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

[smooth]

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.  

They can't be less valuable other than for very short term liquidity reasons (jumping chains is like mining so you have to wait, so you might prefer to trade, but that will be at a small premium) because the are exchangeable. The effect of a side chain not being secure is that no one would exchange into it and everyone would exchange out of it, so it just dies.

[smooth]

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.  

They can't be less valuable other than for very short term liquidity reasons (jumping chains is like mining so you have to wait, so you might prefer to trade, but that will be at a small premium) because the are exchangeable. The effect of a side chain not being secure is that no one would exchange into it and everyone would exchange out of it, so it just dies.

This of course may mean the whole scheme fails. If people do not view any of these side chains as secure, no one will ever exchange in. You might need a floating exchange rate (i.e. altcoin) to allow people to price the risk.

[Peter R]

I see that this thread got moved from "Bitcoin discussion" to "Alternate cryptocurrencies."  

I think we've made good progress today (5 pages of comments).  We've refined the idea of "spin-offs" as alt-coins that are launched with a pre-mine proportional to the unspent bitcoin outputs at the time the "snap shot" of the blockchain was taken.  Users can claim their coins in the alt chain by signing a message with the corresponding bitcoin private key and posting it to the spin-off network.

The purpose of spin-offs is to incentivize alt-coins to compete based on their technical merit and in a non-inflationary manner, as described by cypherdoc:

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.  

Although both spin-offs and side-chains preserve blockchain scarcity, spin-offs achieve this in a less threatening way that neither requires changes to bitcoin nor impedes experimentation and innovation.  

[smooth]

We've refined the idea of "spin-offs" as alt-coins that are launched with a pre-mine exactly equal to the unspent bitcoin outputs at the time the "snap shot" of the blockchain was taken.

Exactly equal or proportional? The latter seems fine.

[Peter R]

We've refined the idea of "spin-offs" as alt-coins that are launched with a pre-mine exactly equal to the unspent bitcoin outputs at the time the "snap shot" of the blockchain was taken.

Exactly equal or proportional? The latter seems fine.

Right again, smooth.  You have a good eye for detail and logic.  I corrected the post. 

[smooth]

We've refined the idea of "spin-offs" as alt-coins that are launched with a pre-mine exactly equal to the unspent bitcoin outputs at the time the "snap shot" of the blockchain was taken.

Exactly equal or proportional? The latter seems fine.

Right again, smooth.  You have a good eye for detail and logic.  I corrected the post.  

It's an interesting point. How is the constant of proportionality determined, and does 0 count?

[Peter R]

We've refined the idea of "spin-offs" as alt-coins that are launched with a pre-mine exactly equal to the unspent bitcoin outputs at the time the "snap shot" of the blockchain was taken.

Exactly equal or proportional? The latter seems fine.

Right again, smooth.  You have a good eye for detail and logic.  I corrected the post.  

It's an interesting point. How is the constant of proportionality determined, and does 0 count?

I suppose you could say that a "spin-off" converges to a traditional launch as the pre-mine approaches zero.  Or conversely, that a "spin-off" is the best-practices generalization of a traditional (zero pre-mine) launch when zero-premine is not feasible (e.g., PoS). 

[iopq]

If the problem of distribution is fixed in a PoS coin in such a way that nobody feels that they are getting a rough deal then you could have something. The problem with coins that have very few stakeholders is lack of liquidity. The problem with coins that give out their coins to too many people is lack of early adopters.

[smooth]

We've refined the idea of "spin-offs" as alt-coins that are launched with a pre-mine exactly equal to the unspent bitcoin outputs at the time the "snap shot" of the blockchain was taken.

Exactly equal or proportional? The latter seems fine.

Right again, smooth.  You have a good eye for detail and logic.  I corrected the post.  

It's an interesting point. How is the constant of proportionality determined, and does 0 count?

I suppose you could say that a "spin-off" converges to a traditional launch as the pre-mine approaches zero.  Or conversely, that a "spin-off" is the best-practices generalization of a traditional (zero pre-mine) launch when zero-premine is not feasible (e.g., PoS). 

Does this apply to etherium?

[Peter R]

I suppose you could say that a "spin-off" converges to a traditional launch as the pre-mine approaches zero.  Or conversely, that a "spin-off" is the best-practices generalization of a traditional (zero pre-mine) launch when zero-premine is not feasible (e.g., PoS).  

Does this apply to etherium?

I'm not sure I'm following your question.  The Ethereum developers will apparently distribute the pre-mine by selling some of it in exchange for bitcoin during an IPO event and keeping the rest for themselves.  This has many people questioning their motives.  The spin-off clone aethereum is an exact replica of Ethereum with the exact same % pre-mine, just distributed according to the spin-off principle.  

[smooth]

I suppose you could say that a "spin-off" converges to a traditional launch as the pre-mine approaches zero.  Or conversely, that a "spin-off" is the best-practices generalization of a traditional (zero pre-mine) launch when zero-premine is not feasible (e.g., PoS).  

Does this apply to etherium?

I'm not sure I'm following your question.

Is (a clone of) Etherium a case when a zero-premine is not feasible?

[thoughtfan]

I suppose you could say that a "spin-off" converges to a traditional launch as the pre-mine approaches zero.  Or conversely, that a "spin-off" is the best-practices generalization of a traditional (zero pre-mine) launch when zero-premine is not feasible (e.g., PoS).  

Does this apply to etherium?

I'm not sure I'm following your question.

Is (a clone of) Etherium a case when a zero-premine is not feasible?

There are plenty who are proposing it.  That's both the beauty and confusion of open source alts at this stage of the game.  We could end up with Etherium -the-original-with-premine, a number of zero-premine clones, at least two spin-off versions (æthereum and ɯnǝɹǝɥʇæ) and one or more side-chain versions!

[FredOm]

Not sure that I understand you right.

You plan to make those few who are already insanely-BTC-rich, in the future
now even richer with every coinsystem that is innovated in your way ?

I invite you to skim through this text:
https://bitcointalk.org/index.php?topic=552226.msg6009832#msg6009832
(read the paragraph "The filthy rich ...")

Perhaps you can come up with a better idea, that is appealing not only to your clientele.

BTC 1NQ4pmBoC6ENjz5c8LjJG9u4tCbLq5NDBE
[BC] BTCavLhd46HTm9FDfeke2BszZ6UfUDPYKJ

[Peter R]

...you think actual bitcoin distribution is a fair distribution. Everything about this is wrong.

Fairness is subjective.  

What we know empirically is that the distribution of coins in bitcoin is efficient.  It has been tested by the market over 4 years and over 1,000,000% increase in price.  

My premise is that an alt-coin launched using the "spin-off" technique would naturally out-compete the equivalent alt-coin that used a different method for pre-mine distribution, all other variables being equal.  The reason I think this is that the spin-off technique distributes the coins widely and in a manner that we know is efficient for bitcoin.  This provides the spin-off immediately with (a) a large potential user base, (b) a large potential pool of liquidity, (c) a large number of "holders" (as most bitcoin users will be impartial to this idea).  

This is not a debate about fairness.  This is a debate about what would actually happen and one that can only be answered with the benefit of hindsight.  

[Peter R]

Not sure that I understand you right.

Perhaps you can come up with a better idea, that is appealing not only to your clientele.

Primarily, I am engaging in an educational campaign to get our community to re-think where the value in bitcoin comes from.  The value comes from the shared agreement from a broad and diverse community that the blockchain is correct (with control of spots on this ledger provable via digital signatures).

Technical details hardly matter.  What matters is our shared belief system.  Although I am doubtful that any of the alt-coin proposals represent genuine useful innovations (but please go ahead and try to innovate), if one is found it will become part of bitcoin using the spin-off technique.  

[cypherdoc]

You plan to make those few who are already insanely-BTC-rich, in the future
now even richer with every coinsystem that is innovated in your way ?

that is an assumption that is not necessarily true but may be exactly the way it plays out.

Peter is saying let's see what the market decides.  altcoin's have nothing to fear if they are innovating with the right intentions (subjective yes).  his proposal should make altcoin devs think seriously about their own motives as to why they're introducing an altcoin.  if there's true innovation that is meant to benefit the community, they will be rewarded richly, as they will have the most insider knowledge of just how good their altcoin is (or isn't).  the way they will do this is that b/c of this asymmetric knowledge there will undoubtedly be Bitcoin naysayers from the free altcoin distribution who will dump their new found "free altcoin" for cash or other coin on the open market.  the devs are then just as free to scoop these up at bargain prices.  as the altcoin grows and matures they will become rich.

i like this method much more than Sidechains b/c it totally separates these altcoin/schemes from the Bitcoin protocol which will have to be changed to implement Sidechains.  that is risky and complex. Spin-offs are cheap, simple, and no risk.

it's a beautiful play on economic incentives.  

[jparsley]

Intresting idea, has this been used on a coin

[YarkoL]

there will undoubtedly be Bitcoin naysayers from the free altcoin distribution who will dump their new found "free altcoin" for cash or other coin on the open market.  the devs are then just as free to scoop these up at bargain prices.

Also tech-savvy bitcoiners will hold/scoop them, and so we have a nearly instant gauge of market valuation, which will reflect on exchanges. So the initial distribution does not really matter much.

I hope Ethereum or some other unique altcoin devs will first take up this proposal voluntarily so we'll have a proof of concept. The clone route is a bit nasty.

[cypherdoc]

there will undoubtedly be Bitcoin naysayers from the free altcoin distribution who will dump their new found "free altcoin" for cash or other coin on the open market.  the devs are then just as free to scoop these up at bargain prices.

Also tech-savvy bitcoiners will hold/scoop them, and so we have a nearly instant gauge of market valuation, which will reflect on exchanges. So the initial distribution does not really matter much.

I hope Ethereum or some other unique altcoin devs will first take up this proposal voluntarily so we'll have a proof of concept. The clone route is a bit nasty.

this is exactly what we hope will happen.  this is a deterrent, or hammer, so to speak.

the altcoin devs would be wise to think through the economic incentives proposed here very, very carefully.  i only hope they come to the right conclusions.

[cypherdoc]

there will undoubtedly be Bitcoin naysayers from the free altcoin distribution who will dump their new found "free altcoin" for cash or other coin on the open market.  the devs are then just as free to scoop these up at bargain prices.

Also tech-savvy bitcoiners will hold/scoop them, and so we have a nearly instant gauge of market valuation, which will reflect on exchanges. So the initial distribution does not really matter much.

actually, the initial distribution makes all the difference.