rpietila Altcoin Observer

[dga]

At the risk of leaving some sore toes in my wake, my academic self decided that I should continue documenting my experience in alt-coins.

Here's the Monero one:

http://da-data.blogspot.com/2014/08/minting-money-with-monero-and-cpu.html

Wow very interesting story.
Can we expect more altcoin mining story´s from you? (like i guess you also do BBR AWS mining and in the beginning it was quite profitable)

Yes nice article dga, any chance you can update your blogpost about cuckoo to its current state?

I'll do a follow on one of these days/months.

[Jungian]

At the risk of leaving some sore toes in my wake, my academic self decided that I should continue documenting my experience in alt-coins.

Here's the Monero one:

http://da-data.blogspot.com/2014/08/minting-money-with-monero-and-cpu.html

Wow very interesting story.
Can we expect more altcoin mining story´s from you? (like i guess you also do BBR AWS mining and in the beginning it was quite profitable)

Yes nice article dga, any chance you can update your blogpost about cuckoo to its current state?

I'll do a follow on one of these days/months.

I looked around your blog. Very nice.

One question though. I'm not sure I understood it right. Did they deoptimize the miner to get more for themselves?

[GreekBitcoin]

At the risk of leaving some sore toes in my wake, my academic self decided that I should continue documenting my experience in alt-coins.

Here's the Monero one:

http://da-data.blogspot.com/2014/08/minting-money-with-monero-and-cpu.html

Wow very interesting story.
Can we expect more altcoin mining story´s from you? (like i guess you also do BBR AWS mining and in the beginning it was quite profitable)

Yes nice article dga, any chance you can update your blogpost about cuckoo to its current state?

I'll do a follow on one of these days/months.

Just bookmarked your blogspot

[Roy Badami]

Perhaps it is good to interpret my own post because it wasn't obvious:

As with metals, the #1 is really valuable, but the #2 is only about 1/50 as valuable. Others are not even counted.

So will it be with coins, therefore do not buy coins that aim to be #3.

I'll assume you're referring to gold and silver. Assuming that's the case, you're wrong. Platinum is more valuable than gold and palladium is about 75% as pricey as gold, and there are plenty of other metals that are more valuable per unit mass than silver (I'm not finding a list real quick, but I'd guess indium and most of the rare earth metals like gadolinium, europium, etc.).

Sure, but those metals aren't used as a pseudo-currency anywhere, unless I'm mistaken.

There are certainly platinum bullion coins, (e.g. the Platinum Noble), and if Wikipedia is to be believed, Platinum and Paladium get currency codes, too (XPT and XPD).  Looks like Rhodium doesn't, but all three are available in bar form from bullion merchants.

roy

[smooth]

One question though. I'm not sure I understood it right. Did they deoptimize the miner to get more for themselves?

They de-optimized the miner to make it look "plausible" that BCN had been around for two years when they in fact cranked out a fake premined blockchain in a much shorter time on a computer or a small cluster. I question plausible because the idea that no one would have optimized the miner in two years is equally if not more implausible. It is most implausible of all that the miner wouldn't at least use the AES instructions, since a large part of the entire purpose of the design of the algorithm was to use them.

Any extra coins they got from mining other coins after launch with their un-de-optimized miner would be a bonus. It is unknown and likely unknownable how much that was, although given the fact that the coins didn't go instamine (the difficulty adjustment worked so roughly the correct total number of coins were mined in the first days) it couldn't be more than a few percent at most.

[hornyPo]

I might write about BBR, but it wasn't nearly as fun a story (or profitable) as XMR.  I obviously had an optimized miner for it, but decided to take a different strategy with BBR of mining a lot, holding it, and then contributing  code back to the coin to try to improve its value, so I spent a lot of time taking those optimizations and putting them into the open source simpleminer.  In contrast, with XMR, I just mined and sold instantly.

It wasn't as profitable as keeping the xmr miner completely private, but it's hard to compare given the market cap difference.

What I've found is that overall, "totally private miner"  (XMR) >> "optimize, mine, release" (BBR) > "convince the developers to pay to open source" (PTS) > "open source miner with optional dev fee" (RIC) > "give code away and ask for donations" (scrypt).

Not economically surprising, but some good lessons in there for future coin developers who want good miners -- get someone to do it ahead of time.

Thank you for sharing your experience and economic point of view.
Of course it will be very different if you mine for arbitrage now, or try to improve the coins value from helping them put your code to open source code if you expect that long term success of the coin, you get more value with this strategy.  
I´m curious about if your strategy works for the future, i hope it and my gut say it will.
Just thought you was selling BBR in the beginning when the price was so hight and profitability was big from AWS mining.

[dga]

I might write about BBR, but it wasn't nearly as fun a story (or profitable) as XMR.  I obviously had an optimized miner for it, but decided to take a different strategy with BBR of mining a lot, holding it, and then contributing  code back to the coin to try to improve its value, so I spent a lot of time taking those optimizations and putting them into the open source simpleminer.  In contrast, with XMR, I just mined and sold instantly.

It wasn't as profitable as keeping the xmr miner completely private, but it's hard to compare given the market cap difference.

What I've found is that overall, "totally private miner"  (XMR) >> "optimize, mine, release" (BBR) > "convince the developers to pay to open source" (PTS) > "open source miner with optional dev fee" (RIC) > "give code away and ask for donations" (scrypt).

Not economically surprising, but some good lessons in there for future coin developers who want good miners -- get someone to do it ahead of time.

Thank you for sharing your experience and economic point of view.
Of course it will be very different if you mine for arbitrage now, or try to improve the coins value from helping them put your code to open source code if you expect that long term success of the coin, you get more value with this strategy.  
I´m curious about if your strategy works for the future, i hope it and my gut say it will.
Just thought you was selling BBR in the beginning when the price was so hight and profitability was big from AWS mining.

Agreed - that's why I'm trying the "hold" strategy with BBR, because I've never actually done it before.   I'm moderately conservative with money, so I get a little chicken about things as high risk as alt-coins.  But I figured that a few thousand BBR wasn't actually a ton of money in the big picture, so I'm doing it as an experiment.

I mined and sold a lot of BBR on Amazon when it was profitable, so that the BBR I held on to was "free" (I covered all of my mining expenses, pulled out some realized profit, and then held on to some of the extra).  I realize that's not economically rational, but it was emotionally easier to convince myself to hold on to it when I wasn't incurring any expenses other than the time it took.

The story I'd write about BBR, if I ever do, is how surprisingly long it remained profitable on EC2 CPU instances even after otila and wolf and I released our CPU optimizations.  There was a large window when you could just git clone the BBR repository, start a miner running on an AWS spot instance, and make a (small) amount of money.  Economics tells us that shouldn't happen for very long, because other people will come along and mine as well.   I think there's a really interesting lesson in there about the barrier to entry:  For a long time, the fastest BBR miners were solo miners, and it was a little tricky to compile / run for the average person, so the few folks who could get things running well on EC2 were still doing pretty well.

Watching crypto is like watching technology and economics on fast-forward.  It's pretty amazing.

[darlidada]

@dga: what has baffled me the most in your story is your disclaimer at the end: you're saying you're not holding any bitcoins. Really ?! anyway thanks for sharing:)

[smooth]

There was a large window when you could just git clone the BBR repository, start a miner running on an AWS spot instance, and make a (small) amount of money.  Economics tells us that shouldn't happen for very long, because other people will come along and mine as well.

Economists who believe in efficient markets (I don't, really) would say that there are hidden risks, and activities aren't necessarily economically profitable even if they are profitable in a simple accounting sense. In this case, for example, you can't sell the coins right away, so you are risking price fluctuation while they mature. There might be other risks as well (legal risks?), if you really look for them.

[Este Nuno]

@dga: what has baffled me the most in your story is your disclaimer at the end: you're saying you're not holding any bitcoins. Really ?! anyway thanks for sharing:)

You would probably be surprised how many people there are who are interested in the technology but don't speculate on Bitcoin.

And then there are people who decide there is more money in investing or trading alts. Higher risk, higher reward.

[ibuyltc]

At the risk of leaving some sore toes in my wake, my academic self decided that I should continue documenting my experience in alt-coins.

Here's the Monero one:

http://da-data.blogspot.com/2014/08/minting-money-with-monero-and-cpu.html

This would explain the "Monero Botnet" that was quite the rave 100ish pages ago

[smooth]

At the risk of leaving some sore toes in my wake, my academic self decided that I should continue documenting my experience in alt-coins.

Here's the Monero one:

http://da-data.blogspot.com/2014/08/minting-money-with-monero-and-cpu.html

This would explain the "Monero Botnet" that was quite the rave 100ish pages ago

What? I read that the devs of XMR use botnet to make fake demand for this coin. Is it true ?

[georgehosterguy]

Lol how can you make coin demand with a botnet?  Mine it to remove supply?

[Este Nuno]

At the risk of leaving some sore toes in my wake, my academic self decided that I should continue documenting my experience in alt-coins.

Here's the Monero one:

http://da-data.blogspot.com/2014/08/minting-money-with-monero-and-cpu.html

This would explain the "Monero Botnet" that was quite the rave 100ish pages ago

At the risk of leaving some sore toes in my wake, my academic self decided that I should continue documenting my experience in alt-coins.

Here's the Monero one:

http://da-data.blogspot.com/2014/08/minting-money-with-monero-and-cpu.html

This would explain the "Monero Botnet" that was quite the rave 100ish pages ago

What? I read that the devs of XMR use botnet to make fake demand for this coin. Is it true ?

This has nothing to do with people who mine XMR with botnets.

[othe]

Lol how can you make coin demand with a botnet?  Mine it to remove supply?

That´s what people call sarcasm.

[ibuyltc]

Im just pointing out that roughly 100 pages ago this thread and the official XMR thread were filled with "XMR BOTNET" and other garbage that has turned out to be false.

[smooth]

Lol how can you make coin demand with a botnet?  Mine it to remove supply?

Good question

[vuduchyld]

At the risk of leaving some sore toes in my wake, my academic self decided that I should continue documenting my experience in alt-coins.

Here's the Monero one:

http://da-data.blogspot.com/2014/08/minting-money-with-monero-and-cpu.html

That shit is awesome.  Great narrative, beautifully documented!  Thanks for sharing!

[dga]

@dga: what has baffled me the most in your story is your disclaimer at the end: you're saying you're not holding any bitcoins. Really ?! anyway thanks for sharing:)

You would probably be surprised how many people there are who are interested in the technology but don't speculate on Bitcoin.

And then there are people who decide there is more money in investing or trading alts. Higher risk, higher reward.

Yup.  I think *coin is absolutely fascinating in a technical, economic, and social sense.  It took me a while to get hooked -- when I first heard of it a few years ago I blew it off as a stupid waste of electricity, but I was wrong.  Once I looked more deeply, it got me hooked.  But I try to keep my real investments very simple and safe and in ways that don't require my judgement to be right, because I don't think I'm good at predicting future value.  Some people seem to be, but whenever I get actively involved in, e.g., trying to pick what stocks to hold, I just lose more money than if I left everything in a diversified set of index funds.  So - no holding Bitcoin.  I've greatly enjoyed doing software projects related to it and could easily see doing more.  I love the ease of sending money using it and have been using it quite a bit that way, but I limit my exposure to volatility by paying coinbase an extra 1% now and then to move back and forth from USD.  I hope it destroys the high-fee remittances market some day.

Re the botnet comment:  Totally unrelated.  What I was doing was winding down around the time the botnets were starting to appear.  As one of the people who was suggesting that there *is* bot activity in XMR, I still maintain that position based upon the IRC logs I've seen of the botherder, but I don't think he/she/it/whatever actually had that significant an effect on the coin.  But it's possible that some of the earlier speculation about botnets might have been because of the advantaged miners -- there were certainly a lot of posts in the XMR thread wondering where the hash rate had come from (some from before I started playing).

[vuduchyld]

STRONG (like a bull!) recovery continues!

Index 1: 85.09 (LTC recovery brings this back closer to Index 2)
Index 2: 86.81
Index 3: 81.78 (this one is the one that I think represents the total market the best)
Index 4: 82.39
Index 5: 88.21
Index 6: 86.62 (these last two are most volatile, it seems, because they are price-weighted)
meta: 85.15

Indexes have basically recovered halfway from their downturns.  Your portfolio may have seen a 33% increase over the last few days and possibly 12-13% in the last 36 hours.  If this is NOT the case, you might have chosen the wrong alts.

As of 20 minutes ago...

Index 1: 87.13
Index 2: 97.53 (remember, this index includes neither BTC or LTC, but might skew high)
Index 3: 92.93 (also includes neither BTC or LTC and I would claim this is the most pure-play, cap-weight alt index...contains a basket of 31 alts that are tops in combined volume/market cap.  If I re-balanced every WEEK, I think the number would be closer to Index 2)
Index 4: 84.24 (includes LTC, which is still down from the start of this index in early August.)
Index 5: 89.81
Index 6: 85.73 (indexes 5 and 6 are price-weighted, and the relative underperformance of BTC over the time period is actually baked into the weighted prices.  Honestly, I'm considering using BTC-denominated price starting with the next re-balance)
meta: 89.56

In the last four days, the biggest movements have come from Index 2 and Index 3.  Everything else is up around 5% or less since last update, but these indexes representing purest-play alts are up 10% or more in 4 days.

Since the beginning of the indexes on 8/4, BTC has gone from $590 and change to a shade over $500.  It looks as though alts plunged farther faster, but have been outperforming BTC in their recent recovery.

Amazing recovery continues...furthermore there are now some pretty significant divergences that separate the players from the also-rans.  Just my humble opinion, but this kind of market movement illustrates the value of indexing and the need for the resource in toolbox of anybody interested in alts.

Index 1: 105.57
Index 2: 128.54 (again, does not include BTC or LTC, but it does include all other currencies on coinmarketcap.  LTC has recovered from its recent depths, but still well below where it was early in August)
Index 3: 125.07 (I continue to believe that this one most closely approximates the alt market in the truest sense....it contains 31 alts selected by price/volume combination and re-balanced bi-weekly.  No BTC or LTC.  Cap weighted.  Give me a few months and I may very well offer an open-ended mutual fund type investment in this "basket" of alts!)
Index 4: 102.78 (LTC drags this back down a bit, but still over the August 4th level)
Index 5: 92.53
Index 6:  88.10
Meta index: 107.01

Remember, these indexes were largely in the 50's and 60's just 11 days ago when alts were taking a serious beating.  

Indexes 5 and 6 are price weighted, like the DJIA.  Interestingly they have NOT recovered quite as well.  From what I can tell, the reason is that the recovery has been especially acute in some of the higher-cap alts.  My quick check shows that Ripple has gone from $40mm in cap to $140mm and BTSX has gone from as low as $16mm to around $60mm right now.  

If your portfolio is full of those, you're looking at my index and asking why in the hell anybody would index.  If you're lugging around nothing but BTC and LTC, you can only wish you had a 25% return in August.