Country-based cryptocurrencies with self-regulating incentives.

Or: “Keeping a crypto-currency focused towards the country in question.”

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I’ve posted about this before, on how communities can create their own altcoins with self-regulating incentives. I’d just like to re-iterate how this could be done.

In the past few weeks, country-coins have been making big splashes, with Auroracoin almost hitting $1 Billion cap (although a bit misguided as the amount of coins in supply weren’t ALL the coins). The others one that splashes are coins such as Mazacoin (of the independent Lakota nation) & Spaincoin.

It is permission-less innovation. A cryptocurrency is automatically a global network. The way in which these coins focus on a country is to pre-mine a large portion of it (say %50), and then manually distribute it to citizens of the country. This is called an airdrop. You can read how Auroracoin will do it in Iceland. The gist is that using ID, you verify your citizenship and can claim a portion of the pre-mine.

The problem with this method, is that over time there is no guarantee that Auroracoins will stay in the system or in the hands of Icelanders. A strong mining group outside of Iceland can mine it or a wealthy individual over time can just buy a lot of it. While this, to some extent is “fine”, there is no self-regulating incentive to KEEP the center of the system within Iceland. Auroracoin can be adopted by Iceland (officially), but that still doesn’t stop it from it flowing out of the network it is INTENDED to support.

What is needed, is for the money supply to consistently stay at the center of the intended network: ie Iceland.

Now. The next part is a bit more decentralized, and ideas that could make it more decentralized are welcomed.

Each block’s coinbase MUST have an additional hardcoded address [preferably a multi-sig M-of-N for security if possible]. That address belongs to the central bank or government. It gets 10% of each block [for example]. Every year, citizens can claim 3% of it [a yearly ‘airdrop’]: equally [like claiming pension currently]. The other 7% goes to the central bank & government. That is the “tax” the citizens pay towards the government. That is what they will use instead of all other forms of tax [perhaps a bit drastic] to build roads, schools, policing, and so forth.

Considering that that address is known, extreme transparency of public funds are now possible as well. Every transaction from that address must be signed by multiple people, and every transaction must be explained by the government what it was spent on.

This means: the incentives are aligned. Other miners can be a part of the blockchain, but they will inherently do it to form of an incentive structure of belief of the country in question. ie, Miners will mine the USD country-coin, because they believe in the power of the US to utilize it effectively. It also means, coins generally stay within the country, as the incentives remain there.

It also means, in order for the country to use the coins better and put it to better use, they need to remain honest and build the country to the best of their ability. Let it float freely. The more valuable it becomes, the more the country and all of it citizens can do with their country-coin.

So, here’s an example:

Let’s do one for South Africa. Let’s call “E-money Mzansi”. It’s a sha256 coin modeled off of Bitcoin. It has similar timeframes. 4 years halving. Except, its nominal amount is increased a bit so that each citizen could have about 1000 coins each. Eventually supply will thus be (correcting for expected population growth) about 70 Billion. So block rewards are adjusted accordingly.

Each block has an extra coinbase address where 10% of the reward goes to the South African Reserve Bank. If it is NOT there, it is not a valid block. And then those coins are then used as described above.

Some technical considerations:

That hardcoded address is extremely, extremely vulnerable. Once compromised, it’s game over. M-of-N only keeps it safer for a while. Also, not ideal.

Forks. It is possible for citizens to just fork off that requirement for that hardcoded address. However, the government will only work on their fork: the one with their address in it. Citizens only get yearly airdrops from their fork (which will give poorer citizens that rely on it incentive to stay on that chain too), and government contractors will also work from their fork, and will then proliferate into the rest of society.

To start with this know, might be a bit difficult. You could go the current country-coin route and do it without permission. The developers of the coin simply keep the private key of the central address, until the government comes on board. Or you could actually go to a central bank and ask them (good luck with that). Another, more interesting way, is to kickstart this with a new political party. Chances, the rest of the crypto-world will absolutely love what you are doing and because cryptos float so easily, you’ll see money flowing in from around the world, strengthening your cause dramatically.

You could also radically do this without permission from the government. Create your own group and transparently commit to use the money to better the lives of ALL South African. Donating money to community projects that benefit South Africa.

I want some thoughts? I know some people are anti-centralization and anti-government. If you are, then also please give comments also, but please be constructive rather than just harping on about how bad they are. I do think it provides a very, very interesting alternative.

Introducing “The Cypherfunks”: a decentralized band & cryptocurrency.

For the past 3 weeks I’ve been building “The Cypherfunks”, and it is now ready for pre-announcement.

"The Cypherfunks" is a decentralized band and cryptocurrency: sustaining a new type of music collective.

To quote the website:

The idea is to create a music collective anyone can be a part of (in all manners of affiliation). The time is ripe to attempt such an experiment thanks to the Internet, technology and cryptocurrencies. With the age of the Internet, it’s a given that the sum of the talent outside any group is always greater than those inside. We see this with open source companies and projects such as Linux. Collectively, the sum of contributions made possible through the Internet to a mutual goal, always results in wondrous new concepts.

"The Cypherfunks" is such a new experiment towards music. We are all part of one big band. We release music under this collective, and we all have equal rights to "The Cypherfunks". Music is to be produced, reproduced, shared, reshared, sampled, resampled in all forms and manner. Like Lennon and McCartney famously collaborated within The Beatles, so can any form of affiliations come together as "The Cypherfunks" to create and remix. Anyone can also play and gig as "The Cypherfunks".

As bedroom producers, and garage acts, we know that this is a passion: a passion we would like to continue doing. In order to sustain this: “The Cypherfunks” is also a cryptocurrency. We can tip, pay and transact with others in and outside of the collective. Like a rendition? Tip a fellow member. Perhaps “The Cypherfunks” want to play at a local venue, but don’t have enough money? Donate through the Internet.

The cryptocurrency also means that if the collective releases great music, we ALL become successful: enabling us to continue churning out great music to share and remix. It is music, decentralized: attempting to be the world’s biggest, and most diverse band. We are ALL “The Cypherfunks”. A decentralized band. An “open-source” band.

Everything is working. Just have to do some final small adjustments, and it is good to go. This is my first attempt at creating a cryptocurrency, so I anticipate some hiccups initially. I hope you will bear with me, as we jam and music together!

The tentative release date is: 21 February 8am UTC. This gives me the whole of Friday (I’m GMT+2) to help and work out problems if there will be any.

This IS a community project. I’m only the lead developer. We need miners, developer, musicians, listeners, fans, etc. So join! You are welcome!

More details on the website: http://thecypherfunks.com

Follow @thecypherfunks where I’ll be posting most of the updates in the run-up to the launch.

Thanks to the people who has been a soundboard for various parts of it so far: Christopher Franko, Bryce Weiner, Candice Holdsworth, Niel de la Rouviere, the “Crypto Klets Kamer”.

Here’s the first song that forms part of the collective: a happy epic anthem about “The Cypherfunks”.

Woohoo! Let’s go!

Bitcoin’s biggest innovation.

There’s so many facets to cryptocurrencies. Since I’ve been deep into the trenches, there’s just so many new great things about it that hasn’t been able before.

Things like smart property, decentralized contracts (that can disrupt civil law, arbitration, etc), payment channels, colored coins, decentralized autonomous corporations (2), trust-less storage and autonomous agents. I lose track sometimes. I’m sure I missed some.

When you can decentralize trust into a shared ledger, it brings about quite interesting new features as you can see by the examples above.

But. There’s one part of the cryptocurrency revolution that stands out.

Just like the web brought about the democratization of information and communication, so cryptocurrencies will do to value.

Let me reiterate:

Web - Democratization of information.

Cryptocurrencies - Democratization of value.

In humanity’s history, the systems that were capable of sustaining a currency were your larger institutions: governments (and more recently, banks). The reason was: only they were capable of protecting the currency from being counterfeited. Part of the faith required in using any form of currency is the belief that it is prohibitively difficult to counterfeit. If I on my own, start printing some paper money, and tell people to use it, they are going to laugh at me. The only way to make sure people don’t laugh at you, is to make sure you are big enough (in systems scale), so that faith can be put in your capability that it is not being counterfeited.

Even the mightiest institutions in the world have to constantly keep up: with an estimated $60 - $100 million counterfeit USD alone being in circulation (of the $1,29 trillion in circulation). Not a lot: a respectable 0.01 of cash in circulation. But, where does that leave any other institution? Nearly impossible. A lot of smaller banks failed due to the troubles of counterfeit bonds, and notes. It has been left to the devices of a select few institutions.

When you look at what the world of information looked like before the web, the pattern shows its colours. While it was easier than making a currency, information was still locked up in institutions that had the power to spread it. Media was in control: book publishers, newspapers, TV stations, radio, etc. The power of the man on the street was classifieds in their local newspaper and word-of-mouth.

We all know how that story played out. Twitter, Facebook, Wikipedia. FREE information sharing, instantly across the globe. And we are all better off because of it.

Now, when you see what’s happening with cryptocurrencies, the same pattern emerges. Cryptocurrencies allow anyone to create one where counterfeiting IS NOT POSSIBLE. All you need is an electronic device to do some hashing (even smartphones can churn).

The power of the value maintainers are given to the hands of anyone and everyone. Currently, you can even create an altcoin with just a form. And it just going to become A LOT easier. Soon Jimmy in primary school can create a currency that’s STRONGER in terms of trust/security than any fiat currency.

Can we even fathom what this entails?

As Andreas Antonopoulos, eloquently stated: “We can now decouple monetary value from a currency”.

This will give freedom of choice, and agency to everyone who wants to opt-in. Freedom to store value wherever you decide it to be. The first obvious choice would be to take your value away from corrupt regimes and countries that mismanage a currency. People were once powerless against information spread by the media, and now we have the choice to make up our mind, enquire and research on our own. It doesn’t even have to be anti-statist, just like mass media now is still around (in a different form). It’s about empowering people.

People around the world have in JUST 2 months put their value ($50 million of it), in Dogecoin. And if you are a part of it, you know it’s (primarily) not about “sticking it to the man” and “regaining back control”. It’s fun, a great community, giving and welcoming. They’ve donated money to service dogs and olympians. It’s about people choosing to put value where people want their value to be.

You might scoff, and wonder “why the fuck would people do that”? And the beauty of it: you don’t HAVE to join. The information revolution brought about people sharing weird erotic fanfiction with others. Being a part of this information revolution doesn’t mean YOU have to read it. But it gives CHOICE, and freedom that you can find that information. With cryptocurrencies, it will be the same: freedom to affiliate value wherever you want it to be.

Just like some people have used the freedom of information to topple corrupt regimes, a lot of it was also about human connection (blogging, social networks, etc), and empowering others (wikipedia). Then there’s also doge and funny cat videos.

We’ll see cryptocurrencies undergo the same use cases: to subvert monetary mismanagement (see Argentina), but to also create the Dogecoin’s of the world AND all of the above will make it all worthwhile.

In what seems like a fun joke, the Dogecoin community had a big party in NYC recently, and put the Doge face on the Wall Street Bull.

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In the next decade, we’ll look back and realise just how much this picture meant. Now, we don’t quite know just what we are in for.

It’s a grand time to be alive.

The reward of designing emergent systems.

One of the most rewarding experiences I’ve had, was in the early days of Tweekly.fm (when Twitter didn’t include links in searches), I could see the chatter about it. One day, up pops a tweet:

This left me incredibly happy. Something I brought into existence, put things in motion that did the above. Not really “knowing” what effect Tweekly.fm has on discussions in non, social-media life, this was so cool to see. It ACTUALLY resulted in people’s lives changing. It was emergent behaviour from an idea that was once just in my head.

The same has happened with TwimeMachine, in the most unexpected ways. I see people tweeting, saying they are laughing at their old tweets, or feeling some sort of introspection. It’s great knowing that NBA, Paulo Coelho, ESPN or Swedish House Mafia has used it, but it’s far more exciting to think of the small things that has been set in motion. What if that introspection led to significant change in someone’s life? You also find videos like this:

Was someone tasked to do this?! Was it for a school project? Why? Just… what? What is it?

It’s odd, but it’s very rewarding. It somehow came to this.

Which makes we want to come to my point. I’ve created things that spontaneously gave rise to emergent behaviour (without that being the intent). What happens when I create something whose purpose is to BE emergent?

I’m about 2-3 weeks from launching my own altcoin (cryptocurrency). It’s not just an altcoin, for the sake of it (like most copies these days). It will represent a new concept that hasn’t been tried yet. It’s goal is to be emergent, to let the idea loose and see what pops out. To say I’m excited is an understatement. If my idea has any merit (to the extent to which I think it does), it can set things in motion on a far greater scale than my previous projects. Even though I’m prepared now for emergent results, I can’t wait to see what surprises it will bring.

The web brought a new platform, where anyone (like me), could launch projects for next to nothing (TwimeMachine costs me $10 a month). 5 years ago, if you said I would be creating a currency, it would’ve seemed farfetched, but now I am. And just by thinking about the potential of it, has me incredibly excited. I’m burning to share it, but I want the launch to be perfect. Will probably announce it next week. Going to be fun!

The Bitcoin ‘waves’ of adoption: decentralized funding rounds.

I’ve been fascinated by the rate of Bitcoin’s adoption (and correlation to price). Here’s an interesting graph:image

From this post. And a bigger version.

This is a trend I’ve noticed too. Past performance don’t indicate future performance, but it is still interesting to wonder if there is any credence to these patterns. It seems that with each big ‘rally’ it was an order of magnitude higher. 0.1 - 1. 1 -> 10. 10 -> 100. 100 -> 1000. When it rallies, it rallies close to these patterns (an order of magnitude rally).

When the price rises, the media suddenly starts attributing external factors to it: trying to tie some reason for the price rise. When Zynga news broke, Bitcoin rallied, and media attributed it to that. But now, with even more massive retailers like Overstock, TigerDirect, Fancy, Porn.com, etc accepting it… the price didn’t climb. By correlation to Zynga, it should’ve rallied substantially more.

And then I look at the graph above, and wonder if there isn’t perhaps some other forces at stake here: tied to complexity and systems theory. It seems price leads adoption, not the other way around. It’s as if when a rally happens, it pulls the momentum of this complex network forward, and now allows more freedom and space for the actors in the system to catch up. That’s why: after a price rally, the ecosystem grows, and grows. But it’s not linear. With each wave, it’s been the same. Once the size of the ecosystem catches up to the price, it rallies again.

Then, another comparison comes along… Funding rounds of companies. “Price” leads adoption. VCs provide funding so that the companies can act on improving the network of the company. But it’s a leap of faith. The VC’s have to believe in the future potential and value of the company.

This, is the same with Bitcoin. One of the first, well-known ‘VC’ investments in Bitcoin was someone paying $42 for 10 000 (buying a guy a pizza). Someone was willing to take a risk to buy what could possibly be worth millions. That’s the same in VC. At first, small seed rounds, big risk. Then larger amounts of cash on the table as time goes on. But each time, price enables further adoption. That pizza was investment in Bitcoin, and kickstarted Bitcoin’s capability to create adoption.

With each ‘funding round’, all owners of Bitcoin become wealthier, and then have the capability to further create new parts to the ecosystem. Case in point: I can take time off now after my masters and work on Bitcoin stuff, because those that I bought last year has now appreciated.

What’s interesting to compare as well: with tech companies. Facebook, Dropbox, and Twitter all were valued around $8-10 billion after 5 years (Bitcoin’s age). And when an IPO, happens? Who are the underwriters? “Wall Street”. What’s one of the predictions to happen this year with Bitcoin? Institutional money is going to start pouring in.

As mistaclutch on Twitter replied to me when I linked this picture. It’s probably just apophenia: a tendency to seek patterns in random data. It’s still interesting to speculate. ;)

Personal coins and agency.

Since I’ve embarked on exploring the concept of personal coins, the most important part that I’m excited about is the agency it provides.

People form part of networks on various scales. You are a part of your family, your suburb, your town, your province/state, your country, your continent, the world, etc. All at different levels.

With each network you are a part of, you can play some role. The larger the network, the more difficult it becomes to make an impact (on a meaningful scale).

With cryptocurrencies, scarcity can be applied to any form of network: at any scale. Thus being able to quantify that network. Because of this revolutionary concept, owning a part of a network introduces agency to individuals on a scale never imagined.

Simply, by growing a network, you can create wealth. This exists on same scale today, through stocks, in companies. If you hold Apple stock, being an Apple enthusiast and talking about it, creates some ripple effect that might lead into an increase in price. But an individual can only do SO much in a network as big as Apple’s. However, now because we are able to quantify networks of any scale, the barrier to entry is much, much lower.

This means, any person now has the agency to do more with their lives than just having to resort to a job as the ‘value exchange’. The current mode of earning value (for most people) is intra-value trading in a network. The ‘network’ is the currency of the country you are living in. What’s happening is people are trading ‘stocks’ or parts of the ownership in the network of their country.

But the network you are a part, which that currency represents is your country… You CAN improve the value of it, but on a national scale it’s much more difficult to make a significant impact. But with smaller networks (of currencies), as the scale goes smaller, you have more control. Resulting in a new form of “wealth creation” that’s now available to people, that’s not a job. And it is much more feasible, as the barrier to entry to influencing smaller networks is lower.

The network you have most control over (and have the capability to influence), is the one you find yourself: resulting in personal coins.

Personal coins shouldn’t be about greed, or seeing it as obnoxious, or egotistical. It’s about granting agency to individuals in a world that’s being increasingly automated by software.

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Some of these ideas and concepts, I’m writing up in a book, which I plan to announce soon.

P.S. Speaking of personal coins. I’m putting Simoncoin on hold for now. I don’t think the current pure altcoin implementation is the best way to go. I’m looking at other implementations first.

Update on personal coins. What needs to happen for mainstream use.

In the past month since I announced my own planned personal coin, there’s been some new tech journalists launching their own: such as Alex Hern, and Joe Weisenthal. I’ve also discovered the first personality currency was Cinnamon Coin based on Cinnamon Carter. Indirectly, the Coinye West coin (or rather Coinye Coin due to “legal pressure”) is also coming.

Matt Corrallo also launched an altcoin maker: coingen. I was planning to make something similar, but I veered off into a more esoteric level: thinking of baking in alt coins securely onto the Bitcoin blockchain.

Slowly, but surely, it is starting…

To mint personal currencies, there’s currently 2 ways I see it can happen:

Pure altcoin & colored coins.

Pure altcoin:

This is what we are seeing with Dogecoin, Litecoin, and new personal coins such as Herncoin and Stalwartbucks. The concept is fine, BUT it lacks security: both in terms of technical chutzpah required by developers AND the problem of having chains with small hashing powers.

With coingen, in some manner, Matt has made it easier to create one, but it is still difficult to maintain one. A pure altcoin unfortunately also suffer from low hashing power risk. Someone can quickly come and derail a coin (if they were so inclined).

Colored coins:

Colored coins is the process of using Bitcoin as a proxy for other assets: basically allowing anyone to mint anything on the blockchain. You ‘color’ some satoshi that represents new assets. These assets can then be traded similarly to Bitcoin: they just then don’t use the nomimal value of BTC, the currency. So I can mint 1 million Simoncoin. This works well, because it uses the security of the Bitcoin blockchain AND it is now starting to be relatively easy, thanks to development in the area.

The problem with colored coins however, are that it is centralised. Making a personal coin decentralized will breed more trust, as I can’t manipulate AND I have additional incentive to be continuously involved in order to sustain it. In other words, I’d rather get involved with someone willingly relinquishing their personal coin to a decentralized approach.

So how do you combine them? Colored alts. And that’s what I’ve conceptually designed. Using the Bitcoin blockchain, users can mint any decentralized currencies on top of it.

Here’s the concept I’ve posted on the colored coins Google group. And here it is quickly on the Bitcointalk forums. I’m still looking for comments, but I think I’m in the right direction.

I believe a future of personal currencies means stripping away the worry of managing the technical sides (for everyday users). As you can see, it is tech journalists and tech savvy people playing with personal coins. This means, removing the worry of security AND the worry of maintenance.

So, I’ll see how far I get with it, as I would like to technically design it as well. This way I feel Simoncoin will have the best rate of success (you don’t want people moving coins halfway through). Making it future-proof. It also means anyone can hopefully create a personal coin by just a tap on their phone.

Announcing Simoncoin - world’s first individual altcoin.

In the previous post, I explain how it came to this. I’m going to run this experiment, and it’s going to be risky, but I would love to see this future come to fruition.

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Simoncoin is an investment in me, and my capability to make the world a better place.

It’s an experiment that I have conviction on! The cat is out of the bag. Whether this is how the future will look, it remains to be seen, but I do believe that individual cryptocurrencies lights up a path to a future where we can invest in each other’s capability to make the world a better place. Someone won’t have to work menial jobs just to get by. You can become a very ‘wealthy’ person simply by being altruistic: giving back to a community, helping elders across the street or fighting injustices.

Perhaps the future versions will be different: minting colored coins on the Bitcoin blockchain, or using systems such as Open Transactions. But for now, let’s start with this.

For now. Simoncoin is going to be launched in January 2014. I’m busy creating my own fork, setting the monetary policy, creating wallets, creating a block explorer, pools and so on, before the launch. Most of the basic altcoin code is done. I need to set up the rest of the infrastructure though, as well generate the merkle root. But I’m going on holiday with the family soon, and I want to be present and not want to worry about fixing bugs.

Allowing people to easily create their own cryptocoins is a next step: and then creating an exchange for all of them is what I want to work on for next year. If you like this idea and want to get in touch (as developer or investor, don’t hesitate to contact me).

After this, creating a system where each altcoin can float and make it possible to pay with any altcoin (no matter how new) at any store. (ie altcoin -> BTC -> Bitpay).

In the far future, if this idea takes off, creating a system where buying another person’s coins could simply be as easy as walking past them: making it possible to easily and quickly invest in small gestures of goodwill.

EDIT (23 January).

Simoncoin is on hold for now. I’m trying to figure out the best way implement this idea. I believe the current way is probably not the best implementation.

In the future, everyone will have their own cryptocurrency.

Everyone in the next 10 - 20 years will have their own altcoin (or derivative of it). I’ll have a simoncoin.

In what sounds like an odd turn of events, recently launched dogecoin made me think deeply of how we ascribe value. Due to the ease of launching currencies (thanks to Bitcoin), it was inevitable that something like dogecoin would come along. However, looking at all the previous cryptocoins, all of them have been centered on some an idea: that is for the most part arbitrary. You have ‘feathercoin’, ‘worldcoin’, ‘litecoin’, ‘sexcoin’ etc. The strength of these coins as currency is its ability to kickstart and sustain a network effect (big or small). Having stronger concepts (and backing), allows it to sustain and continue to have value.

With Dogecoin however… there’s no lofty theme, or concept, other than doge: the meme. It’s currently very big on the net. Doge harnesses a strong existing network effect. Its usefulness as a currency is exactly that. It seems as if ‘money’ (or value) is a correlation to a network effect. Speaking to Bryce Weiner on twitter, he mentioned the idea of creating a cryptomarket based on celebrities.

And then the next step fell in place. What if Justin Bieber decides to back and launch his own altcoin? Buying and owning a part of Biebercoin is an investment in his network effect. There will be many teenagers wanting to pay and use Biebercoin as currency, and it will make sense for vendors to adopt and use it (in stores, in apps, etc). As investors, you’ll want to be a part of his success and thus own some of it. In other words, what if you saw Justin Bieber in his video ages ago, you could’ve bought some Biebercoin and took part in his success?

Jokingly, I told me friends about this, and they mentioned: imagine if there was there was a Mandelacoin right now?

And then it dawned on me…

Why not mint a cryptocurrency for each person? Mandelacoin and Biebercoin will be valuable by virtue of their achievements. But there are lesser (and other achievements) in life as well… and its value will be directly tied to the person’s ability to generate a network effect.

The beauty of this concept goes into another direction as well. We are continuously living in a world being eaten by software, where people are losing jobs left, right and center. Valuing the work being done, and getting paid for it is becoming a cock-up. If your net worth is simply tied to your network effect, you can become anything!

If you live a life of altruism, simply helping people in grand ways, you’ll generate a network effect and your net worth will grow as a result of it. You can be an artist. You can be a great mother in a community. You can contribute to open source software. All of the previously pure altruistic gestures will now generate wealth for an individual.

It also goes for the inverse. If you behave evil (what people perceive as evil), you will lose your net worth, as your money will be a direct vote on other people’s behaviour: a fluid ‘vote’ on people’s actions. In South Africa, our president Zuma, is squandering tax funds to build himself a massive home. The problem is: due to inefficiencies with how money and value flows, he’s locked up that net worth and power. Even if he behaves badly, ‘karma’ will take longer to decrease his power. It will have to lead to a breaking point, where the populace will get up and revolt. With this system, the populace can discreetly sell the Zumacoins they’ve accrued (when he was a more genuine leader), and let his wealth and power plummet.

So here’s an idea: create platforms, tools and suites to make it easy for people to launch their own coins. And then allow them easily exchange value between all the different coins. Make it float easily, so that I can pay with simoncoin at a store, even if they do not accept it explicitly. Or rather, fluidly spend the value of the coins I own of several people (ie spending Biebercoin for now, due it to having increased in value). Tipping and buying parts of other people could also be made extremely easy. Meet a kind stranger on the street one day, you can immediately then and there, discreetly buy some of their coins.

Value for now will probably be tied to its value in Bitcoin (as most altcoins are currently being valued) or the current reserve currency in the world: ie USD. However, into the future due the fluidity of the network of value, prices would probably be start being displayed specifically to you, perhaps as a percentage? ie, this beer will cost 0.0003% if your current net worth (whatever coins you hold).

Who’s in? Let’s do this!

For now, the going will be slow. We will start seeing (mostly tech) people slowly but surely minting their own coins (probably creating litecoin/scrypt forks), until a platform exists for anyone to easily create one, and allowing easier and quicker exchange between them.

Ideally, people would start minting their coins when they are born. At that stage, family would most likely be mining it for the first few years: allowing the child to eventually own their wealth when they come of age. If there is sign of genius, others could start buying some of the coin. But for now, we’ll have to go from here. Hopefully I get the most of my own coins. ;)

For established people, this process might be a bit more difficult. If Bieber releases his Biebercoin, he will have to contend with miners coming in and usurping his coin. But having a strong network effect could mean, he could either pre-mine some of it (to a reasonable degree), or simply through the wealth that he has buy it up as it comes into circulation.

There are some flaws to having millions of small coins: mainly security of the chains. Perhaps this idea will take some other form, in colored coins on the Bitcoin blockchain (best security) or through Open Transactions.

All I know is. It’s going to be a very interesting road ahead. And thus, I’m announcing Simoncoin. Launching in January 2014.

EDIT:

@gvrooyen, the director of the MIH Media Lab where I was at for the past 3 years, added a follow-up post: Cryptocurrencies as public shareholding, which is also worth a read.

Thoughts about Dogecoin (and altcoins).

On the 8th of December, Dogecoin was released. wow.

It’s market cap is already at $1 million USD and it’s the 4th largest scrypt altcoin in terms of hashing power.

Looking at the altcoin market there’s already 45 of them (if not more). A lot of them are turning into complete copy-cat coins, with no discerning difference: the long-tail of competing virtual currencies.

I recently read a response from Erik Voorhees (creator of satoshi-dice and prominent early adopter of Bitcoin) on Litecoin (and altcoins).

Here’s a quote with which I disagree with:

Speculating on altcoins, in general, is pure greater fool theory in action, because there is no significant fundamental utility, no “improvement delta” over Bitcoin itself.

If you think about the technical benefits, then yes, this holds true. Litecoin’s improvements aren’t that much more beneficial over Bitcoin. If you look at other altcoins, they might provide other technical experimentations such as Peercoin’s use of proof-of-stake algorithm which will end up being much more energy efficient into the future.

BUT.

A feature of money is its network effect: being a medium of exchange. IF an altcoin is just being speculated, it kickstarts its network effect, improving its “improvement delta” beyond its technical merits. Once it reaches escape velocity (people coming on board due to a lot people already being on board, like Litecoin), it’s in the clear. Being in the right place at the right time is often enough. A great example in another realm is Javascript’s lunge into the spotlight. It’s not of one the best languages around, but due to it being well-placed (being a client-side browser language), it became unexpectedly popular due to the proliferation of apps built into browsers: even becoming the backbone of server-side frameworks such as the popular Node.js.

Looking at Dogecoin, a clear jokecoin (or memecoin), it’s added social features is the backing of a massive meme, AND the fact that people see it as a joke/lighthearted… which might be enough to kickstart its network effect into escape velocity.

I won’t be surprised if dogecoin becomes a top 10 coin (> $10 million market cap).

It also brings about an interesting question. Due to cryptocurrencies making it so very easy to launch money, does it unbundle value to simply being a network effect?

If you liked this post, do drop me some dogecoins: DFVzezccAsdq1LQwrPTDe1nMXKrL7aEUWY. wow.