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The old objections against altcoins are rolled out and paraded again like a good circus. Let me paraphrase what author is saying: "There will be no other crypt

by pyalot2 13y ago

The old objections against altcoins are rolled out and paraded again like a good circus. Let me paraphrase what author is saying: "There will be no other cryptocurrency, for whatever purpose, ever, than bitcoin." That's of course complete bunk. Yes, most of the existing altcoins are doomed, because they don't add anything of value. The few that do add something unique, are as likely as not to see these features adopted into bitcoin itself. However there are areas where an altcoin can succeed, under the following conditions: - If it adds something unique - If what it adds is useful and liked by people - If what it adds cannot be incorporated into bitcoin Wait, how can it be that something can't be incorporated into bitcoin? Well, bitcoin has a certain architecture, which makes some ideas more easy to incorporate, and others hard, or impossible. A few examples of things that would have a difficult time landing in bitcoin: - Colored coins - Blockchain based trade order execution (would also be predicated on colored coins). - Domain name resolution - Trust metrics - Arbitration and reversable transactions There's many more. But you get the idea, most of these things are not inherently compatible with how bitcoin works, and is liked by people for working in this fashion. That doesn't make this bad ideas, it just makes them ideas where supplemental systems can excel.

gbl08ma 13y ago
I submitted this because I wanted to see it discussed in this light. I think the author makes some good points but others are just plain wrong. For example, when it is said that Litecoin and other Scrypt-based coins were created just as a way not to let GPU mining rigs go worthless: I believe the existence of other coins with different algorithms is important, even to point out possible flaws in Bitcoin and the way SHA-256 is used. Altcoins, among other things, provide a way for testing (sometimes crazy) ideas that can't be tested on Bitcoin at this stage, and allow for more choices to be given to the user (in the same way Linux is not the only open source kernel, GNU GPL is not the only open source license, etc.). If you think of Bitcoin as just another open source project, and consider "altcoins" to be forks, you'll find forks that are basically just copies of the main project with some values adjusted to the will of the creator, and you'll find more elaborate forks that actually add something new (even if these additions prove to be inadequate to merge into the main project at some point). The second type of forks is, in my opinion, very desirable, while the first one is pretty much useless and, sometimes, is nothing more than a pump-and-dump scheme.
- nwh 13y ago
  > For example, when it is said that Litecoin and other Scrypt-based coins were created just as a way not to let GPU mining rigs go worthless This is incorrect. Litecoin was created to stop CPUs going idle, it was a resistance against GPU mining. They since changed their tune a bit, but that was the stated aim on their main page for a year or so. > I believe the existence of other coins with different algorithms is important, even to point out possible flaws in Bitcoin and the way SHA-256 is used. If sha256 is broken so badly that arbitrary outputs can be chosen, all things are dead. Litecoin uses sha256 everywhere internally too, just not for their mining algorithm.
  - gbl08ma 13y ago
    > This is incorrect. I didn't say that was correct, I was just saying that's what the article (incorrectly, in my opinion) appears to say. I'm not sure who's misunderstanding who... > If sha256 is broken so badly that arbitrary outputs can be chosen It's not about sha256 being broken or not, but about the way it is being used for mining (being used incorrectly != broken hashing algo). Even though I agree, if it was being used improperly we would have noticed by now - I could have chosen a better example.
    - nwh 13y ago
      > "Litecoin uses Scrypt as a proof-of-work scheme. Scrypt uses the low-latency cache memory of modern processors to provide greater hash-speeds on CPUs in comparison to GPUs. We would like to extend our thanks to ArtForz for the implementation." https://web.archive.org/web/20111128074850/http://litecoin.org/ https://web.archive.org/web/20111128074850/http://litecoin.o...
    - maaku 13y ago
      > It's not about sha256 being broken or not, but about the way it is being used for mining (being used incorrectly != broken hashing algo). Even though I agree, if it was being used improperly we would have noticed by now - I could have chosen a better example. It's being used absolutely correctly for mining. Proof of work needs to be extremely easy to validate. You want the fastest hash possible, not the slowest.
kylebrown 13y ago
I agree. Trying to incorporate every new feature as a layer on top bitcoin is like putting a square peg in a round hole. Decentralized trading, the most wanted next-gen feature, was not mentioned in the article. And as you say, colored coins are one of those square pegs. That's why Stefan Thomas (developer of the original colored coin client) joined Ripple to continue his work - it has a protocol built from the ground up to support bid/ask offers and trade matching. Its also curious that a trusted "miner backbone" is being suggested as a solution to the 25% attack, because that's essentially Ripple's solution to sybil attacks (a hardcoded unique node list).
unclebucknasty 13y ago
I didn't read the article as saying that no altcoin could ever succeed. In fact, I read agreement with your statement that for an altcoin to be worthwhile, it must add something new and desirable. But, it is the author's opinion that much (all) of the current altcoin to date adds nothing. In his opinion, many are just algorithmic tweaks based on the same concept as BTC. They feel like a hopeful rush to copy BTC and manufacture value for those who missed out on early BTC. I am inclined to agree. A friend dabbles in altcoin and we just had this discussion. He can't point to a reason that they have additional value currently, but suggests that one could take off. IMO, that's no different from playing the lottery. From your list of possible value-adds for altcoin, can you point to any existing altcoins that possess them?
- synchronise 13y ago
  I have to strongly disagree. There have been quite innovative alt coins in this first wave, the most prominent ones being Namecoin, Litecoin, Peercoin, Primecoin, Freicoin and possibly Anoncoin as they have all found niches that they can cater to. Litecoin has the second largest market cap and has the honour of being the first major Scrypt coin Peercoin has the third largest cap, it introduced Proof of Stake as an alternative for Proof of Work and in the latest round of alt coin investment it did the best in terms of market cap increase to coins ratio. Namecoin has a niche as a alt DNS Primecoin allows Proof of Work to be useful rather than selfish to the network as is the case with Bitcoin Anoncoin recently integrated i2p and Zerocoin to provide greater anonymity for users Freicoin had a great idea with demurrage, very capitalist, but it failed because people want a currency that's either going to hold or appreciate in value and also because 80% of the funds were held by the Freicoin foundation rather than the community. There's also a second wave of altcoins coming, ones not based on Satoshi's algorithms. The best example would be eMunie, which from what I hear is very close to release.
  - unclebucknasty 13y ago
    Many of those you listed were covered specifically in the article, and I believe the author cites sound reasons why the supposed differentiation doesn't add the claimed value. I tend to agree with the author for the most part, though I think some of his refutations are as theoretical as the assertions of claimed value he is refuting. Grain of salt though, as I don't claim expertise with these altcoin beyond general familiarity. I would be curious to know what you think of his opinions re: the altcoins you mentioned. Still, I think the overarching point (at least in my view) is that what is overlooked most is that Bitcoin's greatest value at this point is the network effect. By far, it is the closest thing we have to a consensus on an alternative currency. So, it is not enough for a new coin to present some incremental benefit. It most be unquestionably superior in some fundamental ways. Remember, these altcoin aren't just competing with Bitcoin. They are competing with fiat. So, the sheer number of altcoin popping up tends to devalue the lot. BTW, I actually believe that Bitcoin has some fundamental weaknesses that need to be addressed. Some of these may be so foundational to Bitcoin, that it may actually require a new altcoin to fix them. For instance, confirmation time is one such issue. So, it's not that I am swooning over BTC as the perfect currency. I just haven't yet seen anything that offers a compelling alternative when the BTC ecosystem, network effect, and inertia are considered. EDIT: BTW, the idea of having a bunch of different altcoin, each catered to a certain "niche" strikes me as especially odd for a currency. As we've seen with BTC, it is difficult enough to gain widespread adoption for even a single alt currency. It is hard to see multiple niche currencies gaining the necessary critical mass to breakout, nor the desirability of managing such from a user perspective.. I am not being facetious in saying that the idea of assigning some niche value to a particular currency seems an excuse for the lack of true differentiation, and an acknowledgement that the currency represents only some minor or incremental benefit.

by pyalot2 13y ago

gbl08ma 13y ago

I submitted this because I wanted to see it discussed in this light. I think the author makes some good points but others are just plain wrong. For example, when it is said that Litecoin and other Scrypt-based coins were created just as a way not to let GPU mining rigs go worthless: I believe the existence of other coins with different algorithms is important, even to point out possible flaws in Bitcoin and the way SHA-256 is used. Altcoins, among other things, provide a way for testing (sometimes crazy) ideas that can't be tested on Bitcoin at this stage, and allow for more choices to be given to the user (in the same way Linux is not the only open source kernel, GNU GPL is not the only open source license, etc.). If you think of Bitcoin as just another open source project, and consider "altcoins" to be forks, you'll find forks that are basically just copies of the main project with some values adjusted to the will of the creator, and you'll find more elaborate forks that actually add something new (even if these additions prove to be inadequate to merge into the main project at some point). The second type of forks is, in my opinion, very desirable, while the first one is pretty much useless and, sometimes, is nothing more than a pump-and-dump scheme.

nwh 13y ago
> For example, when it is said that Litecoin and other Scrypt-based coins were created just as a way not to let GPU mining rigs go worthless This is incorrect. Litecoin was created to stop CPUs going idle, it was a resistance against GPU mining. They since changed their tune a bit, but that was the stated aim on their main page for a year or so. > I believe the existence of other coins with different algorithms is important, even to point out possible flaws in Bitcoin and the way SHA-256 is used. If sha256 is broken so badly that arbitrary outputs can be chosen, all things are dead. Litecoin uses sha256 everywhere internally too, just not for their mining algorithm.
- gbl08ma 13y ago
  > This is incorrect. I didn't say that was correct, I was just saying that's what the article (incorrectly, in my opinion) appears to say. I'm not sure who's misunderstanding who... > If sha256 is broken so badly that arbitrary outputs can be chosen It's not about sha256 being broken or not, but about the way it is being used for mining (being used incorrectly != broken hashing algo). Even though I agree, if it was being used improperly we would have noticed by now - I could have chosen a better example.
  - nwh 13y ago
    > "Litecoin uses Scrypt as a proof-of-work scheme. Scrypt uses the low-latency cache memory of modern processors to provide greater hash-speeds on CPUs in comparison to GPUs. We would like to extend our thanks to ArtForz for the implementation." https://web.archive.org/web/20111128074850/http://litecoin.org/ https://web.archive.org/web/20111128074850/http://litecoin.o...
  - maaku 13y ago
    > It's not about sha256 being broken or not, but about the way it is being used for mining (being used incorrectly != broken hashing algo). Even though I agree, if it was being used improperly we would have noticed by now - I could have chosen a better example. It's being used absolutely correctly for mining. Proof of work needs to be extremely easy to validate. You want the fastest hash possible, not the slowest.

kylebrown 13y ago

I agree. Trying to incorporate every new feature as a layer on top bitcoin is like putting a square peg in a round hole. Decentralized trading, the most wanted next-gen feature, was not mentioned in the article. And as you say, colored coins are one of those square pegs. That's why Stefan Thomas (developer of the original colored coin client) joined Ripple to continue his work - it has a protocol built from the ground up to support bid/ask offers and trade matching. Its also curious that a trusted "miner backbone" is being suggested as a solution to the 25% attack, because that's essentially Ripple's solution to sybil attacks (a hardcoded unique node list).

unclebucknasty 13y ago

I didn't read the article as saying that no altcoin could ever succeed. In fact, I read agreement with your statement that for an altcoin to be worthwhile, it must add something new and desirable. But, it is the author's opinion that much (all) of the current altcoin to date adds nothing. In his opinion, many are just algorithmic tweaks based on the same concept as BTC. They feel like a hopeful rush to copy BTC and manufacture value for those who missed out on early BTC. I am inclined to agree. A friend dabbles in altcoin and we just had this discussion. He can't point to a reason that they have additional value currently, but suggests that one could take off. IMO, that's no different from playing the lottery. From your list of possible value-adds for altcoin, can you point to any existing altcoins that possess them?

synchronise 13y ago
I have to strongly disagree. There have been quite innovative alt coins in this first wave, the most prominent ones being Namecoin, Litecoin, Peercoin, Primecoin, Freicoin and possibly Anoncoin as they have all found niches that they can cater to. Litecoin has the second largest market cap and has the honour of being the first major Scrypt coin Peercoin has the third largest cap, it introduced Proof of Stake as an alternative for Proof of Work and in the latest round of alt coin investment it did the best in terms of market cap increase to coins ratio. Namecoin has a niche as a alt DNS Primecoin allows Proof of Work to be useful rather than selfish to the network as is the case with Bitcoin Anoncoin recently integrated i2p and Zerocoin to provide greater anonymity for users Freicoin had a great idea with demurrage, very capitalist, but it failed because people want a currency that's either going to hold or appreciate in value and also because 80% of the funds were held by the Freicoin foundation rather than the community. There's also a second wave of altcoins coming, ones not based on Satoshi's algorithms. The best example would be eMunie, which from what I hear is very close to release.
- unclebucknasty 13y ago
  Many of those you listed were covered specifically in the article, and I believe the author cites sound reasons why the supposed differentiation doesn't add the claimed value. I tend to agree with the author for the most part, though I think some of his refutations are as theoretical as the assertions of claimed value he is refuting. Grain of salt though, as I don't claim expertise with these altcoin beyond general familiarity. I would be curious to know what you think of his opinions re: the altcoins you mentioned. Still, I think the overarching point (at least in my view) is that what is overlooked most is that Bitcoin's greatest value at this point is the network effect. By far, it is the closest thing we have to a consensus on an alternative currency. So, it is not enough for a new coin to present some incremental benefit. It most be unquestionably superior in some fundamental ways. Remember, these altcoin aren't just competing with Bitcoin. They are competing with fiat. So, the sheer number of altcoin popping up tends to devalue the lot. BTW, I actually believe that Bitcoin has some fundamental weaknesses that need to be addressed. Some of these may be so foundational to Bitcoin, that it may actually require a new altcoin to fix them. For instance, confirmation time is one such issue. So, it's not that I am swooning over BTC as the perfect currency. I just haven't yet seen anything that offers a compelling alternative when the BTC ecosystem, network effect, and inertia are considered. EDIT: BTW, the idea of having a bunch of different altcoin, each catered to a certain "niche" strikes me as especially odd for a currency. As we've seen with BTC, it is difficult enough to gain widespread adoption for even a single alt currency. It is hard to see multiple niche currencies gaining the necessary critical mass to breakout, nor the desirability of managing such from a user perspective.. I am not being facetious in saying that the idea of assigning some niche value to a particular currency seems an excuse for the lack of true differentiation, and an acknowledgement that the currency represents only some minor or incremental benefit.