Cryptocurrency Auroracoin Given to Every Person in Iceland
by Nermin Hajdarbegovic / February 5, 2014
A team of Icelandic cryptocurrency enthusiasts is gearing up to launch an altcoin designed specifically for the population of Iceland. Auroracoin is a litecoin-based digital currency, 50% of which is pre-mined. This is where it gets interesting: the pre-mined coins will be distributed to the entire populace of Iceland starting on 25th March. Each one of the country’s 330,000 citizens will receive 31.8 auroracoins.
Iceland’s banking sector does not have a very good track record, and this appears to be the driving factor behind auroracoin. The team cites the government’s use of strict capital controls following the collapse of the local banking sector in 2008. These controls are still in effect, and the auroracoin team disputes the notion that they are good for the economy, or the people of Iceland for that matter, stating:
“These controls were supposed to be ‘temporary’, but as with so many government actions, they remain in place to this day. This means that the people of Iceland have, for the past five years, been forced to turn over all foreign currency earned to the Central Bank of Iceland.”
“This means that the people are not entirely free to engage in international trade. They are not free to invest in businesses abroad. The arbitrary use of power this entails and the unsustainable debt of the Icelandic government has created uncertainty and risk in all aspects of commerce. This has had a crippling effect on foreign investment, as foreigners in general avoid investing in Icelandic enterprises, because of the risk of not being able to convert their investment back into dollars or euros.” Digital currencies are one way of getting around the restrictions. In theory, they could allow consumers and investors to do whatever they like with their money, but only if the government does not step in. Auroracoin’s developers also point out that the Icelandic krona has lost 99.5% of its value since 1960 relative to the US dollar.
Print money, get out of debt
The trouble with the Icelandic financial system is not that it is in some way different than financial systems in other western countries, but that it was relatively small to begin with. Once the bubble burst, Iceland’s relatively small economy could not help and the country still finds itself in a world of trouble. That explains the devaluation of the krona, as the government can only service its debt if it keeps increasing the money supply, resulting in high inflation. Auroracoin is supposed to be distributed to the entire population by an “Airdrop” which should reach every citizen. That’s what sets it apart from other altcoins – it will have a large user base at launch, provided people take interest. This is, in part, made possible by Iceland’s extensive ID database. It is an interesting concept, but it might have a few problems getting off the ground. First and foremost, it will not be easy to reach the entire population and get them on board. Even if this happens, the government may choose to get involved, but it’s an interesting experiment nonetheless.
Iceland’s Auroracoin Passes Litecoin, Becomes Third Largest Altcoin by Market Cap
by Pete Rizzo / March 3, 2014
Auroracoin, the digital currency launched this February for use by the citizens of Iceland, has now passed litecoin to become the third-largest digital currency by market capitalization. At press time, auroracoin had a total market capitalization of $515m, roughly $162m more than litecoin’s $353m, according to data from Coinmarketcap. The price of auroracoin (AUR) currently stands at $47.08 on the company’s website. The quick spike in interest from investors has surprised even its creator Baldur Friggjar Óðinsson who has mixed sentiments about his coin’s meteoric rise. Speaking to CoinDesk, Óðinsson indicated that he believes the high value could be key to convincing more Icelanders to claim and use the 31.8 auroracoins his team will disperse to citizens later this month. Explained Óðinsson:
“What I did not expect was the sheer volume of speculation that would go on. I thought a market cap of $20m would be a huge success and enough to get Icelanders excited.”
The news of auroracoin’s ascent on the market cap leaderboard is particularly noteworthy given that digital currency is based on litecoin. Fifty per cent of all auroracoins have been pre-mined, and will be given out via an ‘Airdrop’ to citizens on 25th March. Claimants will be required to use state-issued ID numbers in order to receive the coins.
Speculation threatens community
Though undeniably excited about the interest his project has generated, Óðinsson says that this increase in value is not without its drawbacks. First and foremost, he worries of the effects excessive speculation could have on the success of this month’s launch.
What will all this speculation do to the Airdrop? My fear is that things are overheating.
— auroracoin (@auroracoinIS) March 3, 2014
This focus on speculation, Óðinsson reasons, may detract from the building of necessary infrastructure, as most current trading is being conducted by speculators, not involved community members. However, Óðinsson acknowledges that given the digital currency’s decentralized nature, there’s only so much he can do to ensure its ultimate success.
“People need to be able to do something with their coins other than just immediately sell them. This aspect of the coin can’t be centrally planned, it has to grow from the community.”
As evidence of auroracoin’s rise, major altcoin exchanges are rushing to add the hot listing to their offerings. In just the last week alone, auroracoin has been added to Cryptsy, Swiss Coin Exchange and Mintpal.
AuroraCoin has been added to the Exchange
— BigVern (@cryptsy) March 2, 2014
The increase in interest has been so rapid that auroracoin has faced operational issues with its website, that it suggested were due to its market surge.
http://t.co/RpRdFMX1lg website still out. Trying to resolve issues. Reason for outage here: http://t.co/9bw1fcnfNI
— auroracoin (@auroracoinIS) February 27, 2014
Community members have been noticing the resulting fluctuations, indicating thatthe price has been unpredictable in light of this increased attention. On these issues too, Óðinsson chose to take a balanced view. He recognizes that part of his goal with auroracoin was to open up Icelandic commerce to the rest of the world, and that such additions, while troubling for operations in the short-term, are necessary. “Auroracoin must grow bigger than just to serve the domestic economy. This is already happening,” he said.
Example to the world
Adding pressure to the project is that auroracoin doesn’t just have implications for Iceland. If successful, Óðinsson indicates that he expects more countries, especially those that have experienced a recent banking crisis, to follow auroracoin’s lead. Óðinsson did reveal that his team is currently preparing for the Airdrop, and that smartphone apps and other key complementary features are under development. For now, it seems, the March deadline will remain Óðinsson’s main focus. “There is only so much I can do, other than execute the Airdrop. The success of the coin is in the hands of the community,” he said.
Mazacoin Aims to be Sovereign Altcoin for Native Americans
by Danny Bradbury / February 6, 2014
Iceland may be the first nation to get its own cryptocurrency, but if Payu Harris has his way, it won’t be the last. This week, he hopes to mine the genesis block for mazacoin, an altcoin for the native American nation in the US. Specifically designed for the Traditional Lakota Nation, mazacoin is initially being targeted at the Oglala Lakota Nation, which is Harris’ own tribe. He works at Kimitsu Asset Management, which is focused on creating a bitcoin-based native American tribal cryptocurrency. Harris is launching the altcoin under the Bitcoin Oyate Project, and hopes it will give native American communities some fiscal autonomy.
“One of the favorite tactics used by the Dept of Interior and the local State Government is to threaten to freeze bank accounts if the tribe takes a position that could challenge a State or federal interest,” he alleged.
Harris argued that the tactic has been used several times before against tribes operating casinos. “An independent crypto currency would eliminate the State/Federal ability to freeze accounts and tamper with lawful tax revenues,” he said.
The mechanics of mazacoin
Mazacoin (MZC) is based on the Zetacoin altcoin, which is in turn based on bitcoin’s SHA-256 proof of work implementation. This coin will have a block target of 120 seconds, and a block reward of 5000 MZC. Unlike bitcoin, there won’t be a cap. The developers expect 2.4192 billion of the coins to be mined in the first five years, with a further million per year. Removing the cap is intended as an anti-deflationary measure. The coin won’t all be mined by the community, however; there will be a limited two-stage pre-mine. Harris said that this is meant to build up a reserve of the coins, so that others without the ability to mine can still be a part of mazacoin and can exchange goods and services for it on a local exchange. It’s an anti-hoarding measure, he suggested. During the first pre-mine, 25 million coins will be created for the Lakota nation as a cryptocurrency reserve, which will be used for future price stabilization. A second pre-mine will generate another 25 million MZC, which will be given to a new entity: the Mazacoin Tribal Trust. The Trust will award MZC grants to individual tribal members, businesses, or charities within the Lakota Nation. Grants will range up to 50,000 MZC for charities.
Anti-deflation is an important feature for a coin like mazacoin, which is designed to be used practically by the native American community, said ‘Anonymous Pirate’ (AP), an anonymous Canadian cryptocurrency expert and self-described hacktivist who created the coin for Harris. He also runs CryptoDirect, a trading site for altcoin miners.
“Bitcoin will always be useful, as a store of mass value like gold bars. But gold bars are not what you bring to the corner store to buy groceries,” said AP. “The ideal merchantable value for mazacoin would be between 3 and 5 dollars USD. That would make it portable and easy to use/adopt.”
Harris sees the pre-mine as a means of fairly distributing wealth. “The crushing poverty makes the redistribution necessary if we are to ensure that mazacoin is circulating in the tribal economy,” he says. According to the US government census, the median household income of single-race native American households was $35,410 in 2012. This is just over two thirds of the national average. 29% of native Americans were in poverty that year, which is almost twice the national average. One other way for tribal communities to get in on the coin is to mine it. Harris says that there is talk of a mining pool based on a tribal reserve, and he had been collecting donations for GPU-based miners.
Harris wants mazacoin to stretch beyond those borders to be used by other tribal groups. Governance of the coin will vary between tribes, he explains. “If a tribe forms a update or brings up a direction they feel is important, representative for each tribes Economic Development Administrations or crypto currency development directors can come together and vote on adoption by other regions or tribal governments,” Payu concluded. Mazacoin plans to mine the genesis block this week, and has scheduled a public launch for the coin on Feb 20th.