagine if Farmville used LTC for example). Bitcoin had similar potentials as well but the advent of GPU mining made any entrance into Bitcoin other then exchanging fiat for coin impractical to all but the die hard "craftsmen of coin".
Ownership is critical to the success of alt-coins. As long as the coin has still not reached some level of sustainability, volume and penetration, it remains critical that it continue to recruit new users. Individuals who simply "Buy in" are dangerous because of their speculative propensity to "cash out" which promotes volatility, fear, uncertainty and doubt. The philosophy behind the alt-coins is a powerful one, but individuals in the development phases need to have a sense of ownership so as to ensure the coin has a continuously growing supply of motivated individuals committed to promoting, developing and investing in the coin.
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