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Recently there has been significant online discussion about the value of virtual currency in general and also specifically the day to day value of Bitcoin. Will Hernandez’ post “Andreessen: Bitcoin’s viability is not based on day-to-day value” in particular has sparked much discussion. It quotes Andreessen as making points in three key areas: bootstrapping, innovation, and what might be best called “age of the universe.”
Boostrapping a virtual currency
All online currencies face the problem of getting started from scratch. Andreessen points out “Bitcoin was specifically designed to use speculation early on to overcome the normal chicken/egg bootstrapping problem for new networks.”
Despite the recent price drop in Bitcoin, no one can argue about the success of this approach. Bitcoin has become a viable virtual currency in part because of this strategy. However, this approach has also produced two problems: (1) a focus on speculation has disproportionately rewarded people who, often quite randomly, were early adopters, even if they are doing nothing to further the growth of the coin, and (2) any significant price drop risks a catastrophic failure of support.
Therefore, zippcoin has deliberately taken a very different approach to bootstrapping: (1) distribution through universal weekly allowance (i.e. all accounts get a basic allowance) and (2) rewarding those who promote zippcoin by spreading it to new users.
Yes, people who sign up for zippcoin earlier will receive more than those who sign up for zippcoin later. So, yes, early adoption is still rewarded. But someone who signs up 3 months after someone else will, after 1 more year, will have still received nearly the same allowance of the earlier user, not 1/10th or 1/100th or 1/1000th as much.
Furthermore, and even more importantly: any user, no matter when they joined, if they are actively involved in spreading zippcoin to new users, can quickly accumulate more zippcoin than someone who joined earlier but is passive.
Andreessen rightly celebrates the creativity being applied to the Bitcoin economy. “The [current] price of BTC has very little to do with the level of creativity of thinking that’s going into new Bitcoin apps, or their usefulness,” he writes.
The zippcoin team couldn’t agree more. Creativity will make all the difference. After all, Bitcoin, zippcoin and all other virtual currencies are all, at the core, just big experiments. The day to day price can be a bit of a distraction. The most innovative will be those that will win.
The third point that we’d like to address is Andreessen’s recognition of what might be called “the age of the virtual currency universe.” “The entire Bitcoin system is 6-years old,” Andreessen said. “TCP/IP was 6-years old in 1981. Big things take time. Onward!“
Again, the zippcoin team couldn’t agree more. While Bitcoin is only 6 years old, zippcoin… is only 2 months old! Big things do take time, and they take work: projects must evolve, problems must be solved and improvements must be made. There will be stumbles, but getting up after a stumble and continuing on is what creates breakthroughs.
Interested in the zippcoin experiment and want to participate more? Let others know about the experiment and invite them to join.
Interested in the zippcoin experiment but not sure what to make of everything? Just sign up and wait and see what happens.
Interested in the zippcoin experiment and have an idea for zippcoin? Just try it! Need support for an experiment? Email the zippcoin team at support@ and ask!
- The zippcoin team