Spin-offs: bootstrap an altcoin with a btc-blockchain-based initial distribution

[Peter R]

I would go as far as to say that it is risky for alt-coin developers to not use the method proposed in the OP if they actually believe their coin holds long term prospects.  If they bootstrap, then they will be rewarded if their coin is successful; on the other hand, if they IPO/lottery/etc they will ironically lose wealth the more successful their innovation becomes (as any serious value would emerge in the bitcoin-blockchain-based clone chain).  

I must be awfully dense, but it seems to me that this only applies to coins that have some technical innovation. Consequently an entire class of altcoins escapes the clutches of this framework.

Yes, this applies only to coins that may potentially represent a useful technical innovation.  Coins that do not represent an innovation would not be served by this method.  

Take DOGE for instance.  It does not represents a useful technical innovation; it has a cute mascot and a permanently inflating money supply.  It appeals to the intersection of two subsets of people:

(1) people who believe money should be based around the Shiba Inu breed of dog;

(2) people who prefer a permanently inflating money supply.

It has a narrower potential user base, less liquidity, and a smaller market cap.  DOGE is therefore less useful than bitcoin and thus will be used less.  

[smooth]

Therefore, someone's 10 Bitcoins will be cloned indefinitely into 10 aether1, aether2, ...  , aether9999.
Isn't that inflationary?

I don't think this is inflationary in the usual sense because the value of any future altcoin using this model is already incorporated in the value of btc. Bitcoin becomes something of an inflation-indexed bond.

I find the logic of the proposal a bit lacking though. Once you spin off an altcoin, calling it A, from bitcoin, why does the next one spin off bitcoin and not off A?

[smooth]

Yes, this applies only to coins that may potentially represent a useful technical innovation.

Innovation is in the eye of the beholder, and which innovations turn out to be important is ultimately often only recognizable in hindsight. Not sure your distinction is really sound.

[Adrian-x]

Wouldn't this be something similar to saying hey I want to launch a new app on the Apple App store.  Since Apple already has stock, I'm going to issue ownership of this new app to all of the people who own Apple stock (assume this is technically possible).

As a developer I have no incentive to launch this unless I own a lot of Apple stock.  Launching an alt-coin where you can claim more of the coins than the distribution of bitcoin is a huge advantage especially if you build something that is worth a lot and not a scam.

To the contrary. This is exactly why altcoin like litecoin has value, the developer allowed the community to profit from its success, Charles Lee did not pre-mine.

Litecoin is not successful because Charles Lee did a pre-mine to cover his overhead, it was successful because he didn’t.

In this example using the Bitcoin blockchain to distribute the pre-mine the developer can but cheep coins as people dump them.  


check out http://mapofcoins.com/  we are on generation 6 of the altcoin /scamcoin revolution. How does innovation peculate through if early investors are constantly diluted and not rewarded – the investment into altcoins is coming from those who have Bitcoin, this capital pool drying up as the number of coins increase exponentially.  

[Peter R]

Yes, this applies only to coins that may potentially represent a useful technical innovation.

Innovation is in the eye of the beholder, and which innovations turn out to be important is ultimately often only recognizable in hindsight. Not sure your distinction is really sound.

Like you said, the distinction can only be made with certainty in hindsight.  The OP represents a market-based mechanism to value useful coins while facilitating the death of useless coins.  

[YarkoL]

Ok, thanks, looks like I laboured under the misconception that the distribution scheme was intended to somehow impede the spread of non-innovative coins.

Greed is only one of the factors driving the cryptocurrency scene. People also want to have fun, so the market for all kinds of toycoins will exist.

[Peter R]

I find the logic of the proposal a bit lacking though. Once you spin off an altcoin, calling it A, from bitcoin, why does the next one spin off bitcoin and not off A?

The premise is that to maximize the chance for adoption, the alt should always spin off the blockchain with the highest market cap at the time of launch.  Cryptocurrency users get automatically piggybacked to the most liquid and valuable network (which I expect to remain "bitcoin as is" for the foreseeable future).  

[smooth]

Yes, this applies only to coins that may potentially represent a useful technical innovation.

Innovation is in the eye of the beholder, and which innovations turn out to be important is ultimately often only recognizable in hindsight. Not sure your distinction is really sound.

Like you said, the distinction can only be made with certainty in hindsight.  The OP represents a market-based mechanism to value useful coins while facilitating the death of useless coins.  

I agree it discourages some useless coins (the ones motivated by a premine/IPO). I'm not convinced that it discourages all or even most useless coins. The other models (of useless coins) don't particularly seem affected.

Certainly worth a try though.

[smooth]

I find the logic of the proposal a bit lacking though. Once you spin off an altcoin, calling it A, from bitcoin, why does the next one spin off bitcoin and not off A?

The premise is that to maximize the chance for adoption, the alt should always spin off the blockchain with the highest market cap at the time of launch.  Cryptocurrency users get automatically piggybacked to the most liquid and valuable network (which I expect to remain "bitcoin as is" for the foreseeable future).  

I dunno, why not spin off all of them? That's the largest market cap, right?

[Adrian-x]

I must be awfully dense, but it seems to me that this only applies to coins that have some technical innovation. Consequently an entire class of altcoins escapes the clutches of this framework.

As I said before, there are coins that have absolutely no technical merit, but they gain value from being aimed to specific community. For example, this one. If devs gain the trust of the communities that the coin is intended to serve, why would anyone in those communities switch over to the  bitcoin-blockchain-based clone chain? Especially if there is no IPO (but there could be premine).

Inspired as you are by the arch-altcoin-hater Daniel Krawisz, I believe you see little worth in that kind of coins, yet we'll be seeing their number increase, but AFAIK your scheme cannot stamp them out.

But don't get me wrong. I think the idea itself is genius if not genial.

I was thinking the same thing, Coins that benefit from pre mine benefit the most with this method, but it can be used for any coin.


But as cypherdoc pointed out this idea in the free market will be like a hammer to the scamcoins, alts will compete on innovation to succeed not cheap memes.

Community coins will probably not use this method but be limited by the success of the supporting community.

[Peter R]

I agree it discourages some useless coins (the ones motivated by a premine/IPO). I'm not convinced that it discourages all or even most useless coins. The other models (of useless coins) don't particularly seem affected.

LOL, what should we do about all the useless coins!  

[Adrian-x]

Therefore, someone's 10 Bitcoins will be cloned indefinitely into 10 aether1, aether2, ...  , aether9999.
Isn't that inflationary?

I don't think this is inflationary in the usual sense because the value of any future altcoin using this model is already incorporated in the value of btc. Bitcoin becomes something of an inflation-indexed bond.

I find the logic of the proposal a bit lacking though. Once you spin off an altcoin, calling it A, from bitcoin, why does the next one spin off bitcoin and not off A?

it can, it probably will, you can also use A and the Bitcoin Blockchain to make bigger better A+Bitcoin

[cypherdoc]

I find the logic of the proposal a bit lacking though. Once you spin off an altcoin, calling it A, from bitcoin, why does the next one spin off bitcoin and not off A?

The premise is that to maximize the chance for adoption, the alt should always spin off the blockchain with the highest market cap at the time of launch.  Cryptocurrency users get automatically piggybacked to the most liquid and valuable network (which I expect to remain "bitcoin as is" for the foreseeable future).  

I dunno, why not spin off all of them? That's the largest market cap, right?

eventually, if this concept works, the mere threat of a co-opt of the altcoin distribution by the Bitcoin blockchain mechanism will be enough to prevent scamcoins from even coming to market. 

and then, if truly innovative coins/schemes come to market, they may decide to automatically include the Bitcoin blockchain distribution by default for survival thus further strengthening Bitcoin.

the real genius in Peter R's scheme is that b/c open source has now evolved to becoming best practice, this puts altcoin devs in a tough spot.  they are forced to innovate for Bitcoin, not a scamcoin.  this will unify the entire cryptocurrency space.  and if they decide to be closed source, it's over for them from day 1. 

[Brangdon]

æthereum is functionally identical to Ethereum, but rather than purchasing ether with bitcoins, you can freely claim your share of æther by signing an æthereum address with your bitcoin private keys.

That's basically what happens when Bitcoin forks, isn't it? After the fork there are two block-chains, and people who owned coins before the fork now own coins in both block-chains. The alt-coin is a more radical fork than the Bitcoin community would normally consider, but conceptually it's still a fork of Bitcoin.

Another useful property of this technique is that it makes the bitcoin blockchain robust to 51% attacks. 

In the very unlikely event that the bitcoin network came under an unrelenting 51% attack, people would simply use the most promising clone.  Since users have the same slice of that pie too (unless they traded), there is no need to "panic trade into litecoin," for instance.

That's mainly helpful if there isn't much growth in the user base between the fork and the attack. If æthereum launches, and, say, 2 years goes by, during which Bitcoin sees a 10-fold increase in users, and then the attack happens, 90% of Bitcoin users will be holding no addresses that they can turn into æthereum coins.

(Numbers picked for simplicity. I expect and hope to see exponential growth in the Bitcoin user base over the next several years. Even if it's 4x in 5 years rather than 10x in 2 years, the benefit of what you say here will fade.)

[cypherdoc]

Therefore, someone's 10 Bitcoins will be cloned indefinitely into 10 aether1, aether2, ...  , aether9999.
Isn't that inflationary?

I don't think this is inflationary in the usual sense because the value of any future altcoin using this model is already incorporated in the value of btc. Bitcoin becomes something of an inflation-indexed bond.

I find the logic of the proposal a bit lacking though. Once you spin off an altcoin, calling it A, from bitcoin, why does the next one spin off bitcoin and not off A?

it can, it probably will, you can also use A and the Bitcoin Blockchain to make bigger better A+Bitcoin

b/c Bitcoin will always have greater mining capacity and thus greater security.  don't forget, A still has to prove itself and attract miners on it's own merit for long term survival.

[smooth]

But as cypherdoc pointed out this idea in the free market will be like a hammer to the scamcoins, alts will compete on innovation to succeed not cheap memes.

The free market has more of a sense of humor than you think. How much of GDP is represented by totally frivolous industries, or even harmful ones?

I don't think anyone can prejudge what works in the market. That's why you need a market, and central planning (i.e. anointing which coins have "real" innovation) doesn't work.

DOGE could "inexplicably" continue to grow on the strength of marketing and eventually eclipse BTC. It won't, but that doesn't mean it can't.

[smooth]

Therefore, someone's 10 Bitcoins will be cloned indefinitely into 10 aether1, aether2, ...  , aether9999.
Isn't that inflationary?

I don't think this is inflationary in the usual sense because the value of any future altcoin using this model is already incorporated in the value of btc. Bitcoin becomes something of an inflation-indexed bond.

I find the logic of the proposal a bit lacking though. Once you spin off an altcoin, calling it A, from bitcoin, why does the next one spin off bitcoin and not off A?

it can, it probably will, you can also use A and the Bitcoin Blockchain to make bigger better A+Bitcoin

b/c Bitcoin will always have greater mining capacity and thus greater security.  don't forget, A still has to prove itself and attract miners on it's own merit for long term survival.

Mining capacity is irrelevant to this proposal. Merged-mining with bitcoin can be done either way.

[Adrian-x]

I find the logic of the proposal a bit lacking though. Once you spin off an altcoin, calling it A, from bitcoin, why does the next one spin off bitcoin and not off A?

The premise is that to maximize the chance for adoption, the alt should always spin off the blockchain with the highest market cap at the time of launch.  Cryptocurrency users get automatically piggybacked to the most liquid and valuable network (which I expect to remain "bitcoin as is" for the foreseeable future).  

I dunno, why not spin off all of them? That's the largest market cap, right?

sure all 350 of them may be a little heavy, but why not pick the top 3.

[Nxtblg]

As a close follower of Ethereum, although I agree that that team have done us all a great service in outlining the potential that exists in that wide space of Crypto 2.0 - I have increasing doubts about the way they are going about realizing their vision. I was at a couple of Ethereum meetups in London recently which just gave me the impression that despite their great ideas they as a team are disorganized and indecisive (eg they keep on moving their IPO goalposts).

Thanks for confirming my suspicions. I've already dropped a snark or two about Etherium turning teamwork into committee work...nice to hear a witness.

[railzand]

http://vid.ly/7h6w6m

Some of the devs and researchers were looking for pretty much just this at PrincetonBTC