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Author Topic: rpietila Altcoin Observer  (Read 386394 times)
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rpietila
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May 25, 2014, 06:02:40 AM
 #1

Hi, I am rpietila. Welcome to my first thread on altcoins. I have been a Bitcoin owner since 2011 but never owned any alts, until I bought some MRO after it hit the exchange last week.


My take on altcoins

As my readers have noticed, I am not a big fan of altcoins. I have a distaste for the concept that enriches quacks and dumpers, I have never seen much long-term viability in them, and I have little time compared to money, and following the pump-and-dumps that all altcoins (as well as Bitcoin!) are prone to, would take far too much time compared to the meager gains achievable in the illiquid markets. I don't even trade Bitcoin except the major swings, and those only with a fraction of my holdings.

It has not gone unnoticed in the altcoin circles that I would be a great marketing asset, but I have declined all offers until now. The reason is that the coins have been bad, obvious pump and dumps, and even though I would have made some gains participating in them, my readers would have likely made a loss, and not only is that an unrighteous way to make money, I don't even need it, since I believe in the long-term success of crypto, and of Bitcoin, and have enough of them to take care of all my needs in the future.

The classical altcoins do not offer anything relative to Bitcoin, except maybe a different hashing algorithm. An important thing to remember is that there is no long-term market niche for two coins with the same algo. The hashing power of the larger coin is constantly threatening to destroy the smaller one. Even if that does not happen, there are network effects in play that favor the larger coin and suppress the smaller.

The 2.0 coins are in development and offer interesting new features. These coins tend to be fully premined, though. It would be more prudent to call them "shares". I have started many companies so that in the beginning I own all the shares, and I try to raise money and enlarge the ownership by offering them to the public. There is nothing wrong with that, but it is not a way to distribute these wide enough for them to ever function as a currency. It is akin to monetizing your ideas, generating value out of nothing, and I believe these coins are doomed to fail for this reason alone, not to mention that as startups, their failure rate is anyway 70-90%.

A new category that has just surfaced in 2014, are the privacy-enhanced coins. Although these are new, and much development is needed and is going on, the value proposal is appealing: unlike Bitcoin, which I believe is already well analyzed so that the enemies of privacy can attribute a name to most of the large addresses, these coins can offer true privacy and anonymous holdings and transactions. Not all of them, and not perhaps yet, but the potential is there. They are also seeing some price action.

Please consult the Cryptocurrency market cap when reading on. Note that I am comparing the prices relative to BTC only, so most of the coins may make gains in dollar terms even though I am bearish on them in BTC terms, once the next BTC bubble comes.

LTC
is the leading scrypt coin. On the one hand, the emergence of scrypt ASICs may provide a support to LTC's stagnating price (like SHA256 ASIC's did to Bitcoin in early 2013), on the other, it may be that they are just used to mine whatever is the most profitable coin to sell, and the proceeds are used to buy BTC. Typically LTC shoots up at the late stage of a BTC bubble. Therefore I am bearish on LTC just now, but it might be a buy when it hits 0.01, in anticipation of a leveraged rally with BTC.

DRK
This coin is centralized to be mined by masternodes. I have also heard that the developer of this coin is misrepresenting the truth concerning premine, and that he holds 2 million coins (out of 4.3M). This is a reason to be very cautious. Also DRK is in no way cheap, and there is not yet much use for it, so it is all marketing and speculation. I would not buy it now, as I did not when it was 10 times cheaper.

NXT
is 100% premined to a few executives in the beginning. It is a startup, and not a currency, and I don't believe it will ever be. Invest accordingly.

DOGE
is one of the 2 coins (other was AUR) where I saw some merit. This was when it had just come, at 35s. Now I believe it is in a terminal decline, since there are no markets for all-around coins except BTC. A further threat is that DOGE's inflation is quickly slowing, making its network very vulnerable. I advice to sell out on this one.

XRP
is pronounced crooked by a few of its developers, who have recently left the company. Even though there never was any reason to buy those, selling them is my advice if you have any.

MSC
100% premine. I have to admit that I don't know much that they are doing, but I have little belief that this coin can beat BTC in value appreciation, and there is a high risk that it will just fail. If you ever need MSC for any purpose, just buy it then.

BC
is designed a 100% premined pump&dump get-rich-quickly coin, which I did not touch when it was introduced to me in the early days of the first pump. Stay out (unless you like to be on the receiving end).

QRK
is also a secretly premined coin, which I believe is already in a terminal decline after the original pump was successful.

XPM
is surprisingly pricey still. Don't buy it.

AUR
Even though I was interested in this before the great pump in March (and would have made up to 100x gains if I had bought), now it is in a "following" mode after crashing back. If I moved to Iceland, I would probably start using it. Not an unconditional "sell" though.

MRO (Monero)
Okay, there was a reason why I wrote on alts. Cause I have just made my first altcoin investment ever! Monero has a trait which pretty much all other alts lack: slow and geometrically decreasing issuance. At present, only 5% of MRO is mined, and even after 4 years there will still be 20% left to be mined. There is no premine, and the community consists of several people Smiley Furthermore, it is at least currently a CPU coin, since the hashing algorithm is designed to make it difficult to implement for GPU let alone ASIC. These things make it "fair" so that there is no way to amass large stashes except by working for them in the competitive mining or buying in the open market.

The market for the coin is very active and extremely liquid. There was an OTC market in the beginning. MRO was listed in Poloniex 5 days ago and the reception has been good. It has been the most traded coin ever since despite having a market cap of only 1-3 M$! Up to 10% of the outstanding MRO changes hands daily in Poloniex, mitigating the extreme volatility that is plaguing many alts with concentrated ownership.

And now comes the main point: The coin has a feature, which is not implementable in Bitcoin - privacy! It is called CryptoNote, and means that all transactions are mixed in a protocol level. This is imo the most advanced privacy that is currently found in crypto universe, although I am sure that some disagree and let them teach me how I am wrong Wink

The coin is probably circulating quite widely already. New mining is about 30kMRO per day (BTC180), which is about $100k (!) and the price is rising (despite that). This is not a pump and dump coin, because the inflation takes care that new coins are constantly coming to the market. A word of warning though - the market cap may seem lucratively small, but the total issuance of MRO is 20 times the current, which is a little less than that of BTC. Therefore it is easy to compare the relative valuations by just comparing the prices. At 0.006 BTC currently, MRO is not the cheapest coin around (1:166 of BTC). I would advice to not buy hastily, and not participate in bubbles (if any). Mining is also an option.

This is the first altcoin I bought, and I did it during the time when it had been listed in the exchange. My relative position is less than in BTC though, so if only one remains, I would still do better if it is BTC Smiley

ADD: Relative position means: (my holding)/(total issuance).
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May 25, 2014, 06:13:59 AM
 #2

I have been doing due dilligence on alts for two weeks now.  My findings line up very strongly with your positions.  I split Most of my new altcoin purchases up evenly over Monero and Darkcoin last week.  But as I researched further I shifted the majority out of DRK and into MRO.

I am retaining a small stake in Counterparty as well although that is on the chopping block and my research continues.

I am:

96% BTC
2.5% MRO
1.2% XCP
.3% DRK

I also own a litecoin. Wink
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May 25, 2014, 06:19:49 AM
 #3

As usual, I agree with nearly all your points.  The majority of (and possible all) alt-coins serve no useful purpose.  They are dead coins walking.  The market will select the best payment network run from the most legitimate ledger.  Right now the best payment network is the Bitcoin Network and the most legitimate ledger is the Blockchain.  If, in the distant future, a superior payment technology is identified, the Blockchain Ledger will be forked or spun-off to this new technology.  There will never be a need to "panic trade" out of the bitcoin ledger and into some foo-coin ledger.  Value is stored in the Blockchain Ledger and not in the technology.

The fact that you mentioned Monero (MRO) is interesting.  The current narrative in the alt-coin community is "privacy," which was further reinforced by Darkcoin's recent moon shot.  But Darkcoin was illegitimately pre-mined insta-mined, has closed-source binaries, is not technologically innovative, and has a volatility-enhancing block reward equation1.  Darkcoin will likely collapse, some will call it a scam, and others will say they shouldn't have invested in something they didn't understand.

But like Satoshi said, "we are pattern-seeking story-telling animals."  The privacy narrative will remain, and in an effort to avoid the pitfalls of Darkcoin, Monero may appear as the legitimate alternative.  Monero is an open-source clone of Bytecoin so the technology has a track record.  Unlike Bytecoin (which is now 80% mined), only 930,000 of the eventual 18.4 million coins have been mined, so the distribution appears more legitimate.  Experts such as Greg Maxwell consider the ring-signature approach "top notch" (although they've also expressed concern), and it seems that more and more people keep talking about it.  And with this post now I am one of those people lol.  However, the fact that Monero has a fairly high inflation rate (which is needed for legitimacy unless the spin-off technique is employed) may preclude it from making a Blackcoin / Darkcoin-type moon shot.

On a final note, I think people speculating in alt-coins should look at it more like short-term human psychology analysis rather than long-term investing.  I worry that a lot of the people in the Darkcoin, Blackcoin, XRP, Nxt, etc. threads over-estimate the long-term potential.  


1The Darkcoin block reward decreases with increasing network hashrate and increases with decreasing network hashrate.  This tends to further limit new coin supply during rallies (adding to the pump), and increase new coin supply when miners have lost interest (adding to the dump).

Run Bitcoin Unlimited (www.bitcoinunlimited.info)
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May 25, 2014, 06:21:47 AM
 #4

Also...  the Ripple fiasco unfolding before our eyes is a case study in how a well coded platform with some of the most useful features in an alt can be destroyed by a bad distribution structure.

The vacuum being left my XRP demise will be filled eventually.  It had lots of good ideas, but noone wants another central reserve bank type structure.
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May 25, 2014, 07:37:21 AM
 #5

MRO is shining because it has a value proposition (privacy), it has a community, and the coin is still 95% not mined and mineable by anyone (non GPU/ASIC). The competitor, DRK, is centralized, has half of the current supply instamined, and it a lot more expensive. This was an easy choice really.

I don't know XCP that's why haven't mentioned it. It is 100% premine so why should I care?
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May 25, 2014, 08:03:14 AM
 #6

MRO is shining because it has a value proposition (privacy), it has a community, and the coin is still 95% not mined and mineable by anyone (non GPU/ASIC). The competitor, DRK, is centralized, has half of the current supply instamined, and it a lot more expensive. This was an easy choice really.

I don't know XCP that's why haven't mentioned it. It is 100% premine so why should I care?
With a P2P exchange it would be useful to exchange BTC<>MRO as a method of making BTC anonymous. Even if MRO isn't used as a currency it could be valuable as a tool for BTC. Almost like an optional add-on.

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May 25, 2014, 08:17:27 AM
 #7

MRO is shining because it has a value proposition (privacy), it has a community, and the coin is still 95% not mined and mineable by anyone (non GPU/ASIC). The competitor, DRK, is centralized, has half of the current supply instamined, and it a lot more expensive. This was an easy choice really.

I don't know XCP that's why haven't mentioned it. It is 100% premine so why should I care?
With a P2P exchange it would be useful to exchange BTC<>MRO as a method of making BTC anonymous. Even if MRO isn't used as a currency it could be valuable as a tool for BTC. Almost like an optional add-on.
NXT AE, even better to have another coin in the mix...
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May 25, 2014, 08:45:07 AM
 #8

MRO is shining because it has a value proposition (privacy), it has a community, and the coin is still 95% not mined and mineable by anyone (non GPU/ASIC). The competitor, DRK, is centralized, has half of the current supply instamined, and it a lot more expensive. This was an easy choice really.

I don't know XCP that's why haven't mentioned it. It is 100% premine so why should I care?
With a P2P exchange it would be useful to exchange BTC<>MRO as a method of making BTC anonymous. Even if MRO isn't used as a currency it could be valuable as a tool for BTC. Almost like an optional add-on.



Some long term Bitcoin weaknesses are:
- centralized mining (in only few pools),
- lack of fungibility (due to lack of privacy), and
- security hole in the elliptic curve (not in the hash algorithm).


CPU mining (GPU and ASICs resistant) is key to true decentralization. Any of you mining MRO can confirm that MRO is GPU resistant?

Cryptonote's MRO seems a good solution to bitcoin's lack of fungibility, and it's a feature that Bitcoin can hardly adopt. But it's not enough for an altcoin to succeed because, as dillpiklechips says, it could be useful simply to "wash" bitcoins.

Concerning the elliptic curve algorithm in MRO, I have not found any info.



MRO has 8x folded in just few days, and that's enough for me to stay apart.

Risto, what was your MRO purchase price?






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May 25, 2014, 08:58:14 AM
 #9

You tell me to respect the host, but it is you that has no respect Rpetila and his readers: instead of being straightforward and nuanced at the beginning of this thread, you came in here trying to promote something that has no future value for the host and his readers. Worse than that, as you are invested into it, it's a shameless promotion to defend your interest at the expand of all of us.

Now I'll stop engaging you because we are all derailing this thread towards altcoins instead of TA.

I merely pointed out a logic fallacy in grouping all altcoins together. Where is the disrespect towards Risto? You are making stuff up.

As to others, they sit on false information regarding Darkcoin, Monero and stuff. Most in here are trully clueless about +/-'s of the anonymous coins out there yet they pretend to be investment experts having found out about them like a week ago, propagating false information.

I have holdings in pretty much every anonymous coin there is precisely for this moment of boom, when everyone was like "anonymity? naaah... too shady" and stuff like that. So give me a break.

Quote
DRK is on the verge of collapse anytime, we are all aware of it.

I heard that at 0.003, 0.005, 0.007, 0.01, 0.014, 0.02, 0.026. Traders lost their coins to the rise and expected the dump that never came. They are now waiting to get back in, so let it fall if it must.

Keep in mind some fundamentals, whether the price corrects, flash-crashes, or goes to the moon and beyond:

1. Dark is aiming for the private/anonymous market. If just 1 out of 10 transactions are held privately/anonymously in the future, the anonymous coins will hold at least 10% of the whole cryptocurrency marketcap (so ~750mn out of 7.5bn with running prices). That leaves plenty of room for growth.

2. It provides real-world utility and stuff that people can actually use. Some of the top10 cryptos in coinmarketcap have some "fancy" concepts and features that most people do not even understand what they are / what they do / why they are useful. Privacy is something that everyone understands and has a need for in some degree. People do not want to have their bank statements online, so why would we do that with crypto? Businesses too (for competitive reasons).

2. Low inflation: BTC gives out 3600 BTCs per day. LTC gives out 28.800 LTC per day. DRK produces only 2880 DRK per day - and it will lower 7% next year.

3. Due to low inflation a significantly smaller amount of fiat (or fiat equivalent in BTCs) is required to keep the price stable compared to either LTC or BTC.

4. Due to low production of coins, coupled with the coins held for masternodes, the buying pressure for existing coins escalates.

5. BTC and LTC holders may hedge some of their investments with DRK, as DRK makes its ascent and scares them. Large bagholders of LTC in particular may have problems sleeping well and will either sell LTC or hedge with DRK. This creates a feedback loop that narrows the gap between LTC/DRK as money from LTC flows to DRK, allowing DRK to go to #2.

6. DRK represents a hedge of various forms. For example its security is not dependent on only 1 hash. It is also a bad-news-hedge in the sense that when news like "Bitcoin was banned in X country" hit, it can go the opposite way of Bitcoin. Kind'a like USD/EUR pairs when USD goes bad and EUR goes up and vice versa. Fiat hedging for BTC is unrealistic because it's a binary market. You either have BTC or fiat. But BTC/DRK is an actual hedge inside cryptos. "Bitcoin banned where? Great.. DRK to the mooooooon".

7. The numbers of coins in circulation is heavily in favor of DRK, in terms of scarcity: ~4 million DRKs vs ~12mn BTCs vs ~28mn LTCs.

8. Coin-numbers-adjusted, the price of DRK is 1/7th of LTC and 1/120th of BTC. This is grossly undervalued if one assumes that at least 5 or 10% of cryptocurrency transactions will be performed privately/anonymously and thus the price should move upwards to reflect this fact, even if DRK only occupies a far smaller percentage than now in the private/anonymous market.

9. The possibility of "mining" with masternodes, is like buying a mining ring that is free (you don't actually pay it as you still keep your DRKs) but also not obsoleted with time or new technology. Beats GPU / ASICs investment in both CAPEX and OPEX.

10. DRK is ahead of the competition. The competition has severe weaknesses and "blocker" issues. Zerocoin is the best solution but doesn't exist - and if it does come out, there will be a huge trust issue with the initial key. Bytecoin has good anonymity as a mixer but is based on an unproven/untested blockchain technology and consequently people can't trust much money on it, compared to the 5 years of running of Bitcoin. It's more like a gamble option - not something that you can throw heavy money. It also scales badly, has usability issues and is not interoperable with the bitcoin-based payment systems for merchants etc. These will hamper it for quite some time.

The fact that Cryptonote technology is superior to the current implementation of DarkSend (which will change in next revision), doesn't make it NSA-proof in itself. This means that both coins are private, not anonymous, not nearly 100% anonymous and anything else is snake oil. In essence both DRK + Cryptonote coins will be adequate for privacy, combined with IP obfuscation and "best practices" followed by the user, except if the NSA has other plans. This is like 99% privacy and the 1% to make it 100%, will require extra work from both camps. So the "superiority" aspect of Cryptonote's anonymity is null and void, unless NSA-proofing is achieved. In the meantime, the drawbacks of the whole Bytecoin system are enormous and cannot justify the "costs" for the user or the merchant. So, overall, there is no advantage in going with a Bytecoin system, over a Bitcoin-based system which is proven.

11. DRK has a coder that codes. Darkcoin has become something like a development platform of new features instead of a regular "shitcoin"-clone that offers nothing or that is stagnant.

12. Compared to LTC (which is ahead of DRK), LTC is a technological dinosaur. The LTC camp itself is worried:

https://litecointalk.org/index.php?topic=19819
https://litecointalk.org/index.php?topic=19955

Additionally, the LTC camp has failed in its primary mission to "sell" ASIC resistance, a point that would improve Bitcoin's "inadequacy". In other words, there is no reason why DRK could not exceed LTC and take #2.

13. Top-100 richlist keeps stacking when weak hands are like "maybe I should cash out": http://chainz.cryptoid.info/drk/#!rich

14. DRK has first mover advantage as the public anonymous coin which succeeded and initiated the anonymity pursuit in other coins (which are now scrambling to say DRK is scam, is a fail, is this, that, so we should take its place because we are, of course, better). Bytecoin existed from 2012 but nobody knew it until March-April 2014. By then people were already DarkSending money with Darkcoin.

I'm only going to address point 10 because it kind of makes everything else redundant.

Anyone that still believes bitcoin was invented by innocent minds, for the good of the people needs to check the whole of history to see whether there is any prior evidence of powerful people trying to stack the game in their favour. I'm sure you won;t have to look hard Wink

Now I'm not saying categorically that it isn't, I'm saying the odds are against it. So if BTC is masterminded by the (govt/rothschild/illuminati/some other rich guys) then we can assume the price increase is equally as orchestrated. The copycat coins can copy so far, but ultimately only BTC has the backing to push it over the top. The others will always remain small players. The people who invented bitcoin invented it the way the did for a reason, what you describe as weaknesses are design features. There isn't the slightest chance 'they' are going to let a competitor that doesn't have these desirable features supercede bitcoin.

I'm not one of the guys in charge, so my optimal strategy is play the odds as best I can, and hedge black swans. My investment in BTC is already hedging the black swan. I haven't bet the farm, if BTC fails I'm largely whole and ready to play the work hard(ish), enjoy life, retire comfortable game. If BTC succeeds the retirement is just a bit sooner and a bit lusher.

Hedging the black swan that $[altcoin X of N] is the one true god feels more like a lottery. Like buying a basket of penny shares and hoping one hits big. I'm not saying don't do it (I got a few, a surprisingly high 20% of my total crypto when i figured it out - might need to adjust that!) unlikely any of them will (be allowed to) usurp bitcoin imho.

"A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution" - Satoshi Nakamoto
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May 25, 2014, 09:05:51 AM
 #10

For those who expect anonymous coins to have 10% of the crypto volume, please consider silkroad statistics.
If I'm not mistaken, Solkroad had about 4% of all BTC transactions, you also should consider that back then market for "normal" coins was pretty thin.
I think if anonymous coins will have 1-3% of the volume of "normal" crypto currency, consider yourself lucky.

Quote
Dark is aiming for the private/anonymous market. If just 1 out of 10 transactions are held privately/anonymously in the future, the anonymous coins will hold at least 10% of the whole cryptocurrency marketcap (so ~750mn out of 7.5bn with running prices). That leaves plenty of room for growth.

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May 25, 2014, 09:32:24 AM
 #11


What do you mean when you say Nxt is more a startup than a crypto ?

-------------

Please allow me to post a link here.

Monero use a new code and is quite complex for beginners.
I made a tutorial that I keep updated :

[ANN][MRO][HOW TO] Install GUI wallet & mine Monero on Windows
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May 25, 2014, 09:36:12 AM
 #12

Good for making a separate thread. I'm curious whether discussion here will stay anywhere close to valuable though. Altcoin threads usually aren't Wink
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May 25, 2014, 09:46:03 AM
 #13

For those who expect anonymous coins to have 10% of the crypto volume, please consider silkroad statistics.

I'd advise to consider common logic:

1. People have the option of having all their transactions (similar to the transactions of their bank or credit card), online, forever, so that others can see (transparent coins and public ledger / blockchain)

2. People have the option of obfuscating their transactions so that these are not visible to third parties (perhaps except the NSA -for now- who is better equipped to crack the obfuscation)

Yes, I'd say a considerable amount of people can opt for #2. Not to mention escaping government oppression in areas where cryptos would be banned.
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May 25, 2014, 10:00:14 AM
 #14

One thing I want to say about LTC.  It's pretty well known that most of the big players such as KNC, Ghash, etc, are going to be building farms for Litecoin.  The LTC network is set to expand to a giant level comparable to that of Bitcoin itself.  Once the BTC and LTC networks are virtually identical in scale and investment capital, in a rational world, the price of BTC should go down and LTC go up.  The world is not rational, and BTC has a bit more forward momentum, so I expect both to go up with increasing world adoption.

Why do I think ASIC will help Litecoin?  You can look at an altcoin named "Myriadcoin" to get an example of why.  Myriadcoin was designed to be mined with five different algorithms at the same time with separate block rewards for each algorithm.  This makes it a lot harder for a mining cartel to monopolize coin emission.  It turns out Myriadcoin's biggest strength was also it's biggest weakness.  Since a mining cartel has a hard time driving up difficulty to constrain supply, there's a lot less upward pressure on price.

Right now Litecoin is doing exactly what I predicted it would do.  The price would initially dump with the initial ASIC roll out as the vendors exploit the difficulty and mine and dump, but over the next few months as the ASIC distribution becomes more even, the price will then increase as supply becomes constrained.

Why do I think altcoins are valid?  Because the financial industry wants to hedge security, and one, single block chain does not give them that.  What if Gavin or some other guy issued an update that imploded the BTC network?  They're just supposed to accept 100% loss?  No, they're not going to do that.  There will be at least 5 big coins because a 20% potential loss is a lot better than 100%.  Also, at least two coins have to exist for value of the first to transfer to the second should problems arise.

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May 25, 2014, 10:05:35 AM
 #15

Right now Litecoin is doing exactly what I predicted it would do.  The price would initially dump with the initial ASIC roll out as the vendors exploit the difficulty and mine and dump, but over the next few months as the ASIC distribution becomes more even, the price will then increase as supply becomes constrained.

So Litecoin is far from being dead ?

Does that mean that algorithms doesn't change anything in a crypto ? (because after some time everything is even)

Why altcoins are so obsessed with algorithms then ?

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May 25, 2014, 10:10:34 AM
 #16

MRO is shining because it has a value proposition (privacy), it has a community, and the coin is still 95% not mined and mineable by anyone (non GPU/ASIC). The competitor, DRK, is centralized, has half of the current supply instamined, and it a lot more expensive. This was an easy choice really.

I don't know XCP that's why haven't mentioned it. It is 100% premine so why should I care?

That's an incredibly short sighted dismissal considering you admitted not knowing it. I'm a little stunned-. XCP is a token just like BTC is a token. Bitcoin is also a protocol just like Counterparty is a protocol. Counterparty overlays a crypto-financial marketplace on bitcoin blockchain, enabling brand new applications and hence
expand the use of bitcoin blockchain by doing so, (therefore BTC as a unforgeable token or 'share' in the actual bitcoin network can go up. in value - the same goes for XCP.)

XCP was distributed via Proof-of-burn

IE: transactions were burned by being sent to unspendable output. These ~2,125 btc are lost to the ether.
This was not an IPO. No entity including development team ever saw a penny of those funds. Actually it had the effect of enriching bitcoin holders. This distribution model  put everyone on equal footing from day 1, ensured no allegations of foul play nor complaints of mismanaged funds. Everything from day 1 is  fully auditable and transparent for the world to see.

As opposed to something like mastercoin which went directly into funding the development team and into pockets foundation with likes of david johnston, brock pierce as members.

Counterparty was indeed the first to market with functional DEX. whilst mastercoin was in whitepaper stage. Dex from beginning can support BTC as it can support XCP and automatically escrow transactions between smart properties.

Since it is built upon Bitcoin Blockchain it does not have a requirement for POS, nor POW!. The idea of adding one is crazy. And therein lies the reason for what you call a 'premine'
No entity controlled the distribution of these coins. None of it was reserved or otherwise siphoned off. The distribution was enforced at a protocol level from genesis block to end of burn period like a vending machine, and this can be vetted by anyone.

Since there is no need for coins to constantly be emitted via a mining process,  using POW would only be required in the initial distribution before a transition period . What algo would they use? And how would that automatically make it fair? I could rent 300-700MH of scrypt hashing power without a big issue, sha256 is no better. What difference this makes, i would own unfair amount.. And of course some have much higher hashrate under their direct control. an example is one manafacturer who have ~300gh worth of scrypt hashpower from next month. this is more than entire ltc network hashrate. it's ludicrous. Counterparty chose absolutely fair distribution.

The manafacturers control POW based markets now, In China yesterday meeting of all the biggest miners, exchange owners & mining pools occured- they formed a coalition of sorts to discuss, collaborate and focus towards large scale private farms and cloud hashing in future.  You can and should check chinese sources to read more about this. it's definitely no small news to be ignored.

I'd encourage anyone to analyse the protocol thoroughly before being too hasty about dismissing counterparty.  I really am disturbed, upset even at how quickly rpietila dismissed it. I guess the ones who have been around since 2010 will understand better, those that came a few years later (2012, 2013) saw a slightly different version of bitcoin, big changes by then. for sure the sentiment changed and community was almost unrecognisable. Counterparty is like bitcoin felt in 2010-early 2011 in my opinion.

I have not seen a SINGLE project during that time aside from pre ripple labs ripple butchering that was remotely as interesting until the day counterparty came along.

Some of the applications of the counterparty protocol:

Decentralised smart property exchange - trade anything for anything (example: Trade gold/silver ontop of bitcoin blockchain, redeem for physical PM's and instantly escape BTC volatility)  an example http://www.digitaltangibletrust.com/

Decentralised Asset issuance- Assset trading, dividend distribution - Whether you are in Singapore, Silicon Valley or Somalia, you can raise funds via the counterparty protocol, distribute shares to potential investors. and trade those on the market. You don't have to sign up or ask for permission. There is no central authority setting the rules.

Decentralised Speculation/ Hedging/ Betting (binary options, sports books etc)- Prediction Markets, CFD's - speculate on the outcome of future events and hedge against price movements of smart properties, currencies and commodities.

the first p2p betting platform - http://test.countersports.com/start

Decentralised, trustless sentinels via Counterparty's inbuilt Broadcasts and feeds - Warrant Canary, Dead Man's Switch, Heartbeat bcast , Keepalive bcast ,  Watchdog Timer

 intrade that can't be closed?, BTCT/Bitfunder that can't be pressured by SEC?, Gox that can't have it's 'cold' wallets siphoned? You can't play fractional reserve on a transparent auditable marketplace such as counterparty. millions of millions of dollars have been lost to storing decentralised currencys at centralised locations.  Huge damage to bitcoins public perception. .Counterparty comes along with decentralised solutions to centralised problems.  Who get's it?-- we're not talking millions of $ mkt cap here- the idea is bigger.







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May 25, 2014, 10:16:07 AM
 #17

Decentralised smart property exchange

Biggest problem with this and XCP is, as a NXT guy noted, it's far too easy for colored coins to be worth more than the actual currency part of the network, at that point, your PoW mining security is far too low for assets involved.  I'm not an NXT fan due to it's distribution, but if colored coin type assets make it to the mainstream, they will probably do much better on PoS networks should those ever be deemed secure.  There is otherwise not a lot of reasons to put large amounts of assets on a network that doesn't account for their security.

Due to the way PoW security works, colored coin type assets are destined to always be a tiny fraction of the currency portion of it's network's value.

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May 25, 2014, 10:18:02 AM
 #18

I'm not DRK fanatic as you may see me, I just know its history. You may also discover I don't usually write much. However this post is an exception and is the reaction to utter injustice towards DRK.

I found out about it in late January, before the first bubble from 0.0002 to 0.0023. Since the beginning it gathered strong community around it doing different kind of work like optimizing mining client, logo and site design, bringing up forum, a lot of organizational stuff and donating to the fund to do everything else that couldn't be done by community members. You may find a lot of discussion about this in early pages of DRK thread (like <300). The majority of strong believers, like AlexGR, didn't leave after sad DRK dumping after C-CEX hack and continued to support it throughout march-april. The dev himself continued his work as well acting on community's advice.

The community was going to stay quiet before darksend is tested and opensourced. We knew that immature technology would gather a lot of criticism and that's not good. However it went not as planned resulting in current bubble (btw, pretty much like Bitcoin bubble in 2011, even with similar prices). This is something that community and dev cannot control and those who blame DRK for that are either trolls or unwise. It very well may fall below $6 or even lower as it happens to bubbles, but we don't really know when. I think that's why AlexGR discarded betting. It's neither good nor bad that DRK became speculative tool now, it's just the nature of cryptocoin world. Also that was quite a compliment for me to see its volume overthrow 6K BTC a day on Mintpal alone, meaning that big players arrived and indicating that fundamentals DRK has are really strong.

Regarding instamining, speculation about early miners getting super-rich, etc. etc.

I've never mined anything before or after DRK. For DRK mining I even rented 8 Xeon servers (it was even before GPU miner arrived) and I remember the times getting like 40 DRK a day with that setup. Though every day the reward was getting lower and lower. Very soon it became more reasonable to simply buy it instead of mine. Especially after GPU miner arrived and even more after price crash. Those who blame early miners I see as simply regretting they didn't discover or haven't had enough belief in DRK before.

So I held like 5K DRKs throughout March-April. Me personally (and I suppose a lot of others) felt to temptation to sell it above 0.003, supposedly to rebuy lower. Maybe some of us managed to do that, some not (I'm only partially because of AC scam). A lot of people still holding since February and will do further I believe. Thus, I don't think DRK is now distributed in favor for early adopters. Sure some of them yes, but I admire those people as they had enough strength to hold. I don't think devs are big holders, but if they hold a couple of thousands I believe it's reasonable payment for their work, attitude to community and devotion to the idea. I don't think they will dump upon heads of believers because they don't want their work ruined. Rather I think that major holders are guys with a lot and lot BTCs. I draw this consequence from huge buys in the range 0.01-0.02 after 0.0175 peak (May 16-22).

As a conclusion, I just want people to turn on filters and don't believe all the negativity being poured out upon DRK. Sure, there were some issues and there will be more, but hey, that's natural progress and DRK devs and community managed to overcome them so far. Even after bubble burst there is very high probability DRK will take its niche. Who knows how large it would be Wink



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May 25, 2014, 10:57:02 AM
 #19

One huge problem with all CPU coins and that is bots. What about viruses, etc. infecting computers and having them serve as miners for DRK, MRO and other CPU coins?
Not 100% bad as it does strengthen the network but it can lead to problems later on. I could hear the department of homeland security now. But then again, any
anonymising technology (e.g. darkwallet), will probably cause similar reactions.

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BTC = Antifragile - "Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Robust is not the opposite of fragile.
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May 25, 2014, 11:15:22 AM
 #20

One huge problem with all CPU coins and that is bots. What about viruses, etc. infecting computers and having them serve as miners for DRK, MRO and other CPU coins?
Not 100% bad as it does strengthen the network but it can lead to problems later on. I could hear the department of homeland security now. But then again, any
anonymising technology (e.g. darkwallet), will probably cause similar reactions.

IAS

Bitcoin was a cpu coin for half its life. So...

DRK is cpu/gpu. Bytecoin and clones (MRO included) are cpu only right now and thus affected more.
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