I'm Tech-Impaired But in Charge of Spearheading Development of an Altcoin

[ignitiondefect]

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

[1715388952]

1715388952

[1715388952]

1715388952

[1715388952]

1715388952

[1715388952]

1715388952

[rokkyroad]

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.

[ignitiondefect]

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.

[50cent_rapper]

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.

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

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

[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 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.

[ignitiondefect]

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.

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

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

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?

[TPTB_need_war]

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 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.

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 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.

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).

[ignitiondefect]

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

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:)

[ignitiondefect]

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

[markm]

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-

[ignitiondefect]

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.

[TPTB_need_war]

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

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.

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).

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).

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 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:)

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.

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-

Issuing shares means he can go to jail for issuing unregistered investment securities.

[ignitiondefect]

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?

[TPTB_need_war]

Thanks. To answer, I have zero interest in a pump and dump. In fact, all coins would be distributed to users and the company would own none.

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.

In terms of tipping other users, I believe that should be enabled but not directly associated with voting because that would act as a disincentive to upvoting. Instead, the company would be the original fount of all coins.

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).

In terms of millions of users, that's the long-term goal. In fact, you are exactly right about the 1000s of users being the correct short term goal, as we will be location-based.

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).

As long as the coin works, I'm perfectly happy to fork litecoin or whatever. I see no shame in the term "copycoin", imitation being the highest form of flattery.

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.

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?

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. 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).

[50cent_rapper]

Also, who are the service providers who could create a BTC fork for me for 1 BTC?

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

But think about TPTB_need_war words. He telling the truth.

[anon__]

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?

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.

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

[TPTB_need_war]

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?

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.

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.

[Nxtblg]

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.

I've looked into that. The nasty little surprise is the "Howey 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.
 

[TPTB_need_war]

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.

I've looked into that. The nasty little surprise is the "Howey 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.

[TPTB_need_war]

Hopefully, we would be OK with regard to securities law if we premine 100% and distribute those coins to users of our app at no cost.

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, 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.