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How To Create Your Own Cryptocurrency
mspohr writes "Since the code for Bitcoin is open source, we have seen the creation of various Bitcoin clones and enhancements (Litecoin, Dogecoin or Coinye West, anyone?... There are about 70 listed on this site.) This article explains the process of making your own. Thanks to Matt Corallo, a veteran Bitcoin developer, you can easily create your own at coingen.io. He has automated the process of modifying the source code to create custom currencies. Just enter in the name for your new currency, a logo image and set a few parameters (or accept the defaults), and you can have your own cryptocurrency. Source code and some customizations cost a bit extra. Once you have your own 'coin,' you just need to convince people that it is worth something."
As I noted on Bitcontalk to someone who bought Bitcoins for over $1000 each, "Great! We need suckers like you to keep this thing going!".
At least that's more visually appealing than the goddamn Slashdot beta site.
I'm in the process of making a coin! I named it HLC or HighlanderCoin, it's halves every 500000 and has an initial block value of 0.000001 HLC. Best part is, there can be only 1!
To educate people into not using altcoins.
What happens when Bitcoin goes over $2000? Or what happens when it goes over $50,000? Or what happens when it goes over $200,000? [...] Only time will tell, my friend. Only time will tell.
Good luck with that.
Flame away, but I think the whole trend of digital currencies is stupid. It basically comes down to people tasked their computers with solving math problems. Okay, big deal. Whoopie for those people. Their math problems are not worth anything. The inverse of the old saying, "Nothing of value was lost." fits here. Nothing of value was created.
People want to trade one fiat currency, for another? Okay. What's the point?
Our economic challenge is one of resource scarcity. Coming up with schemes to trade compute time for fiat paper is not doing anyone any good.... With the exception of those few who are fortunate enough to convince some suckers to trade their paper for solutions to complex math problems.
Well, here's a new section for my "beating down democracy" book.
Suppose you want to discredit crypto-currencies, or at least dilute their effect. What can you do?
You can start a raft of new currencies with sketchy names and origins. Currencies based on celebrities, currencies based on businesses, sports (such as Nascar commemorative plates - good as gold in many US locations), and even personal currencies!
"We can't stop people from using BitCoin! What can we do?"
"Let's generate alternatives - so many that people won't know which ones to use."
"You mean like software standards?"
"Yes - exactly like software standards."
"Heh. They'll never see that coming..."
I found mutiple errors in the first paragraph of the paper. That does not engender trust in the quality of the authors work. The first paragraph of the paper states:
> Every four years the number of bitcoins created is scheduled to be cut in half until 2040
The correct date is approximately 2140 AD. The reward per block started at 50 BTC and is cut in half every 210,000 blocks, which nominally takes about 4 years. After ~130 years you have done 33 halvings, so the reward is 50 / (2^33) = 0.58 Satoshi, where 100 million Satoshi = 1 bitcoin. Since the smallest unit in the bitcoin transaction system is 1 Satoshi, the reward becomes too small to measure, and thus mining for new coins stops.
> Mining is done by volunteers who operate servers running bitcoin software.
Three errors in one sentence. Most miners do it for income, not volunteering. They earn a share of the block reward by participating in mining pools. They don't use servers, they used to use graphics cards until that became too difficult, and now mostly use custom hardware (ASICs). Neither are servers in the client-server sense, they are nodes in a peer-to-peer network, because they have to receive new transactions and send completed blocks to the other nodes. Miners generally don't run "bitcoind", the default client, or other wallet software. They run custom mining software for the kind of mining hardware they use.
Which part of that suggests that GPs $1000 "sucker" can't make a short-term profit and get out by selling at the right time?
An investor who bought in at $500 and sold at $1000 isn't a sucker and it isn't necessarily dumb luck either. You don't have to believe in the underlying principles or long term prospects of a company/stock/currency/anything to be able to make a quick buck off it off the back of short term investor behavior or market conditions.
Might I recommend this one instead: http://www.devtome.com/doku.php?id=scrypt_altcoin_cloning_guide Written by yours truly back in May. Source is no longer on line for the examples (foocoin) but there's so many clones out there, one can use any of them.
I know what you're thinking. Did I forward 65,535 packets or 65,536 packets?
> Mining seems to just waste energy,
No, mining is "proof-of-work" to enable reaching consensus on the order of transactions. This is necessary to prevent spending a balance multiple times. Only the first spending event counts. It is done by searching for hard to find hashes for a block of transactions + the hash of the previous block + a random number you insert until you meet the hard-to-meet condition (a low hash value). Using the hash of the previous block as part of the data for the current block puts the blocks in sequence, so you can know the order of transaction events. Attempting to change any block contents, such as altering transaction values or adding another transaction will change the hash, so it no longer matches the value stored in the next block. If you attempt to find a matching hash for your altered block, now the second block will no longer match the value in the third block. You end up having to find hashes for every block after the altered one up to the last one.
By making finding hashes so hard that the entire mining network can only succeed every ten minutes, you force everyone to collaborate on the search, leaving no computing power to generate an alternate history of transactions. The longest chain of blocks had the most work put into it, and thus represents the consensus of events.
If you can figure out another way to ensure digital transaction data isn't altered, great, you can become famous. Nakamoto's big invention is chaining hashes + requiring work to find the hashes, so that altering the data would require even more work. As long as a majority of the network is honest, a hacker can never catch up.
When Bitcoin goes over $2000 yes, you'll be able to buy any tulip bulb you want.
That is very true. A wise speculator can make money on any asset, as long as the asset's price is moving. It was tulip bulbs, and it was shares, and it was metals, and it was houses... and now it is just long numbers.
It's just important to note that being money and being an object of speculation are two goals that are diametrically opposite. So far BTC is an excellent object of speculation - and the better it becomes at that, the less attractive it becomes as money. The BTC picked the speculation route, and as result it is now a bubble. "Buy now, the prices are guaranteed to grow into millions per coin, the prococol is designed for that!"
True in theory, but not in reality. How many "internet companies" are trading at high multiples? What is their "intrinsic value" and why are the multiple so high?
Take a look at companies you think have "intrinsic value" and note their relative low PE's. Now take a few you think dont have intrinsic value and the corresponding high PE's. Why do people pay that PE premium?
For example, here is the PE for facebook: 121.08
And for reference:
Google 32.71
Apple 13.63
How much advertising can you sell?
Somewhat correct about Tulips, but it was more a "economic bubble" something like the internet bubble in the early 2000's or the more recent "housing bubble"
I can see it finding a niche as a payment service for those distrustful of conventional finance. That's quite a lot of people right now.
I understand that there are people (not too many, but some) that do not trust US banks, or Federal Reserve, or the US Government. However what in the world would make them trust Mt. Gox instead?
You have to trust some exchange. Otherwise where are you going to get your BTC, and how are you going to spend it? Mining today is not for common people. On the spending side, there are a few businesses that take BTC - but they rarely sell what you need (usually it's services that cost very little to provide, like hosting.)
Trusting the exchange means that you need to send your country's currency to a faraway country. The exchange there operates without any oversight, and it is only due to goodness of their heart that they send some BTC into your wallet. The same happens in the opposite direction: you send them your BTC, and in return, at some later time (soon or not so soon) they will send you the national currency - that you may have to explain to your country's tax authorities.
The exchanges are not immune from more common financial difficulties - here is one story as an example. Exchanges are not insured, and they can crash and burn at any time. Sending money to them always carries a high risk of never seeing the money again. This is far less of a concern with a bank, where you have a contract and where your money's path is traceable.
Note that both conversions (to and from BTC) cost you money; and the BTC transfers themselves also cost money. BTC was always claiming that fees are optional and symbolic, but none of that appears to be true today, as mining turned into a for-profit business with hefty investments and running expenses. In the end, the service (BTC or bank) will cost you something because the work has to be done, somewhere and by someone, and the BTC not a network of close friends anymore. People are in it for money, and guess whose pockets that money is supposed to come from?