Bitcoinereum Deceptively Claims it is Mineable
Today on Cointelegraph, one of the more mainstream crypto news outlets, a sponsored article was run about a token called “Bitcoinereum”. According to their website, Bitcoinereum is “The First Bitcoin Minable ERC20 Token on the Ethereum Blockchain.” This is a bold claim by the token, considering that it is not mineable.
The token, which has no whitepaper associated with it, uses a function called “Mine()” that anyone can call in order to be given a piece of the reward. Like Bitcoin, approximately every 10 minutes 50 tokens are distributed, with a halving reward that is described on the website as occurring “every 4 years”; they don’t bother to elaborate how that 4 years is calculated empirically.
The glaring issue with this type of “mining” is that there is no competitive market that is formed by the intersection of mining difficulty, energy costs, and hardware efficiency. You never really mine, instead you just keep spamming a contract function until you receive the reward.
This distribution system strips away all the economic equilibrium that is associated with competitive cryptocurrency mining since it replaces the act of expending resources with a gimmick. A Sybil attack is almost trivial on this type of contract, since the contract has no way to know if all the different addresses it interacts with are actually from different users or just one user who has the best and fastest script to get his transactions in efficiently and cheaply.
Bitcoinereum is very reminiscent of Minereum, another ERC20 token that claims to be “the first ever self mining Smart Contract Token” according to their Bitcointalk ANN. But, a close look at their white paper (PDF warning) reveals a number of stipulations that only serve to increase centralization and reward developers and early supporters with rare “genesis wallets.”
It is peculiar that a paid article was run on Cointelegraph about Bitcoinereum, which is seemingly dead on all exchanges, forums, and social media. But what’s not peculiar is the death of a token that pretends to be a Bitcoin-like currency while abandoning the basis for its scarcity, resource intensive mining.
Fortunately for the rest of us, 0xBitcoin already exists as the first truly mineable Bitcoin-like token on Ethereum. Following the EIP918 standard, 0xBitcoin is actually mineable in the truest sense of the word, hashrate stats and all. As it turns out, a mineable currency is only valuable and useful if it’s actually mineable.
For a more formal critique of the Bitcoinereum code and the flaws in its distributional algorithm, see this post by Infernal_Toast, the author and deployer of the 0xBitcoin Contract.
