Alternative coin distribution method: burn old stuff

[ttookk]

This is not a new idea, but I think, with some touch-ups, this may be an interesting way to manage initial distribution of a coin:

Instead of an ICO, you have a timeframe in which coins of random cryptocurrencies can be sent to dedicated burn-addresses. At the end of the distribution phase, participants get coins proportional to the BTC value of coins they burned.

To qualify as a cryptocurrency that can be burned, some conditions have to be met:


A minimum BTC value has to be met at the time of distribution.

The blockchain has to be healthy, as in a minimum number of blocks found in the last 24 hours before distribution.


Thoughts?

[thebatletbet]

burn coin is all coin use burn system not new system, new burn is fails karma coin to burn karma token
coin distribution is good maybe same LTBcoin, distribution use forum site and activity, slowly distribution is founder and owner can revenue from advertising, not inflation coin because distribution is slowly, and coin not control owner, because all coin distribution is free

[talkbitcoin]

apart from the fact that burning coin is a bad idea, and i don't see much point in doing it, my thought is that what is wrong with the good old normal way of making a new altcoin, have normal chain and distribution without ICO, premine,.... and just let everyone mine from block one and distribute coins with a logical economical roadmap in mind and with a realistic number of coins!

why should we ignore this and choose complicated bad ways?

[d5000]

I like that idea. But it is one of the more complicated methods for the founders - much work involved and not much profit (or entrepreneur's wage) can be taken. A multi-coin ICO without minimum participation rate would be a similar and more attractive way.

[johhnyUA]

Maybe, it's one of the most stupid ideas which were on this forum.
Why i must burn MINE coins? They already with me. And i don't want to go for risk like send them to guy (developer) about whom i don't know nothing. Maybe he just takes my coins and run away. Or his own coins after start trading on exchanger will cost less then i paid for it.
But sometimes is much easier to send bitcoins against to buy some shitcoin and send it to someone. Commision can be very big (if i want to send big amount of money) (I think this is main problem)

[jaberwock]

this is the same as buy the coins, except by the fact that no one will receive the actual payment

I don't like the idea of burning money.

also how to be sure the devs or anyone else won't use a burning address that they have the private keys?

[HI-TEC99]

this is the same as buy the coins, except by the fact that no one will receive the actual payment

I don't like the idea of burning money.

It's the same system counterparty used.

https://en.wikipedia.org/wiki/Counterparty_(technology)

Counterparty has a native currency called XCP. It was originally issued using a provable method called "proof of burn". This method involves sending bitcoins to a special address that renders the coins permanently unspendable. By avoiding funding during its launch, Counterparty has ensured that developers and users have equal financial opportunities. During January 2014, 2125.63 bitcoins were sent to 1CounterpartyXXXXXXXXXXXXXXXUWLpVr

https://blockchain.info/address/1CounterpartyXXXXXXXXXXXXXXXUWLpVr

also how to be sure the devs or anyone else won't use a burning address that they have the private keys?

There are ways to make an address from a script that evaluates to false, and coins sent to any such address are unspendable. The address is generated from a script and has no private key, so a dev can't spend the coins sent to it.

https://en.bitcoin.it/wiki/Proof_of_burn

By "burning" a tranche of bitcoins I just mean sending them to an address which is unspendable. The precise technical details of this will vary from cryptocurrency to cryptocurrency. With Bitcoin, any address which is [the RIPEMD160/SHA256 hash of] a script that evaluates to false will do. So, the script should do a "deliberately silly" thing - instead of things like "check such-and-such signature, and put the validity result on the stack", it should do something like "add 2 and 2, and now check if what's on top of the stack is equal to 5". (Or just "push 4, and check if it's equal to 5". Anything of that sort.) There are thus an unbounded number of such scripts, with entropy saturating RIPEMD160 since you can choose big numbers to taste. So, bitcoins sent to such a txout can never be redeemed on a future txin

[cryptohunter]

It's not really like burning money. You just decrease the supply of alt coins you no longer want. In theory it should increase the value of the remaining coins if demand stays the same.

There have been a few coins like this before but they never really took off. I'm not sure why could be a good way to get rid of old junk without crashing their tiny markets.

 

[ttookk]

There are lots of arguments for and against this idea.

I typed it with a tired mind, so here are some additional thoughts:

During the byteball distribution, people complained, that they don't have BTC, but have other coins. Having a system in which not only a single coin, but lots of different cryptocurrencies can be used, was one reason for this idea.

Instead of just linking up wallets, burning coins creates a kind of "gate". This would prevent people from linking up giant BTC addresses, like ICO funds and stuff.

Because people have to actually spend money, instead of getting stuff for free, the risk of dumping may be lower. Of course, this depends on the quality of the coin created.

People complain about ICOs being get-rich-schemes for "developers". I get that. I don't think this is necessarily a given, but devs might decide that they want to prove their honesty and commitment by not taking the money for themselves (again, see byteball).

apart from the fact that burning coin is a bad idea, and i don't see much point in doing it, my thought is that what is wrong with the good old normal way of making a new altcoin, have normal chain and distribution without ICO, premine,.... and just let everyone mine from block one and distribute coins with a logical economical roadmap in mind and with a realistic number of coins!

why should we ignore this and choose complicated bad ways?

Not every cryptocurrency works in a way where mining is an option, for example if the amount of coins/tokens is fixed. You may create a minable token that can be exchanged later on, though. Might not be the worst idea, actually. 

[inashed]

This could work, following some logic, in a ultra specific way.

The logic and how the distribution method of this coin would be:
If you think about it, money is a way to represent wealth.

This coin where you burn coins to get the starter coins, would work in a specific way:

The max amount of coins from this altcoin would be decided.
The burning day (actually the burning day and minute of the day), would also be decided before the system start. Lets imagine 6 months and 0 minutes.
People would be able to send BITCOINS to a specific place. At any moment of time until the burning day, they can get their coins back, if they want.

On this example, after 6 months and 0 minutes, all BITCOINS at this special burning place would be burned. People would receive coins based at the amount of coins they burned compared to the total amount of coins people burned. If 100 coins were burned, and you burned one coin, then you will get 1% of all altcoin coins.

Those coins will be the entire poll of coins, no new coins will be mined. Miners (or whatever proof of X is used) will only receive transaction fees.


All those rules have specific ideas behind it and here are them:

Money is a way to represent wealth, with this coin, you will be converting your bitcoins to this burnercoin, so you will be representing a wealth you have with those coins, the coins don't come out of nowhere. Unlike usual ipos, the ones that receive the money/coins "to be burned" wont get money out of nothing (the coins or dollars people sent), so you wont "fuck the system" by receiving money out of nothing to someone.

At the example I said before you burn bitcoin for burnercoins, the coin don't need to be specifically bitcoin, but must follow 2 rules:
1-Must be a specific coin: The idea is that wealth is converted in a specific way. If everyone receive X burnercoins for Y another coin, everyone wealth was represented without a doubt (more about it later) at the exact specific way.
2-Must be a very good coin: The ones burning their coins must be losing something. If some random unknown coin was used to make the exchange, the guy could think "hey I will burn this coin, since it will be worthless anyway, so I will be losing nothing by burning this coin and so get free wealth." And if he is right and the coin will be worthless in the near future, he will be getting wealth out of nowhere.

All coins are converted at the exact minute, because inflation, deflation.... exist, by burning the coins at the exact same time, people will be wasting the exact same thing. People can remove their coins from burning place at any time they want, because without a way to remove your coins from the burning place, the wealth they spent would be the wealth of the coin at the moment they sent it to the burning place.

No new coins are mined (except transaction fees), to make sure no one get money out of nowhere. Transaction fess are still needed because of how the cryptocurrency works.



PROBLEMS:

All those rules deal only with the distribution method. The creators of the coin would need to find a way invent some proof of X mining/minting/etc... method that follow the same spirit/idea used to create the previous rules.
One wanted feature is some proof of X method, that reduce the amount of wealth lost by guys that didn't mined the transaction fee. This way, the wealth you receive from mine/mint/etc... is closer to the wealth you spend to mine/mint/etc..

[ulhaq]

I like byteball's general concept, to distribute cryptocurrency to as many individuals as possible. But it was not executed well, only a few ppl (even in the cryptocurrency community) even knew about it. What they seem to want to do is proof of person, which makes the most sense. If you could initially equally distribute a cryptocurrency to every person on earth, wouldn't this be ideal?

[HCLivess]

I like the way bytecoin did it too. I don't understand the OP dev motivation at all however.

[inashed]

[...]If you could initially equally distribute a cryptocurrency to every person on earth, wouldn't this be ideal?

Nope, money is a way to represent the wealth you have.
If you give equal money to everyone without asking wealth back, people will get money out of nowhere. Homeless people would get money out of nowhere.
Thats why ipo without burning coins is a bad idea, the developers get money out of nowhere.

[ulhaq]

[...]If you could initially equally distribute a cryptocurrency to every person on earth, wouldn't this be ideal?

Nope, money is a way to represent the wealth you have.
If you give equal money to everyone without asking wealth back, people will get money out of nowhere. Homeless people would get money out of nowhere.
Thats why ipo without burning coins is a bad idea, the developers get money out of nowhere.

That is not correct, the money does not come "out of nowhere". When governments prints money and spend it, it did not come out of nowhere, it is at the expense of all other currency in that denomination. So when euros are printed, the value of each euro in circulation goes down.

Look at initial bitcoin mining. The electricity cost was practically nothing. That money is worth a large amount now. You could say that ppl were taking risks for it and it paid off, but really the risk was negligible.

A currency has to be maintained and there needs to be continuing circulation in the future, so there are opportunities for miners who are going to get currency in exchange for work. But in some PoS coins there is no mining equivalent, so it is "free money", and those coins need some way to have an initial distribution. Sure, the founders can exchange currency for fiat, but why is that superior to what byteball did, eg?

[inashed]

That is not correct, the money does not come "out of nowhere". When governments prints money and spend it, it did not come out of nowhere, it is at the expense of all other currency in that denomination. So when euros are printed, the value of each euro in circulation goes down.

If you sell a coin you created, the ones that sold the coin will get money out of nowhere, if anything you are paying for the cost of creating the coin.

Also when government print money, yes the rest of the money value is reduced but imagine this:
Country has 10 citizens.
There are only 100 coins.
Each citizen has 2 coins and the government has 80 coins.
Each person has 2% of the total amount of coins and the government has 80% of it.
The government create 100 new coins.
Each coin now is worth half of the previous value.
Problem solved?
The citizens now have 1% of total coins and the government has 90% of it.
The government got money out of nowhere.

[ulhaq]

That is not correct, the money does not come "out of nowhere". When governments prints money and spend it, it did not come out of nowhere, it is at the expense of all other currency in that denomination. So when euros are printed, the value of each euro in circulation goes down.

If you sell a coin you created, the ones that sold the coin will get money out of nowhere, if anything you are paying for the cost of creating the coin.

Also when government print money, yes the rest of the money value is reduced but imagine this:
Country has 10 citizens.
There are only 100 coins.
Each citizen has 2 coins and the government has 80 coins.
Each person has 2% of the total amount of coins and the government has 80% of it.
The government create 100 new coins.
Each coin now is worth half of the previous value.
Problem solved?
The citizens now have 1% of total coins and the government has 90% of it.
The government got money out of nowhere.

You just stated exactly what I had written. And no, I would not say the government got money out of nowhere. The additional money that the government has CAME FROM the 10 citizens of the country. Their buying power is reduced. The government printing money ipso facto is a tax on its citizens.

If you sell a coin you created, the ones that sold the coin will get money out of nowhere, if anything you are paying for the cost of creating the coin.

The founder creates value by creating the coin. That value is realized by selling the coin.

But my point is, imagine you have 2 currencies that use some PoS method, so no mining is required. You need to have an initial IPO. One of the founders sells the coins for fiat. The other distributes it for free to many individuals throughout the world. How can you say that selling it is superior to giving it away? I do not think either one can be seen as "superior."

[inashed]

You just stated exactly what I had written. And no, I would not say the government got money out of nowhere. The additional money that the government has CAME FROM the 10 citizens of the country. Their buying power is reduced. The government printing money ipso facto is a tax on its citizens.

The out of nowhere means, they just created a coin and got richer compared to the population (by taking their money).
Compare that, with cryptocurrency as some example, you can just increase the amount of decimal digits is possible, so if you have 100 coins and this is not enougth for the population, you can allow 0.1 coins, and now you have 1000 unique coins and no one lost money or got money, then if needed you can allow 0.01 coins and etc...