WBD251 - Bitcoin Vs Ethereum with Samson Mow & Vitalik ...
Ethereum vs. Bitcoin - HedgeTrade Blog
"Quite honestly, I don't think we should be doing smart contracts on Bitcoin. Bitcoin doesn't do smart contracts, and it doesn't do smart contracts because it does security." - Andreas Antonopoulos
Taken from LTB #414 Live Q&A Stephanie Murphy: “What's everybody's view on Rootstock (RSK)?” Andreas M. Antonopoulos: I don't think Rootstock is putting smart contracts on Bitcoin. Rootstock is allowing you to use Bitcoin to pay for smart contracts on the Rootstock Drivechain, which you could theoretically do by shifting money into Ethereum. In fact, recently I saw someone who had built a gateway that allowed you to make a Lightning payment that terminated in an Ethereum contract. So there's many ways to bridge different blockchains together. Quite honestly, I don't think we should be doing smart contracts on Bitcoin. Bitcoin doesn't do smart contracts, and it doesn't do smart contracts because it does security. That's not a trade off I think is worth doing. It's much better to leave that to a chain that has a much more experimental culture and can take bigger risks. As to whether we can do smart contracts, that's not a binary question; it's a question of value. So can we do smart contracts that can keep $1,000,000 secure? Yes. $10,000,000? Maybe. $100,000,000? No, the DAO proved that. How about now? DAI is doing more, so maybe yes. So it's basically a moving front. As the the maturity of the smart contract ecosystem expands, we can do bigger and bigger stakes (no pun intended) within the smart contract ecosystem. Every now and then there's gonna be a fairly catastrophic failure that's gonna cause a regression in the amounts of money that's put in them. But essentially it's growing. We're proving this every day, and it's the same thing with Bitcoin. The way you measure security in a smart contract or you measure security in a cryptocurrency like Bitcoin is how secure is Bitcoin? X billion dollars. That's the stake that is sitting on it right now, unhacked so far. BONUS: Bitcoin's security model as block reward approaches 0. Stephanie Murphy: “Do you think Bitcoin will be able to shift from block rewards to transaction fees to maintain security as the block reward approaches zero?” Andreas M. Antonopoulos: “This is one of the fundamental misunderstandings and dynamics of mining for most people, which is the idea that something suddenly happens sometime at an undescribed future, either at the next halving or in 2141. The truth is on a daily basis, every single miner in the industry looks at six or seven different factors: the efficiency of their mining equipment, the price of electricity in their local fiat, the cost of their operation system, the current price of Bitcoin in fiat, the reward that's available as a block subsidy, the average amount of fees they can get, and the relative proportion of hashing power. They decide based on all of these factors. Do I leave this specific machine on at its current efficiency, or do I turn it off, or do I point it to another coin? That happens every single day. Every single day that decision continues, it’s rebalancing all of these dynamic factors. So the shift between block subsidy and fees happened every single day since January 3rd 2009 and it continues to happen today. Sometimes, the capacity of the blockchain, the number of transactions that are in there, the value of the fees mean that it really attracts miners because there's a lot of fees to take. Other times, the fees decrease, the number of transactions decreases, so they're now more reliant on block subsidy and then it swings back and forth and back and forth. It's gonna oscillate in that way all the way to 2141.
Newbs might not know this, but bitcoin recently came out of an intense internal drama. Between July 2015 and August 2017 bitcoin was attacked by external forces who were hoping to destroy the very properties that made bitcoin valuable in the first place. This culminated in the creation of segwit and the UASF (user activated soft fork) movement. The UASF was successful, segwit was added to bitcoin and with that the anti-decentralization side left bitcoin altogether and created their own altcoin called bcash. Bitcoin's price was $2500, soon after segwit was activated the price doubled to $5000 and continued rising until a top of $20000 before correcting to where we are today. During this drama, I took time away from writing open source code to help educate and argue on reddit, twitter and other social media. I came up with a reading list for quickly copypasting things. It may be interesting today for newbs or anyone who wants a history lesson on what exactly happened during those two years when bitcoin's very existence as a decentralized low-trust currency was questioned. Now the fight has essentially been won, I try not to comment on reddit that much anymore. There's nothing left to do except wait for Lightning and similar tech to become mature (or better yet, help code it and test it) In this thread you can learn about block sizes, latency, decentralization, segwit, ASICBOOST, lightning network and all the other issues that were debated endlessly for over two years. So when someone tries to get you to invest in bcash, remind them of the time they supported Bitcoin Unlimited. For more threads like this see UASF
"Bitcoin is not something you build companies on top of. Bitcoin is something you build economies on top of" - Andreas Antonopolous
Transcribed by me from episode #385 of Let's Talk Bitcoin Tweetstorm of the highlights: https://twitter.com/Sesame4Bitcoins/status/1087970527887667200 On the topic of different blockchains: Jonathan Mohan: One of my favourite people to talk to about this is Joey from Augur because he tried to build Augur on top of Bitcoin. They [Bitcoin community] made him feel like he was the dick for even asking, that he was wasting their time. It was just a very toxic experience of trying to work with that community those developers who try to build on top of Bitcoin. He would turn to Ethereum and say, “hey, there's this bug I have that Ethereum can't handle,” and then a week later Vitalik would just update the Ethereum protocol. Andreas Antonopolous: I think that's a perfect demonstration of not just the difference in philosophy but more importantly the difference in application space. The reason Bitcoin is, and has been, and continues to be conservatively developed is because its area of specialization is super robust, super secure, super deterministic, sound money, and operating in highly adversarial environments where you can't expect the goodwill and cooperation of anyone. Not the hardware vendors, not the miners, not world's governments, not institutions, and in that environment it serves some very important needs that don't exist in the world today. To be truly neutral, truly sound global money, it has to do those things, and that means you can't have the kind of flexibility where one person decides let's add something to the protocol without very carefully thinking about all of the implications that has down the road - Bitcoin has specialized in that domain. It's why even though I believe we'll have a proliferation of different currencies in the long run, none of those will be able to effectively compete for the one application of super secure robust sound money that survives adversarial environments. And for exactly that reason Ethereum, can't do that, will never do that. In fact, if it tries to do [sound money] it would actually destroy its other benefits (flexibility). Those are two different application spaces and you can't occupy both at the same time. Sure, some developers are just dicks and that has nothing to do with with the underlying issue but some of that has to do with the fact that Bitcoin has to be more conservative in order to serve that application space. It cannot simply adopt changes without thinking very very far ahead about the implications those changes will have. Bitcoin is not something you build companies on top of. Bitcoin is something you build economies on top of. I never saw really Bitcoin as something that you build companies or apps on top of. The broader cryptocurrency space is playing that game out, and ironically, all of those other things/apps fail to work if you shut off the ability for them to have a sound, neutral money that can be exchanged no matter what, anywhere. Adam B. Levine: So that kind of brings to mind another question, do you have any past strongly held convictions regarding Bitcoin or cryptocurrency where you've changed your mind? Andreas M. Antonopolous: Back in 2015. I thought that we had to address scaling sooner rather than later, and I made some comments about that. I supported a tweet that Gavin Andresen made at the time about increasing the block size and that was a belief that I held strongly. Over the next year, I took a 180 and went in the exact opposite direction. The reason I made a 180 was really simple: from the very early stages, I believed in this idea that the protocol ossifies over time as it gets embedded in more devices. And once it's ossified, you can't make any changes. So I've always thought we have a narrowing window of things we can change in the core protocol to make improvements, the absolutely necessary improvements, before that window shuts, and then you can't make any changes. It's like IPV4 - it's in too many devices, you can't even upgrade it anymore. I believe that's happening. When the scaling debates started I thought we had a window of about two to three years. The debate around scaling which turned into a power play demonstrated practically that that window had already closed for many controversial decisions. That we could not reach consensus, and that the power struggle and ability to make money in that power struggle was already trumping engineering. At that point I realized that in fact, that window was much narrower. Once I realized that, I also understood that there are other more important things that need to be done first: privacy being the most important. And if we have a narrow window, privacy needs to be done in the base layer but scaling can be done in the second layer. Therefore I flipped. I've started believing that privacy was needed first and scalability could wait until later and mostly be done on the second layer quite effectively. I took a lot of flack for that, but it wasn't arbitrary. It was because the facts changed and based on new facts a strongly held opinion was worth nothing because I had to revise my understanding of the space. Jonathan Mohan: I don't think the enemies of Bitcoin are the Rogers or the Bitcoin Cash guys. I think the real enemies are going to be the exchanges in the listing agents and what they will or will not allow to be called Bitcoin when a consumer presses “buy,” when Bitcoin ultimately does have privacy. There's no such thing as private money and I think that everyone says that. Bitcoin needs to be more like physical dollars, and I think that if you try to sell physical dollars today, you go to jail. I don't know how legal Bitcoin will be once it's made private and further I don't know to what extent any of the people we consider allies like the Coinbases of the world would in any way support a Bitcoin with privacy in it. I actually I think we're past the point of Bitcoin having privacy, and if a Bitcoin were to have privacy that it would be some marginalized fork that no one can get access to. I think so my fear has always been: make sure you're building SSL not PGP. Cuz almost everyone uses SSL no one uses PGP. I think we're at the point now where the facts as they are, it's that if Bitcoin were to become truly private, it would be basically the PGP of Bitcoin and the one that isn't would be the SSL of Bitcoin. Andreas Antonopolous: I really like the fact that all of the privacy developments right now, specifically things like taproot and graftroot are actually around obfuscation and plausible deniability to give the exchanges a “see no evil” out of exactly that conundrum. Meaning that if it looks like a payment to a public key and you can no longer tell the difference between that and a Coinjoin, you're done. Stephanie Murphy: I don't know what the future is gonna look like, and nobody knows. We can speculate and think about it and it's really fun, but at the end of the day, none of us can really even imagine it fully and we're gonna have to wait and see what happens, but that’s part of the excitement. Being aware that you don't know is also exciting because you can just be surprised by what comes out and not try to control everything or plan everything. Andreas Antonopolous: I'd like to take the opposite perspective, kind of more optimistic. Because what what you say is true and that's definitely happening but the opposite is also happening. Which is when I think that there's an intractable problem or a very hard problem that we seem stuck on, and then suddenly a brilliant solution emerges from nowhere that nobody expected. That was my experience with for example Ethereum. I had not imagined the application of smart contracts in the way Ethereum did it when it came out when I read that first whitepaper by Vitalik in 2014. I had not seen that coming. Mimble Wimble, Lightning Network, the softfork solutions in Segwit. There's all of these technologies and inventions that came out of nowhere, there was nothing really to prepare me for the idea that these were under development or that someone had thought of them, then boom, suddenly they're on the on the radar. So that's also another thing that makes this such an exciting space: can't predict anything other than it won't be boring.
[AMA] Arcade City founder Christopher David - Ask me anything
Hi folks. I apologize for not posting here sooner. The initial plan was to talk with some smart Ethereum folks privately (we're doing that now), work out a detailed proposal for Ethereum integration + DAO model + token sale, then bring it to you all for feedback mid-April. Given the recent interest in AC, positive and negative, probably best we start the Q&A/feedback part of that sooner. No, we're not launching a token sale anytime in the next few weeks. It remains a "maybe" -- and if we do one, we're looking at probably May or June. That would only come AFTER multiple rounds of feedback from you folks. We will only proceed if/when we get a critical mass of community support. I did have a really cool April Fools' joke involving TOKEN SALE STARTS NAO NAO NAO GIVE US UR ETHERS I was going to post here yesterday, but decided that wouldn't be the best way to introduce us. Let's just say it involved Rick Astley. I'll be responding in this thread most of today and tomorrow, and on an ongoing basis moving forward. Happy to answer questions about Arcade City and/or my shady character and theft of lunch money from old ladies, etc. Recent news & background info:
Much more can be found by googling 'christopher david uber', 'christopher david arcade city' and so on. Ask me anything! ~Chris Edit: Forgot to include our five-minute pitch video which offers probably the best overview of what we've accomplished so far, and introduces our current equity seed round: https://www.youtube.com/watch?v=qiHZM6M-THM
https://letstalkbitcoin.com/blog/post/lets-talk-bitcoin-357-real-lightning-with-elizabeth-stark I was reminded of that while listening to this podcast on the lighting network. Thinking how some improvements to Ethereum use tokens to secure the network. For example, truebit using a token to secure off chain computations verification. While lightening network doesn't use a token and it's secured by the miners when transactions are closed. Just that one thing (tokens) makes them so different. Because it shows an entirely different approach to consensus and security. Proof of stake VS proof of work. And how that philosophy has carried into all Ethereum projects.
Opinion surrounding the consequences of the Tether situation if it is confirmed to be fraudulent and the state of Bitcoin.
Many individuals are currently maintaining a healthy level of skepticism concerning Tether as Bitfinex as a whole. A series of shady coincidences (hack amounts, Bitcoin price shift matching USDT printed, etc.) and concerning facts (USDT are not redeemable in USD) is driving rumors of wash trading. Note that the following is my personal opinion. I do not present anything as fact, despite believing strongly in everything I'm writing. If a scandal erupts from either Tether or Bitconnect being exposed as scams in the short/medium term, Bitcoin (and Bitcoin Cash, Litecoin and other clones that barely represent an upgrade on the original) are done. Let's be honest: if Bitcoin did not already have a disproportionately high market cap, it would already have bowed in favor of tokens with much better tech. If all top-10 coins started 2017 with the same $1b market cap (for example), Ethereum would be number 1, Bitcoin cash would never have been created and NEO, IOTA, Ripple and Monero would be the other four players in the top 5, although I can't claim to know which order they'd be in. Bitcoin would probably be chilling next to ETC right now. It makes sense: they're both legacy tech. However, as we all see, that's not the case. Cryptocurrencies are young and money doesn't follow the tech yet, but it will. They are far too open, valuable and accessible for businesses not to eventually adopt the best player. As of now, cryptocurrencies are almost purely treated as investments. Very few people get them to use them (with some exceptions, like Monero, especially on the dark web) and their value is equivalent to their potential. This is where I'm sure I'll lose a lot of people. Bitcoin (and its leftovers) has no potential. It fails at being an effective decentralized currency (ridiculous transaction fees and delays, extraordinary concentration of the hash power in dedicated machines located in China) and it fails at being an effective store of value (well over 1M, estimated to be closer to 4M -- are essentially lost). It is not anonymous, does not have a clear use case and yet Bitcoin absolutely dominates the cryptosphere. That leads anyone with a shred of investment experience to conclude that its price rises solely due to market manipulation (Tether situation (allegedly), disingenuous claims made by many leaders, constant shilling, FUD attacks, media censorship, name recognition (most subreddits I've been to stiffle discussion in favor of their own coin and even /Crypto has shown to heavy muffle talk of competitors, such as IOTA - my post was removed from the queue a few hours after it was posted despite breaking no rules) and speculation by big players that the price will keep increasing before they can successfully exit. In the current state of things, I believe almost everyone else is just there along for the ride and does not understand what is unfolding. A few things can change that. One of these things is the implosion of Tether (and most likely Bitfinex) before serious code upgrades can be done to Bitcoin and solutions found to the absolute joke that is its 'decentralized' governance. When the price of an asset keeps increasing ONLY because new investors want to take advantage of the increase in price, driving it even further up, you've got an extremely dangerous upward spiral that can only lead to a crash. As of right now, people who are holding Bitcoin are assuming that Bitcoin in particular we will reach mass adoption before most other ambitious projects roll out a working product, build their ecosystem and stabilize. That is a very, very dangerous bet to make.
Nearly 30% of Americans (we're not talking about a 3rd world country!) do not have credit cards, and they have been around since the 50s.
A fifth of the global population does not have access to the Internet.
...but Bitcoin, an already outdated and impractical piece of tech, is supposed to conquer the world in the next 5 years? The second thing that can disrupt (read: kill) Bitcoin is stagnation. Thinking that Bitcoin will soar to half-a-million dollars like McAfee believes is lunacy and I think most people here would agree. Few think about the actual implications, though. What room does that leave for Bitcoin? Will it stop growing at $15,000? $30,000? $50,000? More importantly, how much time until it reaches this height? Bitcoin is a product, not a political revolution: the segregation between the branded "Bitcoin" and "the rest" (we even have a term, altcoin!) and its cult-like following makes it very clear. If it weren't the case, superior tokens like Ether, Monero or Lumen would have passed it already. Like any product, Bitcoin needs a unique value proposition. And it has one! It's useful in Venezuela or... Zimbabwe. Except it isn't. It's in no way better than the other currencies I mentioned above. It's way worse, in fact, due to the problems I talked about. So, here is a graphic showing a product's life cycle stages. It's up for interpretation, but I'm convinced we've left the 'introduction' stage and are in the growth stage. Bitcoin is, as of now, an investment product. Its value is only in its constant price increase. Because of this, it's not unreasonable to believe that if the price stops increasing, it won't stabilize, but cause a crash instead, as a financial product without any potential for return has absolutely zero value. I'll conclude with some questions: would you buy Bitcoin if you knew the price would be stable in the years to come? Even more importantly: do you honestly believe Bitcoin can recover from a significant crash (for example, caused by a Tether scandal), especially if other major players (ETH, XMR, etc.) with fervent communities and actual use cases overtake it?
RSVP here: http://www.meetup.com/Ethereum-Denveevents/232334344/ This meetup is not about the DAO or hard forks. There's plenty of discussion and debate about these issues online. In the humble opinion of this Ethernaut, these challenges will soon be dealt with - and life will go on. Lots of interesting non-DAO action is happening in the ecosystem, and the evening will feature two excellent presentations from our community:
Brian Gardner will discuss all things mining. He's spent decades in the hardware industry and has a unique expert perspective on the topic. Ethereum proof-of-work (POW) mining is perhaps more important than ever, given that the DAO hack might delay the implementation of proof-of-stack (POS) for the platform.
Coury Ditch will discuss Maker (MKR). Coury has deep-dived into Maker over the past few months, and will be providing a thorough overview and analysis of this project. What are MKR's objectives? What are the potential risks?
Afterwards we'll have ample time for discussion of all things crypto. Between the DAO hack, fork debate, and blocksize debate in Bitcoin, these are very interesting times to be involved in blockchain. A hearty thanks to Zenman and local entrepreneur & crypto enthusiast Sasha Shtern for facilitating the venue! Much like our March meetup, we'll be in the classroom on level 2 of the Phase 3 part of the building. Please find directions here: http://imgur.com/a/QZrYv. In other news, I recently had the pleasure of being interviewed by John Barrett of the Bitcoins & Gravy podcast. We talked about Ethereum, the Denver blockchain community, and much more. Click to listen! John will be hanging out in Denver in a few months, and will be conducting an Ethereum Denver roundtable podcast. More details to come... Cheers, Kent
Positive twist on the failed soft fork: it demonstrates Censorship resistance of the Ethereum network as Counterattacks against censoring nodes are likely possible
Listening to (explanation of the soft fork weakness in the first half hour of) the LTB conversation between Andreas, Emin Gun Sirer and others, the following thought occurred to me: If a part of the nodes (miners/validators) on the Ethereum network are censoring specific transactions, then it is possible to circumvent that censorship and DOS-attacking the censoring nodes selectively by producing transactions that will use the weakness discovered in the soft fork by having each censored transaction accompanied by a second anti-censoring transaction as follows: First: broadcast actual transaction with the censored code: censoring nodes will reject it, other nodes will process it, perform state changes and include the transaction in their (candidate) block Second: broadcast second accompanying anti-censorship transaction containing:
throw if first transaction has been processed // (e.g. by inspecting state changes that should have happened in 1st transaction) // Non-censoring nodes will stop execution here, // but only little gas needs to be paid when transaction is included in the block // Censoring nodes will continue execution since they did not process the first transaction for-loop x = 1 to 1000000000000 {perform-resource-intensive calculation} censored code again // Censoring nodes will be clogged with resource-intensive calculations, // however will not be able to "punish" the spammecounterattacker because // they reject the censored code at the end and cannot collect the gas cost of the transaction
So the net result is that by clogging up the censoring nodes, they lose the battle to find new blocks, whereas only a bit more needs to be paid when the second accompanying clogging transaction is processed by non-censoring nodes. Discussion of soft fork weakness:
Note: the risk of transaction censoring has been discussed at length in the Bitcoin world. As the explanation in the LTB-broadcast showed, it is impossible to censor Ethereum transactions without actually processing them -> that makes this counterattack possible. Update added: I see there has been a similar thread thread three days ago - what I outline here is a way in a world where part of the miners censor and others don't, and how to still get your transactions through while clogging up the censors.
Newbs might not know this, but bitcoin recently came out of an intense internal drama. Between July 2015 and August 2017 bitcoin was attacked by external forces who were hoping to destroy the very properties that made bitcoin valuable in the first place. This culminated in the creation of segwit and the UASF (user activated soft fork) movement. The UASF was successful, segwit was added to bitcoin and with that the anti-decentralization side left bitcoin altogether and created their own altcoin called bcash. Bitcoin's price was $2500, soon after segwit was activated the price doubled to $5000 and continued rising until here we are today at $15000. During this drama, I took time away from writing open source code to help educate and argue on reddit, twitter and other social media. I came up with a reading list for quickly copypasting things. It may be interesting today for newbs or anyone who wants a history lesson on what exactly happened during those two years when bitcoin's very existence as a decentralized low-trust currency was questioned. Now the fight has essentially been won, I try not to comment on reddit that much anymore. There's nothing left to do except wait for Lightning and similar tech to become mature (or better yet, help code it and test it) In this thread you can learn about block sizes, latency, decentralization, segwit, ASICBOOST, lightning network and all the other issues that were debated endlessly for over two years. So when someone tries to get you to invest in bcash, remind them of the time they supported Bitcoin Unlimited.
That's a really good question, and I asked the same question when I went across to Blockstream™. How do you guys plan to make money off of this technology, this great core technology that you're doing? And really the idea is that someone has to build it to make sure its built properly. And if we're one of the leading experts in the world, there's always going to be a way to make revenue. Look at for example the Redhat model, establishing that you could do these great things, will lead to some-kind of revenue - now that's completely vague for me, but that is basically the idea. And also, you've got to put things in perspective, I'm just one employee, so that's the cost if their investment in lightning, just me.
@6:50 So they really turned around and told their investors "if you build it they will come, there's no idea right now this is how we're going to make money", but they know once it's built, the'll be a way?
Well, I didn't talk to the investors, I'm not that far up the food-chain.
I was drawn to Linux by a group of passionate developers, and together we drove it into the mainstream. Bitcoin today has that same world-changing energy and Blockstream is at its epicenter.
So next time someone asks you "Who is in control of Bitcoin", you have a depressing, easy answer. I've been making investments in Bitcoin for a couple of years now, I've even made a small Bitcoin fortune from the Ethereum pre-sale. If Blockstream gains firm control over the blockchain, I'll exit into Litecoin & Ethereum, or invest into real estate.
Nerdfight: Fully-Fledged Cryptocurrencies, Pre-Mined Cryptocurrencies, Vs Appcoins
The crypto space is divided into three categories:
Fully-fledged Cryptocurrencies
Pre-mined Cryptocurrencies
Appcoins
It is crucial for investors to understand the differences between these three approaches. A fool and his money are soon parted. Get educated.
Fully-fledged Cryptocurrencies
Fully-fledged Cryptocurrencies I would define as being initially distributed based on Proof of Work, Proof of Burn, or some other egalitarian means that I haven't seen yet. In a full-fledged cryptocurrency, there can be no central issuer in charge of currency distribution at any point. I would consider Bitcoin, Litecoin and XCP to be Fully-fledged Cryptocurrencies. Satoshi didn't reserve BTC handouts for IPO investors, nor did Charlie Lee of Litecoin do a Litecoin IPO where LTC handouts were reserved for IPO investors. Neither did the makers of Counterparty reserve XCP for anyone, in exchange for money or otherwise.
Pre-Mined Cryptocurrencies
Pre-Mined Cryptocurrencies are exactly like Fully-Fledged Cryptocurrencies, but in a Pre-Mined Cryptocurrency, a central entity reserves an allotment of the currency for themselves. This is financially advantageous for the central entity. I would consider Ethereum to be a Pre-Mined Cryptocurrency.
Appcoins
Appcoins are like Pre-Mined Cryptocurrencies, but a central entity controls the entire supply of the appcoins initially, not just some of it. In an appcoin, this central entity may also arbitrarily expand or contract the entire supply throughout the life of the appcoin, but this is an optional component. The main indicator of an appcoin is the 100% monopoly-owned initial supply. I would consider NXT an appcoin, along with most other pure Proof of Stake coins. Pure Proof of Stake coins are distributed by a central entity who controls 100% of the currency supply initially. To this day I have no idea how this concept caught on with investors, other than PoS being deceptively sold as the solution to mining. In any case, Proof of Stake is the least nefarious form of appcoin. In PoS, the central entity chooses who to distribute the initial supply of the appcoin to, after which it is mostly a free for all. Appcoins can also be built using Counterparty or Mastercoin, or maybe even Ethereum, but in this form they closely resemble company stock or fiat currency. Not only is the initial distribution of the appcoin controlled by a central entity, but the central entity has the ability to inflate or contract that currency supply at will. Appcoins like LTBCoin are much more fair than others in the sense that Adam B Levine is making it a very easy and fair process to obtain LTBCoin. You obtain LTBCoin by commenting or providing value to the letstalkbitcoin media network. I like this idea, but Adam is still acting as the central entity. He can choose who to give LTBCoin to initially, and he can choose to inflate the supply or contract the supply at will.
TLDR
Category 1 cryptos are the most egalitarian and thus the most valuable. Category 2 cryptos are a less valuable form of Category 1 cryptos, in that the pre-mine blemishes the supply forever. Category 2 cryptos will always run the risk of being forked into Category 1 cryptos, effectively rebooted with the blemish flushed out. This makes them less valuable. Category 3 cryptos are more like a tool, for example a fiat currency or a company stock than a cryptocurrency. They can be a genuinely useful tool, but they have a central issuer who can steer the currency wrong at any point. Exercise extreme caution before investing in Category 3 cryptos.
If a billion dollars is indeed coming into the Ethereum ecosystem in 2016 alone (as was estimated earlier Gupta) then how does that translate into Market Cap
Obviously this would not be a billion dollars of purchased ETH. Rather, it's a billion dollars into Ethereum focused projects. But that also results in speculation, particularly by those interacting and hearing about those projects. In other words, depending on how that billion dollars manifests into projects, the actual market cap could be much much higher. I know that true, but I don't know exactly how that plays out. People here with a more experienced understanding of markets and this type of ecosystem please chime in. Gupta ... I love how there's a laugh of dismay regarding the estimates he provides, but then he lays it out. This does look like an early dot com -like time, and I love how he's thinking forward about how we can prepare the system for that kind of disruptive change. Such an amazing forward thinker.
Swarm coins can generate a new coin, are you serious?
Yep, it's a pretty cool thing that was never possible until now. You can get coins for all of our future launches simply by having some SwarmCoin. We expect this distributed incubator model to dramatically impact how business are started and run since it has the possiblity of dramatically accelerating a company's path to market. Just think about it, you start off with a bunch of engaged users from the beginning and they give you money. What could be better than that? Can I mine swarm? No. All 100,000,000 coins are set at the beginning and locked so that no more can ever be created. You can get some SWARM in the fundraiser. How did you come up with this idea? I was initially inspired by the Decentralized Applications whitepaper (https://github.com/DavidJohnstonCEO/DecentralizedApplications) and Vitalik Buterin's writings on the Distributed Autonomous Organizations, including the Ethereum whitepaper (https://github.com/ethereum/wiki/wiki/%5BEnglish%5D-White-Paper). This led me to write my own paper about the possiblity of distributed governance (https://github.com/fractastical/distributed-governance/blob/mastewhitepaper.md). I then notice that folks in the VC industry who were very aware of the limitations of that model and some of the barriers to crowdfunding, including Fred Wilson of Union Square (http://avc.com/2014/03/unregulated-crowdfunding/) and Naval Ravikant of AngelList (http://startupboy.com/2014/03/09/the-bitcoin-model-for-crowdfunding/). After some more research, I did some writing for Let's Talk Bitcoin, Bitcoin Magazine, and my private blog, including articles on Cryptocurrency Crowdfunding: Problems and Potential, (http://evergreenthoughts.quora.com/Cryptocurrency-Crowdfunding-Problems-and-Potential; Bitcoin crowdfunding: Naval and Fred step up to bat, http://evergreenthoughts.quora.com/Bitcoin-crowdfunding-Naval-and-Fred-step-up-to-bat; AppCoin Manifesto, http://letstalkbitcoin.com/too-many-coins/; For Us By Us: Bitcoin Needs To Move Out of the Crypto-enthusiast Box, http://bitcoinmagazine.com/11133/us-us-bitcoin-needs-move-crypto-enthusiast-box/; Why Bitcoin is not a currency, http://evergreenthoughts.quora.com/Why-Bitcoin-is-not-a-currency). The rest came together gradually as I tried to figure out the appropriate technology set to build off of and to put together a team to work on this. What technology set are you using? At the moment, Bitcoin, the second generation protocol Counterparty (https://www.counterparty.co), and a customized vending machine on Counterparty that automatically generates and distributes user-created assts. We anciticipating supporting other 2.0 protocols once they support automatic asset generatoin. Is this legal? We believe this falls into section (1)(d) of our Cryptoequity whitepaper (https://docs.google.com/document/d/1qY0GCGKByXc8aeUaHIgggaSGzYjYHKCY0TeLKYt9b3I), meaning it is allowable under U.S. law and is probably not problematic elsewere. That said, we are not laywers and advise you to consult the local law to see if and what you are doing is regulated. Is there a pre-mine? 8% of the holdings goes to the Swarm reserves, which is split between founders, swarm representatives, and bounties for specific projects. We wanted to avoid a large pre-mine, since that creates misaligned incentives: https://gist.github.com/fractastical/b236024cd106e97b38d0. That said, we thought if there was no pre-mine then founders and early contributors would have less incentive to see the project to completion. We hope we've reached a healthy balance. How will this influence the Bitcoin price? Reliable infrastructure allowing asset issuance via the Bitcoin Blockchain will probably boost the price of Bitcoin significantly, as people will buy Bitcoin in order to access other assets that are available via our platform. Are you a DAO (Distributed Autonomous Organization) ? We are laying the groundwork for Distributed Autonomous Organizations that exist entirely on the blockchain. As more functionality exists, we will integrate it into our platform. Are these coins secure? Will it be vunerable to a 51% attack? We build on Bitcoin 2.0 technologies, specifically Counterparty, so all coins are secured by the full strength of the Bitcoin network. What is decentralized due diligence? One of our goals is to fully decentralize the process of launching your coin, including the very important part of promoting awesome coins and filtering out scam coins. Decentralized due diligence allows multiple groups to compete in the filitering process, with the market ultimately deciding which becomes the trusted option. What about sidechains? We like sidechains. If working sidechains emerge we will extend our platform to support asset issuance on a sidechain. Is Swarm a company? As of right now, there is no legal entity that represents the Swarm. This will certainly come at a later stage. Our goal is to postpone dealing with any of these issues until there is need. How do I get my own coin? In stage two of our fundraiser we will make public a form something like the following: https://docs.google.com/document/d/1IEUIcXK2bNYQqIG3wUrtox4cDO1xCWsbHIVo4ZxbNYA/edit
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