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Are Altcoins Undermining Bitcoin's Credibility?
An anonymous reader writes The editor of a Bitcoin advocacy site believes the proliferation of altcoins (cryptocurrencies other than Bitcoin) is harming Bitcoin's long-term potential as an alternative to traditional currencies. Posting at BadBitcoin.org, a site that seeks to expose online scams that target Bitcoin users, the pseudonymous ViK compares altcoins, including the Internet meme inspired Dogecoin, to a pump-and-dump scheme where developers create their own version of the Bitcoin wallet and blockchain and then "pre-mine" or generate a significant number of cryptocurrency units before the altcoin's official release. Later, when their value has risen, the pre-mined altcoins are exchanged for Bitcoin or in some cases converted directly to cash. While critics of cryptocurrencies in general might find ViK's comments about the altcoin "tulip" mania ironic, the self-confessed Bitcoin fan is nevertheless calling for an altcoin boycott: "The easiest way to stop them is to not participate. We all know that they only have one purpose, and that is to make Bitcoin for the so called developers."
You're just miffed because I have a hotel on Park Place and three houses on Boardwalk.
#DeleteChrome
All of this is funny money.
Bitcoins are just in your imagination.
USDollars are merely imagined by the USGovernment.
Gold has no real value other than using it for things like electrical contacts, etc.
None of this is real money.
If you want real value, get a basket of eggs, hatch the chicks, raise them up, feed them pasture, your other asset - you are landed I hope - and they'll lay more eggs. Now you're in business and can feed yourself. When you succeed at that start feeding other people and they'll give you something of real value like a pork chop or firewood to stay warm with. What ever you do, don't accept cash, bitcoins, gold or other fraudulent currencies for your eggs. You want real value for your real things.
When Bitcoin was launched, Satoshi had only been mining for a day or so. If you had been paying attention to the right forums, you could have started mining more or less at the same time he did and in fact some people (like Hal Finney) did exactly that.
What's more, Satoshi does not appear to have dumped his coins. Nor did he engage in much pumping. Indeed once people started hyperbolically talking about how Bitcoin would bring about world peace, trying to get Wikileaks to accept it and so on he retreated into the background and eventually left. His coins are still there.
Creating something new with no built in advantage for yourself, being totally honest about it, and then when its value soars not selling ..... is pretty much the opposite of a pump and dump scheme.
Clearly Bitcoin has enough credibility for people to value it at hundreds of dollars. You may not think much of it, but as long as there are people willing to exchange it for traditional currency or goods and services that's enough to keep it viable.
The attraction of altcoins is that people who got in early on Bitcoin are not rich, simply because they mined vast quantities of it when mining was easy. People who missed the gold rush now see altcoins as offering a second chance. The only problem is that there are so many and most will fail, so you have to pick the right one AND get in very early with significant mining power (initial outlay).
Actually it gets worse because most altcoins were designed to be ASIC-proof, but now ASICs are appearing to mine them anyway so there is yet more expense to stay competitive.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
You're just miffed because I have a hotel on Park Place and three houses on Boardwalk.
That is a violation of the rules. Houses and hotels must be as evenly distributed as possible across properties of the same group. So it is legal to have a hotel on Park Place, and four houses on Boardwalk, or four houses on each, or four on one and three on the other. But it is NOT legal to have three houses on one and a hotel on the other. Here are the official rules.
But they said the exact same thing about Linux distributions in the 90's, after the post Redhat influx of distros. What we learned from that experience, and some of us knew it at the time, was that the more people you have working in their own isolated environments, solving the problems that are important to them... the more innovation you have in the greater Linux space. It's the trickle down effect in open source software, and it's what makes a product or product ecosystem stronger. And we're seeing the same effect in the Bitcoin space. Just look at the proliferation of Scrypt variation, Gravity wells, different variations on proof of work, proof of stake, and others. Like Linux, Bitcoin is more than a bundle of software products, it's an entire ecosystem. To dismiss that, and say that there should only be about Bitcoin seriously misses the way open source innovation works. The rest is all marketing, which is bullshit by definition.
This signature has Super Cow Powers
I just don't agree with him. Bitcoins have some serious issues. If someone develops a digital currency that addresses those issues and makes them more practical for every day use I support it. If I had to wait for 10 minutes to get my starbucks coffee paid for I'd probably decide to just pay cash. I also wonder how quickly the blockchain would grow if bitcoin became more mainstream. Anonymity is also an issue. I think competition between digital currencies will only make them more practical and robust. That can only be a good thing for digital currencies in the long run. If progress is not made digital currencies will never replace conventional ones.
not to mention that he's doing it wrong: you put your hotel on Boardwalk first, since you get the most money AND the most likely landing there thanks to the "Advance token to boardwalk" cards.
But they aren't the best investment anyway; you'd do better putting your hotels on Orange, then Red/Yellow, then Light Blue...
Tsk, tsk....
I have no problem with your religion until you decide it's reason to deprive others of the truth.
I hereby award you the Hermes Conrad award for meticulous technical correctness. It may be collected at the Central Bureaucracy upon reception of a properly filled out, signed, stamped and notarized Award Reception form.
Live today, because you never know what tomorrow brings
Clearly Bitcoin has enough credibility for people to value it at hundreds of dollars.
No -- clearly Bitcoin has enough potential for people to value it at hundreds of dollars.
There's a difference. The price of Bitcoin was driven up in the past couple years mostly on the basis of what it might become, not so much what it already is. That's not "credibility" as a currency -- that's potential value as a speculative investment.
You may not think much of it, but as long as there are people willing to exchange it for traditional currency or goods and services that's enough to keep it viable.
Again, that's not why it has most of the value it has today. Most of the growth has been because there have been people willing to exchange traditional currency for it, not the other way around.
Currencies can get their value from at least three components: (1) "inherent" ulility value of the basic material, (2) utility value of the currency as a medium of exchange, and (3) speculation due to investors and people happy to buy the currency because they think other people will ultimately need the currency for reasons (1) and/or (2).
Paper dollars, for example, have almost no value of type (1), but they have a lot of type (2), and the U.S. dollar is popular enough around the world that lots of people view it as a safe enough investment for (3), which keeps its value higher than if it were only the internal currency of the U.S. Gold has some value of type (1) (i.e., applications requiring its properties, like jewelry and applications which use its conductivity and resistance to corrosion), and it functions in limited capacity in (2), but most of the increase in gold's value in recent years has come from (3).
Now take Bitcoin. It has absolutely NONE of (1). Until relatively recently, it had extremely few everyday applications where it could be used for (2), and still there are significant problems to be overcome which will make it easy for average people to deal directly in it as a currency in safe and secure fashion. So the VAST majority (maybe 99% or more) of Bitcoin's value is about (3) -- random speculation as an investment, effectively gambling on the idea that it will eventually become widely adopted.
That's not "credibility" -- yet. Maybe someday every Bitcoin early adopter's dream will come true, and it will pay off and that value will convert from (3) to (2). But I'm not gonna hold my breath, and I'm certainly not going to go out and buy virtual "money" whose value is currently mostly held up by a small number of investors. Say what you will about the "fiat" nature of the dollar or whatever, but you have hundreds of millions of people worldwide that depend on that value everyday, and they all have an interest in keeping it afloat. Bitcoin? I have no idea who holds most of the value, but I know it's concentrated in a much smaller group of people, and I have no reason to think that they won't dump and run screaming if trust in the "magic money" dies next week.
Make sure that form is stamped five times, otherwise the head bureaucrat will summon the guards to bring him the form to fill out to have you taken away.
In Soviet Russia, five stamps summon... oh, forget it.
Actually, I interrupt this Slashdot joke to point out that the number five actually plays a significant role in old Soviet Russia bureaucracy jokes. Quoth Wikipedia:
The genitive plural of a noun (used with a numeral to indicate five or more of something, as opposed to the dual, used for two, three, or four, see Russian nouns) is a rather unpredictable form of the Russian noun, and there are a handful of words which even native speakers have trouble producing this form of (either due to rarity or an actual lexical gap). A common example of this is kocherga (fireplace poker). The joke is set in a Soviet factory. Five pokers are to be requisitioned. The correct forms are acquired, but as they are being filled out, a debate arises: what is the genitive plural of kocherga? Is it Kocherg? Kocherieg? Kochergov?... One thing is clear: a form with the wrong genitive plural of kocherga will bring disaster from the typically pedantic bureaucrats. Finally, an old janitor overhears the commotion, and tells them to send in two separate requisitions: one for two kochergi and another for three kochergi. In some versions, they send in a request for 4 kochergi and one extra to find out the correct word, only to receive back "here are your 4 kochergi and one extra." A similar story by Mikhail Zoshchenko involves yet another answer: after great care and multiple drafts to get the genitive case correct, including the substitution of "five ÑÑÑfÐ (pieces)" for "five pokers", the response comes back: the warehouse has no kocherezhek.
You must have missed the part where it said
editor of a Bitcoin advocacy site
This "article" is just another stupid "I like this thing and hate its competitors so you should hate its competitors too" rant.
What does this even mean? Asic proof?
ASICs (Application-specific integrated circuits) represent specialized hardware specifically designed for a particular task, in this context the ASICs are designed to mine coins. ASICs outperform (both in speed and power consumption) CPUs and GPUs making ASICs far more profitable.
:-) 24/7 mining some coin.
Coin proof-of-work algorithms have some sort of difficulty setting to control the number of coins being awarded during a time period. The more mining horsepower there is the higher the difficulty goes. This rising difficulty level makes the mining calculations take longer. So as the total capability to do work (all the CPUs+GPUs+ASICs) goes up the difficulty goes up. An individual CPU, GPU or ASIC earns fewer coins per hour as difficulty rises but the total number of coins generated remain roughly constant over time.
ASIC-proof algorithms attempt to leverage the fact that ASICs are specialized. They try to incorporate things found in CPUs and GPUs but not in ASICs. The motivation is to allow CPUs and GPUs to profitably mine something. The problem is that the things missing from the previous generation of ASICs used to design the ASIC-proof algorithm have been finding their way into newer generation ASICs.
So the short story is that some alt-coins were partially motivated by CPU/GPU miner that were driven out of bitcoin mining. Newer generations ASICs are now taking over alt-coins and CPU/GPU miners are once again being driven out.
Those great deals you find on ebay for a used high end GPU. It very well may be a GPU that was over clocked and run just below the point of spontaneous combustion
Clearly Bitcoin has enough credibility for people to value it at hundreds of dollars ...
But not enough credibility for merchants to hold/keep the bitcoins they receive from customers.
Merchants tend to use merchant services offered by various bitcoin exchanges. Basically the merchant does all their pricing and accounting as normal in whatever fiat currency they use, dollars, euros, etc. When a customer indicates they wish to pay in bitcoins the merchant sends sale info to the exchange, the exchange converts the price from fiat to bitcoin and provides a payment address to send bitcoins to. This payment address is the exchange's, the merchant never touches a bitcoin -- lucky for them if they are subject to IRS jurisdiction but that's another story. When the merchant receives the coins they credit the merchant's account with the original fiat amount specified regardless of any particular fluctuation that may have occurred in bitcoin's price.
In short. The merchant prices and does accounting in fiat currency and receives fiat currency in payment. The only thing new is that their payment processor is a bitcoin exchange rather than VISA or Mastercard.
Adding to this, a number of existing altcoins do, in fact, attempt to address bitcoin's weaknesses. Litecoin attempts to resist customized hardware mining and also make the blockchain update faster. Primecoin solves a somewhat useful mathematical problem instead of completely wasting computer cycles like Bitcoin does. There are other examples.
Anyway, it only seems natural that as time goes on, better and better cryptocurrencies will be incrementally developed. To ask everyone to use ONLY what's the first iteration of this tech would be silly.
Of course, there are "me-too!" cryptocurrencies as well, typically with only minor 'improvements' and designed to make the creators rich. I'm all for educating people about how they could be taken advantage of. But boycotting? Come on.
A fool and his hard drive are soon parted.
He does have a point though, and I don't understand why people haven't seen it before.
If you create a currency that is backed by nothing but knowing a very large number, then you can back a infinitely large number of currencies by an infinitely large number of different large numbers (or even the same large numbers). That means that there are inherently infinitely many alt coins out there, and these things are inherently worthless.
It's not really that alt coins destroy bitcoin's credibility, it's that bitcoin itself has no credibility in the first place, and neither do these alt coins.
One ponzi currency claiming the other ponzi currencies are bad for exactly the same reason the first currency is bad is really rather silly. If you want to play in the ponzi currency field, then go ahead but be warned it is legally and criminally dangerous and at least you are accurate in they "are all doomed".
Chaos - everything, everywhere, everywhen