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Jeff Garzik, a bitcoin pioneer known for his contributions to the digital currency's underlying code, has created a rival to the asset whose value he helped push into the stratosphere.
Bitcoin is being held back not only by its own limitations, as he sees it, but by the infighting that has become a permanent feature of the contentious community surrounding the digital currency.
Fed up with the politics and brinkmanship that ultimately, this past July, saw bitcoin split into two separate versions, Garzik decided to create a brand-new cryptocurrency, which he calls Metronome. Now, six months later, he is bringing it into the public spotlight. So we've got to front-load all this work. A case in point: The company hired not one but three auditors to assess its software.
As new coins and blockchain technologies proliferate, the need for them to be able to interact with each other has become a pressing issue. But Garzik thinks he has a better solution: Rather than merely making various blockchains interoperable, he wants to give them a common asset.
Metronome's MTN token doesn't have its own blockchain, as the two most valuable cryptocurrencies, bitcoin and Ethereum, do. The new cryptocurrency can jump from one blockchain to another. Instead of switching assets — selling bitcoin and buying Ethereum's ether currency, for instance — in order to escape the drama or risks associated with a particular network, people can simply move their assets to a new network.
That means Metronome could potentially be attractive to banks and payments companies, which have lately been investigating cryptocurrencies as a means of improving cross-border transactions. A cross-chain asset seems a natural fit. What's more, MTN transactions settle in 15 seconds, according to Garzik, whereas bitcoin transactions can sometimes take an hour or more, owing to congestion in the network.
You can even authorize someone else to withdraw from your MTN account within a certain timeframe and up to a set amount, allowing it to work as a joint checking account with better security features.
Bloq settled on a descending-price auction, open to all, as the fairest means of distributing the initial batch of eight million tokens. In this, Bloq is bucking the trend. New tokens are typically distributed through an unregulated crowdfunding method known as an initial coin offering.
But as the big money in blockchain tokens has begun attracting interest from big venture capital firms and angel investors, it has become relatively common for hot token projects to hold a pre-sale, at a preferred buy-in rate, for major investors. An additional two million tokens will be allocated to Bloq as compensation for developing the cryptocurrency, though Garzik says his company will receive none of the auction proceeds.
Instead, automated software called a smart contract will use those funds, while they last, to buy MTN on the open market, thus buoying the new cryptocurrency's price. There is no telling just how much money the token sale could capture. Yet many token creators, even while attracting investors, are striving not to have their creations seen by authorities as financial instruments.
By classifying them as "utility tokens" — something like paid API keys or memberships that grant their holder privileges on a given software platform — some token issuers hope both to navigate past the Scylla of the Commodity Futures Trading Commission, which has declared that bitcoin and its ilk should be considered commodities, and to avoid the Charybdis of the Securities and Exchange Commission, which in July announced its intention to enforce regulations against tokens that function like securities.
Garzik, however, is adamant that Metronome is designed to be money, like bitcoin. Fierce criticism The chief obstacle is obvious: The answer, if there is one, lies as much in Metronome's economics as in its technical features.
Whereas bitcoin has a hard cap of 21 million coins, Metronome's software is designed to mint new coins ad infinitum. Every day, 2, new coins will be the added to the initial supply of 10 million. But, unlike at a central bank, there won't be anyone with the authority to change the rules governing Metronome's issuance of new coins.
Not everyone is impressed. Online, in some corners of the cryptocurrency community, criticism of Metronome has been fierce. Michael Goldstein, a longtime bitcoiner and president of the Satoshi Nakamoto Institute, described Metronome as "another shitcoin" — the vulgar, colloquial term for a worthless token.
Another critic labeled Garzik "an ICO scammer. Goldstein is one of many so-called bitcoin maximalists, who believe the unique properties of bitcoin, including its limited supply, make it ideally suited to be a global currency or digital gold that will continue to grow in value over time. On Tuesday, he resurfaced one of Garzik's old tweets from August , in which the developer seems to be down on the whole notion of ICOs: In , though, others think the future lies in a multicoin, multichain ecosystem, even if bitcoin remains at its center.
And despite the growing popularity of digital currency — the number of users worldwide now rivals the population of small countries — there may still be time for a new winner to emerge. No drama ICOs have drawn criticism for their lack of oversight and in some cases for the perceived greed and overblown promises of the unproven teams behind them.
Cryptocurrency insiders often say that most new coins will eventually become worthless — "go to zero," in crypto parlance. Even technically sound projects with smart founders can struggle.
In part, this statistic merely reflects the fact that the software platforms associated with many tokens have yet to launch. But, clearly, hundreds of tokens are being bought and sold on speculation alone. Metronome, said Garzik, is "not going to be drama-driven.
While the MTN token will launch on Ethereum, it will soon be compatible with Ethereum Classic, Rootstock a "sidechain" of bitcoin and Qtum, another cryptocurrency network, according to a press release. It remains to be seen whether Metronome can attract users, but Garzik is confident it will prove to be a more elegant solution than mere blockchain interoperability.
You've still got some friction and some cost, possibly a middleman involved in going from a litecoin to a bitcoin, or a bitcoin to an ether," Garzik said.
Bitcoin pioneer Jeff Garzik said Metronome is the result of "years of experience and lessons learned and a [clean] sheet of paper. Partner Insights Sponsor Content From: Bitcoin and the Fight for the Future of Finance.
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