æthereum: a turing-complete cryptocurrency with initial coin distribution based on the bitcoin blockchainNOTE TO READERS: this post represents a “request for comments” regarding an innovative coin distribution method to bootstrap the launch of experimental cryptocurrencies: https://bitcointalk.org/index.php?topic=563972.0 . Our first case study is a clone of the upcoming Ethereum system. FAQs:1. What is æthereum?
æthereum is a Turing-complete cryptocurrency where the initial distribution of coins is based on the unspent bitcoin outputs on an agreed-upon point in the future (these unspent outputs are known as "the nucleus"). 2. This sounds like Ethereum. Is it the same thing?
No, æthereum is unique. 3. In what ways is æthereum the same as Ethereum?
æthereum is functionally equivalent to Ethereum. They are both based on the same source code. 4. In what ways is æthereum different?
The initial distribution of coins in æthereum is different. If you are a bitcoin user, you can use your bitcoin private keys to claim a percentage of æther exactly equal to the percentage of the bitcoin market cap you controlled at the time of nucleus creation. This claiming process is trustless and decentralized and doesn't cost you anything. 5. But I have to buy ether during the Ethereum IPO by trading real bitcoins! Why are you guys giving æther away for free if it is basically the same thing?
The most difficult part of launching a cryptocurrency is attracting a user base. Because you own bitcoins, you've demonstrated that you are an advocate for its success. æthereum can only become successful with the support of the community, and since it costs nothing to "give away æther," doing so both helps our coin and helps the cryptocurrency community.
It has taken us 5 years, 3 crashes, and $600,000,000 of unrecoverable mining costs to efficiently distribute bitcoins across the user base. Rather than spending another 5 years and countless crashes, we can bootstrap æthereum by beginning at Day 0 with the same distribution of coins. 6. Wait a second, you’re actually telling me my bitcoin private keys allow me to claim æther for free?
Yes. 7. But what if I decide to claim my free æther and immediately sell it?
We are expecting several people to do exactly this, and in fact this is necessary to create a functioning market for æther. We expect æther to initially trade at less than 0.1% of the bitcoin market cap. 8. Why would I sell my æther at such a low valuation? Even Nxt has a market cap over 0.4% that of bitcoin’s. It seems to me that æther would be worth more because it has more potential users and a more efficient initial distribution of coins.
Well, you are free to keep you æther if you choose to. In fact, if you think the market price for æther falls too low, then you can purchase more from another bitcoin user who feels the price is too high. 9. Are you keeping any æther for yourself? Is there a pre-mine?
The initial distribution of æther is exactly equal to the unspent bitcoin outputs during nucleus creation. æther can only be removed from the nucleus with ECDSA signatures made by the corresponding bitcoin private keys. 10. Then how are you going to reward yourself for your development work?
We believe that many current bitcoin holders will perceive their æther as "free money" and sell it for a low price. Since we believe in the long-term prospects of this technology, we intend to buy these coins for cheap. We will then continue to develop æthereum and if we are successful our coins will increase in value. 11. Why would anyone buy ether if they can get æther for free?
We cannot answer that question for you. Some people may feel that the distribution of wealth encoded in the bitcoin blockchain is somehow unfair. Such people may wish to purchase ether if they feel the IPO process results in a more efficient distribution of wealth. 12. How exactly will I claim my æther?
Using your æthereum client, you can create one or several accounts. Each account has an associated address. To claim your æther, simply sign the æthereum address that you want credited with a bitcoin private key. Paste the signature into the “claim aether” window in your client and post the transaction to the network. This will provide cryptographic proof to the æthereum network of your right to claim your portion of æther from the nucleus. 13. But I don’t trust you with my bitcoin private keys.
There is no need to trust us. Simply sign an æther address under your control with a bitcoin private key using whatever wallet you are comfortable with (e.g., blockchain.info, Armory, etc.,) and paste the resulting signature into the æthereum client. 14. How do I know you’re not going to steal Satoshi’s æther, or remove someone else’s coins?
The æthereum nucleus is based on the unspent bitcoin outputs in the blockchain at a point in the future that will be telegraphed to the community far in advance. This nucleus becomes public information and a critical part of the æthereum code. Anyone will be able to verify that the nucleus credits bitcoin addresses exactly as per the snapshot of the blockchain at the agreed upon time. æthereum will be launched from this nucleus after providing the community sufficient time to verify nucleus accuracy. The æthereum network will only recognize æther claimed from the nucleus with a bitcoin signature, or æther created by the mining process (refer to white paper). 15. Where can I learn more about æthereum? Is there a white paper?
Since æthereum is functionally identical to Ethereum, except for the initial distribution of coins, please refer to the following white paper: https://github.com/ethereum/wiki/wiki/%5BEnglish%5D-White-Paper. 16. Wow, this is a cool idea. Couldn’t any alt-coin be re-released with an initial coin distribution equal to the unspent outputs in the bitcoin blockchain?
Yes. In fact, we believe that any alt-coin will enjoy greater success if any premined coins are freely distributed as per the unspent outputs in the bitcoin blockchain, when compared to any other distribution method. If this premise is true, then any promising alt coin can be made more promising by re-releasing it using bitcoin's unspent outputs to determine initial ownership of coins.
We believe this distribution method is a good thing for the community including innovative alt coin developers. It places all alt-coins on equal footings and allows them to compete based on their own merits.