Battlestar coin - an unashamedly proud altcoin copy

(For good reason)

During my tenure as the project manager for, what was then, SuperNET’s first multiwallet GUI development and launch, I had established a productive working relationship with a number of skilled coders and designers which led me to approaching some of them with a simple proposition.

If they were to create a new coin which offered straightforward dependable functionality and were willing to cooperate with the development team of a commercial application, committing to implement any required modifications or maybe even migrating to an entirely new codebase if needed, this cryptocurrency would be used to form part of an economic model with, that rarest of beasts, a viable value proposition.

The excellent v3 codebase from Blackcoin was chosen as the basis for the new coin due to its long history (in cryptocurrency terms) of security, reliability and the fact it omitted the problematic ‘coin age’ from the staking algorithm.

By having a fixed reward-rate per block, and no ‘coin age’, the creator of the Blackcoin codebase, Pavel Vasin, incentivised consistent staking and removed the risk of an attack on the blockchain from very-heavily-weighted aged coins requiring less than 51% of the supply to cause a fork. A fixed reward per block also means that there is an ever-decreasing percentage-rate of new coins being added to the entire supply over time. Deflating inflation, if you will.

But, while the devs were happy to sign up, I needed another element in the puzzle, the community. This eclectic mix of online personalities ranging from confident and patient speculative investors who understand the nuances of RL business, through to impatient often-short-tempered FUDders who frequently complain about a cryptocurrency not increasing in value to their liking and drilling the dev team for updates and enhancements to the wallet.

They would form the open-community free-market side of the arrangement, an important element in the macro-economic financial model we intend on implementing with our app (more about that in a later article). Establishing price discovery through expressing their confidence, or otherwise, in our operation and serving as active critics, keeping the coin project on its toes to address any shortcomings. In return for their participation in this coin’s open market they would not only likely be speculating on the value of their holdings increasing they would, if they were willing to help secure the network through the process of letting their wallets ‘stake’, have the opportunity to receive additional coins as rewards for any blocks they ‘mined’.

The question of how to actually distribute the initial supply of a Proof-of-Stake cryptocurrency, however, remained. Unlike Proof-of-Work blockchains such as bitcoin, which have a regular emission of coins steadily releasing from the genesis block onward, PoS blockchains generally require that the entire supply be created from the moment of launch. The subsequent activation of the block reward providing for a suitable staking incentive without flooding the market with an excessive inflation rate of new coins.

It is this initial distribution of coins which presents a number of potential pitfalls:

  1. If they are sold off to buyers as being a totallynotasecurity-token, in the vein of it being done under the guise of some sort of ‘crowdsale’ early-access buy of tokens-of-future-utility, there is a transactional element whereby the seller is contractually obligated to the buyers to deliver the expected platform these tokens will be used in. Or the seller has to draw up onerous Terms & Conditions which essentially require the buyers to agree that nothing might ever be delivered and that which is delivered could suck so bad that nobody wants to use it. You would be amazed how many ICOs and ‘token’ sales have drawn in millions of dollars worth of investment with T&C’s which said exactly that.
  2. If they are sold as coins or tokens with anything approaching a hint of the seller implying a future increased value beyond the initial ICO price, then they are undoubtedly securities. That absolutely complicates things. In fact it makes the process so complicated that multiple ‘three-letter’ government agencies tend to want to get involved. Either from the outset or, when it comes to projects who preferred to run their securities sale on the principle that it is better to ask for forgiveness than permission, many months later and likely with serious-sounding warrants and accusations of procedural violations being bandied about. You would probably not be amazed at how many ICOs and ‘token’ sales have now drawn down the wrath of the authorities, demanding the project be halted, subsequent to their raising millions of dollars worth of investment.
  3. Give them away! Otherwise known in cryptocurrency circles as an ‘airdrop’. An interesting premise which simply has the initial coin supply being handed out for free to anybody who wants some. It sounds a bit counter-intuitive but some projects have sought to avoid the previous two legal-minefield scenarios by opting to establish their initial community of holders without actually receiving any funding in return. While this does solve the problems created by selling the coins supply, it creates a new problem entirely, namely, nobody has anything invested in the coin and, subsequently, no incentive to do anything other than dump whatever they have received for the best price they can get.

But there is another way which solves all the above problems and it is one the new coin’s dev team agreed would be the most effective route towards establishing a vested interest without actually selling anything…

…A coin ‘burn’

While it does sound rather dramatic, it is simply the process of sending coins (from a different cryptocurrency) to an address on its blockchain which cannot be spent. They are essentially ‘stuck’ and no longer in circulation. Each participant’s proportional percentage of the total amount of coins burned during the process equates to the share they will receive in the distribution of the initial coin supply of the new cryptocurrency.

By there being no actual transactional sale of the new coins, but a very real cost to all the participants in the distribution, you avoid the contractual obligations, the legal minefields, or the lack of perceived value and create the incentive for recipients to support the network, the project, the community or at the very least, to perceive their holdings as having a sufficient degree of value that they are not inclined to dump-down-to-zero.

So that is what was done. One of the devs from an existing long-standing cryptocurrency project, Bitstar coins, agreed to handle the process and its community were offered the chance to participate in this burn and receive a share of what would be called, Battlestar coin - An entirely-experimental proposition of private enterprise/public community collaboration.

The new coin was successfully launched and now belonged to its own community which we, having participated in the burn process ourselves to secure what was needed for our platform, had also become a part of. They would do their bit in staking their wallets or doing a little trading, while we cracked on with the RL work of developing the mobile platform and reaching necessary agreements with third-party game developers.

While no side has any obligation to the other, both have an incentive to make this process a success. The establishment of a game-theory-dependent relationship.

Coming next . . . how it all fits in with MODN METL