Bitcoin Forum

Recently, I've been interested in gambling with my money by buying altcoins (it is NOT an investment as it is extremely risky, but the returns are potentially HUGE, just like gambling). So, I did an exhaustive research. Here are the criteria for a good altcoin gamble;
1. SIGNIFICANT advantage over Bitcoin in technology.
2. Cost of use is fair.
3. Honest business practices of the creators.
4. Upside potential.

1. The one glaring mistake in Bitcoin's protocol is lack of privacy. A smaller problem is the speed of confirmations. The block size controversy is minor in comparison, in my opinion (not fact, just my opinion). So, bottom line, who offers the most privacy? Shadow (this is NOT an endorsement, see criticisms below). Why? It destroys your coins and generates new ones if you use their shadow send feature. Their shadow coins are then encrypted with a zero knowledge algorithm that makes it impossible to track even if you are holding all the servers.

I've discussed at a Silicon Valley developer and financier round table dinner with top developers and heads of marketing/sales possible ways to unmask the identities of people who spend Bitcoin and it seems that there is NO way to spend Bitcoin without having your identity unmasked by a state level actor with unlimited resources. This also goes for all the other bitcoin clones with claimed technological improvements such as ring signatures. A human cannot track a ring signature payment, but a powerful computer algorithm can. And as for coinjoin, it is very easy to unmask poor implementations of it such as Blockchain.info . Even with an arguably better implementation of coinjoin like with Dark Wallet, it is only good for privacy from individuals but not effective for privacy against a state level actor (such as the NSA). Same goes for coin mixing schemes. This is especially true if human error is involved in the procedure. For example, if you put 10.58 BTC into a mixer and then withdrew exactly 10.58, a powerful computer that analyzes the entire blockchain could still track you.

Darkcoin (aka Dash) claims to improve speed of confirmations to "seconds" due to "supernodes". What they don't mention is that because there are fewer supernodes than regular nodes, it is vulnerable to attack vectors. For example, a DDOS attack.

Maidsafe claims to have solved all these problems, but they are just vaporware because I don't even see a wallet for download on their website.

2. Is the cost of use fair? In other words, how much ninjamine or instamine are you willing to accept? So, the only alt coin that is significantly better than Bitcoin and is not vaporware is Shadow BUT what is the cost of using it? Well, they had their ICO and the mining lasted for all of TWO WEEKS. Then, they switched it from POW (proof of work mining like Bitcoin) to POS (proof of stake mining, where you have to already own Shadow coins to be able to mine them at 2 percent profit per year. They have a very narrow niche market, too, as evidenced by their name "Shadow". You can think about the cost of Shadow like this; It is a black market version of Ebay where you have to buy stock in Ebay in order to use Ebay. Then, you use these shares of stock to buy stuff on Ebay. Oh, and you're taxed 2 percent per year for using this black market Ebay. Oh, and they have zero ETA for their yet to be unveiled black market. Is this fair? You decide. Personally, I think it would've been fair if they at least waited until the unveiling of their black market to switch from POW to POS. If they're unfair from the beginning, do you think that they might be unfair to you in the future?

3. Honest business practices? See this list of instamine, premine, and ninjamine alt coins. Now, look at their websites. If they are honest and upfront about this, then yeah, they're honest. Otherwise, they are being deceptive. http://www.devtome.com/doku.php?id=a_massive_investigation_of_instamines_and_fastmines_for_the_top_alt_coins (http://www.devtome.com/doku.php?id=a_massive_investigation_of_instamines_and_fastmines_for_the_top_alt_coins)

4. Upside potential. Due to limited technological improvement over Bitcoin and Bitcoin's massive head start (Bitcoin has Billions in capitalization while altcoins have, at best, millions in capitalization), it is easy to say that alt coins have very little upside potential beyond the initial pump and dump that only benefits the initial investors and developers.

CONCLUSION
There are NO alt coins worth gambling with. I wanted to hedge against Bitcoin collapse with a gamble in alt coins, but this is not possible. Please email Gavin Andresen and tell him not to mess with my Bitcoins. Stop this hard fork XBT B.S. and just meet over dinner with the other devs and have a mature and adult conversation instead. Then, decide as a whole group with consensus.

Gavin Andreson's email:
gavinandresen@gmail.com

P.S. I am NOT spreading FUD. I am NOT saying Bitcoin is gonna collapse. I am just saying that there is the probability of that happening so you should mitigate the risk by managing that risk. A wise investor does not try to maximize profit. A wise investor tries his/her best to mitigate risk. You can think of investing as gambling against the house (society or the entire market). Even if you have a probabilty advantage over the house, you'll still lose to the house because of the small size of your purse in comparison to the almost limitless purse of the house. For example, if you have a string of bad luck and lose 10 bets before you win 20 bets and get rich, but you've lost all your money to the house already after 10 bets so you can never win the next 20 bets. You don't know what lady luck is gonna throw at you, so the best thing to do is manage your risks. That's the only way to win at the investment game.

Was Litecoin one of the coins you looked at, if so what are your comments and or thoughts on Litecoin?

Its the only altcoin I'm invested in at this stage but only about 10/15% compared to my bitcoin holdings.

Litecoin has no significant tech advantage over Bitcoin;
1. They claim resistance to ASIC mining, but you can buy ASIC miners for Litecoin nowadays.
2. They are faster confirming than Bitcoin, but it still takes a long time for final confirmation to defend against multiple spending attacks. In other words, if you're buying a Ferrari with Litecoin, you'll still have to have a conversation over a cup of coffee with the seller before you can drive away. Litecoin is not offering secure confirmations in seconds.
3. No unfair ninjamining nor instamining, though. The originator of Litecoin has not done any shady business practices, to my knowledge.
4. The key thing is upside potential. I don't think it has much potential given Bitcoin's enormous head start and lack of significant technological advantage.

I don't think Litecoins are bad, but they're not a great investment, either. If you don't have it, don't buy more. If you have it, just hold on to it or spend it if you can spend it on something cool. I wouldn't sell it now, though. I'd wait to see what happens to Bitcoin in the next month or so before deciding to sell Litecoin or not. It may not be a great investment, but if Bitcoin collapses, it may (or may not) take up more market share. I say "may not" because Litecoin has the exact same problem with block size that their devs have to come to an agreement with in the future, too.

darkcoin and maidsafe will never be able to have a significant network effect..nobody outside the crypto uses that shit.

As usual. Top twenty in terms of capitalization. You can specify NXT, DASH (masternody) Bitsnares. etc.

There are also several promising coins small cap: NEM, Siacoin etc

Excellent post miragecash!

Thanks for the link. Invaluable info.

Excellent. Thanks for putting so much work into that. You've potentially saved a lot of people a lot of money.
Everyone really needs to see this research!

Dash monero doge litecoin and others has more pages in Altcoin section .............

Good read....

i think you understand litecoin enough to give financial advice on, where would i even begin  ???

firstly litecoin never claimed/claims or was even designed to be asics resistant, at the time of its creation asics wasn't even an issue.
its mining was simply designed to not compete with bitcoin miners.

Hey, don't take my word for it. The beauty of the internet is that all facts can be checked. Here is a quote from "Coblee" the head dude of Litecoin, "ASICs threatens the original goal of Litecoin"  (the goal being decentralization). "The Scrypt algorithm made this possible. It made it so that everyone with a computer can mine Litecoin, which was Satoshi’s original plan." That way, Litecoin miners with a fast graphics card (which is an application specific integrated circuit or ASIC, specific to graphics, but can be repurposed for crypto mining) will not be at an advantage over someone with just a regular computer.

Reference:
https://litecointalk.org/index.php?topic=18166.0 (https://litecointalk.org/index.php?topic=18166.0)

Since you insisted on my financial advice. Here's the best advice you'll ever get on alt coins. Don't buy them. If you want to participate in this sexy new technology. I understand. I have the itch myself. Mine them. Buy a fast computer, join a mining pool, and mine alt coins. Buy your computer from a store that allows refunds. Why?

Mitigation of financial risk. If your alt coin that you mined did not work out, you still have a nice computer to use for other money making business purposes such as coding, webmaster services, etc. If your computer running at 100 percent clock speed 24/7 breaks before the end of the month, refund it. The computer has dual use. That's called hedging your bets. The computer can be refunded. That's called insuring your investment. The safest investments in the world are ones where the risks can be hedged and insured against.

I made a short list of "honest" coins from the devtome page. None of them seem to be doing so good today and a couple may barely be alive.

So what's going on? People don't give a shit about the good projects? Obviously its about the quick buck and not about altcoins with real world value and use.

It's too bad we did not support the good guys instead of letting the scammers run this scene into the ground with all the clones, ICOs, and premine scams.  

So ya, altcoins are a bad investment.

agree. i've seen people in trollbox pumping scams and asked them and often get the reply "so i don't care i'm making $$$$"

but yeah funny how many exposed scams on here trade at the pointy end  :'(

yet if the same liquidity got behind the few honest coins, the pump n dumpers put their time instead into supporting the various honest coin communities, then everyone would be better off.

i see altcoins as an excellent investment just more so in our financial freedom future rather then an investment for fiat gain  ;)

well you kinda took that out of context, don't think anyone on this forum should be giving financial advice.

and i'm certainly not seeking yours.

however i'm not here for financial gain more so for financial freedom, which could be accomplished by everyone here, if we could get a p2p currency to be widely accepted. 

Yeah, I agree with you. However, I think it will happen, just not yet, because nobody's made an alt coin that is significantly technologically better than Bitcoin, YET. It's bound to happen. The only constant in the high tech world is that stuff eventually becomes obsolete and gets replaced by newer, better tech.

As for quoting you out of context, that was just a tongue in cheek joke. I do have an odd sense of humor  ;D

It will be interesting to see how Shadow plays out. I don't think it is a good "investment" or even a good cryptocurrency. However, they do have some very impressive and promising tech. It's also a very sneaky quasi-legal (maybe even illegal) way to roll out a corporate IPO for a business that gives shareholders a paltry 2 percent return on investment. This is history we are watching. Instead of expensive lawyers and financial services companies rolling out IPOs only to the super rich, by issuing cryptocurrency that represents shares of a corporation and using these shares as currency that can be used to buy stuff from the corporation, is a new business model that the world has never seen before. Also, by encrypting and distributing the network that is the business, it places the business beyond the reach of their geographic government. Instead, governments will have to compete for these corporation's business by offering lower taxes.

We are witnessing the birth of the new business model of the Singularity.

These are exciting times... this new digital wild west we are living in.

The link you posted: http://www.devtome.com/doku.php?id=a_massive_investigation_of_instamines_and_fastmines_for_the_top_alt_coins

sums up Monero as follows: "There are no instantmines or premines in Monero. The smooth block subsidy scheme could be a little bit more tapered towards a slower distribution than it is, but ultimately this coin passes the smell test."

I think it makes good case for Monero, as a good coin.

I have mostly tried to focus on the merged mined coins, because Proof of Work without merged mining is crazy and/or scammy.

It is hard enough to keep miners hashing merged coins, which cost them hardly anything to mine since it re-uses their existing already in use hash-power; trying to do Proof of Work without merged mining splits the world's hashpower up, increasing the chance that less than half the world's hash power is securing a coin, thus increasing the chance that there exists more hashing power out there than the coin has defending it, thus increasing the vulnerability to attack.

If we would focus more on the merged mined coins maybe they would not keep slipping in value to the point that less and elss miners bother to merged mine.

Take a look at IXCoin and I0Coin (as well, of course, as DeVCoin), and while you are at it consider getting into GRouPcoin (for example my doing your mining at mmpool.org merged mining pool) before it gets onto an exchange; and even consider CoiLedCoin, which even mmpool does not include in its merge currently so is very low difficulty.

For a real challenge, consider GeistGeld, with its twelve second or so block timing target it is so fast it pushes the limits of merged mining, if you can solve that you can make a pool that merges more of the coins than any other. In the meantime its difficulty is so low you can mine it with a CPU to rack up a pile of them against the time when someone does do something about the fast blocks "problem".

(Consider how many coins came out with the speed of their blocks being their main hype, claiming to be the fastest while still not as fast as GeistGeld. Also consider the fact that without being on any exchanges all these years, and being able to be mined with just a single core of a single CPU all these years, it probably is one of the best-distributed coins of all, everyone and anyone having had years in which to pick up a few at almost no cost...)

-MarkM-

If you are system admin and have no backup whatsoever consider yourself luck if you only get fired. To take a single coin to an unknown destination and have nothing to fall back (temporarily) in times of crises is a foolish risk.

The whole reason of cryptos existence is a fair means of knowing how much my goods or coin is worth to yours instead of endless printed free paper. yes you have a coin, so im i. Right now its still very primitive. nevertheless it identifies your worth you called it a CV.
In recent times the fundamental reason of bitcoin existence got lost and people tread crypto  as a get rich scheme and all sorts of ways being invented to get rich at the expense of others. This is not Satoshis view.

As it turns out Litecoin has become the defacto backup coin as technically sound with liquidity and gives a second fair opinion of what something is worth. The voting tread for the best starting time to launch had over 5000 views. The ANN tread had over a dozen pages of discussion before mining started so everyone had ample time to get organized.

https://www.youtube.com/watch?v=fk4YqPtvJao (https://www.youtube.com/watch?v=fk4YqPtvJao)
https://www.youtube.com/watch?v=Wg2deAEhoF4 (https://www.youtube.com/watch?v=Wg2deAEhoF4)
https://www.youtube.com/watch?v=6y0H5UOHDhY (https://www.youtube.com/watch?v=6y0H5UOHDhY)

Why bother when another shill will make another copy topic seconds later ?