Topic: Spin-offs: bootstrap an altcoin with a btc-blockchain-based initial distribution - page 24. (Read 53566 times)

Ok, thanks, looks like I laboured under the misconception that the distribution scheme was intended to somehow impede the spread of non-innovative coins.

Greed is only one of the factors driving the cryptocurrency scene. People also want to have fun, so the market for all kinds of toycoins will exist.

Like you said, the distinction can only be made with certainty in hindsight.  The OP represents a market-based mechanism to value useful coins while facilitating the death of useless coins.  

To the contrary. This is exactly why altcoin like litecoin has value, the developer allowed the community to profit from its success, Charles Lee did not pre-mine.

Litecoin is not successful because Charles Lee did a pre-mine to cover his overhead, it was successful because he didn’t.

In this example using the Bitcoin blockchain to distribute the pre-mine the developer can but cheep coins as people dump them.  


check out http://mapofcoins.com/  we are on generation 6 of the altcoin /scamcoin revolution. How does innovation peculate through if early investors are constantly diluted and not rewarded – the investment into altcoins is coming from those who have Bitcoin, this capital pool drying up as the number of coins increase exponentially.  

Innovation is in the eye of the beholder, and which innovations turn out to be important is ultimately often only recognizable in hindsight. Not sure your distinction is really sound.

I don't think this is inflationary in the usual sense because the value of any future altcoin using this model is already incorporated in the value of btc. Bitcoin becomes something of an inflation-indexed bond.

I find the logic of the proposal a bit lacking though. Once you spin off an altcoin, calling it A, from bitcoin, why does the next one spin off bitcoin and not off A?

Yes, this applies only to coins that may potentially represent a useful technical innovation.  Coins that do not represent an innovation would not be served by this method.  

Take DOGE for instance.  It does not represents a useful technical innovation; it has a cute mascot and a permanently inflating money supply.  It appeals to the intersection of two subsets of people:

(1) people who believe money should be based around the Shiba Inu breed of dog;

(2) people who prefer a permanently inflating money supply.

It has a narrower potential user base, less liquidity, and a smaller market cap.  DOGE is therefore less useful than bitcoin and thus will be used less.  

AFAICS first two points apply also to 2way peg sidechains.  


I suppose we have to wait for the "math" behind Back/Hill proposal to judge it properly.


it's a possibility  


also 5 and 6 seems to apply to Back/Hill's design


me too.

I must be awfully dense, but it seems to me that this only applies to coins that have some technical innovation. Consequently an entire class of altcoins escapes the clutches of this framework.

As I said before, there are coins that have absolutely no technical merit, but they gain value from being aimed to specific community. For example, this one. If devs gain the trust of the communities that the coin is intended to serve, why would anyone in those communities switch over to the  bitcoin-blockchain-based clone chain? Especially if there is no IPO (but there could be premine).

Inspired as you are by the arch-altcoin-hater Daniel Krawisz, I believe you see little worth in that kind of coins, yet we'll be seeing their number increase, but AFAIK your scheme cannot stamp them out.

But don't get me wrong. I think the idea itself is genius if not genial.

that's the whole point.  it takes a hammer to the scamcoins and allows only true innovative altcoins to prosper.

This is freaking awesome. Good luck with it. Will rather user altcoins that use this method.

I'm sure a lot of altcoin creators who are in this mostly for profit or their personal idea of "fair" will hate this though.

Thanks cyperdoc.  I borrowed this term from Daniel's essay on the coming demise of alt coins, but agree that it is unclear.  


Here is what I meant by "eaten":

Take NxT for instance.  It is trading at near 0.4% of bitcoin's market cap, has a perceived legitimacy problem due to the PoS pre-mine, and has been losing market share since launch.  But let's imagine that the experiment eventually shows promise: for some reason PoS proves to be useful and everyone agrees.  

Someone can now modify the source code for NxT in a trivial way using the technique I proposed in the OP and relaunch the coin.  Since the NxT clone coins are distributed according to the bitcoin blockchain, this clone automatically has a greater user base than the original.  Bitcoin holders will retain the same slice of the cryptocurrency pie, but automatically be piggybacked to the new network.  There is no inflation as everyone retains the same slice of the total pie.  The bitcoin blockchain has now "eaten" the alt-coin technology. 

I would go as far as to say that it is risky for alt-coin developers to not use the method proposed in the OP if they actually believe their coin holds long term prospects.  If they bootstrap, then they will be rewarded if their coin is successful; on the other hand, if they IPO/lottery/etc they will ironically lose wealth the more successful their innovation becomes (as any serious value would emerge in the bitcoin-blockchain-based clone chain).  

Peter, you have to stop using that term "eat" and define exactly what you mean.

Agree.  That was the point I was trying to communicate.  



Agree.  "Allow" was a poor word choice.  



Disagree.

This has me more confident in bitcoin then ever.  It has convinced me that "inflation from alt-coin proliferation" is a red herring.  Any promising advance in cryptocurrency will absorbed by bitcoin in a non-inflationary way.  A clone launched from bitcoin's blockchain will win (because it represents the most efficient distribution) without causing any inflation.  (I personally also believe bitcoin is ideal exactly as it is.)

This will reduce the amount of alts to ones that have some genuine potential (in such a way that bitcoin holders are automatically stakeholders), and direct investment away from speculative alt coins and into productive advances to bitcoin.  
  

i don't think you're right about this.

if anything, this will discourage alts to be developed.  who will buy a scamcoin IPO when they can get the free scamcoin thru a blockchain distribution?  and this is one this ideas main features, imo.

it takes work to develop and profit from a truly innovative alt and this idea doesn't stop that part of the equation.  those devs can still be rewarded by buying up altcoins from those who dump their free altcoin distributions from lack of knowledge of the alts true potential (the dev himself is the best to have that insight) or who just want to cash in immediately from the free altcoins.

tl;dr  this should deflate the altcoin space to only those with true potential and merit.

Wouldn't this be something similar to saying hey I want to launch a new app on the Apple App store.  Since Apple already has stock, I'm going to issue ownership of this new app to all of the people who own Apple stock (assume this is technically possible).

As a developer I have no incentive to launch this unless I own a lot of Apple stock.  Launching an alt-coin where you can claim more of the coins than the distribution of bitcoin is a huge advantage especially if you build something that is worth a lot and not a scam.

'Fair' is a subjective concept, unique to each person's viewpoint. Discussion of 'fair' is useless.

I puzzle over your use of 'allow'. We don' care what mama don' allow, we'll clone our chain distribution anyhow. Or rather, anyone motivated enough to carry out this experiment will do so, and all of us trying collectively to stop it will be unable to do so.

I somewhat worry that this may lead to the death of the grand cryptocurrency experiment. From my initial take, it smells of inflation. New currencies created without limit, each with a strong incentive for Bitcoiners (or anyone who has holdings on whatever chain is being used to bootstrap the new currency) to use. Perfect incentive - they get the new coins at zero cost.

But this is possible, so the experiment must be done. The sooner the better. If the cryptocurrency revolution is due to collapse entirely in an inflationary death spiral, better now than later.

I hope I'm wrong about that.

Thanks for your comments Ragnarly.


You are automatically allotted the same % of the alt coin pre-mine as your % ownership of bitcoin, at the time of nucleus formation.  No one but the controller of the bitcoin private keys can claim the pre-mine.  Even if you do nothing, you still remain a "holder" by default.  



Let's say the alt-coin launches and is trading at 0.01% of the bitcoin market cap.  Most people will just do nothing.  If the alt ever takes off, these people sleep soundly knowing that they own the same % in this new alt as they do in bitcoin.  

Now some people might say: "wow, NxT is trading at 0.4% of the bitcoin market cap, and this new alt is better because it has a more efficient coin distribution and a broader potential user base.  I think I'll buy some more of this alt coin."

Others will say: "this is stupid.  I'll just dump all this "free money" and then gamble my 0.1 mBTC at just-dice.com"

If more people decide to buy, the price will rise.  If more people decide to sell, the price will fall.  



It will be difficult to profit from what are known as "scam coins" and "pump and dumps," however, if you have a genuine innovation that is actually useful you will be rewarded by natural market mechanisms.

When your coin launches, it may trade at 0.01% of the bitcoin market cap.  You can buy 10,000 of your alt coins for 1 BTC.  If you continue to develop your alt, and if people begin to agree that it is useful, your 10,000 alt coins will be worth more than 1 BTC (possibly a lot more).

This proposed distribution method allows bitcoin holders to piggyback innovations in cryptocurrency, while still rewarding alt-coin developers for genuine innovation.  

imo, most of the alts are scams preying on innocent investors who don't understand the tech or economic principles behind Bitcoin or the scam.

in that sense, they are hurting Bitcoin as the cryptocurrency space is a zero sum game given those conditions.  if the alts were valid or had merit, like perhaps Litecoin, their market caps would be much larger and gaining on Bitcoin.  we aren't seeing this. 

this free allocation of the altcoin currency to current Bitcoin holders will eliminate all premines or payouts to devs from the get go and reduce the genesis of altcoins to those that actually have technological merit which all of us are for. 

I have some low IQ questions: The new alt-coins are given away at first. You can claim as many of them as you want, up to the number of bitcoins you have. At the beginning, the alt-coin has almost zero value.

If the alt-coin gains users, you profit by trading the alt-coin for Bitcoin? And/or a different alt-coin?

What incentive would someone have to create an alt-coin, if they have no competitive advantage in getting them (Apart from their Bitcoin holdings)? Or in other words, why would someone go to all the work of creating an alt-coin rather than wait for someone else to do it and then claim the alt-coin?

Vitalik Buterin (a founder and promoter of Ethereum) spoke to this point in this video (11:50 onwards): http://ytchannelembed.com/video.php?id=dpwhT63EkZ4&t=

"I never had a chance to do anything with bitcoin in 2009 and 2010.  I never even heard of it." -- Vitalik Buterin

"It's not a matter of whether the system [distribution] is technically fair; it's a matter of whether it is actually fair." -- Vitalik Buterin

The impression I got from watching that is that Vitalik believes he has an answer to the subjective question "what is actually fair?"

I believe that if cryptocurrency continues to grow, everyone here who chooses to participate will be rewarded for the contributions they made and the risks they took by holding bitcoin.  It is simply my premise that the bitcoin blockchain represents our best estimate of the most efficient distribution and a clone of any promising alt (should one emerge) based on bitcoin's blockchain distribution would become the dominant coin [without causing any inflation as bitcoin holders automatically becomes stake holders to an equal % in the new coin].