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

[Adrian-x]

Spin-offs: bootstrap your alt-coin with a bitcoin-blockchain-based initial coin distribution

This method (a) bootstraps alt-coins with a very large potential user base, (b) places all alt-coins on equal footings thereby allowing them to compete on their own merits, (c) automatically piggybacks bitcoin investors in any financial gains that may result due to community innovation, (d) fairly rewards innovative alt-coin developers as they can scoop up spin-offs dumped cheaply on the open market, (e) makes it difficult to “pump and dump.”

You yourself said it. The market will redistribute aether to those who see value in it. so it will have to go through the same growing pains of any other coin, only with a magnified effect, because by the time people figure out that the aether they can claim has value without understanding it's potential, they will start dumping. so every boom will be followed by a super dump by people who hold something they don't value. This will go on for quite a few price jumps as every time, more and people people realize that they can claim aether. You can't assume that just because you give someone something, she/he will value it

This is why it is good. Those who risk capital in the Bitcoin are the early adopters and all be a part of this. Market forces reward the best stewards and the naive suffer the stupidity of there actions.

Best case just hold and wait and see.

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[Peter R]

Spin-offs: bootstrap your alt-coin with a bitcoin-blockchain-based initial coin distribution

This method (a) bootstraps alt-coins with a very large potential user base, (b) places all alt-coins on equal footings thereby allowing them to compete on their own merits, (c) automatically piggybacks bitcoin investors in any financial gains that may result due to community innovation, (d) fairly rewards innovative alt-coin developers as they can scoop up spin-offs dumped cheaply on the open market, (e) makes it difficult to “pump and dump.”

You yourself said it. The market will redistribute aether to those who see value in it. so it will have to go through the same growing pains of any other coin, only with a magnified effect, because by the time people figure out that the aether they can claim has value without understanding it's potential, they will start dumping. so every boom will be followed by a super dump by people who hold something they don't value. This will go on for quite a few price jumps as every time, more and people people realize that they can claim aether. You can't assume that just because you give someone something, she/he will value it

Yes, that's the point.  The low-risk strategy for current bitcoin holders is to do nothing.  If people dump their "free aether," then this is evidence that they don't value it.  If people trade bitcoin for more aether, then this is evidence that they do value it.  This expedites the price discovery process because you bootstrap the alt-coin with an already diverse potential user base and with a wealth distribution you already know to be efficient for bitcoin.  

[iain]

One thing people will have to watch for, as they spend their spin-off coins, is privacy implications. If you have a bitcoin address A, replicated to various spin-offs, then each time you notice you have a non-zero balance in some spin-off and decide to spend it, new spendings from address A go out into the public domain. (It might not be called "A" in the spin-off's preferred widely-promulgated syntax - which might use a different prefix, error-correcting suffix, etc. than bitcoin's - but the underlying pubkeyhash must, of necessity, be the same.) The effect is the same as if someone working entirely within one coin accumulated multiple txouts to one address and then spent them to different recipients on different occasions. Blockchain-watchers can learn a lot from this, which is why it's not recommended. Well, with spin-offs, they can learn the same sort of things.

Naturally, coinjoin and the like will spring up in the various spin-off communities, and people who know what they're doing can mitigate the privacy dangers. There is, though, the worry that any particular spin-off might have a rather small community, and not really support good coinjoin mixing.

Having said all that, I must say I'm really impressed with the whole spin-off concept. So much so, that after dithering for a while, I've decided to abandon my "Splash: Ripple without the pre-mine" project, and leave it to someone else to fork Ripple in spin-off style, i.e. starting with the Bitcoin UTXO-set - or, to be precise, the subset that translates into the rather impoverished Ripple address syntax (no multi-sig, no scripts, just single pubkeyhashes).

So, grand announcement time: I hereby relinquish the name "Splash", the slogan "Ripple without the pre-mine", and the currency abbreviation "XSP" to whoever is first to do this. (Or they could do it in Counterparty's style, with XSP minted by BTC being burned. Basically I relinquish to whoever is first to do a Ripple fork without an allocation by software special-case fiat to the developers, or to any other special cases.)

So there you are! You can tell I'm really taken with the spin-off idea, can't you? But please, everybody, bear those privacy aspects in mind!

[LongAndShort]

So..an exchange owner can use our bitcoin to claim these bootstrapped coins?

[smooth]

So..an exchange owner can use our bitcoin to claim these bootstrapped coins?

Exchange owners can do whatever the hell they want with your coins, including run off with them, as has been clearly demonstrated many times.

You don't truly own your coins unless you, and you alone, control the private keys.

[gatra]

So..an exchange owner can use our bitcoin to claim these bootstrapped coins?

haha... very true!
I think it would be best to bootstrap not using holders of BTC, but using only mined BTC - ie the private keys of the coinbase transaction regardless of whether those coins were later spent or not. Reward actual miners of BTC instead of current holders!
The downside is that if the miners already spent the coins then it's likely that lots of those private keys are lost.
Also, it works with p2pool, but in a traditional pool the owner could use your mined coins to claim these bootstrapped coins... OTOH you already trusted the pool OP with your hashrate once, so it would be acceptable to assume you'd to trust them again...

I guess this reasoning would apply to the proposed case... if you trusted the exchange with your BTC it would seem acceptable to assume you'd trust them your bootstrapped coins...

[smooth]

I guess this reasoning would apply to the proposed case... if you trusted the exchange with your BTC it would seem acceptable to assume you'd trust them your bootstrapped coins...

Correct. In some sense exchange owners should handle the spin offs for you and put the new coins into your account, the way stock brokers do. In practice we're a long way from that. First they should stop losing/stealing BTC.

[David Latapie]

allow bitcoin users to claim a share of any pre-mine in direct proportion to the percentage of bitcoin’s market cap they control.

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.

If I understood correctly, the more bitcoins you have, the more premine you'll get. In other words, the richs will get richer and Satoshi Nakamoto will get the lion's share of any altcoin premine.

Surely you had something else in mind, didn't you?

[smooth]

allow bitcoin users to claim a share of any pre-mine in direct proportion to the percentage of bitcoin’s market cap they control.

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.

If I understood correctly, the more bitcoin you have, the more premine you'll get. In other words, the rich will get richer and Satoshi Nakamoto will get the lion's share of any altcoin premine.

Surely you had something else in mind, didn't you?

It's not "getting richer." The way spin-offs work economically is that the value of the spin-off is already included in the value of the parent. What happens is that the existing value is split between the new ex-spin off parent and the new instrument. How much accrues to each depend on the value the market attributes to each.

[chango]

allow bitcoin users to claim a share of any pre-mine in direct proportion to the percentage of bitcoin’s market cap they control.

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.

If I understood correctly, the more bitcoin you have, the more premine you'll get. In other words, the rich will get richer and Satoshi Nakamoto will get the lion's share of any altcoin premine.

Surely you had something else in mind, didn't you?

It's not "getting richer." The way spin-offs work economically is that the value of the spin-off is already included in the value of the parent. What happens is that the existing value is split between the new ex-spin off parent and the new instrument. How much accrues to each depend on the value the market attributes to each.

What ? can you explain that in English ? or better in Spanish! :p. Because as far as I understand it, it is "getting richer".

Cheers!.

[YarkoL]

What ? can you explain that in English ? or better in Spanish! :p. Because as far as I understand it, it is "getting richer".

Cheers!.

I think what he means is that not all spinoffs are equal. Theoretically some spinoffs
would have higher market value than the original coin, while others would be completely
worthless.

So the spinning off can be used to identify the features of the coin where the economical value resides.

If you object to "rich getting richer", consider the fact that you can always make a spinoff of Bitcoin and distribute
it to Doge or any other altcoin owners.

[bitAsp]

I like this idea of Spin Offs... I won't re-summarize it in this post to demonstrate that I understand it...

I have a thought and a suggestion...

I notice that Peter R has posted an RFC about a new Coin aEthereum https://bitcointalk.org/index.php?topic=563925...

Talking points...

• It seems to me that the context has now changed because of the emergence and significance of Darkcoin. Darkcoin appears to have a well-design architecture for promoting anonymous transactions whereas Bitcoin does not.
• Innovation, like that provided by Darkcoin, ought to be rewarded, and not punished
• Moreover, there is no Ethereum Coin in existence. Darkcoin already exists with significant new functionality in place. It is also under serious continuous development with serious a serious technology team leadership.
• So... what about a new Coin that is a Spin-Off of Darkcoin, providing all the functionality that Darkcoin provides.
• And... the big question... What about the Initial Distribution... Well, the Initial Distribution would be divided equally among holders of Bitcoin and Darkcoin at some specific Date and Time.
• 50% of the Initial Distribution Size would be allocated to Bitcoin addresses. 50% of that same size would be allocated to Darkcoin addresses.

http://www.darkcoin.io/
http://www.wired.com/2014/05/darkcoin-is-booming/
http://www.coindesk.com/true-anonymity-darkcoin-king-altcoins/

There are several benefits to this idea...

• This new Coin would be a demonstration that Technology Innovation is rewarded.
• Like aEthereum, this new Coin is a Fluff, Meme-Only AltCoin Killer. AltCoin holders will be selling their Fluff Coins to own the new Coin based on Darkcoin.
• Those holding Bitcoin own a percentage of a coin that provides for anonymous transactions.
• Those holding Darkcoin own a percentage of a Second Coin that provides for anonymous transactions.
• Darkcoin holders will not sell their Darkcoin, hence, doing harm to Darkcoin viability, because their holding DRK entitles them to ownership of the new Spin Off Coin. This is important because it would be a good thing that the Darkcoin Development Team has even more motivation to Innovate.

A final benefit... We don't have to wait for Ethereum to appear on the scene to put Peter R's great idea to the test... 

Thoughts?

[Zangelbert Bingledack]

I want to reiterate that this concept is totally money.

It's the logical way to launch an altcoin, period. The only reason to do it otherwise is to deliberately tweak the distribution to be more "fair," but that is incredibly ironic.

It is incredibly ironic because Bitcoin is the first technology platform to actually allow a completely fair* "airdrop" where no one is left out "because they didn't hear about it in time." Once the world is on the Blockchain (of course the Bitcoin blockchain), the obvious thing to do to ensure no one is left out of an altcoin launch is to give everyone the altcoins automatically, so even if they "missed the airdrop" or "happened not to hear about the amazing new technology," they still are "reverse-taxed" the exact same proportion of the coin relative to their net crypto worth as everyone else.

Therefore if for some reason it ever becomes necessary to switch over from the Bitcoin Blockchain to a different one, there will be no need to: the ledger will be just as before, except for those that specifically opted out of the new technology. Only the technology will be different. With this spin-off idea, likely to be known in the future as "duh, that's how you launch an altcoin," you can't miss the boat, you can only jump off of your own accord. That's game-changing.

Final thought: Now consider that the Blockchain enables any asset to be launched in the same way, not just coins...

*What is "fair" will always be subjective, but at least within the crypto-sphere we can unequivocally call such distributions "fairness-neutral." That is, they don't alter the fairness of the Blockchain distribution as it stands. And Peter R's argument for why the Bitcoin Blockchain is the fairest make a great deal of sense.

[Adrian-x]

Talking points...

• It seems to me that the context has now changed because of the emergence and significance of Darkcoin. Darkcoin appears to have a well-design architecture for promoting anonymous transactions whereas Bitcoin does not.
• Innovation, like that provided by Darkcoin, ought to be rewarded, and not punished
• Moreover, there is no Ethereum Coin in existence. Darkcoin already exists with significant new functionality in place. It is also under serious continuous development with serious a serious technology team leadership.
• So... what about a new Coin that is a Spin-Off of Darkcoin, providing all the functionality that Darkcoin provides.
• And... the big question... What about the Initial Distribution... Well, the Initial Distribution would be divided equally among holders of Bitcoin and Darkcoin at some specific Date and Time.
• 50% of the Initial Distribution Size would be allocated to Bitcoin addresses. 50% of that same size would be allocated to Darkcoin addresses.

There are several benefits to this idea...

• This new Coin would be a demonstration that Technology Innovation is rewarded.
• Like aEthereum, this new Coin is a Fluff, Meme-Only AltCoin Killer. AltCoin holders will be selling their Fluff Coins to own the new Coin based on Darkcoin.
• Those holding Bitcoin own a percentage of a coin that provides for anonymous transactions.
• Those holding Darkcoin own a percentage of a Second Coin that provides for anonymous transactions.
• Darkcoin holders will not sell their Darkcoin, hence, doing harm to Darkcoin viability, because their holding DRK entitles them to ownership of the new Spin Off Coin. This is important because it would be a good thing that the Darkcoin Development Team has even more motivation to Innovate.

A final benefit... We don't have to wait for Ethereum to appear on the scene to put Peter R's great idea to the test... 

Thoughts?

Darkcoin needs to prove itself I think it is still too early to know untill it's been hacked at a bit.

I understand darkcoin uses the coinjoin idea and as a result creating a spin off would require some way of publicly knowing the address so it won't be easy to prove the spin off is open and honest.
 
An innovation like darkcoin if truly better would not need a spin off the market would transfer value. DRK has a long way to go before this happens.

Still if I understand you, given darkcoin's level of anonymity, when it's open sourced Bitcoin could be spun off to make a darkcoin with Bitcoin distribution.

[jonald_fyookball]

there's only 1 problem with your plan Peter.
No alt coin creator will do it.
Then , what are we left with?
forks of shitcoins? 

[Adrian-x]

there's only 1 problem with your plan Peter.
No alt coin creator will do it.
Then , what are we left with?
forks of shitcoins? 

I love the idea it's a $#!t¢oin killer.

[Peter R]

there's only 1 problem with your plan Peter.
No alt coin creator will do it.

If the source code is open, then anyone can create a spin-off clone of an alt-coin.  IMO, if we want to foster the emergence of spin-offs, then we must make the process of creating them easier.  

There actually is a financial benefit to creating a spin-off: the creator benefits from the sharpest asymmetry of information.  If he is confident in his idea, he can offer to purchase his spin-offs at, say, a 1 : 1,000 discount from existing bitcoin holders.  I expect many bitcoin holders to happily sell their "free" spin-off coins to the developer at this price.  

For example, cryptonote-based coins (Monero, Bytecoin, etc) seem to be en vogue at the moment.  From my research, an exchange like Poloniex would definitely list your spin-off coin based on cryptonote.  Furthermore, Poloniex would be able to credit all bitcoin accounts with an equal spin-off balance (since they control the keys to unlock the spin-off), perhaps also charging customers a fee for this service.  This means your spin-off has instant liquidity.  As a developer, you could attempt to purchase these coins from those who think the concept is "stupid" or a "scam" and are happy to dump them.  Alternatively, you could set-up a website where bitcoin holders simply post bitcoin-signed-messages that credit their portion of the spin-off to you, and the site would instantly send a small bitcoin payment to the seller.  

In summary, I believe a developer could benefit sharply from a well-executed spin-off by accumulating a surplus of coins at a huge discount.  There would be no qualms with the legitimacy of the distribution process either, as every additional coin he accumulated he purchased from a wiling seller in the open market.  Of course, if the alt-coin is useless the developer could lose money too, but that is a feature and not a bug.  

[Peter R]

snapshot.bin file size

The initial distribution of wealth in a spin-off is based on a snapshot of the unspent outputs of the bitcoin blockchain at a particular block height.  Bitcoin holders can claim their wealth by producing the appropriate bitcoin-signed message and broadcasting it to the spin-off network.  The Snapshot for a spin-off is similar to the Genesis Block for Bitcoin.  It becomes part of the definition of the coin, is downloaded with the binaries, and has its file hash hardcoded in software.  The purpose of this post is to estimate the minimum size of this file, and to open a discussion regarding the appropriate file format.  

John Ratcliff has done a nice job preparing blockchain statistics here.  In late December 2013, he reported that:

  - 2.4 million addresses contained a non-zero balance,
  - 1.15 million of those addresses contained less than 1000 bits.  

The file snapshot.bin must contain an entry for each of the N addresses that hold a claimable balance.   The "balance record" for address n must contain the following 28 bytes:

Code:

pubkeyhash_n (20 bytes)  balance_n (8 bytes)

Depending on whether the unspent dust outputs are included, the size of snapshot.bin can be no less than

   filesize of snapshot.bin >= 28 x 2,400,000 = 67 MBytes    (including unspent dust)
   filesize of snapshot.bin >= 28 x 1,250,000 = 35 MBytes    (dust removed)

My inclination (although I am flexible here) is to remove dust less than 1000 bits (100,000 satoshis) by calculating the balance of the nth address as follows

Code:

balance_n = 100000 * floor(sum_of_unspent_outputs_assigned_to_address_n / 100000);

The file format for snapshot.bin can be very simple.  I propose a small header that specifies the blockheight when the snapshot was taken, and miscellaneous other header data, followed by a contiguous list of balance records, expressed in binary, and sorted canonically so that a particular balance can be found in O(log₂N) time.  I haven't decided how to deal with balances claimable with more complex redemption scripts such as multisig, and I am looking for advice here.  In any case, the more complex cases can be appended to the end of the snapshot file as shown.  

Code:

// File header:
version (1 byte)  blockheight_of_snapshot (4 bytes)  num_bytes (4 bytes)  header data   // total of num_bytes of header data

// Wealth data for regular addresses:
tag1=0x4E (1 byte)  num_bytes (4 bytes)  pubkeyhash_1 (20 bytes)  balance_1 (8 bytes)  …  pubkeyhash_N (20 bytes)  balance_N (8 bytes)  // total of num_bytes of records here

// Wealth data for multisig addresses:
tag2=0xA7 (1 byte)  num_bytes (4 bytes)  data format to be determined

// Wealth data for other types of outputs with unusual redemption scripts:
tag3=0xB4 (1 byte)  num_bytes (4 bytes)  data format to be determined

Is there anyone interested in volunteering to write a simple program to parse the blockchain and construct the file snapshot.bin (for an arbitrary blockheight)?  I think for the time being and to get started quickly, you can leave out the multisig balances for now.

[Adrian-x]

I haven't committed to learning to program other than entity level html and css but I'll kick start the process by offering 1,000,000 bits (1BTC) to the first person to commit to undertaking the task on condition the code meets Peter's approval and  the source is posted under the same licence as the Bitcoin code.

___

On a separate note but important in understanding and propagating the spin-off and preventing a 51% attack mining needs to ramp up fast and be motivated and sustain the initial offering price. Lots of ideas how to do this but wondering if there is a formula to make such estimates.

[steeldog803]

The importance of creating a well designed coin is nothing compared to the importance of creating the network effect.

Most Alt coins not spunoff/seeded with prior chains are now obsolete in my opinion.

This concept could create the downhill snowball effect for new functionality.

Wheres the donation address