By Zach Schepis
Photo courtesy of BTC Keychain.
To find the first part of this story on BreakThru Radio click here.
The Birth of Altcoins
Many Bitcoin users have made the gradual shift towards new “coins” that remain completely decentralized and true to Bitcoin’s original intentions. Thanks to their relatively small networks (compared to the millions who use Bitcoin) these alternative coins are far easier to mine.
There are currently well over a dozen of these emerging coins that are beginning to make a ripple in the world of online currency. You can check out some of the major players, such as Litecoin (referred to as the silver to Bitcoin’s gold) and follow their values and transactions at BitInfoCharts.com.
Right now, the current value of a Bitcoin is hovering somewhere between $400-$500 USD per coin, while the Litecoin is approximately $12, and Namecoin clocks in at $2.00 (at time of publication). These aren’t fortunes by a long shot, but enough to prove lucrative for potential investors and miners.
There are many more coins, some of which are quite creative. The Dogecoin, which was reportedly first mined at the end of last year according, actually began as a joke that mocked cryptocurrency. It took its name from the Reddit-famous Internet meme “doge” and features a picture of a Shiba Inu dog. With more than 28 billion coins and no market cap, Dogecoin has the most coins in circulation. Bitcoin, on the other hand, maxes out at 21 million coins.
Then there’s TakeiCoin, which is apparently inspired by Star Trek actor George Takei. The coin is configured so each transfer accrues a small fee for human rights causes.
The main difference between these altcoins, aside from their current value and system size, stems from how they are mined. New algorithms in development will continue to generate new coins. As with anything, some are good, and some are potentially useless. It can feel daunting to navigate the guessing game as to what will be the next big coin.
Knowing the Game and Investing Accordingly
For most savvy miners, the first step is simple: make sure you are not mining into a scam. You can help to guarantee a return by choosing a coin that has a finite supply. For instance, a coin like Bitcoin would be preferable to something like the infinite Dogecoin.
Next, find an honest and open creator–a factor that can prove to be difficult in a world of Bitcoin’s anonymous founder(s), “Satoshi Nakamoto”. The reality is that not every coin has a face. Developers Charlie Lee took a serious gamble when he decided to work directly on his Litecoin before any regulation took place.
In the completely transparent cryptocurrency economy it is easy to prove what’s in your wallet even under a false identity. Most creators of cryptocoins don’t–reason being they may have “pre-mined” their coin. False identity or not, this is of real importance.
Pre-mining essentially means that the creator of the coin mines it before it is released. Therefore the creator can choose at any moment what percentage of the total to own without operating under duress of competition.
Certain coins seek to remedy this factor of intangibility. Meetings like the covert gathering at xCubicle and tech forums are abuzz with talk of the Florin–an un-premined coin created in June of last year by the persona SkyAngel. Florin seeks to provide the first permanently stored communication network.
“Florincoin is exactly the same coin I would have made myself, but Skyangel beat me to the punch,” Joey Fiscella, Florin’s primary co-developer, tells BTR. “Since we shared a similar vision, I dedicated my time to working on this new cryptocoin software product. I believe it will prove to be both extremely useful for the cryptoworld, and on a grander scale, can benefit the internet as a whole.”
Florincoin is unique in that it allows for a transaction comment to be featured on the Bitcoin blockchain. These comments are included when sending coins over the network and the text field is capable of storing 528 characters per transaction. They can be a simple greeting or thank-you note, but on a business level, comments can express important details about the exchange.
Such interactions can also be used in more complex ways.
“Take, for instance, a platform that can be built to utilize the text function to store records of payment,” Fiscella explains. “Something like the hash of a receipt will forever be associated with the transaction. It can be a permanent record of receipts for every Bitcoin, Litecoin, and Florincoin transaction.”
New and exciting frontiers await pioneers like Fiscella, who are hip to the promise that the emerging alternative coin market can provide. But the incentive is not strictly monetary. Some of these coins could change and empower the very freedoms our country was founded upon. They could embolden citizens and remind us of our transcendental freedom from oppressive centralizing forces.
“You can use it to create a perfect freedom of speech application,” says Fiscella. “You harness hundreds of mining computers as a network of decentralized free-speech nodes.”