[POLL] The State of Altcoins (and A Proposed Development Funding Model)

[vintagetrex]

there are some really good innovations out there that need funding!!

<https://bitcointalk.org/index.php?topic=252564.msg3531733#msg3531733>

Proof of Storage is the next great innovation in the crypto economy.  It is analogous to proof of work.  Consider how bitcoin unlocked your computer's processor as a money making device, but it left your hardware's potential locked up.  Proof of storage will allow for mass storage of information in a block chain that will become a "timeline of claims."  It will allow for the replacement of the USPTO the way bitcoin replaced the need for the Federal Reserve.  

Please consider funding this project.  

Nemesis is a crypto anarchist cipher-space hosting corporation.  It uses an algorithm to continuously generate and sell a fixed number of type A shares through a proof of work equilibrium.  Type B shares are continuously generated and sold via a proof of storage equilibrium. 

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[ExLibertas]

anonymous developers create an accountability problem - just look at the TrueCrypt project, where neither of the lead developers are identified and whether the software actually encrypts properly is a legit question. when ppl are anonymous and in a position of responsibility, they are not incentivized to behave like normal people.

I should mention that this is a very valid point. The level of funding is likened to a dependent variable in a very anecdotal study in the context of this project. It's dependent on anonymity. Although we can't control for things like exposure, it would provide some data on anonymity outside of technical systems. Personally, I think that's interesting and important to look at. Who knows if one day you'd have the freedoms you enjoy today? Anonymity is part of the freedom family.

it is fair to point out that most altcoins have made limited variations on bitcoin. this is due to the amount of effort and energy it takes to make modifications to the codebase. funding is an issue in terms of making significant modifications happen, e.g. 1 man year of work from a very smart person would be sufficient for most of the previous altcoins happen. in terms of making more substantial modifications, i estimate it would require over USD 200K for any altcoin to have what most spectators consider "significant" changes. note that this assumes devs are being paid more-or-less market rates.

Another point I agree with. Relying on pure donation without any kind of return is unlikely to fund an experienced developer for very long, which is probably why a lot of altcoins are a bit watered down in relation to Bitcoin (no offense, but I'm drawing a comparison between net innovation in code bases). Even though the project can't make any claim as to the value people would assign to this "return" aside from assuming it has no inherent value (to do so would be unethical without real data), the fun part about all of this is getting some coins to use the features you want and support. That's what makes the whole thing exciting and moves development forward for everyone.

[cunicula]

I can see why you are doing this, but could not support it because it is all essentially orthogonal to the needs of every day users.
You seem to be optmimizing the back end. There is a time and a place for this type of stuff, but i think it makes more sense to devote resources to radical innovation. Cryptocurrency is too young for it too be worthwhile making many small optimizations in an altcoin.

[digitalmagus]

There is a time and a place for this type of stuff, but i think it makes more sense to devote resources to radical innovation. Cryptocurrency is too young for it too be worthwhile making many small optimizations in an altcoin.

Hi Cunicula,
First, I just wanted to say that I enjoy your posts. Personally, I'm willing to fund netcoin regardless because even if I don't believe it is perfect enough (see my wishlist below), these small optimizations/fixes/improvements are such that they could eventually be imported into an even better future utopian crypto coin and thus save everyone the development time in the future. As such, netcoin will get some of my donation $$.

On a slight tangent, I was wondering if you could possibly share with us your thoughts on which worthwhile "radical innovation(s)" that benefit end-users could be?

Here's my utopia list:

Price Stability - This is almost like asking to see God, but maybe there's a few clever economists out there that could help out with a short-long term strategy. Bitcoin severely lacks price stability, this makes it a very poor choice for the masses to use as a currency for daily transactions - Aside from it being too confusing for sub 100 IQ humans to understand and keep up with, imagine employers trying to figure out how much less you should be paid every 2 weeks than the previous 2 weeks, or how much less to pay their 3rd party suppliers. Further, as already witnessed with bitcoin, aggressive deflation is likely to cause extreme speculation which results in massive mis-allocation of capital (aka. bubbles) and excessive savings impacts spending, which impacts employment stability, which impacts technological innovation across all sectors. Possibly, the most important negative is that it would allow for a massive disparity in rich vs poor mid-long term, which is the trigger for many civil revolutions, or in this case migration to another coin. Thus, I do not think this would allow for a stable economy mid-long term. Deflation is a clever trick to attract a lot of users initially, and I am ok with that short-term, but not mid-long term. I'm thinking we need something along the lines of: first 2 years: medium aggressive deflation (1/3 of bitcoin aggressiveness? 50-100%), years 3-7: low deflation (target 5-15%), year 7-20 (1-2% deflation a la Fed, but with deflation not inflation). Starting year 7, deflation would be measured not against the USD but against an SDR-like basket of currencies: 20% EUR, 20% USD, 20% Gold 20% Silver, 20% G20 stock indexes (or some such variation). Some time after year 20 this new coin should have achieved global reserve currency status or at least very wide spread adoption (primary currency usage by many countries, at which point, the SDR-like measure could be dropped and a mathematical formula could be devised to attain near price stability  (0.5 deflation to + 0.5% inflation). In short, I'd like to see math replace biased central bank interest rate policy guidance to attain real (not CPI re-defined) price stability. From the average person's perspective, not only is price stability psychologically required, but it would hugely contribute to 'ease of use'. Systems that are simple to use are more widely adopted, faster.

Limited Government Taxation - I believe some capitalism is required for innovation to foster, but capitalism lacks a moral high ground like socialism or some other egalitarian political philosophies. Specifically, pure capitalism = full privatization of all sectors = rich get richer, poor get poorer. My point being, I don't believe everything should be privatized and I do believe there is a role for "government" to play, specifically in funding basic social services: Hospitals, Police, Fire Fighters, City infrastructure, Courts of law, Disaster Relief, Welfare, Waste Management, Defence and Policy makers (likely I missed a few here). Bitcoin can and will be used for tax avoidance by the citizenry. Governments today can enact laws to tax businesses using bitcoin, but taxing of clever individual citizens will be near impossible due to anonymous laundering systems. I see bitcoin laundering to eventually be automated with an app for every transaction, thus nearly all citizens would use it. As such, IMHO bitcoin will ultimately be crushed by government(s) before it gets too big. An utopian coin should use math to set aside a per transaction fee or some kind of yearly allotment that can only be collected by government officials of each nation. Further, dynamic math formulas built into the coin should be used to allocate budgetary capital for nearly all government departments as opposed to corporation lobbied/corrupt politicians allocating the capital. The justification to the solution that should be implemented for this is the stuff of not mere Phd thesis but likely voluminous books written by genius economic philosophers that ultimately will have to be translated to code. I'm thus officially naming the coin of my wishlist "utopia coin".

Balanced Mining - Assuming we can't come up with a more clever replacement for the concept of mining coins into existence, at present I see two possible extremes of which netcoin is one of them. Bitcoin allows for easy ASIC mining, thus in another year or two we'll end up with a dozen or less organizations that control 90% of all the mining, thus allowing for centralization of money creation. Netcoin might be going too far in the opposite direction by wanting to implement too many protocols to severely restrain ASIC mining. The problem created by severely restraining ASIC mining is that it will allow for a problem that is just as severe, the centralization of coin creation by use of botnets, which is worse since it is less energy efficient and illegally/immorally uses other people's computer resources without permission. So how do we achieve a balance here? I think the answer is something along the lines of use algos 1,2 & 3 for say 2 years, and then at the start of year 2, algo #1 gets replaced by new algo #4, such that now you have algo 4,2,3. Then in another 2 years, you replace 2 with 5. Whilst arguably environmentally wasteful from a PCB lifecycle perspective, this would severely restrain any one ASIC company from having long term coin creation control, as every 2 years the race begins anew. From a botnet perspective, botnet mining would be restricted to the time period from when the algo is reset to the time period that FPGA code could be implemented which would likely be a short window period of 2-6 months, which shortly after would be replaced by ASIC mining again until the next algo reset. Or probably even better would be an algo phase-in approach, such that hackers/botnets don't sit around waiting and slam the coin on X day of the reset.

Full Anonymity by default - Not just interacting/dependant on coinjoin, or use of Zerocoin with adverse/trade-off effects. I know, I'm a seemingly conflicted individual: I want some capitalism, some socialism and unquestionably some liberalism and *gasp* some anarchism. By solving the government taxation issue above, anonymity should be *less* of an issue for current elected government officials. Whilst terrorists, drug lords and pedophiles will be theoretically aided by this, one might argue that there should be less terrorists if every country on Earth were playing on an even economic playing field with a global crypto coins vs heavily manipulated fiat currencies. The major crux to implementing anonymity within the coin from day 1 is that it may actually prevent legal wide-spread adoption by brick and mortar merchants as governments would decree it illegal because "oh think of the children!". Without brick and mortar adoption, the coin could never reach wide-spread adoption. I'm thus conflicted at present as to how this dilemma can be resolved.

Network Security - I've said it before (NSA/Snowden issues), and I'll say it again: Whatever new utopian coin is created, it should have either embedded network security or a quick migration path to it after deployment. By this I mean, no reliance on a single TCP port 8333 that can be easily blocked by governments at Tier 1 ISPs. Further transaction security/encryption is required.

Global spot price - With the implementation of miraculous 'price stability', eventually and in theory we should be able to get closer to achieving a global spot price for utopia coin meaning that 1 utopia coin at an exchange in Russia has the same fiat currency / SDR-like value at any other exchange. Or do we still need some radical innovation to achieve global spot pricing. Can there be a peer to peer exchange protocol created such that it tracks the 'value' of all transactions and arrives at a dynamic average spot price that is periodically (1 min?) reported to all client/exchanges? Or should we just forget this idea and leave local supply/demand to determine utopian coin value?

Decimal points & Ease of use - How many decimal points most human brains can easily deal with is arguable. I believe we have all been taught/conditioned to handle 2 or max 3 with current currencies and the metric system. This is not to say in 2 or 3 generations from now, 8 decimal points for currency won't be easy to handle. Still, I believe simple is better. Utopia coin should include some kind of embedded code such that when the fiat or SDR-like value of the utopia point reaches a certain height, a currency conversion holiday occurs; meaning your 10.423 utopia coins are now 104.23 utopia coins. If this is done for all users or specifically across the entire public ledger, then nobody loses out and simplicity remains eternally. Tada! No more need to worry about dealing with 0.49258852 fractions of a coin. Arguably all external systems to the coin that track the coins value require Y2K like updates, unless they were coded to deal with this from day one - and they should be if this feature was included from day one.

Pool Voting Centralization Avoidance - I am not familiar enough with the under the hood workings of how BIPS feature voting in Bitcoin works, but I have read that pools essentially centralize voting power to the pool operators. If this is true, clearly this needs to be resolved.

[cunicula]

Gee thanks
Features for users
#1 stabilized units of value tracking major world currencies.
#2 temporary txn reversability (to allow retrieval of stolen funds in some theft scenarios)
#3 zero confirmation transactions (txns backed by security deposits against double spending)

Repeating this in txt form:
I envision a future where you can hold and pay in USDcoins in the US, EURcoins in the EU, YENcoins in Japan, and CNYcoins in China. The basic coins would be equity backing these stabilized currencies. The price of the basic coins would be volatile like a stock price, but offer higher expected returns for risk tolerant investors. I also see USDcoins earning some positive nominal interest while sitting in your wallet much like a corporate bond. I see people retrieving most stolen funds through self-initiated chargebacks. I also see a future where people can pay for groceries or a computer at a retail store without waiting or exposing the store owner to risk.

Anonymity is an excellent feature, but it is not nearly as important to joe average as 1) can I pay/receive USD instead of blow stamps? 2) can I protect myself from theft? 3) can I pay at the store without an awkward wait?

Back-end:
I think the backend needs to include a mixed proof of work / proof of stake system. However, I do not think people will buy into a coin because of an abstraction like this. They need to see modifications that promise to make their daily lives easier.
The goal of the backend is to allow for stability, speed, long-term sustainability, and scale. People can't see these thing directly. They aren't even necessary or worth offering until the coin has a chance of supplanting bitcoin. Do the sexy features you can put in advertisements and newspaper articles as a first step. Figure out how to keep the system from collapsing under its own weight as a second step.

Note: probably best not to reply to this unless you are the OP. It is his thread and a series of offtopic replies could easily derail it.

[Luckybit]

Sounds innovative, BUT, an anonymous dev + OP with 0 posts = no financial support from me.

The post itself is impressive and shows signs of knowledge.
OP you should stay around here for a while.

Agreed, but I wouldn't personally finance anyone with no reputation and an anonymous dev.  That's all, nothing personal.

I agree the dev should not be anonymous if they receive money. I wouldn't give money to any anonymous individual if I could avoid it. The risk of being scammed is too high.

I think in order for this to work the community who crowdfunds must receive some sort of long term share or stake in the idea they are backing with their funding. They are backing that idea with their money and in my opinion are owed a return which is worth potentially much more than they originally put into it because that is what attracts investment in the first place.

If they get exactly back what they put in then it's a no interest loan. If it's an investment then they should potentially get back much more than they put into it whether that be by dividends, or by getting a share of the profits generated, or by getting some of the coins.

My opinion is that every project which accepts crowd funding should treat the people who fund them as co-owners and shareholders in the idea itself. They should receive a founder badge and that badge should carry with them onto any derivative project as part of a social contract.

It means if you were a founder (crowd funder) of a very genius idea which turns out to be a brilliant paradigm shifting then that badge should carry a lot of weight in the community. Over time there will be individuals in the community who will have a lot of these badges and these people should be the first people to be hired for jobs, these people should be the first people contacted to invest in new ideas, these people people should have shares reserved for them in derivative ideas.

I think the model that protoshares is following with their DACs which spawn DACs is the right way to go about it. If you invest in protoshares then you'll have a 1:1 stake in anything that the DAC idea itself produces in the future. If you believed in the idea of a decentralized autonomous corporation enough to risk your Bitcoins to fund the idea then if the idea is successful you should benefit from all future iterations upon that idea.

This allows the community to collectively claim ownership of an idea without having a patent system. If you think of protoshares as the root node in the tree then from protoshares you can get Bitshares, DomainShares, and a bunch of other *Shares. The amount you get in these future products is based on the amount of protoshares you have. There are 2 million protoshares in total. This seems to be working as a proof of concept for Invictus Innovations.

I think we should extend upon this proof of concept and take it even further. If someone has an idea and has assembled developers then they should follow a similar model as with protoshares. (Idea)Shares can be mined or purchased, can be treated as a currency, can be used as a mechanism of buying and selling ownership of the idea itself and can replace the patent system by allowing people who have a good idea and developers to actually give the idea to the community where it can be turned into an altcoin which can have a mission and purpose.

This will allow the community members to choose the ideas they feel have the most promise and potentially get rich if they choose the right idea. This will create a market where anyone who has a very good idea and developers will be able to get funded if and only if they back their idea with some goods and services which bring the inherent value to the (Idea)Shares.

So if we have for example the idea to create a decentralized exchange and let's call it the Bitshares idea, we first propose that idea by developing a whitepaper. Once the world knows about the idea and is excited about it then create a prototype idea coin which allows anyone to mine or buy that coin while the Bitshares idea is developed into a product or service. Anyone brave enough to buy or mine that coin will own portions of the Bitshares in 1:1 proportion to what they owned in the prototype idea coin. Now if something branches from Bitshares then again you can transfer ownership 1:1 from the owners of Bitshares to whatever came from it. This basically would reward the developers, founders, funders and innovators together.

In my opinion the key to making this work is to treat the developers, founders, funders and innovators as the creative class and do everything we can to come up with reward mechanisms and incentives to attract funding to that class. We should take concepts which work well in the real world like shares, dividends, profit sharing, and adapt those incentives to a decentralized pseudo-anonymous environment.

We should include reputation by having badges. If a particular person has a lot of badges to their name then they are either a great developer, a great investor, a great creator of something, but you wont get a badge if you won't take a chance. You cannot be great if you don't take a chance on a moonshot idea which becomes great.  But we should do everything we can to reward the people who do take a chance on the moonshot idea, and reward the people who dream up these new ideas as well by giving them the recognition of having thought it up. Developers who have worked on various successful projects should also be known and receive recognition whether their contributions are perceived as large or small.

Then as a community we should give special status and rewards to these individuals. Discounts, prizes, status, privileges, dividends, points or whatever you can come up with to make people want that special status.

Anonymity is a conscious decision made and built into this model. Identity becomes an abstraction that clouds judgment far too often, when what we are interested in doing is look at the technology free from the biases identity brings with it.

I'm okay with developers being pseudo-anonymous but they need an identity so we know their reputation and can develop trust. If we don't trust the developers then we don't even know whether or not the code has something in it. I'd prefer developers who give their names and addresses for accountability but in the situation where they cannot do this then they should at least have a persistent pseudo identity which we can confirm is them by digital signature. I think Keyhotee might offer the solution to the identity problem but also the Bitcoin identity protocol can do it. Basically there should be a way for a third party to be able to confirm that the developer we are dealing with is a trustworthy and legitimate person. The community does not have to know the real life identity of that developer but some third party we trust has to know their identity and vouch for them. If no one knows who they are then no one can vet them, and if no one can vet them then no one can trust them enough to run their compiled binaries or even trust that there wont be backdoors in their code. For situations where money and investment is on the line I would not advise anyone to give money to any anonymous person.

Haven't we seen what happened with Labcoin and other scams to know why this is a problem?

This is especially true if people are themselves already built into systems that have matured over time. My personal opinion is that we cannot allow identity to constrict new thought and more importantly, turning those thoughts into reality. We're smarter than that, and we can build better systems than that.

I propose pseudo-anonymity. I'm going to take a stance against complete anonymity. Pseudo-anonymity would mean you can come up with any alias, screen name or pseudonym you like. That pseudonym is like a currency in itself, it has to be backed by something or it's worthless. If you have no one who I know who is willing to vouch for you and say you're legit then I will not trust you. In order for this to work there must be a way for a third party to do vetting of developers in a decentralized way.

Here is one way it could be done. Every developer should have to be a real life person who goes through an in person vetting process. If they pass that process then they'll receive a key known only to them and no one else. After receiving that key then they are a developer trusted by the community.

The reason I think vetting is necessary is because anyone who is in a position to write code to manage other people's money should not be trusted by default. They can be anonymous to the wider community and use only a pseudonym but someone or some protocol has to be set up so that someone knows their real identity.

If there are anonymous developers involved then if they do work on writing code I would say you'd need several trusted developers who can look after them and audit the code that they write. Ultimately we will require trusted developers to develop anything truly important so any plans on making things anonymous also have to solve the problem of trust, reputation, and accountability. Mask your email address, mask your identity from the community, but someone has to be capable of unmasking you and locating you in person so basically we'd need a trusted middle man person who would speak on your behalf and say we can trust this anonymous developer, that the anonymous developer is our friend, and that I know the identity of this person and you can hold me responsible for any damages caused by this anonymous person.