Bitcoin Forum

I'm just going to lay it all out there. I and a partner (with coding help from a contractor offshore) are developing an IOS app that could best be described as a sort of Reddit with some interesting twists that I won't bore you with, except to say that one of the features involves the ability to upvote or downvote posts and comments. This will serve the familiar purpose of allowing users to view posts in order of popularity as well as to effectively police content that is objectionable, boring, spam, etc... So far nothing groundbreaking or unique. Our initial concept involved users being awarded points they would accumulate based on their positive contributions on the app. However, on reflection, it occurred to us that it would have more impact if we switched from awarding meaningless points to awarding units of our own cryptocurrency.

So, our app is 90% done. But we believe that the cryptocurrency feature could make it much more interesting and we want to create a cryptocurrency and build a wallet into the app prior to releasing it this spring. My challenge is that I don't even know what I don't know in this area.

I also had another related thought that could theoretically infuse our contemplated cryptocurrency with value that is linked to the future success of our company. Specifically, I wondered what might happen if we allocated 20% of our company's common stock (founder's shares) into a trust independent of the company. The trust document would direct the trustee to hold the stock for at least 5 years and then make best efforts to liquidate the stock and use the cash proceeds to purchase any outstanding units of the cryptocurrency that had thenceforth been awarded to users at a price per unit equal to the total stock sale proceeds divided by the total number of outstanding units of cryptocurrency. The idea is that by linking our cryptocurrency to the performance of our company's stock, we would (a) increase the value of the cryptocurrency and (b) provide owners of the cryptocurrency an incentive to support the growth of the app.

Coming from a place of crypto-ignorance, a few questions come to mind (and I'd be much indebted to anyone who can help with answers, criticism or ideas):

1. Should we start our own coin from scratch or use some service/platform like NXT, Cryptonote, etc?

2. What kind of coin should it be? POW? POS? Should it be 100% pre-mined by our company? After all, it will be the company that awards coins to users.

3. Is there a simple way to manage the coin without us having in-house technological expertise (i.e. an online interface or service provider)?

4. How do we build and incorporate a simple wallet for our cryptocurrency into our app? Should we find someone on Odesk(Upwork) or are there developers available somewhere on these forums.

5. How much is this all going to cost?

Humbly,

-IgnitionDefect

As far as #1 is concerned. We don't need another altcoin. New coins are met with disdain and distrust these days.

You may be better served partnering with an established altcoin. One that has talented developers and tech and, more importantly, credibility already existing. Good luck.

I debated whether to post this under "Project Development" but it seems thats only for "Bitcoin related projects" and this is Altcoin related so I posted it here. If I'm mistaken, I'll move it over.

There is hundreds of bitcoin forks/copy-paste coins, they all dead in long-term (which is 6 month for cryptcoins). To make such a fork it cost 1 BTC. It can live much longer if you support it via your firm.

There is also a number (roughly 10) coins which are unique: Ethereum, NXT, Bitshares, NEM and so on. It cost much more to fork it and you probably need to hire someone to maintance it.

The simple solution is to paid 1 BTC for 100% premined  POS coin.


Even bitcoin exists for 7 years. Who know what will happen in 5 years?

I don't want to be an innovator. I just need an out-of-the-box solution ideally. The value of our coin wouldn't be based on being some sort of unique coin, it would be based on its integration with our app. If the app is a disaster, the coin is a disaster.

Thanks. With regard to the 1 BTC fee for the 100% pre-mined coin, who offers this service? If its 100% premined, how do people get compensated for maintaining the blockchain/processing transactions?

You don't have enough scale to drive a crypto currency.

One of the main properties of money is it be widely accepted so it is fungible for many types of products and services. Without that feature, it is not desirable to hold it, other than as a pump & dump speculation which is why you see most altcoins declining after an initial hump of pumping (often insiders buying from themselves to pump up the value causing fools to buy).

Your best bet is to find an altcoin that will reward your signups and usership some how feeding value back to you for that effort. Unfortunately there doesn't appear to be any altcoin design to do that yet. This was one of the aspects of my marketing plan for my planned altcoin (which was temporarily stalled because of some rethinking I am going through (https://bitcointalk.org/index.php?topic=1319681.0) about the idealism of crypto currency).

I think it would be best if you don't have to do anything other than some simple integration by your offshore programmer. And it would be best that you find a way to profit on a greater movement for an altcoin than to try to invent an altcoin and scale it yourself. You don't even have the slightest clue how much is required. You could not afford to do it correct, other than to clone an existing altcoin but that wouldn't be 1/100 of the work needed to accomplish a movement that will lead to a successful altcoin.

I think you should be talking to me if I decide to proceed on my altcoin and if I feel confident I can still do it. I am doing a lot of deep thinking right now.

I've had a lot of success in the past in developing and marketing to millions of users. The key is integrating into some existing need. For example, when I created CoolPage(.com) web page editor software in 1998, it incorporated 1-click instant publishing to free hosting sites Geocities, FortuneCity, etc.. This was before we had Friendster (the first FoF social network). That drove a million downloads (back when the internet was 1/10 the population) and 335,000 confirmed websites (altavista had a feature for counting these back then).

So you need to think this way of partnering with greater economies-of-scale than you can do by yourself. Otherwise you will surely fail.

Edit: this was assuming your goal is not just another pump and dump to speculators. I was assuming you want to earn money some how by monetizing your app, not by finding greater fool investors.


Invert that, since the coin will be a disaster than so will be the app.

If your financial incentive to continue developing, marketing, and improving your app rely on the success of you creating a copycoin, then your plan is already dead-on-arrival (DOA).

The copycoin era is dying (or at least until another massive run up in speculative fever for Bitcoin reignites if it does and who knows when that will be, probably not until fall 2016 at the earliest).

That is true at the moment because the app has not been released or promoted yet, so we have 0 scale. However, in the event that the app takes off, I think our concept could be a great way to introduce people to the world of cryptocurrency.

Currency or other units of value can be used to purchase things as you say. But they can also be held as an investment, particularly if you have reason to believe they could increase in value (as might be the case where coins are indirectly linked to rapid stock appreciation foristance).

If we are sucessful in aquiring the millions of downloads we envision, and we incorporate the coin into our app in a compelling way, I think community interest with spring out of that, particulary if the value of the coin is linked to the success of the app.

Thank you for responding:)

The app won't depend entirely (or even mostly) on the value of the coin. It's more the other way around.

Since you are talking shares anyway, why not simply issue so many common stock shares that they are tiny value per share, comparable to a cryptocurrency value per coin or maybe less since shares have no decimal-places they are whole things, integer things; issue the shares on an existing platform such as HORIZON or NXT or Ethereum or the like, and use the API of that platform from your app to let people earn shares.

-MarkM-

That's brilliant, the only downside being compliance with federal securities laws.

Yes but you are not going to create enough diversity of uses and acceptability of your coin to scale up. Bitcoin had all the media in the world and also all the tech people wetting their pants and begging retailers to accept Bitcoin. And there was a massive speculative fever in Bitcoin in 2013.

You need to be partnered with many others who are doing similar and diverse kinds of apps and services with crypto currency. Thus you need to partner with a crypto currency which is capable of driving such a diverse interoption. This will also make the cryptocurrency aspect more enticing for your users.

Unfortunately I don't know of any serious altcoin (that has serious innovation that can challenge Bitcoin) which has some sort of partnership program like this. Perhaps Bitshares. I think I read something about an affiliation program, but I will warn you that I think Bitshares is a flawed technological direction. Afaik, NXT doesn't have anything that can help you in terms of partnership of distributing a common coin unit such as NXT (although it does help in creating your own coin).


Without driving the currency adoption, you are just repeating the gimicks of other copycoins. Perhaps if you can get 100,000 verified users, you can gain a speculative frenzy and cash out and run. But it is very, very unlikely you can drive this to widespread adoption because it will require being able to code all the aspects of a crypto currency to make opportunities available to others who want to do what you are doing. You can't just make your own little world of copycoin and expect to achieve any ongoing network effects.

Also creating an altcoin that has something significant enough to compete with Bitcoin is a very significant effort. I'd say 100 times more work than creating an app. And a lot of specialized knowledge that for example an expert developer such as myself took 3 years to assimilate.


If you start with the word "millions", then I think you don't have any plan B and are not doing due diligence marketing. You should instead have a plan to monetize your app even if you only get 100-1000 users per month. So that you don't put yourself in such a "do" or "die" proposition.

Another thing is that you should focus on the value your app provides to users. The crypto currency can be a way users can vote (they pay microtransactions). This adds value to your app.

But much better you could tie your scaling to 100 other developers who are also tying their scaling to yours. You should not create your own private copycoin, if you are really serious about this.

If you are just deluded or doing a pump & dump, then let me not waste any more of your or my time.


Issuing shares means he can go to jail for issuing unregistered investment securities (https://bitcointalk.org/index.php?topic=1218399.0).

What about using the NXT monetary system?  Anyone have any experience with that? Also, who are the service providers who could create a BTC fork for me for 1 BTC?

If you were working within the marketing plan I contemplated for my altcoin, your company could also get some coins too. So that is another way you monetize your app in addition to any other ways you already planned.


Yes you should be a faucet for coins, but these coins should not be just for your app, but for many 100s of apps (done by others). More faucets, more scaling.

Dogecoin was apparently successful with users tipping. I am not sure if tipping is a disincentive to voting. Seems to correlate well to upvoting and disincentivizes vote spamming. If you want votes to more accurately reflect value, IMO they shouldn't be free and thus users need coins to vote (but of course do what you think is best if you feel that interferes too much with your usership ... remember I don't know your entire model so I can't access details like that within your overall model for this app).


Again a perfect fit to the marketing plan I was contemplating. Exactly what I was thinking that some apps would be more specialized (e.g. location based), thus aggregating many apps through one coin would provide network effects to all those apps plus the coin. Again I think you should take this private messages with me, because I don't want to discuss all my plans in public yet (and also not sure about my plans).


Seems I can't get you to appreciate the value of interopting on scaling through a common coin with other apps. And I can't get you to appreciate to focus on your core competency and not try to do everything yourself. If we can't make headway on this understanding, then I need to invest my time else where. Thanks for the discussion.


NXT might have something that will work for you. I had seen something about those who will create a coin for you on NXT for 1 BTC afair. The SuperNet attempts to provide much of the infrastructure and I think it is still under development. But frankly I don't really understand the entire NXT ecosystem. I don't even know where to find all the information about NXT, SuperNet, etc..

Frankly I am concerned about if any of those coins can provide for example microtransactions or other features you will probably need to really add the value to your app with coin integration.

Bitshares and NXT are working in that direction, so you may want to look at those, but again those are both Proof-of-Stake which I think is flawed (https://bitcointalk.org/index.php?topic=1319681.msg13488432#msg13488432). Perhaps the SuperNet has some Proof-of-Work integration, but I don't know. IMO I don't think the world will adopt a PoS coin (based on the linked reasons (https://bitcointalk.org/index.php?topic=1319681.msg13488432#msg13488432)).

For example: https://bitcointalk.org/index.php?topic=1005245.0

But think about TPTB_need_war words. He telling the truth.

You don't need anything like that. Anyone who downloads the Nxt client and has some NXT can create their own currency.

He could start with his own currency (NXT system or which ever makes the most sense for him) then even convert those units to a more promising direction later if anything comes available.

In that case, I would think he should chose the option that is the least effort for him on integration and maintain. Because he needs to keep his options open and not overly exhaust his resources on a single platform since it is not yet clear what is the best.

I've looked into that. The nasty little surprise is the "Howey test (http://securities-law-blog.com/2014/11/25/what-is-a-security-the-howey-test-and-reves-test/)", which allows the SEC to go after any vehicle so long as it meets this four criteria:

1. It has to be sold for money.
2. It has to be intimately tied to a common enterprise, not an aggregation of enterprises.
3. A reasonable person considering whether or not to buy it will be motivated by the hope of profit when deciding to buy or pass.
4. The expected profits are to be realized by the efforts of a centralized group headed up by the promoter, or the efforts of the promoter him- or herself.

Cryptocurrency-wise, #4 is the easiest to avoid for a true decentralized cryptocurrency. So long as you encourage, or at least allow, any independent party or parties to build value-adding services using your cryptocurrency which have the effect of making the crypto more valuable, I think you can make a good case for criterion #4 being false. To qualify as a security, all four criteria have to be met. If one of the four criteria is false, your crypto will not be a security by this test.

By my reckoning, your best bet is to focus on #4 rather than trying to get clever or cute with #1. ["The IRS said Bitcoin is property, not money, and I sold it for Bitcoin!"] Better yet, focus on #4 and #2 by actively encouraging as many independent folks as possible to build value for your crypto. In this sense, the crypto most unlike a security is Dogecoin. To prove it meets the Howey test, the SEC would have to prove a conspiracy theory. That's possible in a court, but it's an onerous procedure unless the conspiracy is small in membership. With respect to Dogecoin, the SEC might as well be hawking the "Protocols of the Elders of Shibe" (if you get my drift.)

One notorious crypto, Paycoin, did meet the Haney test because its promoter, Josh Garza, personally promised that he'd buy back the ones he sold at a price of twenty dollars each through an organization he controlled. This promise sunk him; the fact that he reneged on it sunk him hard.

Disclaimer: I'm not a lawyer, only a Googler. Don't listen to me unless you want to go overboard to pass the "smell test." You cannot rely on me for a technicality-driven measn to avoid the Howey test.
 

I replied to you in the long thread about the Howey test (https://bitcointalk.org/index.php?topic=1218399.msg13499387#msg13499387).

I think so if you can also get many other apps to use your coins and create a huge diverse ecosystem for these tokens (but I don't think you can do that without losing your focus on your app!), but consult your own attorney. Note smooth and others felt premine was culpable. I argued against that. None of us are lawyers.

Again I strongly urge you to realize you are not capable of scaling up an altcoin. Just go read this thread (https://bitcointalk.org/index.php?topic=1319681.0), so you have some clue about the level of technical issues you are no where near prepared to implement. You should focus on your app and partner with an altcoin that wants to work with apps and scale up many apps. But you are not going to listen to me, so go ahead and learn the hard way. Good luck.

Disclaimer: I am not a lawyer.

I doubt distributing 100% at no cost is a problem.

What I suspect will never escape some degree of capability is selling ICO coins. No matter how many times and how many different ways you claim "it isn't an investment" we all know it really is an investment. Prosecutors and judges know too.

But sure get your own legal advice. Better yet, pay multiple lawyers to give you different advice. Then you can pull out whichever one you need and claim good faith since you were relying on competent advice of counsel.

i recommend integrating an existing altcoin or even 4.

use ones with a strong existing infrastructure that means you can get away with minimal requirements to support your usage.
you will not even need to run nodes, just use their existing api's
and many such api's are generic between coins, so won't require too much work between coins.

also if you use existing popular coins, it will be an encouragement for those coin users to use your app,

if your app is awesomely used and popular, then you could consider adding an in-house currency which you could distribute through the app itself.
personally i'd recommend PoS as it's easier to protect the network by holding a % of premine in house staking wallets, rather than putting it at risk to the amount of random rogue hash or even legitimate coin-switching pools.

Your reply:


says that you're either antsier or more prudent than I. You seem reluctant to accept that Howey requires that all four criteria be met, and even more reluctant to recognize the efficacy of a "best-efforts" defense. Did you read the link I supplied, or the Wikipedia article on Howey (https://en.wikipedia.org/wiki/SEC_v._W._J._Howey_Co.)? W.J. Howey went out of his way to discourage independent action. By my lights, that's the complete opposite of the peer-to-peer foundations of cryptocurrency. As I noted, I'm no lawyer myself...but I fail to see why a best-efforts defense backed up by repeatedly and publicly encouraging independent entrepreneurial action won't hold up.

A capable lawyer could really drag out the case by slowly and emphatically introducing every individual exhortation by the dev (team) to build an independent service for the cryptocurrency - as Defense Exhibit A, B, C, and so on in a performance that would be a lot like a filibuster - and not stop introducing them until he runs out, or is shouted down by the judge (which would give him good grounds to "except" [i.e., indirectly object and give notice of a future appeal.]) or until the prosecutor agreed to stipulate that there's a pattern of exhortation that's the opposite of the pattern of W.J. Howey's exhortations. To mount a defense of this kind, all you need to do is be somewhat of a nag. :P

How do you prove 100% was distributed not to yourself? I think you should remove the "100%" and reconsider if that changes your stance since you were stating in my thread that a premine is culpable.

I think he wants to add value for users by giving them some coins for free. So he would need to partner with an altcoin that has that sort of partnership opportunity available. Afaik, none do. It is one of the marketing ideas I was going to pursue with my coin. Obviously Aeon and other coins which are distributed via PoW or are already fully distributed for PoS can't qualify for his needs.

And you all think I was joking when I said I had many tricks up my sleeve on marketing. This wasn't the only one.


He is naive (https://bitcointalk.org/index.php?topic=1319681.msg13501488#msg13501488) if he thinks he can manage his own coin. But let him learn the hard way.


Choosing an inferior consensus model (https://bitcointalk.org/index.php?topic=1319681.msg13488432#msg13488432) in order to create an inferior copycoin is of low value to his users (Edit: because as the linked post points out, wide-scale adoption drives value and wide-scale adoption via network efforts requires trust in the consensus model).

First of all, if you are talking about criminal culpability in a theoretical sense, you don't need to prove anything, the prosecution does. In a practical sense it might help to use KYC-type procedures, have low-barrier methods to receiving free coins without limiting that to only a portion of the distribution, keep good records, etc. Or maybe it is impossible, I don't know.

It certainly isn't the case that every ICO has to be of the form "hey anonymous investorsoh-sorry-I-meant-users, send your BTC to this address and we'll send you some coins, and remember this investmenttoken is not an investment".


I was responding specifically to the OP's statement here about giving away 100% of the coins. If you don't give away the coins but instead sell them (or do anything else like pretend to give them away while actually keeping them or giving them to privileged affiliated parties) you are likely taking a bigger risk.

Obviously you are referring to Iota and Ethereum.


And thus my point was that it can't proven that you gave away 100% and thus the implicit distinction you made was impossible.

I can probably safely assume you didn't read the entire thread of prior discussion and analysis at the link I provided to you. I don't have time to go redigest that thread again, so I will just attempt to broadly resummarize from memory. You should refer to the thread to dig deeper.

I had read the actual Supreme Court text and not just summary of interpretation. The judgement revolves around the interpretation of the meaning of "investment contract" and it specifically says that there are no specific cases that will preclude the interpretation of the economic reality:


So there are no specific rules. The court will look at the economic reality of whether participants were placing of capital or laying out money in expectation of profit. Note that 'capital' might not even mean money. It can include applying their effort, which is a form of human capital. I confirmed this by reading in depth other expert interpretations and subsequent case law.

It appears to me that the court will look at the reasonable expectations of the participants. And always side with protecting the public. Thus my interpretation is if the participants are not investing but just using your tokens, then they don't need to be protected by securities registration. However if your tokens are being invested in by investors expecting a profit, then you need to register then with the SEC. This is why I advised making sure the ecosystem is well diversified asap, so that by the time investors start accumulating the tokens, then it can't be alleged that the investors were basing their investment on the ongoing effort of the original developers of the coin. It is with this interpretation that I have concluded that even coins (such as Aeon and Monero) which distributed their coins via PoW are still culpable under this law. And I don't understand why smooth is risking his already lucrative employment as a software developer to work on a coin that could end up getting him in big trouble. He doesn't need that! And for what gain? IMO Monero and Aeon are not solving any major paradigmatic issues for crypto (https://bitcointalk.org/index.php?topic=1319681.msg13503926#msg13503926). OTOH, since they are very small fish, they are likely to never amount to any legal case, but again why waste effort?

But again I am not a lawyer, so you can't cite my posts as legal advice!!

Moving back to the point: use Nxt. Just posted in the old NXT thread:
https://bitcointalk.org/index.php?topic=303898.msg13506440#msg13506440

Thanks for doing it! I'm not a lawyer myself; I'm just a crypto enthusiast.  And to be frank, I'm batting this around in part to gin myself up; in this sense, I'm not dispensing advice of any sort. I have a long track record of sinning my own sins & taking my own blame. :)

It's just that criteria #2 and #4 really cut to the heart of why a cryptocurrency and its ecosystem is profoundly different from a business or corporation. If a court unthinkingly applies the Howey test in an choplogicky manner, it'll act as a stereotypical regulator (if you get my drift.)

That said, I should be preparing myself to "sin my own sins and take my own blame."

Thanks EvilDave. This looks ideal so far. I'm reading up on it now.

Economic reality, as you said. If you really give away the coins and the money really doesn't flow into your pocket, that's one thing. If you "give away the coins" and then next day you happen to mysteriously discover funds to buy a Lambo, that's something else. Much better chance to end up in the slammer in the latter case (though both may still be small risks in an absolute sense, or not).

If you want 100% guarantees, too damn bad. They don't exist. You could do absolutely nothing having to do with coins/investments/securities and the next day you could be out jogging instead of inside coding and get hit in the head by a meteorite and killed.  Everything in life is deciding which risks to take, and even then accepting that much is unknowable and uncontrollable.

Concur:

@OP
You say you don't know anything..

Then the 2nd half of your first comment you go on and on about knowing everything.

Your full of shit.

And voting crap ? ..that sounds dumb and gay.
Up voting posts etc is always a bad idea.

Tacking on a pointless currency to what sounds like a pointless app is ..pointless.

I think all you want here is people to give the idea to copyright.
This routine is often employed by guys here who want to make their coin but want pre-approval.
They are concerned otherwise it will get ignored / flamed.
So they want the public to tell them how to make it so YOU can reap the reward.

And maybe drum up some business here and find a dev to tack on a shit coin for you.

Fuck this shit.

^^You must be a lot of fun at parties.

I'm currently leaning towards creating a token through Counterparty that uses the Bitcoin blockchain. GetGems did this for their app, which has a built in wallet that can store both Gems and BTC. I like the idea of being part of the bitcoin ecosystem and being compatible with the blockchain, etc.

Have any of you used the GetGems app or purchased Gems?

Smooth and others have pointed out that GetGems adoption is estimated to be pathetic.

Again we have advised that creating your own shitcoin for your app is really silly because you will not have enough network effects and investors will also not be interested in your vertical market coin, even if your app becomes super popular it won't matter because you as a developer don't have the focus to make innovations of the coin features needed and the ability to market the coin horizontally. Block chain tech is reserved for experts. You are expert at marketing your app. You aren't likely an expert at everything, given you admit in the thread title that you are "technically impaired".

Horizontal markets (which can be a mosaic of a plurality of vertical markets) are the only way to incentivize strong network effects.

This is the last time I will comment in your thread, because it is obvious that you are determined to create your very own shitcoin.

GetGems is looking for ways to do airdrops to users. Why not partner with them. You can't create coin network effects by yourself.

(bear in mind that I took a look at GetGem's website and based on the website alone, I am not confident in their marketing acumen, but perhaps their apps are where the marketing action is)

Please do not mistake my negativity on your plan to create a shitcoin, as indicative of any animosity towards you or your app plans.

inferior consensus model vs blockchain at risk from any person with a middling mining rig...  unless POW coin becomes incredibly valuable to mine of course.

there are coins trading that you can usefully cpu mine with a cheap arse vps. i could put my low end gaming puter on them and screw them up ...