You are missing the point.
Quote: "If you see fraud and don't shout fraud, you are a fraud"
-- Nassim Taleb (author or Black Swan and Anti-fragility; credit to opennux for the quote).
I think there is a large color spectrum that involves "fraud" and "illegitimacy".
The classic form of scam/fraud is a scheme were people put their money and then lose it.
Does DRK have these characteristics? Are people losing money here? Or have they multiplied their bitcoins 10-100-1000x depending their point of entry?
Year to year performance (and March 23 of 2014 was over two months after the launch of Darkcoin) is something like 12-14x. Month-to-month is also exceptional (1.7x)
First of all, on the matter of redistribution:
You don't know 90% of what happens in the markets. You can say "coins traded at such a price" but you don't know who was on each side of that trade.
Some times, you do.
Now I agree it is certainly fair to say that the coins might have been redistributed or could have been redistributed. I would not object to that at all. But to present this as fact is unsupportable and effectively fraudulent.
I've addressed the distribution part on the reply to Joshuar which I'll repeat here:
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Some of us who follow DRK closely know who the DRK whales are / were and we know their stories. Personally I've talked with most of them (or if I haven't, I've read their stories). I know how they got their DRKs and this pretty much narrows down what Evan has. It's not two million and it's not one million either. If my assessment is correct it should be closer to 300k coins - some of which he probably bought for 0.25btc/10k DRK. I believe he must have suffered serious losses with the Mintpal "confiscation" and consequent dumping at market prices.
I was also there while wave, after wave, after wave of dumping was happening every day at Cryptsy near the 0.0012-0.0016 range. Every day the same bitching "ohhh the dumping". We're talking quantities that were multiple the daily production. How can the instamine be ...intact if all this dumping had occurred? But now we are >10x that price with 0.017, so, in retrospect, it was very cheap distribution.
Same with thousands of coins during the first exchange days. Quite a big volume in DRKs (not so much in BTCs) at insanely low prices (0.000020-0.000080 then 0.000180, then 0.000500, then it got to 0.002 before the c-cex hack of 330 btc which brought huge reshuffling in the market). Hacker bought DRKs up to 0.008, moved them to the poloniex and was selling/dumping them for 0.0008-0.0012... again, significant re-distribution of coins.
Then you have the May pump... you have coins that you have acquired at 0.000025 up to 0.001x and the price goes 0.028 by the massive whale, which IMO was probably a stolen-BTCs-whale playing with various altcoins and having DRK as his "pet"... so at that point, the market took over the redistribution.
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Second why is the instamine described as happening over 48 hours when in fact:
The "48 hours" is the usual trolling floating around.
1. Within the very first hour over 500,000 coins were mined
2. Within 8 hours over 1.5 million coins were mind, which is most of the instamine.
On the matter of the instamine itself, you are ignoring a whole host of extremely shady practices that surrounded it.
3. That Evan misled people into thinking that the launch would not happen for days (and specifically not in hours), then it happened in a few hours. Considering the 500K number in the first item above, the effect of this "ambush" was enormous.
The effect is not "enormous". It is as much as the market decides it is.
You can make Smoothcoin and you can mine it to 100% of coin supply (and there are PoS coins out there that were 100% premined and distributed) but it will not be worth anything until you somehow give it value, and people value it. The scam-way to do that is with promising the world, pumping, then dumping on the new owners without delivering anything. It's a win-lose scenario that tens of scamcoins have followed. The scammer / dumper wins at the expense of the naive buyer.
The DRK scenario is a win-win for developer and DRK-owners. Developer has a vested interest in assigning value to the coin he initially made as a worthless coin, and after working and working on it for months and years, and expanding its feature set and adoption, price rises and all participants gain.
Personally I dislike Evan's tactic* on how he went about it, but on the other hand, I have to be a realist on the aspect of fairness. How would it be "fair" if everyone mining Darkcoin became 10-100-1000x richer and Evan, who made it all happen for them, was doing it as a ...hobby, getting peanuts? Likewise, how would it be "fair" if BTC whales and hackers and scammers, had more Bitcoins than Satoshi who actually invented Bitcoin?
* Although I also have to point out that Evan offered an airdrop of a couple million extra coins, I think it was 2-3 months later. It was voted down by the community. People had already seen too much dumping happening and the consensus was that initial distribution was not an issue. But diluting the coin supply would be a greater issue (lose-lose for most parties involved).
4. The stated reason for delaying the launch for days was to do more testing and fix bugs. Yet when the coin was lunched it still had a "major problem." Why was the rushed ambush launch done in this manner, at a time that corresponded to late night in the US and very early morning in Europe?
I cannot answer this for Evan, but IT people do tend to have strange hours. BTW, even fork decisions have been questioned for the days they were introduced by Evan.
Btw, I've also seen the opposite argument for fairness, which is like this: "If we launched at a predetermined hour, instead of doing a ninja-launch, then all the cpu farms would flood the coin at that instant, with PC users getting nothing - so it's fairer to the average miner".
5. Evan withheld information about the purpose, features, and goals of he coin development until after the instamine was complete. It was absolutely impossible for you to have any reason to mine this coin unless your strategy was to mine 100% of new coins that were launched, you just happened to stumble into it, you were friends with Evan, or you were Evan. In effect it turns the instamine into a premine, because the coins were mined before the coin was properly announced.
You are pretty off here.
1) There was enormous incentive to mine it due to being a cpu-mining only coin suitable to cpu farms and desktops that desire more profitable coins to mine compared to GPU-saturated algorithms. Just the fact of having a different algo (x11) was in itself a serious "magnet" of interest, even without knowing the upcoming feature set. The reason is that there was serious saturation of GPU algorithms and CPU raping by botnets and server instances (for other cpu coins).
2) The announcement of the future directions did not change the price. 10k DRKs still cost 0.25btc to buy. Actually when it hit the ccex echange in early february there were even lower prices (0.000020btc/DRK). So, objectively speaking, did the revelation of Evan's vision for what DRK will some day become, change the price or the desirability? And even if Evan had announced his vision, along with the launch, at the times you mention (late-US / early-EU times), wouldn't you still hold it against him as it would be "irrelevant"?
6. Various changes have been made to rewards, etc. multiple times., always in the direction of reducing/restricting/locking up supply, to the benefit of existing holders. The latest version of this is masternode payments, which look very much like a HYIP.
Now it is possible all of this was an accident. If so, you are asking us to believe in a string of extraordinary coincidences all apparently (by sheer luck) benefiting the same party or parties.
If it is not an accident then it is evidence of deliberate fraud on the part of the person or persons still involve with running the project.
The changes have been made, indeed, but if it is of benefit to existing holders, it is also of benefit to a buyer that decides to buy NOW. If a deflationary change is made that preserves one's wealth better, or an economic incentive is placed that will increase value in the long term, why would a buyer that buys NOW, not get the same benefit that the current holder has? They will gain equally.
Ensuring that the coin does good is also ensuring the interests of the participants. This does not constitute a fraud / scam. You can argue that future buyers will buy at an increased price, but they will still buy because of that specific feature set that will give them even greater price at a later point of time.
On the other hand, if, say, you tuned a coin to be more inflationary (with current holders losing), this is also something that will impact current and future buyers 6 months from now. They will be thinking "why buy this over-inflationary coin if it can't preserve my BTCs?".
As for the satoshi comparison, it's fairly absurd. Let's review (using the numbers above):
1. The rate of Bitcoin mining followed the published schedule. There were no extra coins mined at the beginning (in fact I think some of the early blocks were quite slow). It took 2-3 months to mine 500K coins, not one hour
2. It took the better part of a year to mine 1.5 million BTC, not 8 hours.
Yes, but it only took 1 block to get 50 BTCs and less than a week to get 34.000 BTCs (the entire worth of DRK's instamine right now).
If DRK is a scam, the scam has an economic value. Say you are a reporter and you have to make an article on how big a scam DRK is. You'll either use Jan 2014 valuation of the 2mn DRKs, or current valuation of the 2mn DRKs.
The 2 prices you will come up is 50 BTCs (0.000025 x 2mn coins) or 34.000 BTCs (0.017 x 2mn coins).
And, again, 50 BTC was just the initial block of Bitcoin and 34.000 BTCs are like what? 4 days of solo-mining it?
4. There were indeed bugs in the code, and some mined coins were even lost to fix them, but none of this involved a "major problem" right after launch when an enormous number of coins were mined.
Problems at launch happen with a lot of altcoins. IIRC even LTC has an instamine issue due to problems with the difficulty adjustment algorithm (DRK was forked by LTC btw).
5. satoshi did not withhold information about the features and goals of the project. He engaged in a detailed and extended discussion about how it would work and what it was attempting to accomplish before it was launched.
Yes, but the concept was too alien at the time for people to relate, resulting in a solo-mine. Now, if we are negatively biased toward Satoshi we could say that the solo-mine is "evidence" that he didn't really try to market it well enough, on purpose, so that he could solo-mine his coin and then retroactively call him the 300mn dollar scammer or something, using today's valuation for his then worthless coins.
If you really look hard, you can find a negative spin for everything.
6. No changes were made as satoshi made it clear that to have legitimacy as a decentralized system, the parameters needed to be "set in stone"
That's were DRK's DNA is different, in that it is not a fixed coin. It's like a development platform with new features added. For example there were no DarkSend or masternodes to begin with to get masternode payments. And DRK is also responsive to economic circumstances. What good would it be if it had top notch tech and died due to inflation?
Unlike Bitcoin which has the 5-6 year advantage, the steady inflationary curve doesn't work for altcoins that start now. If I launch today and know that tomorrow the coins will double and in four days they will double again, why would I want to ...hold? You have to apply new economic strategies that work for the new field (altcoins) and ensure that people get the most for their money.
One more thing to add. The part of this that is (probably) fraudulent is not that Evan got a lot of coins, its that it was held out (and in many ways continues to be held out) as a public open distribution process, when in reality what happened was in effect more of a premine (see items above esp. #6), and I believe at this point that was very likely the intent. If he had forthrightly presented it as a premined coin, one might think that was a bad idea, but there would be no claim of fraud, at least not by me. I've never claimed that an openly premined coin was a fraud.
The problem was publicly admitted and remember that he offered an airdrop solution that was voted down from the community. Evan knew that the instamine issue will be brought up again and again and that's why he wanted it solved. It's not his fault that people voted down the airdrop. At that point Evan's responsibility and blame ends, and it becomes a community responsibility. And the community had its reasons to say no.
As for the "fraud", remember what I said earlier. If people are getting massive ROI, they aren't really "scammed". A quote that brings a smile to my face is some forum members who were writing (as they watched their DRK worth multiply) "Evan scam us some more"...
