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

[cypherdoc]

There's no need to include the founders in the initial distribution of a spin off. We've been through this already. Their premine or IPO distribution in the original coin is part of the problem. We are trying to avoid that in the spin off.

 The way the founders can still benefit is by buying up the cheap spin off coins that will surely be dumped by Bitcoiners who are skeptical. The founders will surely buy them up if they sincerely believe in their project since  they have the asymmetric knowledge  necessary to make that assessment.

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[smooth]

My comment was not so much directed at the claim window as the stated intent to exclude possibly lost coins.

Okay, in some trivial sense all lost bitcoins are already excluded from the altchain, because any corresponding altcoins can never be claimed. 

But the important thing, as far as I'm concerned, is that there needs to be some point in the future when potential investors can stop caring about whether or not they still include those potential coins in their analyses.

When does this hypothetical time in the future happen for bitcoin itself?

Since the answer is never, if investors really "need" this, then they wouldn't be investing in bitcoin, and the bitcoin distribution wouldn't be efficient.

Your argument is essentially a refutation of the original premise.

[Peter R]

Your premise that new technology
would always outcompete a spinoff
with a better distribution is certainly debatable.  

I think D&T said if a coin is innovative AND if it uses the spin-off technique, then it is unlikely that a copy could outcompete it.  In other words, if the "spin-off effect" is real, by launching with a spin-off distribution the developer can minimize the chance that his tech gets scooped by a clone (that goes on to outcompete the original).  

I like the idea of including original
owners in the spin off distribution,
because it gives additional benefits
to both parties.  Additional "fighting chances"
to the spin off, benefitting bitcoiners,
And insurance to the original altcoiners.

Developers gonna develop and no one can stop them.  However, it is pretty clear to me that a properly launched spin-off would outcompete a 50% pre-mined (but otherwise equivalent) coin.  But what if the developers awarded themselves 5% of the new coins?  What about 1%?  

If I was going to launch an alt-coin, I would use a true spin-off.  Since I was the one who picked the mining algorithm and controlled the launch date, I'd have my miners fired up and ready to go right at launch.  By mining when difficult was low, and perhaps by purchasing coins dumped for cheap, I bet a developer could accrue 0.1 - 1% of the money supply for a low cost.  The beauty here is that there will be no questions about the legitimacy of the distribution.  Every detail would be completely transparent.

Is 0.1% - 1% not enough incentive?  If your spin-off reaches the market cap of Litecoin, then that's $300,000 to $3,000,000 of potential profit.

I think a lot of the alt-coin developers aren't thinking BIG.  Litecoin has a $327 million market cap AND is not innovative AND has a sparser distribution than bitcoin.  Could a properly-launched and functioning spin-off of something that actually represents a potential innovation take second place?  

[toast]

Peter R: What % do you think is "safe" for an altcoin developer to use?

If you have a large dev team and lots of unique tech, it is safer for you to give a smaller proportion to BTC and larger proportion to other, more targeted distribution that is more favorable to yourself. I don't buy the "it only takes one dev to keep a fork maintained" argument, there is so much more to acquiring network effect than initial distribution.

I'm curious about specific numbers. You wouldn't settle for anything less than 100%, and would lead a snapshot effort? What about 80%? 50%? Bitcoin whales can only spread their attention so thin before being unable to fork everything.

[Peter R]

Peter R: What % do you think is "safe" for an altcoin developer to use?

The point I was trying to make is that only 0% is "safe."  With any other distribution, there will be questions about legitimacy.  If there are too many questions, the technology (should it actually be useful) may be at risk of getting scooped by clone launched with a more efficient distribution.  

But like Cypherdoc said, the developers can still benefit based on the asymmetry of their information.  They can be highly-prepared to mine coins upon launch and they can purchase coins from bitcoin holders who are happy to sell this "free money" for cheap.  

When I said earlier that I expect the developers could accrue 0.1 - 1% of the money supply, I meant starting from 0%.  If the initial distribution differs from what is encoded by the unspent outputs in the bitcoin blockchain, it is not a spin-off.  

[gjhiggins]

I haven't seen it mentioned above ... there's an experiment in progress that uses a "proof-of-chain" approach to coin distro:

https://bitcointalk.org/index.php?topic=623147.0

Code:

Have Bitcoins, Litecoins or Dogecoins? Well then, you already own CLAMS!

Import your Bitcoin, Litecoin, or Dogecoin wallet into CLAM Client and BLAMO! You've got CLAMS!

If your sca-sca-sca-sca-scared!  Send your Bitcoins, Litecoins and Dogecoins to a new wallet, then try CLAMS out!

Claim your free CLAMS today, and be one of the 1st to stake a block on the first Proof-of-Chain block chain!

The tone is a bit lurid perhaps but the claims proved accurate when this lapsed Shibe collected his CLAMs.

Cheers,

Graham

[smooth]

If I was going to launch an alt-coin, I would use a true spin-off.  Since I was the one who picked the mining algorithm and controlled the launch date, I'd have my miners fired up and ready to go right at launch.  By mining when difficult was low, and perhaps by purchasing coins dumped for cheap, I bet a developer could accrue 0.1 - 1% of the money supply for a low cost.  The beauty here is that there will be no questions about the legitimacy of the distribution.  Every detail would be completely transparent.

Instamining where the developer has some major advantage is definitely questioned and there are some well known if somewhat successful (and likely a large number of less successful and less known) examples that are questioned.

Buying from people who don't place the same value on it is likely to be viewed as more legitimate.

[Peter R]

"Clams" is highly suspect upon first glance.

DO NOT LOAD YOUR BITCOIN WALLETS INTO ANY SOFTWARE THAT YOU DO NOT UNDERSTAND. 

With a properly-executed spin-off, there is no reason that a user would be required to import his private keys (wallet file) into a spin-off client.  Claiming a spin-off can be done using either bitcoin OP_RETURN transactions or bitcoin-signed messages, all from your existing wallet software.

[Peter R]

If I was going to launch an alt-coin, I would use a true spin-off.  Since I was the one who picked the mining algorithm and controlled the launch date, I'd have my miners fired up and ready to go right at launch.  By mining when difficult was low, and perhaps by purchasing coins dumped for cheap, I bet a developer could accrue 0.1 - 1% of the money supply for a low cost.  The beauty here is that there will be no questions about the legitimacy of the distribution.  Every detail would be completely transparent.

Instamining where the developer has some major advantage is definitely questioned and there are some well known if somewhat successful (and likely a large number of less successful and less known) examples that are questioned.

Buying from people who don't place the same value on it is likely to be viewed as more legitimate.

Lol, after I wrote that post I was worried it would be mis-interpretted because I don't think I was clear.  What I mean is that the developers could begin mining upon launch and could be well-prepared to do so efficiently.  The only "advantage" the developer might have is that he's likely the one paying his coin's launch the most attention.  

For example, the snapshot.bin file could be based on the unspent outputs at Block #310,000.  However, it could be agreed that the coin "launches" at Block #314,000 (giving everyone ~one month to make sure there's nothing "funny" about the snapshot.bin file).  It would be agreed that the blockhash for Block #314,000 gets encoded in the snapshot.bin header and when this data is known, the coin goes "live." This type of launch mechanism allows everyone to know the launch details ahead of time, yet delays the launch until a certain event happens on the bitcoin blockchain.  Once the event happens (Block #314,000 is found), it becomes every-miner-for-himself.  The only advantage the developer has is that he is probably paying closer attention and will likely be ready to mine the moment this event occurs.  

So there is no way to "pre-mine" or "insta-mine" without getting caught.  Once the coin is running, it will be clear to everyone (to within a few minutes) when it was launched.  If the launch date is, for example, 3 months prior to the first Reddit or bitcointalk thread, then that's obviously a red flag.  If there are threads announcing the launch details months in advance, and even CoinDesk runs a story on it, then in my opinion the developers have done their due diligence in making the announcement.  If they happen to mine most the coins for the first few weeks because few others bothered, then I don't see how that would be interpreted as a problem.  

[smooth]

If I was going to launch an alt-coin, I would use a true spin-off.  Since I was the one who picked the mining algorithm and controlled the launch date, I'd have my miners fired up and ready to go right at launch.  By mining when difficult was low, and perhaps by purchasing coins dumped for cheap, I bet a developer could accrue 0.1 - 1% of the money supply for a low cost.  The beauty here is that there will be no questions about the legitimacy of the distribution.  Every detail would be completely transparent.

Instamining where the developer has some major advantage is definitely questioned and there are some well known if somewhat successful (and likely a large number of less successful and less known) examples that are questioned.

Buying from people who don't place the same value on it is likely to be viewed as more legitimate.

Lol, after I wrote that post I was worried it would be mis-interpretted because I don't think I was clear.  What I mean is that the developers could begin mining upon launch and could be well-prepared to do so efficiently.  The only "advantage" the developer might have is that he's likely the one paying his coin's launch the most attention.  

For example, the snapshot.bin file could be based on the unspent outputs at Block #310,000.  However, it could be agreed that the coin "launches" at Block #314,000 (giving everyone ~one month to make sure there's nothing "funny" about the snapshot.bin file).  It would be agreed that the blockhash for Block #314,000 gets encoded in the snapshot.bin header and when this data is known, the coin goes "live." This type of launch mechanism allows everyone to know the launch details ahead of time, yet delays the launch until a certain event happens on the bitcoin blockchain.  Once the event happens (Block #314,000 is found), it becomes every-miner-for-himself.  The only advantage the developer has is that he is probably paying closer attention and will likely be ready to mine the moment this event occurs.  

And as I said, it is still likely to be questioned if the developer is uniquely "well-prepared" to mine and ends up mining a disproportionate amount because others are unaware of it or not uniquely well-prepapred (sometimes compounded by a low starting difficulty and bad difficulty adjustment algorithms that give a huge advantage to all miners -- but especially developers -- who get in early).

But it is hard to argue with actually buying coins from a seller, although I guess even in that case there could be shenanigans. For example, the developer could be deceptive about plans for future investment, to scoop up cheap coins before revealing investment plans. Sort of a reverse pump-and-dump.

If there are threads announcing the launch details months in advance, and even CoinDesk runs a story on it, then in my opinion the developers have done their due diligence in making the announcement.  If they happen to mine most the coins for the first few weeks because few others bothered, then I don't see how that would be interpreted as a problem.  

I agree with this extreme example in theory but I can't think of a single coin in practice that has been launched this way, with months of notice and press coverage. (I guess Etherium counts, though it hasn't been launched yet.)

In practice what often happens is an announcement post is made and the thread gets quickly buried if it isn't among the most widely followed (and replied).

[YarkoL]

The spin-off technique is only a tool.  

Exactly.
So you shouldn't have any qualms about spinning off Monero.

[jonald_fyookball]

I suppose if an alt was pre-mined it wouldn't make sense to try to create a "dual" distribution,
and we can just go with a bitcoin based distribution.   Sorry, I'm late to the party as usual. 

But like Cypherdoc said, the developers can still benefit based on the asymmetry of their information.  They can be highly-prepared to mine coins upon launch and they can purchase coins from bitcoin holders who are happy to sell this "free money" for cheap.   

I was thinking the same thing -- they might even create some ASICs ahead of time if they really believe in the new scheme.

[Brangdon]

If I was going to launch an alt-coin, I would use a true spin-off.  Since I was the one who picked the mining algorithm and controlled the launch date, I'd have my miners fired up and ready to go right at launch.  By mining when difficult was low, and perhaps by purchasing coins dumped for cheap, I bet a developer could accrue 0.1 - 1% of the money supply for a low cost.

Let's not forget that some coins don't have mining in the Bitcoin sense. For example, Nxt has no block reward, no inflation, no way to create new coins. Processing transactions only brings in transaction fees, and they are likely to be low in the early stages. What's more, being a proof-of-stake currency, you get the transaction fees in proportion to the coins you stake, and you are starting off with none. So you are kind of screwed on that account.

The main way you would acquire the new Nxt/Bitcoin spin-off coins is by buying from someone selling their Bitcoin claim. Ironically, the more people like your alt-coin, the higher the price, the harder to acquire it cheap, and the less money you make. Even their indifference, not bothering to sell, makes it harder to acquire cheap coins.

[toast]

Peter R: What % do you think is "safe" for an altcoin developer to use?

The point I was trying to make is that only 0% is "safe."  With any other distribution, there will be questions about legitimacy.  If there are too many questions, the technology (should it actually be useful) may be at risk of getting scooped by clone launched with a more efficient distribution.   

Really? I think you're imagining shitty altcoins and not real crypto-equity innovation.

Consider zerocoin. Suppose they went with pure POS and so had 100% preallocation.
Their tech was the result of tons of work in advanced crypto research. Also suppose their codebase is unique and getting a dev up to speed is not a small undertaking. Suppose they allocated 90% to bitcoin and 10% into a trust that paid for development.

You would lead a snapshot/fork effort to re-launch their coin with 100% bitcoin?

What if there were 10 such projects, each with unique technology that is clearly providing value and which was clearly the result of a lot of work? Would you fight all those dev teams at once?

[DeathAndTaxes]

You would lead a snapshot/fork effort to re-launch their coin with 100% bitcoin?

I don't think he said he would do it, just that it could happen.  Open Source projects can be modified and redistributed that is simply a reality. 

[toast]

You would lead a snapshot/fork effort to re-launch their coin with 100% bitcoin?

I don't think he said he would do it, just that it could happen.  Open Source projects can be modified and redistributed that is simply a reality. 

Well they have to be modified and distributed by humans, not fairies. You still have to make your site #1 on google for that search term, you still have to have people talking to media to explain your project, etc.

Do you really think Aethereum will beat Ethereum? I think they won't even if ethereum keeps 100% dev premine.

I think this thread is where I would find the most pro-BTC allocation people. If you guys don't do it, I don't think anyone will.

My opinion is that everyone here is a bitcoin whale and that the "fairness" / "legitimacy" argument is a red herring. I think the average joe would be ok with getting 10 coins in a project with a dedicated dev team over 12.5 coins in a project that is fighting the core devs and trying to maintain a fork.

[Peter R]

I should preface these next comments by saying that we've certainly made progress.  With something like Darkcoin, there were questions that the developers may control 50% of the supply (at least that was the rumour a few weeks ago).  Using the spin-off technique with the blockhash timestamp in snapshot.bin means there may be some argument about whether the developers control 0.02% or 1%.  So the "problem" is 10 - 100 X smaller with a spin-off than a regular launch.  This fact, coupled with the requirement that all bitcoin holders can make a claim in proportion to their bitcoin holdings, suggests to me that spin-offs would generally appear more legitimate than a mine-from-zero or IPO'd coin.  

And as I said, it is still likely to be questioned if the developer is uniquely "well-prepared" to mine and ends up mining a disproportionate amount because others are unaware of it or not uniquely well-prepapred (sometimes compounded by a low starting difficulty and bad difficulty adjustment algorithms that give a huge advantage to all miners -- but especially developers -- who get in early).

I think our goals in this thread should be to establish the spin-off technique so that any mining shenanigans become transparent (e.g., by promoting the use of the blockhash timestamp in the header file).  Once this is done, I don't see how mining can be controlled any further.  The developers could say they didn't mine upon launch, but they could do so anyways without anyone knowing.  And I still question whether this would even matter.  

Do you disagree?

But like Cypherdoc said, the developers can still benefit based on the asymmetry of their information.  They can be highly-prepared to mine coins upon launch and they can purchase coins from bitcoin holders who are happy to sell this "free money" for cheap.  

I was thinking the same thing -- they might even create some ASICs ahead of time if they really believe in the new scheme.

But would this be ethical?  It sounds like Smooth might be inclined to say "no."  But like you implied, creating ASICs ahead of time would require a huge investment that might become wortheless if the experiment failed.  

[DeathAndTaxes]

You would lead a snapshot/fork effort to re-launch their coin with 100% bitcoin?

I don't think he said he would do it, just that it could happen.  Open Source projects can be modified and redistributed that is simply a reality.  

Well they have to be modified and distributed by humans, not fairies. You still have to make your site #1 on google for that search term, you still have to have people talking to media to explain your project, etc.

Do you really think Aethereum will beat Ethereum? I think they won't even if ethereum keeps 100% dev premine.

Well that is the experiment.  Honestly I don't think anything will come out of ethereum (or clones) so the spinoff concept might outlive them both.

My opinion is that everyone here is a bitcoin whale and that the "fairness" / "legitimacy" argument is a red herring. I think the average joe would be ok with getting 10 coins in a project with a dedicated dev team over 12.5 coins in a project that is fighting the core devs and trying to maintain a fork.

If true then you have nothing to worry about.  Of course you ignore the optimal scenario where the innovative altcoin uses the spinoff concept from the beginning and thus clones have nothing to offer.  The spinoff has the superior tech, the first mover advantage, and the increased liquidity and distribution created by the snapshot block.

[Peter R]

Do you really think Aethereum will beat Ethereum? I think they won't even if ethereum keeps 100% dev premine.

I think this thread is where I would find the most pro-BTC allocation people. If you guys don't do it, I don't think anyone will.

Like D&T said, this is an experiment.  It is not clear yet what will happen.  

Regarding the statement "if you guys don't do it, I don't think anyone will," well…it depends.  I think we need to fully define the technique, develop a tool to make the snapshot.bin files, and then assist with a reference launch of a potentially interesting alt coin.  

If the technique works and the spin-off thrives, and if there is a clear mechanism for developers to earn even a small profit, then I think spin-offs will proliferate and threaten alt-coins launched with non-spinoff distributions.  Remember, once the reference launch is complete and working, it should be quite easy to port that part of the code to new alt-coins to create additional clones.  

On the other hand, if we learn that the technique doesn't work for some reason, then probably no one will bother with them.  

In either case, we will learn something important.  

[jonald_fyookball]

Do you really think Aethereum will beat Ethereum? I think they won't even if ethereum keeps 100% dev premine.

I think this thread is where I would find the most pro-BTC allocation people. If you guys don't do it, I don't think anyone will.

Like D&T said, this is an experiment.  It is not clear yet what will happen.  

Regarding the statement "if you guys don't do it, I don't think anyone will," well…it depends.  I think we need to fully define the technique, develop a tool to make the snapshot.bin files, and then assist with a reference launch of a potentially interesting alt coin.  

If the technique works and the spin-off thrives, and if there is a clear mechanism for developers to earn even a small profit, then I think spin-offs will proliferate and threaten alt-coins launched with non-spinoff distributions.  Remember, once the reference launch is complete and working, it should be quite easy to port that part of the code to new alt-coins to create additional clones.  

On the other hand, if we learn that the technique doesn't work for some reason, then probably no one will bother with them.  

In either case, we will learn something important. 

haha...maybe....
we're pretty far out on the bleeding edge.

Bitcoin itself is an experiment...

Altcoins are an experiment based on an experiment.

And THIS could be said to be experiment based on an experiment based on an experiment...so we might not
have enough meaningful data...but will be interesting to see what happens with aEthereum.
Hopefully you'll be ready in time.