How To Create Your Own Cryptocurrency 203
mspohr writes "Since the code for Bitcoin is open source, we have seen the creation of various Bitcoin clones and enhancements (Litecoin, Dogecoin or Coinye West, anyone?... There are about 70 listed on this site.) This article explains the process of making your own. Thanks to Matt Corallo, a veteran Bitcoin developer, you can easily create your own at coingen.io. He has automated the process of modifying the source code to create custom currencies. Just enter in the name for your new currency, a logo image and set a few parameters (or accept the defaults), and you can have your own cryptocurrency. Source code and some customizations cost a bit extra. Once you have your own 'coin,' you just need to convince people that it is worth something."
Re:There's one born every minute. (Score:2, Informative)
50 shades of Coin, or 50 Coins of Gray?
because another worthless piece of data pushed by an exceptionally successful marketing campaign should be the reference.
Re:Is he really a "sucker"? (Score:5, Informative)
What happens when Bitcoin goes over $2000? Or what happens when it goes over $50,000? Or what happens when it goes over $200,000? [...] Only time will tell, my friend. Only time will tell.
Good luck with that. [arxiv.org]
Re:Lame. (Score:5, Informative)
Re:It's a nice idea. (Score:5, Informative)
> Mining seems to just waste energy,
No, mining is "proof-of-work" to enable reaching consensus on the order of transactions. This is necessary to prevent spending a balance multiple times. Only the first spending event counts. It is done by searching for hard to find hashes for a block of transactions + the hash of the previous block + a random number you insert until you meet the hard-to-meet condition (a low hash value). Using the hash of the previous block as part of the data for the current block puts the blocks in sequence, so you can know the order of transaction events. Attempting to change any block contents, such as altering transaction values or adding another transaction will change the hash, so it no longer matches the value stored in the next block. If you attempt to find a matching hash for your altered block, now the second block will no longer match the value in the third block. You end up having to find hashes for every block after the altered one up to the last one.
By making finding hashes so hard that the entire mining network can only succeed every ten minutes, you force everyone to collaborate on the search, leaving no computing power to generate an alternate history of transactions. The longest chain of blocks had the most work put into it, and thus represents the consensus of events.
If you can figure out another way to ensure digital transaction data isn't altered, great, you can become famous. Nakamoto's big invention is chaining hashes + requiring work to find the hashes, so that altering the data would require even more work. As long as a majority of the network is honest, a hacker can never catch up.
Re:Is he really a "sucker"? (Score:2, Informative)
A "wise speculator" stays the hell away from "assets" which have no intrinsic value and whose valuation depends entirely upon the actions of fools. If you plan to gamble on the markets, there are plenty of opportunities which aren't as risky as cryptocurrencies. They're "assets" whose value could collapse to its natural value -- zero -- at any time, without any warning, for no particular reason.
At least during the classic tulip runup, what was being bought and sold was an actual scarce resource -- beautiful tulip bulbs which didn't breed true because their color patterns were a product of infection by tulip mosaic virus. These tulip bulbs had real world value, because real end users of tulips would pay more for uniquely beautiful flowers. If I understand things correctly part of the speculation was based on futures trading, essentially gambling that particular growers would be able to outdo themselves in the next crop. The speculation did of course reach absurd levels, but at least it resulted from real demand for a real thing.
Bitcoiners have decided to skip the real product, have imposed a completely artificial and arbitrary scarcity on the virtual product (one which wrecks its utility as money, which is supposedly the end goal of the project), and have made the production of coins flagrantly wasteful of energy, setting piles of real resources on fire (and thereby polluting the atmosphere) for no reason beyond pretending that they're suddenly super rich. Each bitcoin therefore has negative real world value, not positive, and yet they're being traded as if they were precious metals. It's another tulip bubble but at warp speed, with missing steps, and far more delusional "investors".
Besides all that, it's also really hard to execute trades quickly (see: the infamous Mt. Gox lag that mysteriously kicks in whenever the price begins cratering) or get real currency out of the bitcoin marketplace. There is an enormous risk of losing your shirt even if you make nominally "correct" decisions about when to buy and sell.
Re:Errors in Paper (Score:5, Informative)
The correct date is approximately 2140 AD. The reward per block started at 50 BTC and is cut in half every 210,000 blocks, which nominally takes about 4 years. After ~130 years you have done 33 halvings, so the reward is 50 / (2^33) = 0.58 Satoshi, where 100 million Satoshi = 1 bitcoin. Since the smallest unit in the bitcoin transaction system is 1 Satoshi, the reward becomes too small to measure, and thus mining for new coins stops.
This is closer but still incorrect. All accounting in Bitcoin is performed with integer arithmetic. The reward per block started at 5,000,000,000 satoshis and is right shifted by one bit every 210,000 blocks. The reward does not become too small to measure - it becomes precisely zero.
Re:Is he really a "sucker"? (Score:4, Informative)
You have to trust some exchange. Otherwise where are you going to get your BTC, and how are you going to spend it? Mining today is not for common people. On the spending side, there are a few businesses that take BTC - but they rarely sell what you need (usually it's services that cost very little to provide, like hosting.)
Trusting the exchange means that you need to send your country's currency to a faraway country. The exchange there operates without any oversight, and it is only due to goodness of their heart that they send some BTC into your wallet. The same happens in the opposite direction: you send them your BTC, and in return, at some later time (soon or not so soon) they will send you the national currency - that you may have to explain to your country's tax authorities.
The exchanges are not immune from more common financial difficulties - here is one story [wsj.com] as an example. Exchanges are not insured, and they can crash and burn at any time. Sending money to them always carries a high risk of never seeing the money again. This is far less of a concern with a bank, where you have a contract and where your money's path is traceable.
Note that both conversions (to and from BTC) cost you money; and the BTC transfers themselves also cost money [bitcointalk.org]. BTC was always claiming that fees are optional and symbolic, but none of that appears to be true today, as mining turned into a for-profit business with hefty investments and running expenses. In the end, the service (BTC or bank) will cost you something because the work has to be done, somewhere and by someone, and the BTC not a network of close friends anymore. People are in it for money, and guess whose pockets that money is supposed to come from?