Will Darkcoin Have Thiel's Last Mover Advantage

post by diegocaleiro · 2014-05-23T21:39:41.483Z · score: -2 (14 votes) · LW · GW · Legacy · 40 comments

Thiel plays with the concept of last mover advantage when talking about what is valuable about Google and Facebook. His claim is that being the first social network (who knows what that was) is not, contra intuition, what matters, instead, if you are the last search engine or the last social network you win. 

Bitcoin is the first real cryptocurrency. But will it be among the last ones? 

Darkcoin, as Louie, Kevin and others told us a few days ago it would, has exploded. (Thanks for the money guys!)

I don't understand much about the properties that differentiate cryptocurrencies, but a few of Darkcoin's features seem very desirable. 

It has early incentive to increase because it is good for illegal markets and international transactions. This incentive is robust and absolute, non-traceability is binary, you can't be less traceable than untraceable. 

This is equivalent to Facebook starting off within the highest status social humans in the planet, young, healthy, wealthy and brilliant Harvard college students (compare to Orkut, which failed in great part because it spread worldwide too soon, allowing a lower social class (Brazilians, Persians) to overtake it, disincentivizing the elites to remain there).  

It has convention status. Its market cap has surpassed all altcoins besides Litecoin. 

This advantage was originally Orkut's (which is Bitcoin in the analogy). It is what MSN stole from ICQ, and facebook from MSN, and Whatsapp from all platforms. 

Effective altruists in particular should consider buying Darkcoin because the EA part of you should be less loss averse than the non-EA part of you, and Darkcoin is obviously a gamble to the extend the reasons I'm laying out here are false or insufficient.

Finally Darkcoin has a complex bootstrap reward system for owners of many Darkcoin, who can own masternodes,  and that is how Dropbox won, by creating a university level (copying Facebook's serendipitous "strategy") contest which would dramatically increase data storage of winning universities. Mine won and I have 30 Giga for free forever, for instance. 

There are other features that caused Facebook to win, or MSN to win. Are there features we want from a cryptocurrency that have yet not been captured by Darkcoin? Or are we witnessing a real last mover advantage in real time? 

 

 

40 comments

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comment by gjm · 2014-05-23T23:29:46.399Z · score: 31 (33 votes) · LW(p) · GW(p)

if you are the last search engine or the last social network you win

Isn't this because what makes you the last one is the fact that you won?

It currently looks as if Facebook is "the last social network", at least for the time being. Why does it look like that? Because everyone uses Facebook. I bet there were lots of other social networks launched after Facebook, but no one calls whichever of them was chronologically last "the last social network".

In which case, "be the last and then you will win" is useless advice, because it is equivalent to "win and then you will win".

comment by Aharon · 2014-05-24T07:38:07.069Z · score: 0 (2 votes) · LW(p) · GW(p)

Case in point: before Facebook became large in Germany, there was a carbon copy called StudiVZ (http://en.wikipedia.org/wiki/StudiVZ). It lost out partly because it came chronologically after Facebook - it wasn't able to map connections to people outside of Germany well, which Facebook could.

comment by ChristianKl · 2014-05-27T16:38:14.460Z · score: 1 (1 votes) · LW(p) · GW(p)

It lost out partly because it came chronologically after Facebook - it wasn't able to map connections to people outside of Germany well, which Facebook could.

I don't think that's a good description of why things played out the way they did. Friendster also died.

On the other hand Xing is still strong in the face of LinkedIn.

comment by Aharon · 2014-05-27T22:38:43.764Z · score: 0 (0 votes) · LW(p) · GW(p)

I probably should have emphasized the "partly". Of course, other factors also played a role in its demise, but they did try to gain footing in other European countries rather late.

Concerning Xing: Yes, you're right, this went very differently. It would be interesting to compare the LinkedIn/Xing and Facebook/StudiVZ situations to find out the differences and commonalities, but to do so in detail is beyond the scope of a comment, I think.

comment by diegocaleiro · 2014-05-24T16:18:00.616Z · score: -3 (7 votes) · LW(p) · GW(p)

The advice is: when faced with fully predictable startups, like cryptos, look for the properties that caused other startups to be the last one. When I did so I found convention to be powerful for social things, concentric distribution from an elite group or reason, and not being the first one. DarkCoin has those properties, and zerocash as someone pointed out will have some of them.

Sarcasm sign: But you can strawman what I said, compress it into useless tautological advice, and win some karma points for it, so why shouldn't you right? The point is winning karma, not believing true things, I keep forgetting :)

comment by gjm · 2014-05-24T16:37:44.197Z · score: 1 (1 votes) · LW(p) · GW(p)

For the avoidance of doubt: I posted what I did because I thought it was correct, not in order to get karma. (And I'm as surprised as anyone by how much karma I got for it.)

The advice still seems pretty tautological to me, I'm afraid, or at least rather obvious: look for startups that have ended up winning and see if you can see what they did right. Isn't that what everyone already does? (We could, I think, do with more looking at promising ones that have ended up losing and seeing what they did wrong. The winners are already highly visible and we aren't likely to forget to look at them; the losers, not so much.)

And I don't think I've ever seen such a thing as a "fully predictable startup".

[EDITED to add: I see that the parent comment of this one is getting quite a lot of downvotes. For the record, none of them is mine.]

comment by diegocaleiro · 2014-05-24T22:39:22.514Z · score: 0 (0 votes) · LW(p) · GW(p)

I'll write about fully predictable startups at the open thread, may be a useful concept, and may be a waste

comment by David_Gerard · 2014-05-24T13:33:07.528Z · score: 10 (12 votes) · LW(p) · GW(p)

This post comes across as publicity material for the coin in question.

comment by gwern · 2014-05-24T02:31:31.648Z · score: 5 (5 votes) · LW(p) · GW(p)

It has early incentive to increase because it is good for illegal markets and international transactions.

It will be interesting to see if there's any uptake. According to my latest data, only one of the Tor black-markets has announced Darkcoin support, and it turned out to be a scam (unclear if anyone ever paid using Darkcoin).

comment by metatroll · 2014-05-24T01:14:36.662Z · score: 5 (7 votes) · LW(p) · GW(p)

But there are so many more coins to come: Dawncoin (for Thelemites), Duskcoin (for Hegelians), Wrongcoin (for rationalists), Ritecoin (for reactionaries)...

comment by CronoDAS · 2014-05-24T02:27:03.411Z · score: 3 (3 votes) · LW(p) · GW(p)

I like Ponzicoin.

comment by ChristianKl · 2014-05-27T16:42:57.313Z · score: 1 (1 votes) · LW(p) · GW(p)

It's more than a name. Darkcoin has actually the feature of anonymous transactions that Bitcoin doesn't really have.

comment by jacob_cannell · 2014-06-03T07:08:59.493Z · score: 0 (0 votes) · LW(p) · GW(p)

Err - what about coinjoin?

comment by jimrandomh · 2014-05-23T22:58:01.912Z · score: 5 (7 votes) · LW(p) · GW(p)

There is a rumor that this coin was 50% pre-mined. If that's true, or if you don't know what this means, then you should not be spending your money on it.

comment by niceguyanon · 2014-05-23T23:12:01.870Z · score: 6 (6 votes) · LW(p) · GW(p)

Regarding what you are talking about:

https://bitcointalk.org/index.php?topic=560138.0

comment by ChristianKl · 2014-05-27T16:37:43.423Z · score: 1 (1 votes) · LW(p) · GW(p)

Why? Because the point of a currency is that miners make money? I think it makes sense to have the people who program the software make money.

comment by somnicule · 2014-05-24T05:09:33.998Z · score: 3 (5 votes) · LW(p) · GW(p)

The cryptocurrency I'm most excited about is ethereum, and though it is going to have a premine, development is being done in a very open fashion. It allows users to develop smart contracts that execute whenever they contract's address receives a transaction. I've already written a binary LMSR prediction market contract which could run on ethereum.

comment by gwern · 2014-07-02T16:45:39.128Z · score: 0 (0 votes) · LW(p) · GW(p)

I've already written a binary LMSR prediction market contract which could run on ethereum.

Looks like it uses centralized judges, skimming the code. Wouldn't Truthcoin be better to work on?

comment by somnicule · 2014-07-02T23:19:46.798Z · score: 0 (0 votes) · LW(p) · GW(p)

Yeah, lately I've been trying to implement TruthCoin's SVD voting algorithm in Ethereum. Had a few hiccups so I'm putting it on the back burner for now.

But, unless I did something to the code I've forgotten, the judge can be an arbitrary contract here. A panel of judges, a single judge, a simple proof-of-stake voting system, or a TruthCoin-like system, etc.

comment by Jayson_Virissimo · 2014-07-02T03:59:05.030Z · score: 0 (0 votes) · LW(p) · GW(p)

Is your prediction market code open source? If so, where can we find it?

comment by somnicule · 2014-07-02T04:36:43.142Z · score: 1 (1 votes) · LW(p) · GW(p)

Here, but it's not in working order right at the moment.

comment by Tenoke · 2014-05-23T22:59:28.489Z · score: 3 (3 votes) · LW(p) · GW(p)

It seems to me like if you follow this logic, the way more likely winner would be zerocash (not out yet), which is/should be significantly more anonymous (if not fully).

Effective altruists in particular should consider buying Darkcoin because the EA part of you should be less loss averse than the non-EA part of you, and Darkcoin is obviously a gamble to the extend the reasons I'm laying out here are false or insufficient.

This strikes me as very faulty reasoning, but I admit to not even being sure what exactly do you mean.

comment by diegocaleiro · 2014-05-23T23:09:16.546Z · score: -1 (1 votes) · LW(p) · GW(p)

The power of convention and having a large market cap will be all that DarkCoin can do to win.

I think of cryptocurrency as fully predictable startups. You know exactly how the CEO thinks. What you don't know is if a new startup will come.

When Zerocash gets in, people who think like me will put money into it, fearing that it will go up because it seems safer since it is layered on top of bitcoin (it is right?). So Zerocash will try to win by being attached to the global leader, whilst Darkcoin will attempt it by taking a larger portion of the market before Zero arrives.

EA's should be Lessrisk averse because if you are being selfish and you lose bigtime, you are doomed forever. If you are altruistic and you loose bigtime, its okay, someone else who took as much risk has just won bigtime, and they'll save the World for you in the meanwhile. In other words, if we are both trying to prevent Xrisk, what matters is how well we do as a whole, and everyone knows that humans are skewed towards being loss averse, so to win we must counteract this aversion.

Notice that there is one risk (X-risk) to which yes, being loss averse is correct, since X-risk effectively impedes the possibility of being altruistic, by leaving no mind behind towards which to be nice and kind or self to execute the kindness. X-risk is a total bummer basically.

comment by tut · 2014-06-01T12:49:10.103Z · score: 1 (1 votes) · LW(p) · GW(p)

EA's should be Lessrisk averse because ...

This is right for risks that you take and other EAs don't, but it isn't a good argument for all EAs to make any specific investment.

comment by Tenoke · 2014-05-23T23:25:28.273Z · score: 1 (1 votes) · LW(p) · GW(p)

When Zerocash gets in, people who think like me will put money into it, fearing that it will go up because it seems safer since it is layered on top of bitcoin (it is right?).

Nope.

if we are both trying to prevent Xrisk, what matters is how well we do as a whole..

True.

.. and everyone knows that humans are skewed towards being loss averse, so to win we must counteract this aversion.

I don't think that this is true in the investment world any more (let alone with cryptocurrency investments). It is getting to the point where high-risk high-return investments are getting overvalued [in some markets] since many players are looking for them. You seem to be a prime example of this overcorrection phenomena - recommending something purely because it is risky!

comment by Alicorn · 2014-05-23T22:29:09.942Z · score: 3 (3 votes) · LW(p) · GW(p)

I got Louie's newsletter and clicked the Darkcoin link but couldn't figure out how to actually buy any. What did I miss?

comment by radical_negative_one · 2014-05-24T00:11:46.900Z · score: 6 (6 votes) · LW(p) · GW(p)

Now that I'm curious about what I missed, where can I sign up for Louie's newsletter? I just spent ten minutes looking and I can't find it.

comment by lukeprog · 2014-05-24T02:35:39.962Z · score: 5 (5 votes) · LW(p) · GW(p)

http://rockstarresearch.com/

comment by lukeprog · 2014-05-24T02:35:03.750Z · score: 4 (4 votes) · LW(p) · GW(p)

I bought BTC with USD via Coinbase, then deposited the BTC from Coinbase into a newly created Cryptsy account, and then traded the BTC for DRK on Cryptsy.

comment by Tenoke · 2014-05-24T08:24:37.785Z · score: 2 (2 votes) · LW(p) · GW(p)

Make sure to also get a DRK wallet and to transfer your coins there in the end, instead of leaving it on Cryptsy.

comment by lukeprog · 2014-05-24T16:24:29.047Z · score: 0 (0 votes) · LW(p) · GW(p)

Any recommendations on where to get a secure online DRK wallet, a la a BTC wallet with blockchain.info?

comment by Tenoke · 2014-05-24T16:50:31.537Z · score: 2 (2 votes) · LW(p) · GW(p)

I don't think that there are any online wallets for DRK yet. At any rate, I wouldn't recommend you to use one even if some have popped up - I've personally been burned (and so was gwern) by the first online wallet for Dogecoin (Dogewallet) back in December.

My recommendation is to download one of the wallets from their page (I used darkcoin-qt for linux), encrypt it with a long passphrase (you will either be prompted to do so or there will be an option to encrypt it in settings), wait for it to sync, transfer your darkcoins to an address in the wallet, make a few backups (usually from file>backup) and optionally even delete the actual wallet and forget about it for a while (in case the wallet code has vulnerabilities).

This sounds like more work than it is, however, it really isn't and you really shouldn't rely on a buggy exchange like Cryptsy (or any exchange for that matter) for longer than you need to, nor an online wallet recently created by unknowns.

comment by gwern · 2016-01-15T18:23:50.844Z · score: 1 (1 votes) · LW(p) · GW(p)

This sounds like more work than it is, however, it really isn't and you really shouldn't rely on a buggy exchange like Cryptsy

To follow up a little on this: where there was smoke, there is fire. I swore off Cryptsy use after I noticed while trying to buy a little bit of Doge to hedge that Cryptsy was so buggy that it would let you go into negative balances. I discussed this on #lw-bitcoin with some other LWers also noticing bugs on Cryptsy; we decided that this bug alone was probably exploitable through trading but we didn't want to risk being wrong or committing a crime*. Some months afterwards, reports began popping up of Cryptsy being ban-happy and not letting people withdraw... Finally, the hammer has dropped.

Lo and behold: http://blog.cryptsy.com/post/137323646202/announcement They were hacked over a year and a half ago for 13,000 bitcoins. They had no cold wallet, and they ran all of the scamcoin daemons, written by con artists and random Internet people and used by a dozen people, on the same server as the real bitcoins, and all it took was one trojan dropped in a super-obscure altcoin to steal everything. Then naturally they decided to keep running fractional while lying their asses off to try to pull things back (how they ever expected to recover 13,000 bitcoins, I don't know, so probably they were lying about their motives too to keep the salaries flowing).

Priceless quote:

This worked fine for awhile, as profits decreased due to low volume and low Bitcoin prices, we would adjust our spending accordingly. It wasn’t until an article from Coinfire came out that contained many false accusations that things began to crumble. The article basically caused a bank-run, and since we only had so much in reserves for those currencies problems began.

* The bug was that you could sell an amount twice. So you could deposit 1 bitcoin, and buy 2 bitcoins' worth of an altcoin, leaving your account in a state of -1 bitcoin (!) and +2 altcoin. You couldn't withdraw until you repaid your -1 debt, but this still seemed exploitable. The exploit would run: deposit bitcoins; go into negative balance on Bitcoin by overbuying some volatile altcoin like Litecoin; if the altcoin happens to double or triple, you then cash back into Bitcoin for profits, but if it doesn't go anywhere, you can cash back at no loss, and if it drops, you just abandon that account and create a new one. In effect, you are speculating with free margin/leverage.

comment by diegocaleiro · 2014-05-23T22:51:52.010Z · score: 0 (0 votes) · LW(p) · GW(p)

Tripling your money in a week, assuming you sold today and bought that day.

Does anyone know how small the market cap of Darkcoin has to be for it to be the conventional currency for money laundering (with bitcoin in between of course)? This is when I plan to withdraw, when the marginal return of its most robust reason for winning becomes negligible.

How much needs to be laundered daily these days? Are there good sources on black markets?

comment by Dustin · 2014-05-23T22:31:43.773Z · score: 0 (2 votes) · LW(p) · GW(p)

http://www.darkcoin.io/getstarted.html

comment by Alicorn · 2014-05-24T02:12:48.601Z · score: 0 (0 votes) · LW(p) · GW(p)

Yes, I found that, but its link for "buy darkcoin" goes to the Moolah website, which doesn't have any obvious way to buy darkcoin with USD on it.

comment by gwern · 2014-05-24T02:25:54.766Z · score: 12 (12 votes) · LW(p) · GW(p)

Just a note for anyone considering going via Moolah: at the request of a third party, I recently spent a few hours digging through Moolah.io's online presence, shell corporations, domain names, and server fingerprints; I was left with an extremely bad impression of them - if Moolah is not itself a scam, it could turn into one at any time, and is likely technically vulnerable to the first skilled hacker to come along. (So a bit like MtGox.) If you ever use Moolah, make sure to keep your exposure to it as minimal as possible.

EDIT: see:

comment by Furcas · 2014-05-24T02:24:52.688Z · score: 0 (0 votes) · LW(p) · GW(p)

Once you've registered there's a link to their exchange, Prelude... which has had problems with account activation for a week. -_-

comment by CronoDAS · 2014-05-24T02:29:05.890Z · score: 2 (2 votes) · LW(p) · GW(p)

It has yet to be seen if Darkcoin can withstand a government crackdown.

comment by niceguyanon · 2014-05-23T22:49:39.543Z · score: 0 (0 votes) · LW(p) · GW(p)

If this newcomer delivers on what it promises, it would be a game changer. I haven't done much research on darkcoin until now, and found this anonymous source indicating that darkcoin's source will made open around June. My major concern if I was an investor would be whether or not when made open, will there be any major flaws and exploits? Predictions anyone?

Also, where can I read more?