backtop


Print 27 comment(s) - last by EricMartello.. on Dec 24 at 12:13 PM

New cryptocurrencies could be viewed as extensions of bitcoins, offering new capabilities to the BTC economy

With the digital cryptocurrency Bitcoin (BTC) evolving into a $8.4B USD (market cap) economy and drawing the attention of serious economists, other rival cryptocurrencies have tried to grab headlines of their own.
 
I. Bitcoin Rivals Emerge
 
Bitcoin came along unnoticed to most in 2009.  By contrast, these newcomers are off the ground and running.  Bitcoin uses proof-of-work on SHA-256 hashes to seed the market with coins (a maximum of 21M BTC will be produced).  Other rivals adopt similar approaches with small twists.  For example, Namecoin (NMC) serves the *.bit domain and uses its work to try to fight "censorship" of oft taken down websites (or promote illegality, depending on your viewpoint).  Launched in 2011, it is worth $31.8M USD at present -- about 1/200th of BTC's net value.
 
Then there's Peercoin (PPC) which adds proof-of-stake to the seeding process to add a small amount of inflation, which will allow it to have no real limit on the maximum amount of currency (unlike BTC and most other alternatives).  It has a market cap $66.4M USD. 2013's Primecoin (XPM) has a similar unlimited pool based on the 1CC/2CC/TWN algorithm.

Cryptocurrencies
Bitcoin's success has inspired a fresh legion of cryptocurrencies based on various encryption algorithms.
[Image Source: James Best Jr./NYT]

And there's Litecoin (LTC) and Ripple (XRP) -- the two most serious challengers of the pack.  Both Litecoin and Ripple drop BTC's SHA-256 based seeding for seeding by newer, and some would argue, more secure alternative cryptography functions. 
 
Ripple uses the scrypt (2012) algorithm and is worth $1.5B USD (but on the downside all its coins are seeded).  Litecoin is worth less ($0.5B USD), but has more room to grow as only about a quarter of its coins have been seeded by its underlying ECDSA (2009) algorithm.
 
Then there's Novacoin (NVC) (2013, scrypt), Feathercoin (FTC) (2013, scrypt), and Yacoin (YAC) (2013, scrypt).
 
II. Dogecoin (DOGE): The Meme Behind the Coin
 
But if you're pretty annoyed at this point and feel all these cryptographers and their want-to-be future currencies are a bit too much, there is one last cryptocurrency that might hold some appeal to you.  It's called the "Dogecoin".
 
Dogecoins are actually a real cryptocurrency, founded the same principles as the rest of the bunch, but as their name suggests, they have something to do with dogs.  And not just any dogs -- they're based one of the internet's most famous dog memes, the "doge".
 
Perhaps drawing its name from a 2005-era HomeStar runner video...



...according to a history compiled by Know Your Meme.
 
I've discovered that the next step in the evolution of the meme appears to have come on Mar. 3 2008 when LiveJournal user joseph "the quiddler" quade (bleak_) posted a blog containing the video below with the title ""lmbo look at dat f--en dog" (in all caps) of a dog jumping with the song "Pump it Up" by Noikokyphs Amyntaio.


This was reposted in Mar. 27, 2008 era post in the Something Awful (SA) forums (under BYOB Goldmine).  Entitled "lmbo look at dat f--en dog" posted by user DannoMack.  The theme stayed alive via a similar parrot-themed post "lmbo look at dat f---en parrot" on You're the Man Now Dog.

The rest of the history is written elsewhere -- on Oct. 18, 2010 a post entitled "LMBO LOOK @ THIS F--KEN DOGE" was added to the /r/Ads Reddit subpage by papajohn56.  The dog pictured this time around was a Corgi.  The original content is no longer available, but it's possible it was this video from daily Corgi.  Soon "doge" themed blogs starting popping up on tumblr. 

Doge hipster
A hipster "doge" shows the trademark stylings of the meme in its Shiba/e Inu themed iteration.
[Image Source: Reddit]

Then along came a tumblr about Shiba Inus (a breed of Japanese dog) entitled "Shiba Confessions", which focused the discussion on Shiba Inus speaking in humorous, at times cryptic Engrish, exploiting the fact that "doge" sounds a little like an Engrish spelling.

III. From a Joke to a $130M+ Digital Fortune

Dogecoin was first conceived by a Sydney, Australia-based graphic designer/marketer named Jackson Palmer (@jacksonpalmer).  Mr. Palmer is relatively known for his day job in which he works at Adobe Systems Inc. (ADBE) marketing the company's "Business Catalyst" (BC) product.  Here's a video of Mr. Jackson published by BC Gurus:


Entertained by the public fascination with bitcoins, he decided to spoof them with one of his favorite memes ("doge"), tweeting that bitcoins were oh so très passé and that he suggested users instead invest in the "dogecoin":
Encouraged by friends who thought it was hilarious he photoshopped what a "dogecoin" might look like, and bought the domain name dogecoin.com.  At this point it was still a joke.

Ben Atkin (@benatkin) a student at Front Range Community College (FCCC) in Colorado encouraged Mr. Palmer to make it a reality.  He comments
He then posted to some dev buddies:
Doge Qt UI
The first iteration of the dogecoin Qt wallet/mining UI, featuring the trademark "doge-speak".
[Image Source: Billy Markus]

Mr. Palmer, encouraged, reached out to a Portland, Oregon dev. friend, Billy Markus (@BillyM2k):

Four days later they had a working mining client in Qt (Windows, Mac) and wallet app, and they announced their work. In a Spelunk.in interview he explains:

The timeline was pretty quick. I tweeted at Jackson Thursday, finished the coin Saturday, then we released on Sunday.

Dogecoin
"dogecoin" (DOGE) is the internet's first meme-based cryptocurrency. [Image Source: dogecoin.com]

The "currency" took off after the url and an accompanying forum post in Bitcoin Talk became a fast-spreading viral metameme earlier this month.  Currently a DOGE is trading for 0.04 BTC (source) making it worth over $21 USD.


Mr. Markus has since taken on a new alias going by the name Shibetoshi Nakamoto (SHIBEtoshi -- get it?), a play on Bitcoin's shadowy, anonymous creator Satoshi Nakamoto.  Unlike the BTC creator, who people have been trying to guess at the identity of for some time now, the DOGE creator wasn't quite so careful at covering his tracks, leaving a bit less mystery.
 
There's still a bit of mystery as he isn't exactly a prolific online figure, however, his reddit account posting reveal that he was working as an engineer at International Business Machines Corp. (IBM) [post]:
Billy Markus beaverton

...and further evidence comes from his inquiries in whether Mozilla was hiring in Portland [post]:

Billy Markus Portland

It's possible he no longer works at IBM and is focusing solely on cryptocurrency as he was encouraging other cryptocurrency enthusiast to "quit their day jobs" in the chats on spt.vircurpool.com [thread]:

Billy Markus quit your day job

Also, if you search for his user name on Twitter, you can see that he's delete some tweets (perhaps in an attempt to offer a bit of mystery), but his account his actually quite old and contains much discussion of his interest in e-sports.  There's a cached version that matches up with his current professed interests, minus the dogecoin part.  I'm saving it here for posterity's sake:

BillyM2k

So while Billy Markus may keep a low profile he does appear to be only thinly disguising his actual identity.
 
IV. What to Learn From the Internet Turning a Joke Into a $130M+ "Currency"
 
The DOGE does raise some interesting points.  Its humor-driven theme certain alludes to deeper questions about cryptocurrencies in general.  The biggest question is that if it took DOGE's creators just a few days to create their currency, what's to stop the cryptocurrencies from flooding the market?
 
The answer is unclear.
 
But perhaps the answer lies in DOGE, which went from unknown to worth around $134M USD in a single month.  Was it because it played off the popularity of the "doge" meme?  Of course, but because now that's been done, the next meme-themed coin won't feel quite as fresh.

dogecoin
dogecoin's meteoric rise in value, may lead to criticism and doubts of crpytocurrencies in general.
[Image Source: Mydogecoin]

So it seems more likely that the lesson learned is that the potential for new cryptocurrencies is infinite, but user interest is not.  Even with the crazy created by bitcoins, you must find a new angle to leverage -- a new algorithm, something humorous or attention catching.

Further, as most of the coins (like DOGE) are traded on the same exchanges as bitcoins, and since very few of them can be traded directly for (U.S.) dollars, they can be viewed as somewhat of an extension of the bitcoin.  That's actually good news for the Bitcoin as it means that its legacy -- as a family of cryptocurrencies -- can grow in any direction it needs to, to accomplish new objectives, capture publicity, and achieve financial stability/acceptance.

Sources: dogecoin.com, BitCoin Talk [faq], Spelunk.in



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

RE: wow, cryptocurrencies on crack
By milktea on 12/19/2013 9:19:51 PM , Rating: 2
Totally agree with your comments about plutocracy. That's how our society is founded upon. And it's hard to change that.

But aside from that, the idea of 'decentralized' currency in itself is flawed, IMO. A decentralized system is very rewarding in the beginning, but in the long run, it would get out of control, becomes unstable, and crashing down in the end. There are many physiological and psychological factors effecting our global enconomy. The only way to ensure stability in the system (in the long run) is to have a 'centralized' authority regulating it.

Moreover, Bitcoin in itself is self conflicting. Its intention was to achieve a decentralized system. But when the time comes where the developer calls for a need for a protocol change, who has the say to make that change? That decision for change/update would become a 'centralized' decision, which is in conflict with the principle of Bitcoin.


By The Von Matrices on 12/20/2013 1:23:04 AM , Rating: 2
There is no developer controlling Bitcoin who can come back and change the protocol alone.

The Bitcoin protocol is completely democratic. Anyone can campaign for a change in the protocol. However, that change only gets implemented if over half of the miners "vote" for the new protocol by adopting it. Otherwise, the old protocol remains.


RE: wow, cryptocurrencies on crack
By JasonMick (blog) on 12/20/2013 10:02:59 AM , Rating: 3
quote:
But aside from that, the idea of 'decentralized' currency in itself is flawed, IMO. A decentralized system is very rewarding in the beginning, but in the long run, it would get out of control, becomes unstable, and crashing down in the end. There are many physiological and psychological factors effecting our global enconomy. The only way to ensure stability in the system (in the long run) is to have a 'centralized' authority regulating it.
I disagree with you on just this one point.

I think that there are three key economic/social debates that have been debated historically:

Centralization vs. Decentralization
Nationalism vs. Provincialism (vs. Anarchy)
Exclusivism versus Choice

Centralization vs. decentralization is essentially the debate of globalism vs. isolationism. In a global economy, whether it's digital or non-digital free trade weakens the control of any one nation, assuming that there's a balance of power.

It's true there's trade barriers and such. But the U.S., Britain, and others who at one point believed in economic isolationism lost that battle long ago when they started allowing foreign investment.

...............

In many ways the new debate is free vs. encumbered trade, which lies midway between the nationalism vs. provincialism debate and the centralization debate, in the sense that nationalism is typically used to justify encumbered trade, and provide a small resistance to decentralization the benefits a small wealthy elite.

Such trade barriers are antithetical to the spirit of capitalism. Capitalism seeks to establish a meritocratic free market system in which excellence is rewarded. Trade barriers generally do nothing except to manipulate trade to the interests of a small controlling elite, while raising cost of goods for the public.

.........

Nationalism vs. provincialism is perhaps the most important debate.

Most of the worst acts of the twentieth century were instigated by cleverly crafted nationalist hyperbole and fascist (in the general sense of the word) transfer of power and money to a small elite who invariably the nationalist state blindly entrusts power to.

By contrast provincialism -- while also exploitable -- is far less so as it operates on a smaller scale. This makes corruption more visible, and politicians more sensitive to the well-being of their constituency.. And also, simply put, there are less people to rob from, so even if there is some level of unfairness, money does tend to flow back into the local economy versus in the nationalist state where money tends to be horded by the plutocracy.

NOTE:
Federalism is being recrafted and misrepresented to be nationalism. Rather it's a framework of strong civil rights and free trade protections that a group of states (provincial constructs) adhere to, such that they can guarantee free trade and mutual security from outside forces with different philosophy.

Federalists may have fought with those who wanted no such framework, but in a modern context that debate has little to do with the bloated nationalist regimes that have arisen in the twentieth century (including in the U.S.)

..............

Lastly there's a debate over exclusivism versus choice.

Plutocrats always gravitate to exclusivism, because if they're the ruling nationalist state, if they can not only pillage their own land, but the world then they're the leech of all leeches -- the ultimate league of tyrants.

The Roman Empire and the British Empire for a time both looked to make their currencies and policies THE money and voice of the world. But they failed.

Now they U.S. is trying to do the same thing. But it's fading economically, at least in comparison with China.

As China flexes its muscle it may look to become the next global empire. But as others failed China will too.

.....................

Returning to bitcoin, I don't think the issue is one of exclusivism or centralization.

Inherently, as I said, all currency is relatively decentralized.

Rather it promotes a breaking of nationalism (to the benefit of provincialism) IF and only if it does not build a new plutocracy.

Further, it eliminates the trade barriers that are restrict a truly free, global economy.

There's no reason to fear cryptocurrency will promote exclusivism either. This multiple competing currencies. If my hypothesis regarding the importance of inflation to prevent early adopter power grabbing is correct, more will likely take to currencies with careful, responsible inflation schemes.

In such a more enlightened time, there will be many choices currency wide, all of which will be internationally usable and available. This will help ensure free trade and global stability.

And it will break the backbone of the dying nationalist movement, which seeks to divide mankind, when educated humans want the same universal protections and freedoms worldwide.

.........

You look at the EU's governing documents, Canada's, and our own Constitution and they really have quite a bit in common, civil liberties and trade-wise.

I hope that some day, when nationalism and plutocracy lay on their deathbed, after much strife, that we may realize that what it REALLY means to be Americans, Canadians, Europeans, etc. is a love for freedom, and that the world can adopt a global pact, akin to the Star Trek "United Federation" sort of treatise, which will guarantee a narrow set of globally recognized civil rights and provisions to prevent trade barriers within the states and provinces of the world.

At the same time provincial governments will continue to make sure that local interests are maximized and that slight differences in governance and social philosophy don't ruin the global league.

In such a future I predict that cryptocurrency and physical currency will merge, in the form of privately created physical currencies with digital means onboard. That way you will have the benefits of "real" money (harder to lose, etc.) but the perks of well-constructed cryptocurrencies (harder to manipulate, globalist, security, etc.).


RE: wow, cryptocurrencies on crack
By milktea on 12/20/2013 12:26:53 PM , Rating: 2
Thanks for your brief but insightful comments. I have no doubt that you strongly believe in your believe. But I still have my reservations in decentralization. Simply because we don't live in an ideal world. So such topic is still very debatable.

With regards to the existing cryptocurrencies, IMO, they are just casualties of what the future global currency would become.


RE: wow, cryptocurrencies on crack
By purerice on 12/23/2013 2:19:38 PM , Rating: 2
was brief sarcastic? :P

I agree on cryptocurrencies but about decentralization let's take two examples from real life.
Centralization of Germany has prevented German kings from ordering Germans to kill each other, but has also allowed an Austrian lance corporal to take over Germany and murder millions of non-Germans.
Decentralization prevented the Indians from establishing a unified voice to demand their rights against the early English and post-English settlers in the US, but also allowed India, South Africa, and Australia to gain relative independence from the British crown (they are still in the Commonwealth).

In short, centralization seems good for societies with primitive technological communication. As technology advances the risks of a highly centralized state outweigh the risks of a highly decentralized state. Likewise the benefits of a highly decentralized state outweigh the benefits of a highly centralized state.


"When an individual makes a copy of a song for himself, I suppose we can say he stole a song." -- Sony BMG attorney Jennifer Pariser














botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki