Last time, I discussed factors that make a coin unattractive to invest in. This article will kick off the start of a series where I rate coins based on those criteria. Let’s start off with megacoin (美卡币), shall we? Launched just shy of 4 months ago, megacoin has been quite successful, reaching a market capitalization of $325,000 at the time of writing. But beware, not all that glitters is gold.
First off, megacoin is a simple litecoin clone, with no real innovation to speak of. Which is not a problem in of itself, but the history of this coin makes it one of the well orchestrated scams in cryptocurrency history.
One of the most damning issues surrounding megacoin is the way in which it was launched. You see, megacoin originally launched without source code, in the height of altcoin frenzy; a period during which new coins were release daily. Around this time period, altcoin clients embedded with bitcoin wallet stealers started popping. This combined with the very amateurish logo and poor grammar skills of the developer caused people to be suspicious of megacoin, and rightly so. As a result, the coin failed to get noticed, and was dead on arrival.
Consider this scenario for a moment – that this was all part of the plan. Now that the coin had been released, the developer, kimoto, could begin mining with little competition. The below graph shows the network hashrate of Megacoin during the first 48 hours:
We can see that the difficulty peaks at 600KHash, the equivalent of just one 7950 mining it. This highly suggests that no more than 2 or 3 people, at most, were mining it during this time period. Next, let’s take a look at the total coin supply during this period as well:
That’s a whole lot of coins being questionably generated, a good chunk of which we can assume went directly to kimoto. This continued for about a week, until kimoto decided to finally release the source code and promote his coin seriously. Network hashrate spiked to 50MHash at this point, and marks the TRUE launch of the coin. The earlier “launch” amounted to a nice cover story for the effective premining of the coin.
All told, during the first week, network hashrate reached no higher than 5MHash, and almost 6,000,000 coins were illegitimately generated. For reference, there are currently just over 18,000,000 coins in existence today (4 months later).
So, in short, it is likely that kimoto purposely botched the launch of his coin, so that he could mine it with little to no competition for almost a week, at which point he launched the coin properly. A clever way to get around the much hated premine, but having the same result in the end.
Speculation aside, where those six million coins went, no one can say for sure. Either way, it doesn’t make for a good launch.
It’s also important to point out that the reward structure of megacoin is disproportionately front-loaded. 50% of all coins are slated to be generated during the first 5 months. This makes it lucrative for all of its early supporters, but a poor prospect for anyone looking to get in later on. That might explain why the community is so fervent. They have a lot to gain – at your expense.
Take a second to look at the main megacoin thread. You’ll notice that the community is very reminiscent of a cult. Some of them seem to be truly convinced that kimoto is none other than Kim Dotcom, founder of megaupload. Let’s make this clear, Kim Dotcom is NOT associated with megacoin. Megacoin supporters are manipulating people into thinking that he is, to inflate the value of the coin. They’ll tell you straight faced that megacoin is on track to overtake bitcoin. They’ll preach on and on about how fairly megacoin was launched. Whether or not they truly believe the nonsense they spew or if they’re just trying to lure in ignorant investors is up for debate.
In closing, megacoin offers nothing new. It was effectively premined to an extreme, and has a neurotic community behind it. The reward structure only favors those who got in extremely early. All of these factors add up to be what I consider to be an awful investment. Investing in megacoin is a lot like playing a game of hot potato. When the fresh, ignorant money runs out the drop in price is going to be violent.
1. Megacoin is not a litecoin clone. Kimoto converted the latest bitcoin code to scrypt. Megacoin is the only scrypt coin that is not a litecoin clone. You raise some fair points but it should be obvious to everyone that you have a clear bias.
2. Megacoin also currently sports the only difficulty algo that is fast switching (every block) while not being subject to the difficulty getting stuck when high hash rates leave. (multipool)
3. “It’s also important to point out that the reward structure of megacoin is disproportionately front-loaded. 50% of all coins are slated to be generated during the first 5 months.”
In this 5 month period, anyone could have bought megacoin for super cheap. If you didn’t that’s kind of your fault isn’t it? Should I complain that I can’t get cheap litecoin or bitcoins now?
actually rum, the “kimoto gravity well” is a rip off of J-coin’s SSDRA, (Symmetrically Scaling Difficulty Readjustment Algorithm) with block roll back if it gets stuck(ie, the block target is lowered to 0 if a block hasn’t been found within a given timeframe.)
I introduced this idea in J-coin, by combining YAC’s retargeting algorithm with Terracoins 3 block retarget, and a switch for emergency retarget every 10 minutes. It’s also a feature present in OSC albeit the difficulty is adjusted per block and there is no 10 minute block rollback. the actual person who wrote the white paper on this idea(and co-author of the algorithm is a 17 year old from Oklahoma named Justin.
1. You speak in riddles. Litecoin is bitcoin with scrypt as a hashing algorithm. Therefore, megacoin is a litecoin clone. In case you were unaware, litecoin is now on the latest version of bitcoin as well, so that point is moot. My only bias is against coins that are obvious scams.
2. Other currencies have fast adjusting difficulty algorithms as well. Quark being one of them, for example. It’s not new, not innovative, and not difficult to code.
3. You don’t think it’s an issue that over 30% of all coins in existence today were mined with no competition during the first week? There is no justification for that. It’s pure greed on the part of kimoto.
1. A litecoin clone is a coin based on litecoin. Megacoin is not based on litecoin and has no litecoin code. There is no litecoin lineage in megacoin. You should really think hard about what clone means.
2. Yes coins have fast difficulty switching and that’s nothing new. However they are ALL susceptible to getting their difficulties stuck when multipool or similer hit them. They also have issues with the difficulty skyrocketing just because some blocks got solved quickly. (see anoncoin the last few weeks getting stuck at a 22 diff, or EXC getting stuck at 21) Megacoin is the first coin that is both multipool resistant while offering more stablized mining like long retarget coins. Megacoin has a FIR filter for difficulty algo and no other coin currently has similer.
3. Tons of coins have been instamined but anyone could have mined megacoin in the first 48 hours. Just because some didn’t, doesn’t mean theres a conpsiracy going on. Kimoto has been slow with source code releases always. Even after gravity well. Is that a conspiracy too?
Also you left out that megacoin is one of the few coins working on zerocoin support, (anc, nvc, mec) and it’s been known for months that kimoto has plans for zerocoin implementation.
So to recap:
1. First scrypt coin based on the newest bitcoin code.
2. First cryptocurrency with a smart difficulty algo that is both fast, secure, and stable.
3. Cool wallet
4. Future zerocoin support.
Most importantly, a dev who actually develops his coin. he may not be the quickest at responding, but we’re in a world where most coins get released and never touched again by a dev.
I’m not in the megacoin cult, and I think it’s possible kimoto never implements zerocoin. But you’re hatred for megacoin holds you back. There are far better altcoins to attack then megacoin. GLD is a great example of a coin that should be attacked for being a scam.
1. You’re arguing semantics. All these coins share 99% of the same code. Functionally, megacoin is a litecoin clone.
2. r3wt’s post addressed this
3. Fact of the matter remains that he premined a massive amount of coins. I don’t like premines, and neither does the community at large. Especially ones that attempt to disguise themselves like this.
There’s plenty of active devs out there who have coins with fairer, better launches.
And don’t worry, goldcoin is next on the chopping block.
Hazard,
The facts of this article cannot be disputed, but your opinions can. You make assumptions in this article and resort to name calling in some instances. I would much prefer to see proof of the identity of the individual mining Megacoin from the launch. Furthermore, you attempt to paint the community surrounding Megacoin in a negative fashion. Are they passionate? Of course. Are there some individuals who believe kimoto is Kim DotCom? They are out there. How do these characteristics lead to being cult like? I don’t see it. There is a clear bias in this article, and that is understandable. You are allowed bias in your own writing, but I think you would attract more readers if you cut the constant bias and exchange it for constant facts. Just my humble opinion. Cheers.
Some assumptions are undoubtedly necessary. There currently isn’t a working block explorer, and AFAIK kimoto never organized any giveaways or anything that would tie a particular address to him. Due to the mostly anonymous nature of bitcoin and lack of these sort of identifying transactions, such a proof is very difficult.
Of course, it’s logical that the creator would mine his coin. In fact, he would be a fool not to mine it if there was such a low network hashrate. So he is the most likely answer. I’d place that at 99% certainty. Either way, someone is running around with those 6 million coins. It’s all too convenient, don’t you think?
As for the cultish aspects of it, the community is really off the wall and unrealistic about their whole situation – more so than any other community (except maybe microguy, that guy is a whackjob). Just look through the last 5 pages of the thread and you’ll find some prime examples. They borderline worship kimoto. It’s bizarre.
There’s a working block explorer on the megacoin thread.
http://mega.rapta.net:2750/chain/Megacoin
I stand corrected. Still, due to the nature of bitcoin there’s no way I can explicitly tie an amount of coins to him. But logic would dictate that he was there mining in full force, don’t you think?
Not everything is cut and dry in the world of crypto, sometimes we have to fill in the gaps ourselves.
While you’re conclusion is logical, without proof there’s no basis and it’s just an assumption. If you’re trying to provide facts, you need proof. I honestly like your site and articles, even though I’m heavily disputing your megacoin claims. The truth is we don’t know who mined megacoin during that period and it’s unfair to call someone out without proof.
Call it an assumption if you wish… But the point is, those coins out there, and they’re a problem. It doesn’t really matter who specifically has them. I’m just presenting the mostly likely scenario. I believe most readers will come to the same conclusions I have as well if they were to investigate.
If its just an assumption it should be labeled as such instead of trying to promote this article as the word of god.
Everyone just sits around and wonders exactly why you hate this coin so damn much. Just because you didnt get 1.5BTC to clone it for him doesn’t seem like justification.
1. Again, a litecoin clone is a coin that C&P’d the litecoin code. Megacoin did not do this. Megacoin is a bitcoin clone if you’re gonna call it a clone. (ps: litecoin was not the first scrypt coin. BY your definition every scrypt coin is a terribrix clone)
2. A quick look at the sources and you’ll see r3wt is full of shit. He’s just trying to push his coins. (Nanotoken is the poster boy of scam coins, j-coin is dead and never had any real life, and he wants everyone to buy his new coin OSC. He’s also a well known scammer on bitcointalk)
3. A premine means you mined the coin before it was released. Megacoin had no premine. You can argue it was instamined, which is fair, but anyone could have mined it. You don’t even have proof kimoto mined it during the first 48 hours. You’re just speculating that it was him.
Not many coins have active devs. Of the ones that do, not many are adding features or working to innovate.
ALF, AMC, BBQ, BTB, BTG, CSC, CNC, CMC, BUK, DMD, DBL, ELC, ELP, EZC, GLX, GME, GIL, GBC, HBN, IFC, JKC, KGC, TIX, LKY, MST, MEM, NAN, NET, NRB, ORB, PYC, PHS, SBC, XNC.
These are all dead or close to dead or are just LITERAL copy and paste coins. Many of them had MASSIVE instamines/premines. (33% of all GLD in existence was mined in the first 2 hours)
Don’t even get me started on WDC, FTC, and PXC. Seriously man, megacoin is far from a scam coin, especially when you look what else is out there. Why aren’t you making articles on how netcoin stole the name of a well known actual innovative project?
1. We’re still arguing semantics. My point is that it had no innovation over what was already out there. Scrypt as an algo has been done a billion times before, and the “latest” version of bitcoin really means nothing, especially when others are running the same version now too. Porting someone else’s work =/= innovative.
And yes, every scrypt coin is basically a tenebrix clone. Litecoin just happened to be in the right place at the right time and gained popularity. I only refer to these coins as litecoin clones because a lot of people don’t know about tenebrix. Also note that I feel that LTC is horrifically overpriced right now.
2. Whether or not thats true or false, fast difficulty adjusting coins are nothing new.
3. A premine is when a coin is mined before release. An instamine is when a coin is mined after release. The line is sort of blurred here, but I feel like it falls into the premine category because for all intents and purposes, the coin wasn’t TRULY released, being that there was only an individual or two mining it. Again, this is all semantics, and doesn’t change what happened at all.
As far as FTC and PXC and all such related coins, trust me, I am no fan of them either. Feathercoin especially, easily the laziest, thrown together, copycat altcoin out there – with a massive instamine to boot. I have no idea how it got as big a following as it did.
Are you in your dream? IFC, HBN, TIX, NET, PHS, ELP, etc etc dead and have no dev support?? Open your eyes and go to bitcointalk the coin threads and check yourself. With this kind of obvious lies, you think people will believe what you said here?
Which Netcoin is the right one? I invested in NET on Cryptsy in the LTC market but i can’t find a bitcointalk thread for Netcoin with the same logo as the one i invested in. So i dont know
The NET that’s on cryptsy is the crappy one.
The original netcoin was never released.
“Call it an assumption if you wish… But the point is, those coins out there, and they’re a problem. It doesn’t really matter who specifically has them.”
The market disagree’s with you. Megacoin is the #1 coin launched on cryptsy by a good amount and it’s holding steady. Bitjohn and vern disclosed that it was the #1 coin traded on cryptsy.
From your article:
“Of course, this was all part of the plan. Now that the coin had been released, the developer, kimoto, could begin mining without any competition. ”
You have no proof of this and without a proof it’s just FUD. Without proof and a claim like this you just look like a tin foil hat conspiracy theorists. Is this what we can expect from your site in the future? Baseless claims instead of facts? Stick to the facts and people will be more interested in reading. Instant mining is something you can prove. 50% of coin gen in 5 months is something you can prove. This however is something you can’t and should be left off an article that offers an “in depth analysis”
“We can see that the difficulty peaks at 600KHash, the equivalent of just one 7950 mining it. This highly suggests that no more than 2 or 3 people, at most, were mining it during this time period. Next, let’s take a look at the total coin supply doing this period as well:”
This part is a much better way of stating it. It’s true, and can easily be verified.
“This combined with the very amateurish logo and poor grammar skills of the developer caused people to be suspicious of megacoin”
You do realize english isn’t his first language right?
For me what caused me to doubt it originally was actually you being the first post in the thread with “NO SOURCE CODE PROVIDED, LIKELY A WALLET STEALER. DO NOT DOWNLOAD.”
You were wrong though and you’ve been spreading FUD since day 1.
The “market” doesn’t bother to look into issues like this, and just believes the FUD on the forums.. About how great and revolutionary and fair megacoin is. Most people are unaware of how shady the launch of this coin was.
Would replacing all instances of “kimoto” with “overwhelmingly likely kimoto” make you feel better?
I’m not making any huge leaps in logic when I go from showing that there was a low hash rate, to saying that kimoto was mining it. It would be a departure in logic to assume that he DIDNT mine it, considering all the effort hes put into the coin. Therefore I can safely make this claim. I believe the information I’ve provided shows beyond a reaosnable doubt that kimoto was mining it. You spreak as if I’m weaving wacky conspiracy theories here.. Come on.
Do you honestly believe that he put in superblocks at the beginning, only to not mine them? This entire launch was crafted in such a specific way that allowed one or two people to mine an obscene amount of coins. You meant to tell me the developer, kimoto, was not a benefactor? That makes no sense.
Obviously this scenario is not as cut and dry as say, PXC, with it’s blatant in your face unnecessary premine. It requires some connecting the dots. Bear with me here.
As far as english not being his first language, yes, I understand that, and I only mention it because as I said, we were in a period where wallet stealers were making the rounds. The combination of poor grammar (which was commonplace with wallet stealers) + no source code is what prompted me to make that post. I trust you will believe me when I say it was in good faith.
Hazard,
I have to put some doubts to bed. I was around during launch. Ran in VM as kimoto suggested. Mined 3.5M coins and spent roughly 2.5 before it hit 0.0004xxx
Nice article as always but too much bias and misinformation.
Some other myths:
Only started posting hype gifs due to klee getting butthurt over them (now the ball is rolling and it can’t be stopped)
Put together 3 websites at launch, 1 still active, hinting at kimoto being kimdotcom strictly for my own gains (and sold out too early before anyone actually thought this was viable)
kimoto contributed to faucets at launch – this probably can’t explain 6,000,000 but can explain a good amount minus the half I directly mined.
but yes, nice article pointing out a rough launch.
Parts have been edited to reflect that I am proposing the most likely explanation for the events that occurred, as per my original intent of the article.
I encourage everyone to investigate the facts as I have and come to your own conclusions.
hazard,
it is openly known that 42,000,000 MΣC will ever be out there. everyone trading it knows that. so, if 6,000,000 MΣC were mined very early, why is that so bad? so what? if it’s not fair, explain why.
megacoins only enter the market by being sold by miners:
all initial owners of any MΣC are either early miners or late miners. you seem to think it’s more virtuous to be a late miner. why? you think early miners didn’t deserve the NOW OPENLY-KNOWN amount they mined, as is explicitly clear in the open-source rules of how it all works. but anyone now choosing to invest in megacoin knows what value as an overall percentage of the currency he’s dealing with. there’s no scam here whatsoever.
if an early miner (maybe Kimoto) accumulated tons of MΣC right at the start, good for him. that’s part of the premise you have to accept when you decide now to invest. it certainly doesn’t prohibit anyone else from attaining large amounts early on, nor does it diminish megacoin’s worthiness of being widely adopted.
evaluate MΣC given the parameter that the currency will be introduced to the market moreso from early miners than from late miners just because of how it’s structured. tell me why that’s wrong.
cults are based on followers faithfully believing in something or someone. but megacoin enthusiasm is based on optimism, not faith. and on real functionality, not fantastic rhetoric.
Here’s why it’s a problem. Kimoto claimed the following: “Every 21,000 blocks (1 month) the reward steps down from 500, 250, 125, 75, 50.” Yet, 40% of those 500 coin blocks were generated within in the first 24 hours due to the very low difficulty he launched the coin at. Such a reward structure only seeks to line the pockets of the few at the expense of everyone else.
Early adopters contribute least to the network. At this point, the coin can be considered monopoly money. No services exist for it, and no transactions are really occurring. Do you think whoever mined during those first 24 hours deserved those 4 million coins? Absolutely not. That is why this coin is a scam.
The reward cycle of MEC is simply too fast. It seeks to line the pockets of the early adopters at the expense of everyone else. 5 months is not enough time to gain mass adoption and roll out services. All the early coins devaluing later coins will likely cause the network to grind to a halt once the reward hits 50. No one will want to mine something that they are penalized by a factor of 10 for not mining months earlier. And the market will reflect this.
Again, to reiterate, there is NO reason to have so many coins flood out in 5 months, other than pure greed and seeking to line the pockets of insiders. If you want a successful coin, a more staggered release cycle like bitcoin has is a smarter move. It spreads the wealth around more, and doesn’t discourage late mining. Of course, that’s not the goal for megacoin, as we can all see.
Some MEC supporters were bashing goldcoin earlier, when in fact megacoin is very similar to goldcoin. I really don’t understand.
Great article that reveal the secret of alt coin dirty tricks.
It’s creepy that this article has so many comments.
Definitely cult-like response.
It shouldn’t surprise us, though. I think cryptocurrencies, because of the freedom they provide, will always be dangerous to use. Still, it’s a small price to pay.
Funny all the cultmembers defending their MEC. What you guys obviously missed was the big MEC banner advertisement on the front page. An opinion is an opinion and hazard has one. However even after tearing the coin apart he is still advertising it. Says a lot. If it was complete shite why take the coin to advertise it. Move on people.. I’m sure Litecoin will be on the block soon as well.
RE: http://cryptometer.org/index.html
O do tell…
Recently this site at the link here crossed paths with a browser of mine.
Wow! Talk about scam after scam, after scam.
Pre-mines, Insta-Mines, lies, deceit, scam after scam, u name it.
So what? u gonna insult my grammar, and that if I have poor grammar and an amateur logo then I too must be a crook? Bull.
Why not attack their coins fundamentals with this link?
It’s the Fundamentals stupid!
Gee…ya think?
Do some due diligence, or what you don’t even know what that is?
Try the link above. It will answer everything for everyone should they care enough to do even a few moments researching all those coins already listed there. With more almost certain to be exposed very soon.
The best coins? Well that’s obvious. And it’s not one’s that were hogged by pigs so that they could unjustly attempt an enormous ripoff under deceitful and wicked pretense.
Just forget about the ‘pump & dumps’, those were for merely peanuts by dimwits. The brighter a-holes are holding out for a major killing long after the ripoff (pre-mine, insta-mine) but it wont be at all likely to ever end up that way.
P.S. Have u ever tried to get in on any insta-mine? Good Luck suckers. They systematically freeze out many who try when it’s an insta-mine, or give so little advanced notice that by the time anyone else hardly arrives the insta-mine has already come and gone. That’s their m.0., along with a lot more scheming. They sometimes even label it as a ‘no premine’ when it’s a grossly unfair insta-mine in what will prove to be a vain attempt to enrich the insiders.
That link above, and the same one at the end of this points to the ethical coin launches versus the unethical coin launch. So which ones will the public support after learning what’s what? gee, ya think?
These low life fraudsters are trying to get something *mega* by doing next to nothing except steal everything while pretending their holly than thou. Get over it.
And something tells me it doesn’t matter about some logo, or grammar, but their actions and character.
Very SOON something tells me it will be all over for the pump and dumps, as well as all the other ‘scamcoins’. Get used to it.
RE: http://cryptometer.org/index.html
Bad grammar and lousy logo’s are nothing to be concerned with.
But bad fundamentals will surely doom any emerging coin in a crowded field of ethical alternatives. At least eventually these scam-coins all die a brutal death, long before they ever make hardly two nickels to rub together.
The author of this article needed a bit of advice on how to attack. So I just couldn’t resist teaching a little tactics about how it’s best done!
Peace. Or WAR. ya think? Got time 4 shock an awe bitches?
nExT cOmEs tHe tAkEdOwN.
me got beter thag to do thin mes wit spel chec
It’s the FUNDAMENTALS stupids.
😉
Thank you s0 much for exposing this, I really thought kim dotcom could be associated because they’ve made it look like that, like, a lot, fortunately I’ve researched enough to get to this page before starting to mine and install their software.