Limit mining a new alt-coin to a specific country.

[Porcupine]

Hi guys, we are designing a currency for Venezuela and we would like to know your insights about limiting the mining and trading to a specific country, in this case Venezuela. Is that a good idea or even possible?

The purpose is to mine and trade with venezuelan currency, which is 'bolivares', and since nobody in the world wants them and foreign exchange is restricted in our country it would be a good idea for venezuelan miners to get paid in bolivares so they can spend it for daily living while people buy the alt-coins for savings. So, slowly we change our shitty bolivares for XVEs and in a matter of years we may be able to start an exchange to trade XBTs for XVEs, you know, like in a real world monetary system (without govt intervention of course).

See, our currency just got debased 600% in one year and we are sick of government robbing us at gunpoint.

No, we can not buy BTCs (the main purpose of a world currency like BTC) because we have no access to dollars, euros, yens or whatever strong currencies and nobody takes our bolivares.

Believe me when I tell you we are fucked.

Ideas?

[Stephen Gornick]

limiting the mining and trading to a specific country, in this case Venezuela.

Is that a good idea or even possible?

No and no.

Technically, there's no way to know from where (geographically) a valid hash originated.

So you'ld be open to the world -- and vulnerable to a 51% attack.

No, we can not buy BTCs (the main purpose of a world currency like BTC) because we have no access to dollars, euros, yens or whatever strong currencies and nobody takes our bolivares.

What you have is friction, but not a brick wall.    When there is profit potential, suppliers of bitcoins (who accept VEF) will emerge.  This means if a buyer is willing to pay a premium to buy BTCs with VEF, some other party with bitcoins to sell will emerge to take those VEFs and use those VEF locally to pay for consumption.   The larger the premium the greater the incentive for these sellers to emerge.   For instance, a business in Venezuela that exports goods or services (e.g., a graphics designer with customers abroad) may ask for Bitcoin as payment (or offer a discount if payment is made in bitcoins) to obtain a supply of coins.  Those can then be sold locally at a premium which more than offsets the discount the merchant might have had to offer to incent some of their customers to pay with Bitcoin.

If Bitcoin buyers in Venezuela are only willing to pay a little premium then there won't be much supply.  But a larger premium will be the incentive that results in an adequate supply arriving.

Now, having said this, ... understand that there's nothing stopping anyone from attempting some regional crypto currency.   There are several that have already been tried with others being attempted now.  Here's one:
 - http://bitcointalk.org/index.php?topic=287485.0

But know one thing, the risk of loss due to a 51% attack (if it is a proof-of-work based cryptocurrency) and volatility are higher with this regional alt currency than with Bitcoin.  Do you really want to expose your neighbors to these risks of significant financial loss?  

[Stephen Gornick]

So, slowly we change our shitty bolivares for XVEs and in a matter of years we may be able to start an exchange to trade XBTs for XVEs, you know, like in a real world monetary system (without govt intervention of course).

Venezuela might be a good place where something like Ripple becomes incredibly useful.  If your goal is simply to trade without being forced to use VEFs, what could emerge are local issuers of commodity-backed digital vouchers on Ripple.

Take a look at the DYM issue on Ripple as an example:
 - http://bitcointalk.org/index.php?topic=149533.0

That uses pre-1965 U.S. silver dimes ("junk silver") as the commodity.   But it could be anything that the issuer would store and then issue the vouchers that can be redeemed for the underlying commodity.   The commodities could include items easily purchased with VEFs today yet are not that difficult to warehouse.  This would include bottles of liquor, cartons of cigarettes, boxes of diapers, postage stamps, even rolls of toilet paper if nothing else.   So you'ld have a single currency issue for each of these commodity items but there would be multiple issuers for the same commodity.

Of course, other commodities sourced locally like coffee beans would be fantastic but you don't want to use something perishable.

[Porcupine]

What you have is friction, but not a brick wall.

It certainly looks like the green monster wall.

I get that provided proper incentives people will trade BTCs for VEF but even so the supply of BTCs will be so low as to cause zero influence in commerce or trading, so the majority of people will never know about that option. That's what we have today.

There is also the possibility to use gold or silver coins (like liberty dollars) and start a black market so people slowly dump their VEFs for real metals, an option I am also exploring.

But I firmly believe there is an opportunity right now in Venezuela for a crypto-currency due to its deteriorating monetary conditions, much like in india and some other 'happy-printing' countries.

So even if it is not limited geographically, how would you go about mining an alt-currency and trading it for bolivares? That's the key point, forget about dollars or BTCs for the moment.

I'll take a look at Ripple.

Thanks for your advice.

[markm]

What can you buy locally and export?

Because if you can ship something people will buy with bitcoins you might be able to increase the value of bitcoins themselves by making them available to the Venezuelan market.

Basically try to hold as many bitcoins as you can, while shipping out emeralds or something, whatever you can get there that is easy to ship, to bring in bitcoins...

-MarkM-

[QuantPlus]

Now, having said this, ... understand that there's nothing stopping anyone from attempting some regional crypto currency.   There are several that have already been tried with others being attempted now.  Here's one:
 - http://bitcointalk.org/index.php?topic=287485.0

Crypto-currencies issued by regions, corporations, political groups, etc...
Will be common soon so totally go for it...
Take a good PoW/PoS Alt and roll your own, baby.

That's exactly why the Alt Space is where it's at and moving at lightspeed...
Bitcoin gets more centralized every day and Ripple WTF?

[ronimacarroni]

Well I don't know about venezuela, but places like Argentina aren't even allowed to use their bank wires (I think)
So they can't buy bitcoins to begin with.
So an alternative currency that's mined within the country that can then be exchanged for bitcoins could help increase its adoption.
I think the solution would be to make it secret and only known to the local community.
Once a large portion of it is mined make it public.

[Porcupine]

What can you buy locally and export?

Practically nothing. We only produce oil, controlled by the government of course, so yes, we're deeply fucked.

97% of our exports are oil related.

Perhaps coffee, chocolate, some agricultural products but forget about that, people sell them for dollars and save them in banks abroad, so there is zero chance to have a healthy economy based on an alternate currency, not even dollars, much less bitcoins. I really don't know why it is so hard to understand our situation.

An alt-currency and subsequently a healthy alt-economy won't flourish unless it can be easily changed for bolivares back and forth.

[Hazard]

What sort of local reach do you have? I may be interested in this project.

[SpeedDemon13]

Hi guys, we are designing a currency for Venezuela and we would like to know your insights about limiting the mining and trading to a specific country, in this case Venezuela. Is that a good idea or even possible?

The purpose is to mine and trade with venezuelan currency, which is 'bolivares', and since nobody in the world wants them and foreign exchange is restricted in our country it would be a good idea for venezuelan miners to get paid in bolivares so they can spend it for daily living while people buy the alt-coins for savings. So, slowly we change our shitty bolivares for XVEs and in a matter of years we may be able to start an exchange to trade XBTs for XVEs, you know, like in a real world monetary system (without govt intervention of course).

See, our currency just got debased 600% in one year and we are sick of government robbing us at gunpoint.

No, we can not buy BTCs (the main purpose of a world currency like BTC) because we have no access to dollars, euros, yens or whatever strong currencies and nobody takes our bolivares.

Believe me when I tell you we are fucked.

Ideas?

Only idea I would have is make a specialized miner for it that is restrict to work by region and/or code the coin to work only in a specific region. ie. ip restriction, region lock, etc. Just an idea... I'm not a programmer, so I couldn't help with coding it...I specialize in IT networking and computer repairs....

[Porcupine]

What sort of local reach do you have?

Not much right now, but once the cat is out of the bag it'll go viral for sure.

I may be interested in this project.

Please share your ideas. I can tell you all I know about our economy, ways to penetrate the market, pools, exchanges, interested miners, wannabepreneurs, etc.

One thing is for sure, if we crack this puzzle there will be a flood of people willing to save their hard earned money, another devaluation is expected real soon.

[briehost]

IP Restriction would be moot, since a miner could simply buy a VPN with a valid IP.

The one thing I could think of for your Venezuela based crypto-currency would be requiring a MinerID to submit a valid block. The only coin I have seen with this implemented is Rucoin, which requires that you purchase one from a network at a price based on how many MinerIDs had been issued in the previous N blocks (didn't see the math on it but that's what it seemed to be tied to). The fee paid for the creation of a new MinerID would go to the miner which published the block which created it, so it worked a lot like a regular transaction, with the exception of granting the rights to publish blocks.

Using something like this, you could at least limit the distribution of miners and attempt to keep them in centralized Venezuela for longer than if you simply released it there.

I have not seen much support for Rucoin or heard about it at all lately, probably because they guarded the source like coca cola guards their recipe.

Another option is to create a coin which has the stated intent of being traded for Bolivar, or to adopt an existing crypto-currency with this intent.

[markm]

Maybe you could simply mine one or both of the really low difficulty merged mined coins, quietly building up a large stash of them so that you will be in position with lots of them when they go onto pools and exchanges? Unfortunately it is already too late to jump on I0Coin and GRouPcoin as they already did go onto pools and, at least in I0Coin's case, exchanges. It is too bad you didnt' pick up those while they were easy. But CoiLedCoin and GeistGeld are still easy to get. The nice thing about the merged mined coins is you can expect them to have decent difficulty very rapidly, look at I0Coin and GRouPcoin now for example, just getting onto bitparking's mmpool jacked their difficulties way up. So if you pick up CoiLedCoin and GeistGeld now before that happens to them too you could end up with a large stash of well secured (high difficulty) coins very rapidly once they do get picked up. In fact you might prefer they not get picked up for some time, so you can have more time to build your national warchest before it happens.

-MarkM-

[Porcupine]

Another option is to create a coin which has the stated intent of being traded for Bolivar

That's the main premise. Bolivars only so people from other countries will have no interest in mining it. What would an indian or a russian guy do with a VEN coin?

There will be a trillion coins so it will be valued really cheap, like a penny per coin or less so it would be stupid to speculate with it knowing there are so many coins that can be mined.

or to adopt an existing crypto-currency with this intent.

We rather create a more localized, 'patriotic' coin (stupid I know, but it helps in marketing), I doubt people will adopt AlphaCoin, BBQCoin, CosmoCoin or whatever, so we better stick to BOLs or VENs.

[QuantPlus]

Maybe you could simply mine one or both of the really low difficulty merged mined coins, quietly building up a large stash of them so that you will be in position with lots of them when they go onto pools and exchanges? Unfortunately it is already too late to jump on I0Coin and GRouPcoin as they already did go onto pools and, at least in I0Coin's case, exchanges. It is too bad you didnt' pick up those while they were easy. But CoiLedCoin and GeistGeld are still easy to get. The nice thing about the merged mined coins is you can expect them to have decent difficulty very rapidly, look at I0Coin and GRouPcoin now for example, just getting onto bitparking's mmpool jacked their difficulties way up. So if you pick up CoiLedCoin and GeistGeld now before that happens to them too you could end up with a large stash of well secured (high difficulty) coins very rapidly once they do get picked up. In fact you might prefer they not get picked up for some time, so you can have more time to build your national warchest before it happens.

-MarkM-

All you ever do is pump your obscure coins.

To the OP...
Just make a decision, build and launch a coin.

Expect your 1st coin to be a failure and a learning experience...
Focus on your 2nd, 3rd, 4th coin being a home run.

[ronimacarroni]

Another option is to create a coin which has the stated intent of being traded for Bolivar

That's the main premise. Bolivars only so people from other countries will have no interest in mining it. What would an indian or a russian guy do with a VEN coin?

There will be a trillion coins so it will be valued really cheap, like a penny per coin or less so it would be stupid to speculate with it knowing there are so many coins that can be mined.

or to adopt an existing crypto-currency with this intent.

We rather create a more localized, 'patriotic' coin (stupid I know, but it helps in marketing), I doubt people will adopt AlphaCoin, BBQCoin, CosmoCoin or whatever, so we better stick to BOLs or VENs.

Well porcupine, just realize that this will no come without a few cons.
1.The coin should take atleast a year of mining to ensure the distribution of the coin throughout the local economy is spread.
2.You run the risk of non locals finding out about the coin and mining it
3.You have to prepare to sell things for the coin on the meantime so when it hits the exchanges people will be interested in it.
4.There is no assurance that your coin will be popular or worth your while as opposed to more established alts like bbqcoin.
You'd be reinventing the wheel pretty much...
Btw is venezuelan coffee as good as colombian?
I'd like some of that.

[Porcupine]

All you ever do is pump your obscure coins.

We'll try to avoid that. No pre-mining. We'll try to have at least a hundred miners enrolled before we start.

All tips we get to make a better coin are highly appreciated.

Just make a decision, build and launch a coin.

Yep, the first step to see an idea materialized is to take action.

[Porcupine]

Well porcupine, just realize that this will no come without a few cons.

Nobody said it would be easy, but there is an urgent need for a solution to our currency problems.

Btw is venezuelan coffee as good as colombian?
I'd like some of that.

It used to be a hundred years ago, now it tastes like sawdust, if you can even find it since it is regulated and practically has disappeared from the shelves.

[Stephen Gornick]

I really don't know why it is so hard to understand our situation.

We understand your situation, just that Bitcoin IS the best answer.

Somehow you believe that this VenzuelanCoin will be cheapter to acquire and then use than Bitcoin.   You'll probably need to get hit over the head a few times before you figure out that it hurts. but VenzuelanCoin, if it is mined using proof-of-work will cost the exact same to mine as Bitcoin and Litecoin, etc.   i.e., mining capacity will rise until there is little or no profit from mining.

More importantly, you are dismissing the vulnerability to a 51% attack.

Bitcoins do cross the border into Venezuela when there are buyers paying a premium.   If that bitcoin buyer is paying VEF, then some smart cookie will do arbitrage by selling BTCs for VEFs at a premium and then using those VEFs to pay for goods and services locally in Venezuela, essentially getting those at a discount.   Trust me, ... if you are willing to pay $12K worth of bolivar (VEFs) in exchange for about $10K of BTCs, then someone with access to BTCs will certainly emerge to sell to you.  This is because that person can then turn around and maybe buy a vehicle worth $12K with your $12K worth of VEFs.

Sure, that lets the person with access to BTCs buy a $12K vehicle with just $10K worth of BTCs, but that's the cost for getting liquidity into your market.     Merchants then would be advised to give a 20% discount for paying with Bitcoin so that the bitcoins get traded locally then.

I doubt 20% is even needed, ... maybe 10% is sufficient -- especially over time.  Trust the market.  It works.  I do understand it sucks for you to have to pay $12K worth of bolivar to get $10K of BTC.  But if those $12K worth of bolivar are being devalued, they'll only be worth $10K in a few months anyways so you might as well make the bid offer now so that down the road you have the BTCs and not the VEFs.

[Stephen Gornick]

Bitcoin gets more centralized every day and Ripple WTF?

Ripple isn't the issuer.  The issuer is the neighbor that you trust to really be holding the 500 silver dimes that she claims to be holding (which the 25 DYM digital vouchers you bought from her are backed by).  You know this is true because you stop over unannounced and ask her to show them to you and she can (or she can't and now you know who not to trust).

So yes ... Ripple is a decentralized method to get an asset-backed digital currency up and running.   If this region-specific currency gets traction and you want something with less central control, you can then run your own validators (possible now that Ripple is open source), or you go with Open Transactions then.