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

[cypherdoc]

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.

no, it's not a fork.  a true Bitcoin fork that went on for more than a few days to weeks would kill Bitcoin as it would be an indication that Bitcoin has failed as a concept.  this is why we had the mad scramble to fix the 0.7 to 0.8 (#'s?) early last year.  the whole system was at risk of going up in smoke if it had persisted.

this proposal let's the independent altcoin work on it's own totally separate from Bitcoin except for the distribution.

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.)

if aethereum lasted that long it would have proven itself as a viable cryptocurrency contributor, which is what we all want.  after 2 or so years of success, it's likely many Bitcoiners who did not receive free aether will have bought into aethereum on the free market along with many newbies to the space.

[Peter R]

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

That's mainly helpful if there isn't much growth in the user base between the fork and the attack.

In the very unlikely event that there was an unrelenting 51% attack that rendered the bitcoin network unuseable, would you prefer migrate to a network that uses the current blockchain, or a network that uses a copy that is 1 year old?

I believe the economic majority would migrate to a new network built from the most accurate and current version of the blockchain of the coin with the largest market cap.  

This is what I mean when I say that the value of bitcoin is in our shared agreement that blockchain is accurate. 

[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

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.

sure but that limits innovation, new innovation in mining sachems are necessary as well (the attitude that I don't care much for a new altcoin that is controlled by the big ASIC hogs of today, is a legitimate market force)

[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.

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

i don't think Peter's proposal involves merged mining.  integrating that would be quite the headache and would require a massive PR effort to get the miners to agree.

the beauty of this proposal is it's simplicity, cheapness, and no risk implementation. it's basically just copying the open source altcoin code and distributing the altcoins via the Bitcoin blockchain percentages.

[Brangdon]

no, it's not a fork.

I don't really agree, but this is mostly a quibble about terminology and what is meant by a "fork", so it's probably not worth pursuing.

In the very unlikely event that there was an unrelenting 51% attack that rendered the bitcoin network unuseable, would you prefer migrate to a network that uses the current blockchain, or a network that uses a copy that is 1 year old?

I believe the economic majority would migrate to a new network built from the most accurate and current version of the blockchain of the coin with the largest market cap.

Here I am nit-picking at a rather minor element of the proposal, so this may also not be worth pursuing. (But it's more substantive than terminology.)

Do you mean from the largest market cap, or to the largest market cap? The latter makes more sense to me. For fairness I'd prefer the network based on the most recent known good block-chain, and for greed I'd prefer the network that gave my coins the largest real-world value. If there were two candidate alt-coins, and one launched just before I bought a house and one after, then I might prefer the older one because it would give me more coins.

I do think a block-chain that is years old is probably not recent enough.

if aethereum lasted that long it would have proven itself as a viable cryptocurrency contributor, which is what we all want.

Well, merely "lasting" doesn't mean that, but if it is the most successful alt-coin then presumably it would be.

I'm not yet sure I do want aethereum to be a viable crypto-currency. I'm still thinking about it.

[Peter R]

I'm not yet sure I do want aethereum to be a viable crypto-currency. I'm still thinking about it.

I think a lot of us feel this way about alt coins in general, Brandon.  And I think Daniel was right when he wrote about their coming demise.  

I personally feel that the complexity in NxT, Ethereum, Ripple, etc will just cause problems and headaches.  We haven't even scratched the surface of what we can do with the bitcoin scripting language yet.  But my proposal is a non-threatening way to allow alt-coin innovation and experimentation.  It takes power away from people pumping their new coins for a quick buck, if they do not actually believe in the coins long-term prospects. 

I believe I've shown that if anyone has a truly innovative idea it is in both their best interest and the best interest of the community as a whole to apply the distribution method described in the OP.  It will sink or swim based on its own merits.  

Bitcoin helps align the incentives of the individual with what is best for the community.  

[smooth]

I think a lot of us feel this way about alt coins in general, Brandon.  And I think Daniel was right when he wrote about their coming demise.  

The fallacy in his argument is that he assumes the race is already won and bitcoin won it. He is likely right there will be only one liquid coin, but from my perspective $5 billion market cap (and falling) is not a winner yet. The race hasn't even really started.

I believe I've shown that if anyone has a truly innovative idea it is in both their best interest and the best interest of the community as a whole to apply the distribution method described in the OP.  It will sink or swim based on its own merits.  

I agree with you here. Crypto-style IPOs are not a good business model and just attract scams, even if (big if) that wasn't the explicit intent of the first few.

[smooth]

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

i don't think Peter's proposal involves merged mining.  integrating that would be quite the headache and would require a massive PR effort to get the miners to agree.

Any coin can be merged-mined if the creator desires. It doesn't require miners to agree and in fact it miners don't even have to merge mine if they don't want, it is just more efficient.

[jonald_fyookball]

are the ethereum guys saying "FUCK" right about now

[smooth]

are the ethereum guys saying "FUCK" right about now

Every open source project faces the possibility of forking. If they didn't think through their business model well enough, too bad. They need to adapt or die.

In all likelihood several of them as individuals will get greater recognition of their abilities as a result of the project regardless of the outcome and can move on the bigger and better things, if it comes to that. 

[jonald_fyookball]

are the ethereum guys saying "FUCK" right about now

Every open source project faces the possibility of forking. If they didn't think through their business model well enough, too bad. They need to adapt or die.

Yeah true, but I do not think they were anticipating this new bootstrapping protocol, right?

[thoughtfan]

It is interesting to me that this idea (maybe it needs a nifty name like 'sidechain' because bitcoin blockchain-distributed premine seems cumbersome!) and Sidechain is happening at the same time.  I'm liking the sound of both atm.

Quick question:  If in the event I've locked a chunk of bitcoins and transferred value into a sidechain alt, would I still be eligible for the whole of my bitcoin holding (including that locked up) or would I lose out from the currently unspendable bitcoins?

[smooth]

It is interesting to me that this idea (maybe it needs a nifty name like 'sidechain' because bitcoin blockchain-distributed premine seems cumbersome!) and Sidechain is happening at the same time.  I'm liking the sound of both atm.

I think spin-off is pretty good. Matches the usage for stocks.

[smooth]

It is interesting to me that this idea (maybe it needs a nifty name like 'sidechain' because bitcoin blockchain-distributed premine seems cumbersome!) and Sidechain is happening at the same time.  I'm liking the sound of both atm.

Quick question:  If in the event I've locked a chunk of bitcoins and transferred value into a sidechain alt, would I still be eligible for the whole of my bitcoin holding (including that locked up) or would I lose out from the currently unspendable bitcoins?

You would lose out unless the genesis of the new coin also recognized that particular sidechain keys. Depending on the details of how the two-way peg works, it might be possible to recognize keys from any sidechain that is exchangeable into btc.

[cypherdoc]

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

i don't think Peter's proposal involves merged mining.  integrating that would be quite the headache and would require a massive PR effort to get the miners to agree.

Any coin can be merged-mined if the creator desires. It doesn't require miners to agree and in fact it miners don't even have to merge mine if they don't want, it is just more efficient.

Bitcoin miners would have to agree to add the hash of an altcoin block into a Bitcoin block, so yes, they do have to agree in aggregate to merge mine.  see here:

http://bitcoin.stackexchange.com/questions/273/how-does-merged-mining-work

[Peter R]

It is interesting to me that this idea (maybe it needs a nifty name like 'sidechain' because bitcoin blockchain-distributed premine seems cumbersome!) and Sidechain is happening at the same time.  I'm liking the sound of both atm.

I think spin-off is pretty good. Matches the usage for stocks.

And just like that it was named.  Spin-offs. 

[thoughtfan]

It is interesting to me that this idea (maybe it needs a nifty name like 'sidechain' because bitcoin blockchain-distributed premine seems cumbersome!) and Sidechain is happening at the same time.  I'm liking the sound of both atm.

Quick question:  If in the event I've locked a chunk of bitcoins and transferred value into a sidechain alt, would I still be eligible for the whole of my bitcoin holding (including that locked up) or would I lose out from the currently unspendable bitcoins?

You would lose out unless the genesis of the new coin also recognized that particular sidechain keys. Depending on the details of how the two-way peg works, it might be possible to recognize keys from any sidechain that is exchangeable into btc.

Thank you.  So as with bitcoins on an exchange anyone interested in maximising their claim on the new coin would need temporarily to transfer any sidechain alts back into bitcoin.  That is I guess another advantage of sidechain alts over alt alts (or however they will eventually be classified) is that the fixed ratio between sidechain alts and bitcoins means the shift shouldn't have the big impact on demand and price that say moving from original LTC to BTC would in both markets.

It is interesting to me that this idea (maybe it needs a nifty name like 'sidechain' because bitcoin blockchain-distributed premine seems cumbersome!) and Sidechain is happening at the same time.  I'm liking the sound of both atm.

I think spin-off is pretty good. Matches the usage for stocks.

I like spin-off too.

[smooth]

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

i don't think Peter's proposal involves merged mining.  integrating that would be quite the headache and would require a massive PR effort to get the miners to agree.

Any coin can be merged-mined if the creator desires. It doesn't require miners to agree and in fact it miners don't even have to merge mine if they don't want, it is just more efficient.

Bitcoin miners would have to agree to add the hash of an altcoin block into a Bitcoin block, so yes, they do have to agree in aggregate to merge mine.  see here:

http://bitcoin.stackexchange.com/questions/273/how-does-merged-mining-work

It's been a while since I looked but my recollection was that you could also do regular mining on namecoin (the block validation code will accept either a NMC pow or proof of a BTC pow, but it isn't economical to do so because so many people merge mine it, so the difficulty is high. On a new alt that might not be true.

[thoughtfan]

are the ethereum guys saying "FUCK" right about now

If their primary intention was to make a fortune out of their innovation one would expect so but so far it looks to me like at least Vitalik is more interested in contributing constructively to the discussion.

https://bitcointalk.org/index.php?topic=563925.msg6150824#msg6150824

[cypherdoc]

It is interesting to me that this idea (maybe it needs a nifty name like 'sidechain' because bitcoin blockchain-distributed premine seems cumbersome!) and Sidechain is happening at the same time.  I'm liking the sound of both atm.

Quick question:  If in the event I've locked a chunk of bitcoins and transferred value into a sidechain alt, would I still be eligible for the whole of my bitcoin holding (including that locked up) or would I lose out from the currently unspendable bitcoins?

You would lose out unless the genesis of the new coin also recognized that particular sidechain keys. Depending on the details of how the two-way peg works, it might be possible to recognize keys from any sidechain that is exchangeable into btc.

Thank you.  So as with bitcoins on an exchange anyone interested in maximising their claim on the new coin would need temporarily to transfer any sidechain alts back into bitcoin.  That is I guess another advantage of sidechain alts over alt alts (or however they will eventually be classified) is that the fixed ratio between sidechain alts and bitcoins means the shift shouldn't have the big impact on demand and price that say moving from original LTC to BTC would in both markets.

It is interesting to me that this idea (maybe it needs a nifty name like 'sidechain' because bitcoin blockchain-distributed premine seems cumbersome!) and Sidechain is happening at the same time.  I'm liking the sound of both atm.

I think spin-off is pretty good. Matches the usage for stocks.

I like spin-off too.

it's funny b/c in my mind i see Peter's proposal as better than Sidechains for now.  but i should reserve judgment until there's more info.  if endentyrell is to be believed, however, there is much complexity involved in setting up Sidechains that could put Bitcoin in jeopardy.  Adam has admitted that there is risk in being caught in a Sidechain during an attack.  this automatically makes those BTC less valuable on the open market than those on the mainchain.  

Spin-offs would be much safer, simpler, and cheaper if it works as a way to deal with altcoins/altschemes.