Crypto-Current (071)

§5.8734 — The earliest alt-coins were Bitcoin project forks (or ‘source code forks’).[1] With the open-source Bitcoin protocol – and its mutant descendants – available as hereditary material, they introduced variations to optimize different parameters, by changing the balance of trade-offs between features such as transaction speed, pseudonymity, resilience, and trustlessness. In this way tokens could be flavored to different preferences, in a process of niche exploration. Within this context, Bitcoin’s very substantial market dominance tends to vindicate the pattern of optimization locked into its protocol. Alternatives are comparatively unattractive. …

§5.87341 — Alt-coins, then, attend Bitcoin. They are part of what Bitcoin has brought about. In keeping with this, alt-coins have promoted themselves, typically, as ‘Bitcoin 2.0’ developments of the crypto space. This can mean supplementing Bitcoin, by directing blockchain-based token systems at a variety of specialized functions, and traits. It can also mean deepening the stack, by layering applications upon the Bitcoin blockchain infrastructure. Between Bitcoin and alt-coins, then, there is general – and often strong – complementarity. That synergy exceeds competition is also the market verdict. Price movements of Bitcoin and alt-coins are positively correlated. They share a fate.[2]

§5.8735 — From the mid-second decade of the new millennium, the complexity of the alt-coin ecology had grown to exceed any convenient oversight. There were already far too many coins, doing too many different things, in too many different ways, to allow accurate summary. Nothing beyond suggestive – though non-random – sampling is realistic here. Due to their remarkable diversity, Namecoin, Ripple, and Ethereum, examined briefly in series, are able to provide a rough sketch map of the alt-coin territories.


[1] A ‘project fork’ is a mutant copy. Source code is repeated, with variation. It thus tends to produce lineages analogous to those resulting from biological evolution. Abstract Darwinian dynamics are then to be expected from it. Forks of any kind are speciation events.

[2] Alt-coins are the worst way to hedge against Bitcoin.

Crypto-Current (070)

§5.8733 — What have we seen so far? The most striking phenomenon has been a massive – and surely unprecedented – proliferation of monetary tokens. Alt-coins began to appear within a few years of the mining of Bitcoin’s Genesis Block (03/01/2009).[1] Namecoin and Litecoin arrived in 2011, Peercoin in 2012. The year 2013 saw the release of Dogecoin, Gridcoin, Nxt, Primecoin, and Ripple. That July, Mastercoin[2] – conceived as a supplementary protocol layer supported by and enhancing Bitcoin – held the first token sale (or Initial Coin Offering). Exponential growth continued into 2014, as Auroracoin, Dash, MazaCoin, Monero, NEM, NEO, PotCoin, Stellar, Titcoin, Verge, and Vertcoin, among others, deepened and broadened the product stream. Ethereum was introduced – and forked – in 2015. Tether appeared in the same year. Seven years into the crypto epoch, then, alt-coins had established themselves as a conspicuous part of the emerging monetary landscape. In the final years of the decade, the upward curve of the alt-coin economy would sharpen still further. 

§5.87331 — While many alt-coins are of questionable value – and not occasionally outright scams – the flood of varied crypto tokens promoted an economic innovation of scarcely deniable importance: the ICO. An ICO – or initial coin offering – raises start-up funding through money creation. The absolute sums involved remain quite limited when compared with more conventional methods of business funding, but the trend lines have been remarkable. The socio-economic originality of the ICO is yet more remarkable.

§5.873311 — ICO revenues amounted to less than US$80 million in 2016. On a monthly basis, they peaked in September, at a little over US$21 million. The take-off year was 2017, which saw a thirty-fold increase. During the second quarter of that year, they were more than doubling each month (the pattern broke in July).[3] Over the whole year ICOs generated revenues worth over US$2.4 billion. The peak was reached – once again – in September, when US$537 million was raised. The month of June 2018 saw an extraordinary US$4.17 billion reaped by ICOs, almost entirely for EOS,[4] contributing over two-thirds of the year’s total US$6.21 billion. Between spring 2016 and fall 2017, total alt-coin market cap rose from slightly under US$26 billion to over US$409 billion.

§5.873312 — An ICO is pure seigniorage. It thus restores to businesses an economic function which had been entirely alienated to the state. Unlike an IPO – the Initial Public Offering of a private company – an ICO executes a currency exchange, of a special kind.[5] The targeted (‘offered’) coin is characterized by its elevated virtuality. It has not yet, or actually, been in circulation prior to the ICO. Its value is thus discounted for risk, and for viscosity. This asymmetry on the actual-virtual axis – which is to say, in time – does the work of the ICO. Through it, the coin-releasing venture acquires actuality, bringing itself forward. Understandably, then, the ICO has been understood as an incremental advance in the formalization of an essential capitalistic function. Resourcing enterprise, through credit and then stock markets, was always an actualization mechanism. The difference lies in ever more overt and thoroughgoing monetization. Making money and making a currency communicate across a condensing continuum. Generalization of the ICO suggests eventual fusion. The end-game is for every economic project to be denominated in its own terms. At such a point, financing and currency proliferation fully converge. A new and distinct monetary epoch would not only have been initiated, but accomplished.


[1] A selective list and brief description of alt-coins is provided in the apparatus. Since over a thousand alt-coins had already been released by spring 2018, an exhaustive treatment is entirely infeasible.

[2] Mastercoin was subsequently renamed Omni.

[3] Source: https://www.inc.com/john-koetsier/ico-bubble-startups-are-raising-hundreds-of-millio.html

For month-by-month 2016-2018 aggregate ICO revenue numbers, see: https://icowatchlist.com/statistics/year

[4] EOS entered the crypto space with its EOSIO blockchain protocol, as a platform for smart contracts and decentralized applications. It competes most obviously with Ethereum. The coin peaked in May 2018, with a market cap of US$15.5 billion. Almost 90% of this value had been lost by the end of the year. … The EOS.IO white paper can be found at: https://github.com/EOSIO/Documentation/blob/master/TechnicalWhitePaper.md

[5] The difference between an IPO and an ICO is not simply qualitative. Shares, too, are money, though at a comparatively low level of intensity. (More precisely, but still vaguely, they are included in Mn where n is undetermined but > 4.)