Be an early adopter now – is LiteCoin the new, fair BitCoin?
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Loading ...tl;dr – If you think Bitcoin is an interesting concept, at least in theory, consider a new fork of it, and start mining … this Wednesday/Thursday.
Little over a year ago, I blogged about Bitcoin, a new high-yield investment.
Since then, through ups and downs, its value has increased 5 folds.
.
Interpret this graph as you wish, Bitcoin has risen X5 in the last 6 months (I still think it will continue to rise, despite the price decline in the last few months).
Now, a new currency is poised to become “The Silver to Bitcoin’s Gold”. I think it has a shot. Introducing … LiteCoin (to be officialy released in a few days).
LiteCoin is extremly similar to Bitcoin. It also has a pre-set limit on the number of coins (84 million). The generation rate halves every four years, just like Bitcoin.
Its major feature, at least IMO, is that it’s fair:
- By now, a lot of people have at least heard of Bitcoin (certainly the readers of this blog), so they won’t take so much time to digest the idea. If you decide not to buy/mine, that’s fine, but it won’t be because you’re not aware of it.
- There are no per-mined coins, unlike some other alternative chains.
- You can actually mine them! When I learned of Bitcoin, I was disappointed to learn that they’re very difficult to mine. They require dedicated GPUs, which the official client did not support. Mining them wasn’t impossible, but it was much too complex, and simply wasn’t worth it for almost everyone that encountered them at this stage. Buying them was much more lucrative (for me, at least).
- LiteCoin uses scrypt, which cannot be run well on GPUs, and is intended to be “CPU friendly”.
- Windows binaries are already availble (on testnet, not functional until the release date) – you can prepare in advance, and don’t have to race other people to start mining first.
LiteCoin might succeed, and it might fail – just like Bitcoin. While I might buy some in the future (after an exchange starts trading in them), for now I’ll be content to mine them, starting either this Wednesday or Thursday. It’s dead simple – just download the client, and run it on your spare CPU cores. You can run it on a low priority, so it won’t boggle down your day to day work.
There is one issue – botnets. If this turns out very profitable, it’s possible botnets will use the infected hosts to mine LiteCoin. Still, it remains to be seen whether this will be a major impact or not. Not that even today some botnets mine Bitcoins with the GPUs of their infected host.
I find the very fact I can actually generate money on my computer exciting. It will not be worth a lot at first, but its value might appreciate, like Bitcoin did. I invite you to join the experiment and try it out for yourselves.
Important note – don’t run the miner without making sure your CPU is properly cooled. Even though summer is just ending, the core will run at 100% X how many threads you run. It should be ok as long as your computer case is properly ventilated.
P.S. – to premept any comments in the style of “Bitcoin is a scam”, please read Is Bitcoin a Ponzi Scheme? before posting. The same reasoning applies identically to LiteCoin.
Ron Gavriely:
I still prefer to donate my spare CPU time:
http://www.worldcommunitygrid.org
9/10/11, 23:29Bulanula:
DO NOT use these scam coins. Better donate your CPU time to a project like the World Community Grid. This is a total scam. Litecoin especially. You have been warned.
9/10/11, 23:32Mark:
I’m not sure any of these clone coins is going to succeed – the differences to bitcoin are all very slight really. Only a digital currency based on a completely fresh set of ideas will have any chance. The more clonecoins released the less interesting they become with each new one
@Ron Gavriely – Since bitcoin is money, you can also donate it too
10/10/11, 5:01Meni Rosenfeld:
What characterizes all alternative block-chain based currencies so far (Namecoin excluded, as it is fundamentally a DNS system rather than a currency) is the absolute cluelessness and lack of seriousness of their originators and followers. A tiny example is Litecoin’s demonstration of complete lack of understanding of the statistical properties of the way a number of block confirmations creates security (where, ironically, the truth of the matter works in favor of Litecoin). And don’t get me started on Solidcoin.
I think of all the work that went into creating Bitcoin. First there’s Satoshi, a man who by all accounts is a master of economics, probability, programming and network architecture. He devised an innovative design and spent years implementing it in an airtight way. He attracted brilliant developers to continue working on it technically and visionary entrepreneurs building businesses around it. It is still an uphill battle to get it accepted socially and economically. And that’s when there was a Bitcoin-shaped niche to fill.
And then there’s some schmo who thinks that by changing 5 lines of code and adjusting some design parameters he understands nothing about, he has created something that deserves to be even a blip on Bitcoin’s radar.
One day, there will have been identified several potential weaknesses in Bitcoin as well as features which may better suit different markets. Educated people who understand Bitcoin’s functionality and the challenges it faces will propose changes, but for some of them not manage to obtain consensus. They will gather and thoroughly think through a design for a new cryptocurrency which diverges fundamentally from Bitcoin. They will toil on implementing it and spend their time and money promoting it and building complementary services. It will experience the growing pains typical of a startup currency, but it will stand a chance competing with Bitcoin, and may find its place either supplementing or dethroning it.
This day has not yet come.
11/10/11, 0:04ripper234:
@Meni, so far LiteCoin seems different than the rest. Your one critisicim about it (besides not being innovative enough) is lack of understanding of block security.
From the LiteCoin announcement:
“We were impressed by the convenience of SolidCoin’s fast transactions. Although we know that fast confirmations are not necessarily as secure as Bitcoin’s slower confirmations, they are very convenient for small merchants who don’t need transactions to be super secure. The average Litecoin block takes 2.5 minutes, one quarter of Bitcoin’s 10 minutes. So if merchants wanted to be as safe as Bitcoin, they can wait for 4 times the number of Litecoin confirmations as compared to Bitcoin.”
Unless I’m mistaken, there are no flaws in this statement (assuming equivalent ratio of honest nodes/attackers).
11/10/11, 0:49Meni Rosenfeld:
The flaw is that with a given honest/attacker ratio, the number of blocks determines probability of double-spending success, not the amount of time. So 6 blocks in Litecoin give as much security as 6 blocks in Bitcoin, no need to wait for 4 times as many blocks.
Of course there’s nothing “wrong” with Litecoin, it’s basically Bitcoin but with a different hash function. This kind of understanding of fundamentals is just an example for what separates those who have what it takes to create a successful cryptocurrency from those who don’t.
To the extent that both GPU-friendly and CPU-friendly mining have their place, they needn’t be in separate currencies – see for example https://bitcointalk.org/index.php?topic=46423.msg555485#msg555485
11/10/11, 1:05coblee:
@meni, I believe you are wrong about the security of each block confirmation. I’ve thought about this a while now. The security depends on the time and not the number of block confirmations. Because in order to successfully pull off a double spend attack, you have hold 51% of the network for a certain amount of time. If a merchant decides to wait 10 minutes (1 bitcoin confirm OR 4 litecoin confirms) to make sure the transaction is good, in order to perform a double spend attack, the attacker would have to hold 51% of the total network hashrate for those 10 minutes in order to succeed.
To think of it another way, let’s take this to the extreme. Imagine if I designed a coin that targets block confirmations periods of 1 year. Let’s call that YearCoin. Do you still claim that 1 Bitcoin confirmation is as secure as 1 YearCoin confirmation? It took the whole network a year to find a YearCoin block! Once that block was found, how easy would it be for someone to double spend a transaction in that block? Wouldn’t you agree that a YearCoin block confirmation is a ton more secure than a Bitcoin block confirmation?
15/10/11, 12:25Meni Rosenfeld:
@coblee, you can do a double spend with less than 50% of the hashrate, but you’re not guaranteed success. You need to be able to build a branch from an old block which didn’t include the transaction you want to reverse, before the rest of the network gets too far ahead. The probability of success depends on your hashrate and the number of blocks the receiver waited. If you have 10% of the capacity, then your success rate is roughly 20% for waiting 1 block, 5% for 2 blocks, 1.3% for 3 blocks, etc. All this assume your relative hashrate is constant and, as I said, does not at all depend on the average amount of time it takes to find a block. This is all discussed in Satoshi’s original paper.
What’s special about >50% is that you’re guaranteed to succeed, eventually, no matter how many blocks are waited. But this result assumes you are in control indefinitely and doesn’t tell you how long it will take – and of course, the time it takes is random so if you only control the hashrate for a few hours you’re not guaranteed success. The greater your hashrate, the less time required / the greater the probability of success in a given time. It’s definitely not simply “if the merchant waits 10 minutes, the attacker should control >50% for 10 minutes”.
So, for the highly unlikely scenario that someone control >50% for a limited amount of time, the amount of time waited is the primary contributor to security. For the much more likely scenario that someone controls ~10% for an extended period of time, number of blocks is the relevant parameter.
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[…] the various alt-coins (Bitcoin forks), I have only promoted Litecoin on this blog, on October 2011 – it was a chance for early adopters to join in on an attempt […]
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