Let's Talk about Scamcoins - Researching for Let's Talk Bitcoin! show

[Impaler]

This is true on some levels but I despise the notion that someone took Bitcoin and modified it to enforce their sense of social justice. Of course, it's perfectly within their right. I just feel that it is not particularly innovative. You have a good point about an alternative that has interestingly different properties - but what properties does Freicoin have besides turning your account balance into a hot potato?

I fear we are derailing the thread but I will respond once more.  I find your statement a bit irronic when BTC itself was a codification of the social justice standards of the Austrian 'hard' money school of economics and it enforces that code amongst it's users quite effectively.  Everyone's got their own sense of social justice and the source code is open source so all alternatives will eventually be created and will likely coexist alongside each other, demurrage was one of the more obvious things to do with BTC because it solves much of the difficult book keeping with demurrage.  In fact the first thing I did upon learning of BTC was look to see if anyone had done a demurrage implementation and discovered the Freicoin project when it was still in it's infancy.

As for innovation, we at FRC credit Gesell with the monetary theory behind demurrage, it had already been implemented in paper form many times and we were just the first to implement it in cryptographic currency.  maaku can attest to considerable technical challenge involved their, it was not simply a matter of tweaking some values in BTC.  Other features maaku has implemented for us include a smoothly declining mining reward curve which avoids those sharp drops that add unnecessary volatility to the market.  We also have a shortened 3 year period to reach full coin-base, our purpose here is to try to see if cryto-currency really is sustainable with a fixed supply.  Lastly we have our foundation which will distribute 80% of the coinbase, the mechanic we implemented of splitting each blocks rewards between miners and foundation addresses is public and entirely traceable as those addresses are compiled in the source.

P.S.  mindtomatter, if your at all interested in hearing more about FRC or are looking for a guest to interview, maaku and myself are available.

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[tvbcof]

The whole premise upon which Freicoin is based, that "hoarding" is somehow bad (we prefer to call it "saving") is flawed. It springs from the Marxist school of thought that is against the concentration of wealth in the hands of anyone, even if the that concentration came about by providing goods and services that people want.

Although I have not studied it for more than 30 seconds just now, I would say the Freicoin is a fairly decent example of trying to hammer a square peg into a round hole and ending up with splinters for one's efforts.  That is because any Satoshi-style distributed crypto-currency is simply a shitty way to do an exchange currency if one values scalability or privacy.

There are actually a lot of really interesting concepts floating around and I am sure that we'll see some decent implementations over time.  I'll bet that those which can break themselves free of the 'Satoshi-orthodoxy' frame of reference will be among those which gain the most traction.  Not that there is/was anything wrong with Bitcoin which is obviously quite brilliant, but more because the problem-set addressed by 'money' is broad and trying to cover all use-cases with a single solution is kinda silly absent a really good reason to attempt it.

[wingding]

I'm looking for suggestions of what you would consider a "Scam Coin" - What the benefit is of pre-mining, what alt-coins are NOT scamcoins.  Looking for people both for and against various coins, we want to represent a variety of perspectives.

Bitcoin is a "Scam-Coin", along with other cc. It is not a currency. A currency is a mean of exchange. Bitcoin is like a stock, except that is does not represent a share of a company producing something. Its only value is that someone will buy it a higher price later. Even Gavin Andresen compares his bitcoins with stocks in an internet startup, and in this sense he shares this point of view. But he profit from the pyramid and hence consider it a fair game.

In common currencies the central banks are in charge of the money supply. In bitcoin there are a very few people owning the majority of coins. Why should I, or the rest of the world let those people become the new money masters? Just because they spotted the concept early? Well that is exactly the same kind of morality justifying a pyramid scheme. If each bitcoin becomes of value 10 000 usd, I can quit working for rest of my life. Gavin Andresen and other high-priests can buy Apple or an airline. It would still be scam. 

[mindtomatter]

I'm looking for suggestions of what you would consider a "Scam Coin" - What the benefit is of pre-mining, what alt-coins are NOT scamcoins.  Looking for people both for and against various coins, we want to represent a variety of perspectives.

Bitcoin is a "Scam-Coin", along with other cc. It is not a currency. A currency is a mean of exchange. Bitcoin is like a stock, except that is does not represent a share of a company producing something. Its only value is that someone will buy it a higher price later. Even Gavin Andresen compares his bitcoins with stocks in an internet startup, and in this sense he shares this point of view. But he profit from the pyramid and hence consider it a fair game.

In common currencies the central banks are in charge of the money supply. In bitcoin there are a very few people owning the majority of coins. Why should I, or the rest of the world let those people become the new money masters? Just because they spotted the concept early? Well that is exactly the same kind of morality justifying a pyramid scheme. If each bitcoin becomes of value 10 000 usd, I can quit working for rest of my life. Gavin Andresen and other high-priests can buy Apple or an airline. It would still be scam. 

I would disagree with you because Bitcoin and to a lesser extent Litecoin have filled the #1 and #2 slots, so when people think of CC they gravitate towards the most useful one, which in this case means the largest user-base.  The bar was low until those slots were filled, but just as Facebook might not be the best social network it is still the dominant one because if you want to use a social network, it makes sense to use the one which is in use by the largest number of people.  Because those slots are now filled, any new coin coming up has to have actual advantages that would motivate people to move away from the status quo and to one of the other chains.  this is only possible if there are actual advantages to doing so, it's not enough to be "the same" because features aside, it's the size of the network that directly impacts the usablity.

I miss something?

[wingding]

I'm looking for suggestions of what you would consider a "Scam Coin" - What the benefit is of pre-mining, what alt-coins are NOT scamcoins.  Looking for people both for and against various coins, we want to represent a variety of perspectives.

Bitcoin is a "Scam-Coin", along with other cc. It is not a currency. A currency is a mean of exchange. Bitcoin is like a stock, except that is does not represent a share of a company producing something. Its only value is that someone will buy it a higher price later. Even Gavin Andresen compares his bitcoins with stocks in an internet startup, and in this sense he shares this point of view. But he profit from the pyramid and hence consider it a fair game.

In common currencies the central banks are in charge of the money supply. In bitcoin there are a very few people owning the majority of coins. Why should I, or the rest of the world let those people become the new money masters? Just because they spotted the concept early? Well that is exactly the same kind of morality justifying a pyramid scheme. If each bitcoin becomes of value 10 000 usd, I can quit working for rest of my life. Gavin Andresen and other high-priests can buy Apple or an airline. It would still be scam. 

I would disagree with you because Bitcoin and to a lesser extent Litecoin have filled the #1 and #2 slots, so when people think of CC they gravitate towards the most useful one, which in this case means the largest user-base.  The bar was low until those slots were filled, but just as Facebook might not be the best social network it is still the dominant one because if you want to use a social network, it makes sense to use the one which is in use by the largest number of people.  Because those slots are now filled, any new coin coming up has to have actual advantages that would motivate people to move away from the status quo and to one of the other chains.  this is only possible if there are actual advantages to doing so, it's not enough to be "the same" because features aside, it's the size of the network that directly impacts the usablity.

I miss something?

I agree with your logic. But the main problem is that a wide use of BTC and perhaps LTC would lead to a large increase in value, which in turns give bubbles and price instability. That is unfeasible for a currency. If Satoshi had premined all the 21 mill coins in the first place, it would not change the picture much from an economy point of view. Except that then everyone would have considered it as scam. But what is really the difference of one guy sitting of most of it, or ten or a few hundred?

[mindtomatter]

Except they actually serve a purpose - The combination of features (borderless, trustless money transfers) combined with a growing network effect enhances the utility - You're confusing an adoption curve with a bubble.  The price will of course overshoot and then correct, the question is the overall adoption trend.

This is different from new coins that add nothing new except speculative potential for people who buy them early.  With bitcoin there is the network affect and the aforementioned utility, what do new altcoins that change nothing bring to the table for the non-early adopter?   As far as I can tell nothing.   Each time something succeeds, the bar for anything that would take it over gets higher.

[acoindr]

...

This is different from new coins that add nothing new except speculative potential for people who buy them early.  With bitcoin there is the network affect and the aforementioned utility, what do new altcoins that change nothing bring to the table for the non-early adopter?   As far as I can tell nothing.   Each time something succeeds, the bar for anything that would take it over gets higher.

Exactly.

That's why I said this back in October 2012 when Litecoin was at $0.04:

...So the solution [to Bitcoin Foundation concerns] is simply to promote at least one other cryptocurrency in the market (ideally there might be 2 for better distribution), and do it before Bitcoin gets a stronger foothold. The timing of TBF announcement is fantastic, because it leaves room in Bitcoin's life for competition to check it. ...

[wingding]

...

This is different from new coins that add nothing new except speculative potential for people who buy them early.  With bitcoin there is the network affect and the aforementioned utility, what do new altcoins that change nothing bring to the table for the non-early adopter?   As far as I can tell nothing.   Each time something succeeds, the bar for anything that would take it over gets higher.

Exactly.

That's why I said this back in October 2012 when Litecoin was at $0.04:

...So the solution [to Bitcoin Foundation concerns] is simply to promote at least one other cryptocurrency in the market (ideally there might be 2 for better distribution), and do it before Bitcoin gets a stronger foothold. The timing of TBF announcement is fantastic, because it leaves room in Bitcoin's life for competition to check it. ...

One thing that altcoin bring to the table is a larger volume; if for example bitcoin were to be the only coin it would mean that the early adopters hold, say 40% of all volume that ever gonna be. If litecoin became even with bitcoin however, it would mean that the early adopter would hold a much lower fraction and that future coins would become much more distributed.  I believe that neither bitcoin nor litecoin will be the mainstream cc, but rather a coin that meet many of the whish-list features AND becomes widely distributed from the start.

[Impaler]

I would disagree with you because Bitcoin and to a lesser extent Litecoin have filled the #1 and #2 slots, so when people think of CC they gravitate towards the most useful one, which in this case means the largest user-base.  The bar was low until those slots were filled, but just as Facebook might not be the best social network it is still the dominant one because if you want to use a social network, it makes sense to use the one which is in use by the largest number of people.  Because those slots are now filled, any new coin coming up has to have actual advantages that would motivate people to move away from the status quo and to one of the other chains.  this is only possible if there are actual advantages to doing so, it's not enough to be "the same" because features aside, it's the size of the network that directly impacts the usablity.

I miss something?

The myspace-facebook story is one of a first mover with the larger network (myspace) being supplanted by a newcomer which had sufficiently high technical merit that it over-rode the formers network advantage.  With sufficient tech any network effect can be overcome, but a first mover generally will have captured the majority of resources and talent and if it dose not become complacent it will innovate sufficiently fast that no competitor ever opens up a large enough technical gap to supplant it.  The internet makes staying on top a lot harder now then it used to be because things scale so well it gives little time to react and the idea space is so wide open it's nearly impossible to cover it all.  Their is also the open source nature of all the coins which makes it very unlikely that anyone can get a big technical gap.

Now their is another avenue, monetary theory competition.  If a coin with a different and superior monetary theory comes along and it is sufficiently superior to outweigh existing network advantages then it faces a different challenge.  Now in this scenario BTC can't (or more accurately won't) respond because its monetary policy is considered sacrosanct (as I think any coin should be).  If the new monetary theory is superior it should replace the older theory just as money replaced barter.

I think one of our big problems here in BTC-vs-Altcoin paradigms is that far too many people on both sides view the 'value' as being in their particular coins, not in the shared CODE or CONCEPTS and in the service companies/vendors/merchants that exist around the coins, virtually all of the companies could and should be be friendly to multiple coins (it's very easy from a technical standpoint) both from a business diversification standpoint but on a fairness standpoint as well.  But most of the companies are in the hands of BTC holding/promoting individuals who I fear may try to shut out other coins so as to create or maintain a monopolistic position on existing networks, this has caused a tendency for re-implementation of many BTC services for alt-coins.

[Transisto]

Personally I am holding ~10% in litecoin until SHA2 hash-rate for a 50%+ attack is beyond the reach of a small corporation. Will reconsider my position at ~1500 Ths.