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Tuesday, December 30, 2014

PayBase Goes Live; Price Hits $22 then Plummets, PayBase Premier, etc.

At long last (well, let's be real: we're only looking at about three weeks since PayCoin launched, and less than a couple months since the intention to even launch PayCoin was announced), PayBase is live. And I have to admit, it has some pretty cool features. The best one right now: all you need to send someone PayCoin is their email address. Sounds a bit like PayPal, doesn't it? But that replaces all the cryptocurrency wallet address insanity that we've all been dealing with since Bitcoin first appeared.

Don't get me wrong -- I can use wallets and they're not that hard; the thing is, "normal" users can't be expected to figure that stuff out, and now they don't have to. It's actually sort of funny, though -- I have some very non-technical people in my family, and even PayPal is still a bit of a mystery to them. But this is definitely much better than downloading a QT wallet, syncing with the block chain, etc. So if you want to tip me some XPY for my writing efforts, just send some to my email address at PayBase! (Crickets....)

Signing up was totally painless for me, and as with ZenCloud there's integrated Two Factor Authentication that's required to get things working. That should prevent any of the stupidity we've seen with various scam companies claiming hacks and such.

With PayBase now live, there's also the question of that $20 price floor Josh has talked about since the coin's inception. There are various ways of looking at things, but I'll give you my perspective. First, GAW promised they would buy PayCoin for $20 once PayBase launched. Second, and more importantly, there was absolutely no promise that they would hold that $20 price floor at all cost. So what do you think happened? Yup: as soon as the price hit $20, there was a massive dump.

GAW says they're still committed to reaching and holding $20, but we need to give them some time. Because if everyone with XPY tries to sell at $20, well, that's going to equal at least $120 million (give or take) -- keeping in mind that at least 6.8+ million XPY is "locked up" in Prime Controllers for the time being. Actually, we can even limit things a bit more: according to the block explorer Rich List, 11,837,506 XPY is in the Prime Controllers plus the top 20 or so addresses with a balance of 20,000 or more XPY, and from what I can see none of those coins as moved anywhere.

Which means really, there are only about 500,000 XPY that might realistically be sold right now. That's only $10 million, so GAW should be able to support their $20 price without too much trouble, but I'm guessing they're going to take things nice and slow. Josh said at one point that today was basically the "worst case" of what could have happened, but that's being a bit generous. He also said they were burning through $500K per minute for a bit to support the price floor, which also seems a bit unlikely (unless we're talking about two or three minutes). CoinMarketCap in total only reports $1.5 million worth of trades on XPY today, so unless there was a ton of trading directly on PayBase....

Oh, and don't forget that GAW also put a $700 per week (in BTC) cap on PayBase sells for now, which means unless they had literally thousands of accounts all cashing out for BTC at once, there may be a bit of hyperbole. But that's nothing too unusual for Josh, and he at least has made good on far more of his promises than anyone else in the cryptocurrency world (AFAICT). Including buying at least some coins at $20 after PayBase launched -- just not all of them.

Anyway, only eight or so hours after the launch of PayBase, the price for XPY right now is sitting at roughly $12.18 according to the PayCoin Block Explorer, while if you want to sell on PayBase the price is $12.11 and the buying price is $12.75. (Update: and dropping!) Umm... what happened to "no fees"? That's a 5.3% spread, which would be the same as a 2.5% fee on buying and selling. But I digress....

It's going to be interesting to see what happens to XPY prices over the next few days. Will we hit $20 again in the near future, or will we maybe sit in the $10-$15 range for a while? I couldn't really say. What will perhaps change things is the first PayBase Premier perk that Josh has announced: one week of staking at the full Prime Controller stake rate (which should be similar to the staking rate of HashStaker I'd assume). In order to get a Premier account, you need to be invited... or perhaps even pay for it. Well, I'd happily pay 5 XPY for a one year Premier account if Josh wants to make that offer. That's similar to the yearly Amazon Prime membership, right? And to get a Premier account, you pretty much need to not dump a bunch of XPY on the market, so I'm qualified!

Here's my prediction for what's going to happen -- and I've been wrong plenty, so don't bet the farm on this. I expect PayCoin may touch $20 on occasion during the next month, but until all of the additional PayBase features are running (like debit cards, PaySave, and Bill Pay) it's not going to stay above $20. Medium term, XPY will likely break $20 and stay above $20 in the next month or two, and long term I think there's a very real chance XPY could hit triple digits before the end of 2015. So think about that before you dump your XPY: if you invest $1000 at the current market price, it could be worth eight times as much before next Christmas.

I'll probably sell some of my XPY at $20, but I'm still very optimistic and I'm looking for that bigger payout. If I could pay bills with XPY, it becomes a lot more useful, and people will start to take notice. Once people can send a car or house payment to their bank via XPY, well, even $100 per coin might be too low. In other words, keep your eye on the real prize. If you have to sell to pay bills and such, fine, but don't end up kicking yourself for being too shortsighted in a few years. Have I mentioned I sold at least 400 BTC when the price was under $5 back in late 2011? Imagine if I had kept just half of those coins! I don't intend to make that same mistake again.

Monday, December 29, 2014

PayCoin Finally Takes Its Correct Place on CoinMarketCap

I've been meaning to write about this for the past week or two, but CoinMarketCap has been discriminating quite heavily against PayCoin since the coin first launched. Well, they have apparently decided it's time to change their tune.

Up until now, CoinMarketCap has been using only the publicly mined portion of PayCoin when calculating the market capitalization, with a double asterisk denoting that there was a "significant premine". Note that the vast majority of PayCoin was put into the hands of HashPoint owners and miners ten days ago, so CoinMarketCap has been very slow to change their stance. What's ironic is that you could make that same case against many other coins, including coins that weren't mined at all (e.g. NXT, Ripple, MasterCoin, etc.) but the total number of coins in existence is still used for those. But I can't really blame them for being at least a bit cautious.

The net result is that instead of 12.325 million XPY multiplied by the current price, only 0.325 million was being used, resulting in XPY being ranked down around #20 (or lower) instead of in the top five. Now, however, the total circulation of XPY has been bumped up to 12,325,674 on CoinMarketCap, and with a current price of over $12 that puts PayCoin... right into the number three spot, surpassing even Litecoin. In fact, the market cap of PayCoin is now about 1.5X that of Litecoin. Wow!

This is, by far, the most successful launch of any coin seen to date. Within weeks of public availability, PayCoin has overtaken Litecoin, and let's be honest: Ripple isn't really in the same category as other cryptocurrencies. So effectively, PayCoin is now the number two cryptocurrency for market capitalization, and PayBase still hasn't come online yet. (But soon, my precious, soooon....)

Ironically, even now the current numbers on PayCoin are still incorrect, as there are 12,375,676 XPY in circulation (so CoinMarketCap is off by 50,000). I'm not sure that matters too much, and perhaps the charts are only updated a few times per day. With the number three spot secured (number two if you don't include Ripple), the next hurdle is a quite a bit further off. PayCoin is still only about 21% of Ripple's market cap, and more importantly Bitcoin is valued at roughly 27X PayCoin. But we're looking at 17 days old vs. nearly five years, so let's just wait and see.

Market cap isn't the only area where PayCoin is thriving either. Looking at trading volume -- and again, this is before PayBase is even fully launched -- PayCoin is ranked number four overall. In trade volume, LTC is still #2 with Ripple #3. What's interesting is that Bitcoin is only about 16X the trade volume of XPY, and with features like PaySave we could easily see the trading volume on PayCoin shoot up. It's going to be an interesting week, regardless!

Revisiting Prime Controller Staking: Compounding Interest

I realized today that I made some errors when looking at the stake rate for Prime Controllers. You see, compounding interest starts to do really crazy things with high interest rates. I tried to put together some numbers just for fun.

Let's say you have a Prime Controller with 125000 XPY in it. If a Prime Controller (PC) stakes on average once every six months (at the end of the current round), it will end up with 343750 XPY. This is what I've used as my basis before, and it's basically incorrect. First, we know the PCs have all staked at least once already, but they've also staked at varying interest rates. Anyway, let's just continue for a moment.

If the PC stakes on average once a month (at the end of the month), it will end up with 580514 XPY at the end of the first round. Yeah, what!? Well, that's what happens with 350% interest -- you get 29% interest every month. So if you had 1 XPY with 29% interest monthly, it would be 4.6 XPY by the end of six months. And we're not even done yet. If the PC stakes on average once a week (at the end of the week), it will end up with 679893 XPY at the end of the first round. Daily staking (which obviously isn't happening right now) would yield 713357 XPY at the end of the round.

So yeah, compounding interest on the Prime Controllers can end up paying huge dividends, but that's at 350% interest, and the interest is apparently variable (we'll see how this plays out the next time more Prime Controllers stake). We also don't know how often Prime Controllers will stake. So far all of the Prime Controllers have staked just once, with interest rates of 350% on 36, 100% on 13, and 20% on 3 (according to the block explorer). That means over all the 52 currently listed PCs, right now we're averaging around 268% interest for the Prime Controllers.

If the PCs hold to that average (or let's just call it 250%) and they manage to stake weekly on average, then the 52 Prime Controllers will end up staking to the point where for every 1 XPY put in the Prime Controller, they'll generate 2.39 XPY in six months. Or in other words, 1 XPY in a Prime Controller would average about 0.0131 XPY of staking income daily. So when the staking rate of HashStakers for round one was announced as 0.0972 XPY daily (on average), well, we're apparently well ahead of that mark right now.

Also, we're still waiting for PayBase to fully launch. "You will be able to create your PayBase account soon. Please check back later." In the meantime, the price of PayCoin nearly hit 0.045 BTC (just over $14) before falling back to the $13 range. Considering PayBase isn't even online yet (apparently), that's pretty good and the $20 mark is certainly looking attainable. But I'll have more to say on that in a moment....

Saturday, December 27, 2014

HashProfit Update: DDoS and Hacking?

If you're curious about why I'm cautious with HashProfit, the answer can be found in the past 12 hours. Starting some time last night, there was supposedly a DDoS (Distributed Denial of Service) attack on their server(s). I don't know if that's true or not, but the site was giving a 502 error earlier this morning when I checked. The site is now back online, but payouts didn't happen last night that I can see, and what's more you get news posts like this one. The English translation is so poorly done that it's worth quoting here (and I wouldn't be surprised if the site disappears in the near future):
Attention! There is highly coordinated and massive DDoS attack on Hash Profit service taking place right now.
27.12.2014 15:18

Site and infrastructure of Hash Profit is under unprecended massive DDoS attack right now.

Attackers spreading the word of panic about collapse of our service and other nonsence with only one main target - to provoke mass panic.

Many users neglecting common safety or being unaccurate has compromented their accounts and that has led to availability of malefactors to sell 15% of their hashrate for PFC and sell these coins via the exchange service, which in turn led to downgrade of PFC exchange rate.

All this is happening right now because lead companies of this market has understood the threat from HP service for their place in the market and they're doing everything possible to drown the company.

Right now HP team is working hard to reflect all the types of threats and the most important is defending of keeping and payout system - that's the main target of attackers.

Also our email is overcrowded with spam and rubbish from hacked users' mails, and that makes fast responses to real users questions very hard.

Main help from our service's users in solution of this difficult problem:

1. Don't panic.
2. Do everything possible to defend your own accounts - mails, BTC-wallets and computers.

We've succesfully deflected serious threats and attacks on our service earlier and we're sire that together we can do this even in a situation this hard.
The gist of the message is pretty clear -- "Hash Profit is fine, don't worry!" The problem is that I've seen and heard that same story so many times in the cryptocurrency world that it's practically a chorus. Basically they're claiming some users have had their accounts hacked, but it's only because those users "neglected common safety", not because of any error on the side of Hash Profit. The only way this would be true is if the users in question didn't set up any two factor authentication (2FA) and if they used the same password on multiple sites.

Assuming that actually happened (again), shame on the users for being stupid. More likely however is that the site itself was hacked and they're just trying to pass the buck. Or perhaps the site was a scam since the start and this is just part of the scam. The hack has supposedly allowed the hackers to sell hashing power for Profitcoin (PFC), which has then been dumped on the open market resulting in a massive crash in the price of PFC -- it's down to around 0.00077 BTC per PFC now, less than a fourth of the price just a few days ago.

Here's the real question: can Hash Profit recover and continue to mine and pay out BTC users? Or is this really just a big ponzi scheme that is now imploding and they're making a story as part of their exit strategy? "Sorry, we got hacked. Sucks to be us, and we lost all your coins. Dasvidaniya!" That's the worst case scenario right now, but it's a real possibility and in fact quite likely; hence I can't recommend anyone buy any more hashing power or PFC right now.

If you like to gamble a bit, there's a potential bright side. Let's say Hash Profit really hasn't lost a ton of money, they're not a ponzi scheme, and they still have a bunch of hardware that can happily hash away and make money for them. Their profits to date have been rather suspect -- no other site really is paying out as well as they have, and their "proprietary SmartMining algorithm" sounds like a bunch of hot air. Anyway, if you were to exchange 1BTC into PFC right now and then buy SmartMining KH at 11 KH per PFC, a single Bitcoin could buy about 14000 KH/s. 14000 KH at the current rate of payouts (assuming those continue) would pay for itself in roughly ten days. Ha!

You know the old saying: if it sounds too good to be true, it probably is. I will be very surprised at this stage if payouts continue at the previous rate, or even if they pay out at all. In fact, until I see more BTC paid out (e.g. tonight), Hash Profit has a huge red flag waving in the breeze. I'll update this post as things develop. Hopefully I'm just being overly pessimistic, and I stand to lose a moderate chunk of BTC if the site ends up being a scam, but worse things have happened to me with cryptocurrencies already.

Update, 12/27/2014 @ 11:32 PM PST: My BTC balance at Hash Profit has updated, and so have the balances of at least two friends that I checked with. The problem now is that the automated payouts haven't happened in well over 24 hours. Oh, and the PFC price temporarily rebounded and then took a further tumble. ROI time is now a ludicrous six days, but there's no way they can sell this amount of hashing power (income) at such low prices. Until I see otherwise, my suspicion is that all BTC at Hash Profit will remain at Hash Profit.

Dasvidanya, Hash Profit, 12/28/2014 @ 10:30 AM PST: The site is offline once more, payouts didn't happen, and some users have reported receiving email responses but nothing that's worth anything. LTCGear imploded in a similar fashion not too long ago, and it looks like today it was Hash Profit's turn. It's looking more and more like the days of profitable cloud mining are over... except for GAW, which continues to do well. Let's hope they at least can buck the trend.

Friday, December 26, 2014

PayCoin Prime Controller Staking Issues?

It's been three days since I posted about this on the HashTalk forums, and now I'm sort of worried/confused. According to the block explorer, not one of the Prime Controllers has successfully staked since the first day of staking (three days and 17/18 hours ago). Let me explain why this is a concern, and just to give a specific reference point, right now (2014-12-26 22:49:51 for block 12939) the block explorer shows that there are 12,356,686.044244 XPY in existence.

I know that I'm personally generating around 4.5 XPY per day with my HashStakers/HashStaker Primes, and I'm pretty much a small fry in the Paycoin world. Craig at present has 29,325 in the HashStaker Champions list, and at an average of 0.00972 XPY per HashStaker per day, he alone should account for 285 new XPY each day. The remainder of the top 10 HashStakers is another 121,489 HashStakers, which would mean another 1181 XPY daily.

Note that the bottom member of the top ten list has about 20 times more HashStakers than I do, so realistically we're talking about probably three or four times that amount of payouts daily. So HashStaker owners could easily account for something like 5000 new XPY daily, and a figure of 20K or more XPY daily would hardly be surprising.

If we go back 24 hours in the block chain, we're at block 11968, which had a total of 12,356,637.14105 XPY in existence. That means in the past 24 hours, we have only added 48.903194 XPY to the block chain through Proof of Stake mining. Which is a problem. Interestingly, even at 5% staking annually, if every XPY in the world currently staked we would generate 1691.53 XPY per day. So again, based on simple math we can determine that only about 2.9% of XPY in existence has staked during the past 24 hours.

Of course, staking is based on coin age so if a Prime Controller with 125K XPY were to stake with a coin age of one week, it will alone generate 8384.668 XPY. So maybe this all averages out over time. But that doesn't change the fact that staking generally happens based on total coin age, and right now the Prime Controllers should account for 56% of all XPY, with a coin age of at least three days, compared to the Orion Controllers that currently seem to be doing all the staking.

Let me put it another way. Taking the 57% or so of all XPY that is currently supposed to be held in Prime Controllers (currently the Rich List shows around 7 million XPY for the Primes), with a staking rate of 350% annually we should be seeing an extra 67204 daily being generated from the Prime Controllers. If we're only generating 43 XPY daily, we're off by a factor of 1562X! Again, this is good news for Paybase as it would mean it's a lot easier to support a $20 price floor, but this is not how the coin is supposed to work according to the white paper and other information.

In short, I think something is going wrong with the staking algorithm. I haven't tried to find any proof in the code -- I'm only looking at the block explorer numbers -- but off hand I'd say it appears only Orion Controllers are currently staking, with the Prime Controllers sitting on the sidelines twiddling their thumbs. GAW cannot possibly continue to pay out potentially thousands (tens of thousands?) of XPY for HashStakers on a daily basis if their Prime Controllers are not actually generating significant quantities of XPY. It is, in a word, unsustainable.

Let's hope I'm just overlooking something, and if not let's hope this gets fixed sooner rather than later!

Addendum, 12/27/2014: So a few days later, it looks like things are working as intended. Block 14226 finally got a Prime Controller to stake, one of the ones that formerly had just 125,000 XPY. And that's not the only block to have that happen recently. Blocks 14241 and 14243 to 14251 had similar results (and 14253 as well). What's interesting is that the stake rate for the blocks appears to be 100% in most cases, not 350%, with blocks 14247 and 14251 staking at just 20%.

That presumably means everything truly is dynamically controlled by the coin algorithm. That's good I guess... though it still brings up that question of how and when Prime Controllers should stake, and at what interest rate? I'm sure if someone wants to analyze the source code we could get the answer, but for now let's just say it's "dynamic".

Also, the "Rich List" and "Prime Controllers" lists are apparently not being updated properly on the Block Explorer. If you look at Prime Controller addresses right now, 15 still show balances of 125,000 XPY, but if you click on those addresses all of them have staked either ~360 or ~1804 XPY now.

Wednesday, December 24, 2014

Re-Examining HashProfit: Better than GAW?

Final Update, 12/28/2014: HashProfit has gone offline again, and all indications are that they have closed up shop and any coins placed in their trust are dead. I had my doubts, but figured "What the heck?" as they were paying out for a smaller investment for over a month. Sorry for any of you who joined me right before the collapse. :-(

Way back in October, I decided to try out another cloud mining service, I used the free 200KH/s for a week and received for my troubles a whopping 0.01 BTC or something like that. I reinvested that BTC into buying some "permanent" hashing power, but all I could afford was 8 KH. I let that sit for over a month, and the payouts were pretty consistent if low. As a better attempt at investing, I decided to buy 100KH, which ended up costing 0.09638 BTC back at the start of December.

It turns out, this was a mistake. Not because HashProfit has proven to be unreliable, but rather that was the wrong way of buying hashing power. I don't recall what pricing was like in early December, but since the purchase (I've been at 116 KH/s for over three weeks now) I've been mining at a steady rate of 0.00082128 to 0.00085028 BTC per day. If we use a more pessimistic estimate of 0.0008 BTC per day, I should recover my initial investment in about 120 days. So what's the problem?

The problem is that buying with BTC at the start of December was stupid. You see, in an attempt to compete with GAW and Paycoin, HashProfit launched ProfitCoin (PFC) back in early November. The coin doesn't have nearly the backing of Paycoin (XPY), but there's one major use for PFC right now: you can use it to buy hashing power at HashProfit at greatly reduced rates. And I'm including the already reduced rates that you can get with the regular "sales" that are announced! Check this out....

At present, the going rate for hashing power on HashProfit is 0.08377 BTC per 100 KH (or if you prefer, 0.0008377 BTC per KH). There's a discount code right now, HPE241214, that will reduce the price to 0.0005948 BTC per KH -- I used a similar code at the start of the month. With that code, you can expect to hit ROI in about 85-90 days. That's pretty good, all things considered, but it's still not the best way of doing things.

I mentioned above that you can buy hashing power at HashProfit with PFC, and here's where it gets interesting. The current rate is 11 KH per 1 PFC, and the price of PFC at present is just 0.003 BTC per PFC over at (and it's been as low as 0.0026 BTC in just the last day). What that means is you can buy 11 KH for 0.0026 BTC if you're willing to jump through a few hoops. Or put another way, the price is only 0.00027 BTC per KH.

If you're still not getting it, here's some additional math. 1 BTC will buy you roughly 333 PFC. 333 PFC will in turn buy you 3663 KH/s of HashProfits' "SmartMining" program. By my estimate, you would then earn about 0.025 BTC per day (actually a bit more, but I'm being conservative here). Which means you would hit ROI in 40 days or less.

Now, I'm by no means betting the family fortune on HashProfit, as the site is riddled with poor English and it seems they're trying pretty hard to copy some of GAW's success without doing a lot of the extra work that would really be required (i.e. getting millions of dollars in funding and investments). Heck, the whole thing could just be a giant ponzi scheme, using latecomers to pay out earlier users. GAW has of course had the same accusations leveled against them, and so far they're doing okay.

Anyway, I've been poking around at HashProfit for a couple months now and so I figured I'd put a larger investment into their services as so far they're doing what they've set out to do. I just bought a nice chunk of hashing power, and it will be interesting to see if ROI really comes by February. If it does, awesome; if not, I've lost far more than 1BTC worth of value ($325 right now) just with the drop in BTC prices that occur on a regular basis.

If you want to follow my example and take a risk, here's the full sequence of steps:
  1. Create a new account at HashProfit (assuming you don't already have one); if you don't, I'd appreciate you using my referral link as I get a potential 5% bonus on any purchases you make there.
  2. Transfer some BTC over to They require two confirmations before you can use your BTC, so on average this will take roughly 20 minutes for your funds to arrive. (Again, I'd appreciate new users to C-CEX using my referral link.)
  3. Go to the PFC/BTC market and buy as much PFC as you have BTC to invest.
  4. Go to the "Buy KH/s" page (under your account on the top) at HashProfit, and under PFC Balance on the left click "Deposit". Get your PFC address and then go back to C-CEX.
  5. At C-CEX, go to My Assets -> Balance on the top, and if you filter by "Non-zero and pending" you can find your PFC wallet. Click the Withdraw button, put in your HashProfit PFC address, and send all of your PFC over there. You'll probably have to verify the withdrawal via an email link.
  6. PFC has a block target time of five minutes and I think HashProfit requires two or three confirmations, so you're looking at 15 or so minutes for your funds to arrive.
  7. Now go purchase SmartMining at 11 KH/s per PFC, and you're done.
I've done all of the above today (Merry Christmas Eve!), and by my estimate I should earn 0.02619045 BTC (give or take) per day. It's almost enough to make me want to invest in a few more BTC worth of PFC, to get to the point where I'm earning more like ten times that rate. Just think of that: 10 BTC's worth of PFC transferred into SmartMining could potentially earn 0.25 BTC per day. $85 per day in income, or an extra $2550 per month? Yes please, I'd like that. Heck, double that amount and most people could quit their day job!

PS: I should note that this is a good enough deal that once this post is live on the web, we might see a run on PFC as well as the hashing power over at HashProfit. Don't be surprised if prices and rates change quite a bit in the near future, as 30-40 days ROI is pretty much the "holy grail" of mining investments.

Addendum, 12/27/2014: Wow, I may have really timed this poorly. Based on the current numbers, ROI is less than a week, but that's only assuming you actually get paid. My "BTC balance" has gone up, but I haven't received a payout since 12/26, and there's now news of DDoS and hacking. I wrote a separate post on this already as a warning, but until/unless something is fixed, I have to assume HashProfit is now going to die and take everyone's coin that invested in the service.

Tuesday, December 23, 2014

PayCoin: Examining Prime and Orion Controllers

Prime Controller Information

A big part of the PayCoin design that sets it apart from other coins is that it has provisions for Prime Controllers. These are nodes that handle a lot of the real work of PayCoin, and in return for the work they get much higher staking rates. I've looked at the source code, and from what I can see Prime Controllers can have their annual staking rate set to 10%, 20%, 100%, or 350%. Yeah, that's a bit coarsely grained as I'd think maybe 50% and at least one more rate should be included, but that's a different matter.

Needless to say, with the potential to stake at 350% annually, you'd expect a lot of people to want a piece of the pie. Especially with GAW talking about $20 minimum XPY values, if you stuck say 10,000 XPY into a Prime Controller for six months you'd be looking at returns of 17500 XPY, or $350,000. Assuming XPY actually breaks and stays above $20 once PayBase is in full use, but that's a different subject. [Side note: PayBase is likely launching next week on Monday, Dec. 29 now. Unless it gets delayed again.]

Here's where it gets interesting, and a bit complex. I'm not quite sure where the Prime rate gets set, but as far as I can tell it happens once every six months. It was set for 350% for the first six months of staking, which is where the Round 1 HashStaker pay rate of 0.00972 comes from. (365*0.00972=3.5478, which means GAW is actually paying out a bit more than 350%.) Given that Prime Controllers pay so much higher than other options -- and you don't have to buy a HashStaker from GAW to participate in theory -- why wouldn't everyone simply try to become a Prime Controller? The answer is simple: cost.

There's a bidding process that takes place at the beginning of each round, and the winners become Prime Controllers. To become a Prime Controller, you need to bid at least 50 XPY, and I believe all non-winning bids become Orion Controllers (more on that later). The catch is that all funds put into your Prime Controller bid are locked for the duration of the round. You'll get the staking bonuses from the Prime Controller, but all of the principle is frozen until the round ends, at which time another round of bidding commences.

That brings us to the subject of the day: Prime Controllers. How many are there and how many coins are invested into those controllers? It turns out that this is visible on the PayCoin Block Explorer, if you go to the Rich List. Right at the top, you should see "All 52 Prime Addresses", which are grouped into one by default but you can break them out. [Note: From what I can see in the Whitepaper, there are only 50 Prime Controllers right now; I don't know for sure if that's correct, but if so then at least some of the addresses in that list are being mistakenly categorized as Primes.] Curious to find out what the minimum winning bid was for a Prime Controller? So was I!

It turns out that while the minimum bid to try and become a Prime is only 50 XPY, the actual winning bids seem to start at 125,000 XPY. Wow! Even at the current price of around $11, that's a big chunk of change. What's perhaps even more interesting is that between all 52 current Prime Controllers listed, there's 7,138,233.1 XPY, or nearly 58% of all current PayCoin in existence. Which means there's a lot less potential for people to be dumping millions of XPY any time soon.

It's pretty clear that GAW controls most if not all of these, as there are basically two categories of Prime Controllers right now. Of the 52 Prime Controllers listed on the block explorer, 16 started with 125,000 XPY while the remaining 36 started with 146,429.0 XPY. GAW apparently controls at least 36 of the Prime Controllers, but what's really odd to me is that where the Prime addresses that started with 146,429.0 XPY have all experienced staking at 350%, the same isn't true of the 125,000 XPY Primes.

Thirteen "Primes" with 125,000 XPY each haven't even staked at all, which is really weird -- they're potentially missing out on something like $8000 per day by not being active! And if they aren't active they could get voted out, so that doesn't seem likely to be the case; maybe they're just "unlucky". Perhaps even worse is that while the remaining three all staked, they did so at what appears to be the wrong rate! Look at the following Prime Controllers:


They're all basically the same; each staked 9.2-9.8 XPY in rewards once so far. Let's quickly do the math on the first one. The start time for staking should be 2014-12-22 14:57:55 and the end time (i.e. first stake reward) is 2014-12-22 21:47:40. That's 0.2845486 days, or 0.000779585 years. Based on those numbers, it looks like the node staked at just 10% -- so still a Prime Controller staking rate, but the lowest possibility instead of the highest. Oops. So if you happen to be one of the winning bids for a Prime Controller, you should probably contact GAW and find out what exactly is going on and why you're staking at 10% instead of 350%. Unless GAW is intentionally staking some Prime Controllers at a lower rate to reduce the flow of new coins into the market? But that would be odd at best, as GAW could sit on the coins and just not sell them or transfer them anywhere.

Orion Controller Information

Moving on, let's talk about Orion Controllers. From what I understand -- and please feel free to correct me -- all non-winning bids at becoming a Prime Controller end up becoming Orion Controllers. That probably happens by default, but whatever. Since there are only 50 (or 52) Prime Controllers and they're all staking about once per day, at least for the next 28 days or so all other staking will happen at Orion Controllers. In order to become an Orion Controller, the Whitepaper isn't exactly clear (and neither are the Hashtalk forums), but it seems all you really need to do is run a node with at least 50 XPY in it, in a single address. Having more than 50 XPY isn't a bad idea, as staking can break your XPY into smaller chunks.

Where there's a bidding process for Prime Controllers, it doesn't seem like you need to do much more than run a node in order to become an Orion Controller. The benefit of being an Orion Controller is that while the stake rate is the same as the wallet (5%), you can stake without waiting 30 days. Staking is also useful as you receive the transaction fees for any block. Looking at the current blocks being solved via PoS, that often means something on the order of 0.001 to 0.01 XPY per block you solve. And if that's all you get, it's probably not worth the effort, but all Orion Controllers are also supposed to split the proceeds of the winning Prime bids (2500 XPY I guess). Since there could be thousands of Orion Controllers, that still might not amount to much, so there's still not a huge draw to me to set up an Orion Controller.

The caveat is that to become a Prime Controller on the next round of bidding (which is now six months away), you first need to be an Orion Controller. So that's probably the bigger benefit -- you could get promoted to Prime in the future to earn a lot higher staking percentage. But given it required 125,000 XPY to win a Prime Controller bid, you'd need a lot of money to reach that level. I wonder if we might see some sort of pooling together happen from people in order to win "free Prime rates" next round? Get about 300 people with 500 XPY each and as long as they're all willing to go in together in one address, you could avoid the need to have 150,000 $10 HashStakers. Good luck with that.

Saturday, December 20, 2014

PayCoin Goes Proof of Stake... Almost

PayCoin officially hit the one week mark this morning, which means that it has now moved on to being a Proof of Stake coin. Or has it? GAW posted on Hashtalk that they will be doing an extra 24 hours of Proof of Work in order to transition smoothly, but that's perhaps a bit disingenuous. This is not a "surprise", but rather the way it was always intended to happen. You see, the problem is that the source code actually sets the Proof of Work reward as follows:
int64 nSubsidy = 0;

if(nHeight == 1){
     nSubsidy = 12000000 * COIN;
}else if(nTime <= POW_START_TIME){
     nSubsidy = 0 * COIN;
}else if(nTime < POW_END_TIME - 86400){ // reward is 0 before ending PoW 1 day
     nSubsidy = 49 * COIN;

if(nHeight > 277 && nHeight < 400){
     nSubsidy = 0 * COIN;
For those of you that don't know any coding, basically that says that the reward is 12,000,000 XPY for the first block, 49 XPY for blocks up until the end time, and 0 XPY otherwise. There's also a clause setting blocks 277-400 to 0 XPY as a reward, but more importantly is the POW_END_TIME - 86400 statement, which sets the reward to 49 XPY if and only if we are one day before the end of the PoW stage. Why would they drop PoW rewards to 0 XPY one day early? Well, they don't actually, as POW_END_TIME is defined as 1419181200 (Sun 21 Dec 2014 12:00:00 PM EST) while POW_START_TIME is 1418403600 (Fri 12 Dec 2014 12:00:00 PM EST). So really the PoW stage is set to eight days and not seven. But there's a bit more going on than you might expect.

One problem is that the code defines a time block for the PoW stage rather than a set number of blocks. The original plan was to have 12.5 million XPY generated during PoW -- 12 million for the genesis block and 500K for PoW mining. But PoW mining doesn't happen exactly at a steady rate -- some blocks are found quickly, some take more time, and sometimes there are glitches that require a hard fork. What has happened now is that instead of 12.5 million XPY from PoW, there will only be 12,343,209 XPY.

My opinion is that GAW should have had a flexible end time, or more specifically the transition should have happened by block number rather than by an arbitrary time. If PoW had ended at block 10204 instead of an arbitrary time, then we would have ended up with almost exactly 12.5 million XPY from PoW. At a one minute target per block, it would have required around 170 hours, or 7'09 days. But that is not to be.

It's no surprise that this "error" works out in favor of GAW, as now their pre-allocated 12 million XPY represents 97.2% of all PoW coins instead of the 96% that it was supposed to be. It also means that right now, a whole lot of work is being done with zero rewards, and because no new XPY is being created the price has started to trend upward.

The real chaos of course begins when PoS actually starts. There are apparently five potential PoS reward rates: 5% for wallets, then depending on the current PrimeNodeRate Prime (and Orion?) Controllers can stake at 10, 20, 100, or 350 percent per year. As I understand it, the first six months will be at 350%, but digging through all the source code to figure that out would take a lot more time and effort than I currently want to expend. :-)

Anyway, in the near future we should see staking begin to happen, and most of that should occur with the HashStakers/Prime Controllers. I don't know quite what to expect from staking rewards in the block chain, because again I didn't dig through the code enough. Usually staking is based on the number of coins in a wallet combined with the coin age, but Prime/Orion Controllers have a bunch of special exceptions, along with a limit to how many XPY can be in the Controller I believe. One thing is certain, however: I expect the block rewards from staking to be a lot less than the 49 XPY rewards of PoW mining, which means the flow of new XPY into the market will be far lower. But I could be wrong, so keep an eye on the block explorer and I guess we'll see what happens.

Friday, December 19, 2014

The Real Deal on the $20 PayBase Price Floor

A lot of people are getting quite excited for PayCoin's $20 price floor to start coming into effect, and I admit I'm one of them. However, as I was thinking about it yesterday, it finally all came together for me. You see, in order for your XPY to be worth $20 at PayBase, you have to be verified at PayBase. That's not a huge problem, but it does represent a sort of valve that GAW/PayBase can freely manipulate to control the flow of coins. Remember the verification levels:
  • Tier 1: You can only buy XPY with BTC.
  • Tier 2: You can buy XPY with fiat, and trade up to $500 XPY for BTC per week.
  • Tier 3: You can buy a lot of XPY with fiat, or trade up to $2500 XPY for BTC per week.
  • Tier 4: You can buy $75K of XPY per week, or trade up to $5000 XPY for BTC/fiat. (I'm assuming you can't trade $5000 XPY for BTC and another $5000 XPY for fiat, but this isn't explicitly stated anywhere.)
I won't bother with the VIP tier, as that's not for most of us, but what you now need to consider is that verifications take time. At best, I'd expect 2-3 days to get verified (that's what it took for verification at Coinbase when I did it), but all GAW has to do to slow down the rate at which people can sell XPY at $20 is take longer. Heck, they probably don't even need to artificially slow it down, unless it's 100% automated, as they will likely have a queue of thousands of people waiting to get verified. And the higher verifications can't be fully automated -- someone has to actually look at your documents to verify that they say what they're supposed to say, and probably do some additional steps as well to ensure nothing is faked.

So, to more clearly state it, all GAW needs to do to prevent having to spend up to $250 million to buy all the existing XPY at $20 each is to not have so many verified users that such a case is even possible. Realistically, I think we might see one or two thousand people verified per week, which could mean $1 million per week to stabilize at $20 on PayBase. If people are also buying at $20 or more, of course verifications can then speed up. I'd also expect each tier of verification to take time, so the second tier only allows $500 per week of selling on PayBase and that's where it will start. Tier 3 allows five times that much to be sold, but it might take another week or more to have your public records verified. Tier 4 inherently requires at least 30 days to reach, and possibly longer as your government IDs are verified.

Long story short (too late!), if you're expecting the price of XPY to jump to $20+ at all of the other exchanges when PayBase comes online, I don't think that's going to happen. If you're looking to buy XPY at $6 on the other exchanges and then sell it at $20 on PayBase, that should still happen but only in limited volume. I'm not saying you shouldn't go out and buy XPY for $6 of course (I bought some at $10 and still feel okay with that move), but if you are intending to make a quick buck next week by doing so then you just need to realize that you'll need to be patient. Long-term I do expect PayBase to continue buying at $20 and eventually that will become the price floor at the exchanges, but this is why Josh even states that they will "start bringing in the $20 floor over time".

Also worth nothing again is that potentially a huge chunk of all PayCoins will be going into staking in HashStakers, HashStaker Primes, Prime Controllers, and Orion Controllers. I'm not sure how many HashStakers exist, but it's probably in the millions. What that means is that of the 12.5 million XPY, probably less than half are up for sale. And on a similar note, I bet VIP verifications are going to be put ahead of many of the other verifications, as those are the people likely to buy XPY rather than sell it.

Note that I posted these thoughts over at HashTalk as well, with my second account there as the first was banned, so it will be interesting to see if I get banned again or not. I'm hopeful that the user moderation has taken a turn for the better, but I haven't posted anything much over there and this sort of content is might ruffle some feathers and get me some downvotes. Hopefully not, but if I get "voted off the island" again I'm not going back. LOL

Early PayCoin Distribution; Price Drops and Recovers, Cryptsy, Verifications, and More

The past day has been rather eventful in the world of PayCoin. GAW's CEO earlier mentioned that they were looking into ways to get people access to money for next week prior to the PayBase launch. Part of the issue with PayBase is that it will need to conform to anti-money laundering regulations and Know Your Customer (KYC) laws, so before you can buy or sell PayCoin using dollars (or some other form of fiat currency) you need to get verified. None of this is particularly new or surprising, and it's the right way of doing things -- and hopefully we won't see any fiascoes like what happened with MtGox. But it takes time to get verifies, which means that if you have to wait weeks or even longer then you can't access the PayCoins you currently own.

The solution was simple enough: GAW distributed PayCoins to all of their HashPoint users on the ZenMiner cloud today. So if you had 4000 HashPoints as of this morning, they've been converted into XPY at the promised ration of 400 HashPoints per XPY. Considering many users have been accumulating thousands of HashPoints over the past month or so, you'd expect there to be a potential run on the exchanges as people try to get out before the crash, and that's precisely what happened...
The price did recover, but it's still sort of "iffy", but then Bitcoin isn't doing much better right now so the two are almost certainly related. Moving on and related to this, Cryptsy has now opened trading for XPY, it seems with the help of GAW. Cryptsy tends to be a much larger market than Coin-swap, so we may see more people involved (and almost certainly some attempts to manipulate the market). The prices for XPY at Cryptsy are currently higher than Coin-swap (0.0162 vs. 0.018), so there's some potential arbitration opportunities, but things are volatile enough that if you want to play that game you probably don't need to move coins between exchanges.

Of course if you're bullish on PayCoin this represents probably the last opportunity to get in at under $10 per XPY (maybe). GAW in the past has said that they will have a price floor of $20 per XPY, which if they had to buy every XPY would mean a market cap of roughly $250 million at launch. Statements made more recently by GAW_CEO  however indicate that the $20 floor may be more of a medium-term goal rather than something that will happen right at launch. For example, here Josh states, "...while we all wait for Paybase to launch and for us to start bringing in the $20 floor over time." On the other hand, elsewhere he has said, "Paybase will purchase Paycoins for $20 each." I guess we'll find out next week if that's really true.

There are some other interesting tidbits that aren't really important, but I notice GAW has started calling it PayCoin instead of Paycoin. They also have a new video (Life Costs Money) to try and get across their marketing message for PayCoin, which is pretty impressive -- this isn't the sort of video you can cook up in a few hours, so they definitely have invested resources into the marketing. GAW's CEO also pointed out that he's learned his lesson about pre-announcing features, so the current PayCoin is not the final PayCoin, basically, and there's a bunch of other stuff being worked on. Nothing new there I guess.

Finally, the last major item of interest is the subject of PayBase verification of your identity -- the KYC stuff mentioned earlier. This is also related to that $20 PayBase price floor, as we'll see in a moment. Like most places (e.g. Coinbase), PayBase will have a tiered system of verification. Initially there will be five tiers, with different levels of verification required.

Tier one let's anyone buy XPY using BTC, but there's nothing really noteworthy there. If you only want to buy a bit of PayCoin with fiat currency, you just need to link a credit card or bank account, which will let you buy up to $10,000 of XPY (which is way more than I ever plan on buying); more importantly, this will also allow you to purchase up to $500 worth of BTC with XPY per week. The next tier requires verification using public records, and that bumps your weekly limits up $2500 BTC (purchased with XPY), or buying $25K of XPY with fiat. The final main tier requires verification with two forms of government ID and an account that's active for more than 30 days, at which point you can buy a ton of XPY with fiat ($75K), and you can sell up to $5K of XPY for fiat. There's  VIP tier as well, which is basically for the rich and famous.

Here's where the $20 floor comes into play. Best-case, people can sell at most $2500 worth of XPY for BTC per week for the next 30 days. And of course PayBase can slow that down even further by taking more time to do verifications. After all, if you're not verified you can't sell any XPY on PayBase, and if you've only had a credit card or back account verified you're limited to $500 per week. So, with that in mind I suspect PayBase can easily buy back as many XPY at $20 each (in BTC) as verified users are allowed to sell. If GAW decides they will only buy $1 million worth in the first week (50,000 XPY at $20), all they need to do is only verify bank and credit card accounts for 2000 people. And considering that each verification could take a few days and might require some manual effort on the part of a PayBase employee, I'd say 2000 people per week is actually sounding pretty ambitious.

I've verified my account at Coinbase, and prior to that MtGox and a couple other places. It's nothing too surprising, but if you want all your transactions to be hidden from government oversight then this isn't what you want to see. The problem as GAW points out is that getting mainstream acceptance of PayCoin (or any other cryptocurrency) basically requires you to get on the right side of the law, so that's what they're doing. Maybe in the future we can shift away from a government controlled monetary system, but for now that's not going to happen.

Of course there's one issue right now: PayBase isn't yet live so no one can get verified I guess. So get in the queue early come Monday, but GAW did say they will prioritize existing customers over newly registered users. All told, with 12.5 million XPY "in the wild" (with likely half still sitting with GAW), plus the verifications limitations, I don't expect there to be a massive run on XPY in the near future. Rather, I'm more inclined to think it will take most of us a week or more to get verified at PayBase, and the higher the verification level the longer it's likely to take. Long-term, XPY still has a lot of cool features going for it and hopefully GAW can deliver, but like most things in cryptocurrency this is by no means a "sure thing".

Tuesday, December 16, 2014

Paybase Delay, Paycoin Investment Opportunity

If you missed it, the launch of Paybase has been postponed until Monday, December 22. The reasoning is pretty sound: launching Paycoin on Friday meant that when there were a few issues and the network stalled, many people were gone for the weekend and it took a lot more effort to get the ship righted. So, with the stall pushing the end of the PoW phase out by half a day or so, that would mean if Paybase launched right at the end of the PoW phase then it would be kicking off Saturday morning. Rather than deal with a weekend again, GAW is choosing to launch Paybase on Monday (though what time specifically isn't actually clear).

This sort of goes without saying, but with GAW "guaranteeing" a price floor of $20 per Paycoin when Paybase launches next week, there's an opportunity to try and cash in on the current sellers. It's a form of arbitrage, albeit with a rather lengthy delay between your purchase and sale. Still, actually sold out of XPY at a price of $20 each, which is interesting as you could buy them for $9-$10 on Coin-swap. Of course you need BTC or some other form of cryptocurrency to make trades there, which might be the issue others are running into.

I don't have a ton of BTC these days, as it's pretty much all in GAW, Hashlets, Paycoin, etc. and I'm thinking about taking my remaining BTC and buying XPY right now. If all goes as planned, I double my money by next week -- Merry Christmas to me! So, why not give it a shot? Worst case, I get to say GAW was a bunch of liars if they can't hold the $20 price.

Something else sort of interesting to note is that the volume of XPY traded at Coin-swap during the past 24 hours is currently 727+ BTC. They charge a 0.5% fee on trades (both sides), so effectively they have made 7.27 BTC off of just the XPY trades in the past 24 hours. The next highest alt-coin is only a fraction of that amount, so by being the first exchange to adopt XPY they have made some nice profits. Good for them, I say -- I wonder if they're holding any XPY in anticipation of the Paybase launch?

Finally, keep in mind that a huge chunk of the existing XPY will be put into HashStakers, Prime Controllers, etc. so even though there will be 12.5 million XPY come Monday, I suspect less than a million XPY could be dumped on Paybase at $20. At one point GAW mentioned having $30 million in reserve to secure the price, so unless there are a lot more XPY dumped than that the price should hold. From there, we'll have to wait and see. At the very least, it should be an exciting ride. :-)

Monday, December 15, 2014

Paycoin Lives... Paybase Next Week

We had a pretty eventful weekend if you weren't paying attention. First and foremost is the big news that Paycoin officially launched. (Woohoo -- finally!) No, not that Paycoin (PYC); I'm talking about the new Paycoin (XPY). There was a ton of hashing power thrown at Paycoin, and the people over at BitcoinTalk as usual are going nuts with cries of scam, ponzi, etc. "How dare GAW not even bother posting an ANN thread at the site!?" Anyway, we're still waiting for Paycoin to fully establish its value, but the going rate right now is about $9 to $10 over at; will it go up to $20+ as GAW has promised? We shall have to wait and see, but at least there's a fully functional Blockchain Explorer already.

There's more to discuss with the launch. First, besides a ton of hash power -- probably the most ever for a new coin -- there was some serious fluctuation in perceived hash rate per block. I suspect this was more a case of algorithm woes, as I doubt tons of people were hopping on/off the Paycoin mining train, but when a new coin gets exponential growth it can create a lot of craziness. They had to stall mining at block 277 for a while to fix the issues, but things are now back to "normal". Which means if you have SHA256 mining hardware, you can actually try mining some XPY... but how much does that pay?

We could use $20 per XPY as a price, or we can go with the current $9.20 at; I'm going to use the latter, simply because right now it's "guaranteed". Don't be surprised if GAW suddenly swoops in next week via Paybase and scoops up all the underpriced XPY for sale, as they've made similar moves in the past (e.g. giving out 750 Hashlets for Vaultbreaker pre-orders). Anyway, right now the value of a Paycoin block is 49.0 XPY, and blocks are targeted to generate every minute. There will be 12.5 million XPY generated in roughly the first week, though 12 million were part of the genesis block. Yes, that's a big premine... I'm a bit confused as I thought there wasn't going to be a massive premine, but things have apparently changed.

Anyway, besides the huge premine, there are still 500K XPY to mine during the Proof of Work phase, after which things move to full Proof of Stake. Here's where it gets interesting. The current pay rate for mining Bitcoin is about $4.30 per THash/s. Using the current price of 0.0285 BTC per XPY with a BTC price of $341, 1TH will net around $30.60 per day with Paycoin. Obviously this is only for the next five days or so, but if the price of XPY actually hits $20 and stays there (or goes up), you'd be looking at $60+ per day from 1TH.

Not surprisingly, all of the rental services have basically shot up in price to at least match (or come close to matching) the above pricing. Nicehash as an example is paying 0.0775 BTC per TH per day right now -- a bit less than what you might make by mining XPY directly and selling it yourself, but then you're not guaranteed to hit a block with mining.

GAW has also talked about Paycoin and Paybase Express recently, and if they can make that actually work it could be truly epic. There are many naysayers and complaints that GAW is just stealing/buying ideas from others, but I really don't care as long as it all works in the end. That's the kicker, though: making it work. If it does, buying stuff from Amazon or other stores with Paycoin could be as easy as using a credit card, and we'll apparently get to try it out next week. So if you need to do some Amazon shopping, please go through my link first! :-)

As for the minimum price of $20 per XPY once Paybase comes online, you need to consider one important detail: all of those HashStakers need to have 1 XPY each in order to be worth anything, and a ton of people have dedicated at least $10 per HashStaker per three months. The current top 10 list of HashStakers alone gives us over 42,000 HashStakers, so we could be talking about potentially millions of HashStakers. If that's the case, then it will be much easier for GAW to secure a price floor of $20.

How they go about doing that should be pretty simple: they will control Paybase, and all they need to do is have a massive buy wall at $20 -- enough to buy up all the XPY that GAW doesn't already control. That could be $100 million or so, but probably quite a bit less is my guess, which means the $30 million GAW set aside to secure initial pricing should be sufficient. As far as other exchanges go, GAW doesn't need to do anything at all -- if you can sell XPY on Paybase for $20, the prices at other exchanges will naturally gravitate to that point as anyone selling for less will have buyers that are willing to transfer the XPY to Paybase.

When staking kicks in, we also have some other things that aren't clear. For instance, the current code base for Paycoin doesn't appear to have any of the advanced features in place yet (e.g. the Hybrid Flex Blockchain), and GAW_CEO has even stated that some of the items detailed in the whitepaper are going to be added during the coming two weeks. I'm not sure if that will require another hard fork or not, but it's a bit questionable to say the least.

I haven't had any time to look for other stuff (e.g. Prime Controllers, Orion Controllers, minimum stake age, etc.) in the source code, but according to the whitepaper I looked at, the minimum stake age is 30 days. Umm... that can't be right, though, as PoW ends after just over seven days, leaving 22 or so days of "nothing" if PoS isn't active! Maybe there's a newer whitepaper? [Update: HashStakers don't need to wait to start staking, and neither do Prime Controllers (not sure about Orion Controllers), so staking will be fine -- it's only the standard wallet that will have to wait, and that stakes at a much lower rate anyway.]

Hopefully this all works out, but in the meantime I have a ton of HashPoints ("future XPY") and I'm trying to mine more XPY directly. When XPY gets pushed to $20+, that could potentially pay for minivan and then some, so here's hoping!

Tuesday, December 9, 2014

HashStakers for Less, but What Happens to Hashlets?

So this past week there was an attempted rollout of the ability to convert Hashlet Primes into HashStakers. One Prime could become either five 6-month HashStakers (worth $17.95 each at current rates), or you could exchange it for a permanent HashStaker Prime that will never expire (value indeterminate). I actually bought five HashStakers a week or so back, just for kicks, but now I realize that was a mistake. You see, for the price of one Prime (currently $51 or so), you can get the same five HashStakers that cost me $89.75. Here's the catch: this is a limited time offer, like today is the last day (and probably only hours left).

So if you haven't tried Hashlets yet, go join the ZenMiner Cloud, then buy a Hashlet Prime today, and then convert that into either a HashStaker Prime or five 6-month HashStakers. If all works out, the five HashStakers will generate approximately $135-$180 over the coming six months, and potentially more if Paycoin takes off. On the other hand, if you want to stick with GAW, the HashStaker Prime will never expire, plus you get a "free" Paycoin as a bonus (paid out as 400 HashPoints I believe), which is a $20 value. So, $51 will buy you a HashStaker Prime for life and you get $20 back automatically. Needless to say, I'm generally thinking the HashStaker Prime option will be best, though the first option is good for a quick turnaround and exit strategy.

Note that Zen Hashlets will be next for converting into HashStakers, but there's a "limited number" available so I'm not sure how many will be able to take this route. Are there enough HashStaker slots available to convert all Zen Hashlets? I seriously doubt it, but maybe a bunch of users won't convert. Why they wouldn't, I don't know, as Zen Hashlets are down to paying about 1.5 cents per day after maintenance fees. A HashStaker will generate around 15-20 cents per day for 180 days (assuming Paycoin stays at $20 in the future), so it's basically ten times more profitable than a Zen Hashlet. Anyway, if there are any HashStaker slots left at that point, other Solos and Genesis Hashlets will also get a chance to convert to HashStakers, at a "to be determined" rate.

There's a second question, though: What happens to Hashlets? (Please, somebody think of the poor Hashlets....)

Right now GAW has something like 1 million MH of Scrypt ASICs in varying forms of Hashlet. It doesn't matter if they're Primes or Solos, those Scrypt Hashlets can only do one thing: mine Scrypt. If everyone converts their Primes to HashStaker Prime (maybe 500K worth of HashStaker Prime), then what happens to the 500K of Scrypt ASICs at that point? Paycoin isn't using Scrypt in any form, those ASICs can't do SHA256 or anything else, so do they all go back to mining Scrypt coins? And if so, at some point GAW would reach the point (most likely) where mining Scrypt coins isn't worthwhile because of decreasing profitability vs. constant power cost and maintenance.

The same thing happens with the SHA256 ASICs after the PoW phase of Paycoin -- they go back to being used as Bitcoin ASICs for the short term I guess. Maybe there's more of a future for SHA256 ASICs with Paycoin, but I'm not sure what that would be. Once PoW ends and PoS begins, ASICs lose their usefulness. They become giant paperweights -- and I should know, as I have a few "paperweights" sitting around my house now.

Meanwhile, there are a million or whatever HashStakers, but each HashStaker is mostly just a wallet address. Power costs are negligible. and you could run hundreds or thousands (or tens or hundreds of thousands?) of HashStakers on a single server I would guess. If Paycoin takes off then GAW ends up with lots of Paycoin stuff, a relatively small number of servers, and tens of thousands of "useless" ASICs. Maybe someone will find a use for those in the future, but right now it's not looking too promising.

Put another way: remember how GAW said Hashlets would "always be profitable to mine?" Well, staking is a form of mining I suppose, so if everyone converts to staking, I suppose you could still say Hashlets (now HashStakers) are still profitable. Right? GAW also said something to the effect of, "We will ship Vaultbreakers before anyone gets Titans!" That didn't end up happening, though, as instead of Vaultbreakers everyone that pre-ordered ended up with Hashlets/Hashlet Prime. Not that they're complaining (well, they probably are if they didn't elect to take the Hashlets back in August...), but to date no one actually has a Vaultbreaker as far as I can tell.

So what to do now? I've purchased and traded for a moderate number of Primes, and I'll probably keep one or two Hashlet Primes just to see what happens to them in the long run. I also just bought a Prime tonight and converted it into five HashStakers for fun (to see how that works). The rest are going to get converted to HashStaker Prime. I made the mistake of not buying Hashlets when they were first announced at $14.95, and I dearly regret not taking the plunge. I also saw the first Legendary Hashlets for sale at $49.95 or whatever it was back on Sept. 11 and I thought about buying a few, but then I did the math and decided it was a bad ROI. Again, I've kicked myself more than a few times for being too cautious.

This time I'm going nearly all-in on HashStaker and HashStaker Prime, as so far GAW has managed to pay quite well. I've hit the break even point I think, and if Paycoin really becomes worth $20+ in the coming month or two then I've basically tripled my investment. It's been a fun ride, and I'm interested to see what will differentiate HashStaker Prime from a regular HashStaker. What will the amps be for a HashStaker -- higher staking rate? I don't even know. Honestly, there's part of me that hopes it ends up being easier to just let the things sit and generate money. I guess we'll know soon enough.

Hash / Stake On!

Monday, December 1, 2014

Paycoin HashStaker: ROI and Analysis

GAW has been on a pretty good roll for a the past six or so months, and we're all excited to see what happens when Paycoin officially starts being useful. For now there are some interesting side stories I could get into, but it would take more time than I have. (If you want a quick example, if you mine on the HashPoints pools, you're currently getting 19 HP per MH per day; why is ZenPool only doing around 0.00031 BTC per MH, which equates to $0.117 and not $0.19? One possible answer: GAW is pushing Paycoin really hard and they want as many people as possible invested. Oh, and ZenPool is actually back up to being about 50% higher than other Scrypt multipools lately, which is nice to see.)
Today however I want to just focus on the HashStaker and talk about ROI potential -- and to be specific, I'm talking only about Paycoin HashStaker here (as in the future there may be other HashStakers released). If you've been around cryptocurrencies for more than six months, you should certainly be familiar with the idea of Proof of Stake currencies by now. In essence, instead of requiring a large amount of computational work (which uses a lot of power/electricity), staking requires you to hold the cryptocurrency for a certain amount of time before you begin earning interest, and those that are holding the currency (i.e. they have "skin in the game") basically secure the transactions. Well, Paycoin has a form of staking as well, which brings us to the HashStaker.

The price for the HashStaker is based on Prime Controller rounds, which will apparently last six months. You can buy either half of a round at $9.95 or a full round at $17.95, so you get a discount by buying in for a longer period of time. Each HashStaker is good for holding one Paycoin, which means you are investing anywhere from $4 (at the 400 HashPoints price) to potentially $20 or much more. The number of Paycoin HashStakers is also limited, as they're tied to the number of Prime Controllers that GAW controls; it's not clear exactly how many Prime Controllers will exist, but I expect it will be tens of thousands at least.

Anyway, let's say you buy into a HashStaker; exactly how much should you expect to earn back over the staking period? The exact staking rate that you'll get from a Prime Controller appears to be somewhere between 275% and 365% nominal annual interest, meaning if we were talking about dollars then investing $1 at the start of the year would result in you having $3.75 to $4.65 by the end of the year -- and yes, that's a "crazy" interest rate, but remember that it's only for Prime Controllers and not for all Paycoin wallets. But we're not dealing in dollars or fiat, are we?

No; instead what you get right now is an investment of fiat or Bitcoin that's currently worth $9.95 or $17.95, and then you'll stake at a rate of 0.0075 to 0.01 Paycoin per day (once Paycoin launches, which is scheduled for mid to late December). So if you invest $9.95, you also have to add in one Paycoin (which might be $4 or might be $10-$20, depending on how you acquire it). Then in three months you'll have your original Paycoin along with 0.675-0.9 Paycoin in staking interest if you go with the half round purchase; if you opt for the full six month round, you'll get 1.35-1.8 Paycoin back.

And there's the catch: how much is a Paycoin worth? GAW is doing a pre-sale via HashPoints at $4 each, so if prices stay that low you'd pay $17.95 to earn $7.20 best-case (meaning you really lost $10.75 or more). If Paycoin totally fails (which is unlikely I'd say), you lose everything. However, if GAW can deliver on their "guaranteed" $20 minimum price by January/February, then your $17.95 investment will deliver returns of up to $36 in six months (basically you double your money), or if you go for the half round you'd receive Paycoins worth $13.50-$18 from your $9.95 investment.

Based on those projections, we're looking at a potential ROI of around three months and then double the investment in another three months, all at a constant rate of returns. It's "low risk" in that you can guess quite accurately how many Paycoin you'll end up with, but it's very high risk in that we have no real idea how high Paycoin prices will climb -- or how low they might fall!

And for the real gamblers, GAW has also suggested a target of $70-$100 within 9-12 months I believe, so if that were to pan out a $17.95 investment could net you roughly ten-fold returns. And if Paycoin prices shoot up, the next round of Paycoin HashStakers will cost substantially more than $9.95/$17.95 per slot.

It's an interesting concept to say the least, and if nothing else you have to give GAW some props for doing something different. I do laugh a bit at the idea of zero maintenance fees -- of course there's no maintenance, as that's sort of the point of Proof of Stake currencies! -- and the rendered images of a HashStaker are also funny (there's no physical device that looks anything like the above image, I can guarantee that), but there's some potential brilliance here as well. I like to hedge my bets with cryptocurrencies so I went ahead and bought a few Paycoin HashStakers for good measure. Now they're sitting idle waiting for the coin to launch, at which time I can start earning more Paycoins.

I do want to make it clear that I am not going all-in on HashStakers right now. I could potentially buy a few hundred with the Bitcoins I'm currently holding, but I view this as a very risky proposition -- which basically goes with the territory in cryptocurrencies. I tossed a couple hundred dollars at the possibility of earning substantially more back in the coming six months, but that's as far as I'm willing to go right now. I could end up regretting not going all-in later on (just as I wish I had bought as many Hashlets as possible when they first launched), but "better safe than sorry".

Sunday, November 23, 2014

Hashcoin's Name Revealed: Paycoin Is Here

This past week or two has been crazy, hence the lack of updates, but I did want to take a moment to cover some of the major news coming out of GAW. The biggest announcement of course is the official name of "the coin formerly known as HashCoin": say hello to Paycoin. So what can we make of this name?
It's actually one of the better names I'd say. Combine a new cryptocurrency with features from Coinbase, mix in a bit of PayPal, then sprinkle in a bunch of other stuff and you get... Paycoin. It's been so long since PayPal launched that I'm not sure most of us remember the early days any more, but it was not an immediate overnight success story. It was something that sounded cool at first but a lot of people were skeptical -- send money via the Internet? What if someone scams you? How do you get the money into your bank account? Why not just pay with a credit card? -- these were all relevant questions, and they were answered over time. And then eBay bought PayPal and the rest is history.

Well, let's just put it bluntly: Josh and the GAW team have far greater ambitions than PayPal. They've looked at the Bitcoin pie and have decided that for one, it doesn't always look so great and needs some better presentation, and while they're reworking things it might not be so bad to improve the quality of the ingredients and hire a professional pastry chef. What we don't know is if they hired the right chef or not, but we should have a better idea in the next couple of weeks. Here's the outline of the Paycoin launch, and if you haven't seen this it can be quite telling:
The first round of the ICO has apparently completed, and tomorrow is the official HashPoint ICO. That will last until December 8, and Zen Hashlets and Prime Hashlets will now be able to mine additional HashPoints for two weeks -- originally the ability to mine HashPoints was going to end at the start of Round 2 of the ICO, but that was extended "due to popular demand". Round 3 is next, which is an invite-only ICO at $10, and then all of the money so far gets split three ways with one third going into the Trust Fund.

Here's where things start to get far more nebulous. You'll not there's still no dates on anything beyond the Round 3 ICO. When does Hashbase launch, and when is the public launch of Paycoin? We don't know. But a bit further out we see the "At-Cost Hash Power" which sounds promising. And then finally, we get to the real meat that will determine whether Paycoin succeeds or not: retailer adoption and credit card processing. And then we end with a lovely "....... Profit!"

GAW has actually fleshed out a lot of things at this stage, and the full Whitepaper is up (though still undergoing minor edits it seems). Perhaps more importantly, they now have officially created a referral system for people to use to get others into cryptocurrency. It's about freaking time they ditched the "email invite only" aspect and made a way for others to directly link to the site!

With all of the announcements and the HashPoints ICO nearly ready to start, I think it's also interesting that Hash Market pricing on the Hashlet Primes and Zen Hashlets has gone up. Zen Hashlets are selling at $12.60 now, though where they go after Round 2 is over isn't exactly clear. Hashlet Prime meanwhile is starting at $40.21, but only in relatively limited quantities -- if you want to purchase $10,000 of Hashlet Prime, you can do so for a price of under $42 per MH, but the next $10,000 would get the price closer to $48, and I'd say there's less than $50,000 total of Primes available for prices people are likely to pay. (Note: I haven't actually added up every Prime for sale, so I might be off a bit, but there are definitely not tens of thousands listed on the market.)

Other Hashlets are taking a beating, though. Genesis is more or less holding steady at around $0.50 per GH, but Multi Hashlet is down to $4, Clever Hashlet is at $6.18, and Waffle Hashlet is at $6.30. None of these are available in large quantities, but they're also down to the point where you're making the "guaranteed" $0.01 per MH per day" in most cases (all have had negative earnings on several days in the recent past that GAW had to correct/subsidize, apparently). Josh has stated there will be a Hashlet upgrade path offered at some point, though, so it's possible you could buy one of these other Hashlets and at some point upgrade to a more useful Zen or Prime for less than the current price of a Prime... maybe. My advice: just stay away from anything that's not a Prime at this point, until we have a real idea of where Zen Pool is going.

The good news is that one way or another, things are moving forward at this point. People will own Paycoins in large numbers starting tomorrow, and by the beginning of next year we might see a decent level of adoption. Or we might see the Coin Adoption Fund fail and the price plummet once Paycoin hits an exchange, but if nothing else it has far more money backing it than any other cryptocurrency. Let's hope it succeeds, as the combination of instant payments, staking, and an enhanced blockchain all sound promising.

Wednesday, November 12, 2014

BTC: Up, Up and Away!

It's interesting to see patterns start to emerge with Bitcoin, and right now after more or less stagnating for the past three or four months, Bitcoin looks to be rebounding. How high will it go this time? I have no idea, but it sure would be awesome if it could break the previous top from last December! I have been hoping something like this would happen, and right on schedule (two weeks before Thanksgiving) we're starting to pick up steam. So here's the question: do you buy BTC now and speculate, or just sit back and watch?

Thankfully, I'm in the position of having some BTC already, so I'm just hanging onto it and seeing where things go -- I'm in this for the long haul at this point. However, I'm also in no hurry to dump thousands of dollars into BTC in hopes that it goes even higher after the investment. Sadly, I just don't have that sort of disposable income hanging around. For those who do, however, I think if you can just dump a few thousand (or a few tens of thousands) into Bitcoin and then turn a blind eye for a couple years, this is about as good a time as any to take that chance -- actually, it was a better time last month when we were at $300 or so, but whatever.

The fact is, more and more businesses are starting to adopt Bitcoin, and I think some of them are going to start saying, "Hey, instead of cashing out 100% to guarantee our profits, we ought to hang on to at least a few percent and see where things go." Can you imagine what would happen if places like Newegg decided to hold just 3% of all Bitcoins they receive? I don't know what sort of BTC volume they're doing, but it's definitely more than zero, and over months they would likely end up sitting on thousands of Bitcoins. If more companies take that same approach -- a calculated risk, so to speak -- supply and demand dictates that there will be fewer Bitcoins in circulation, and thus price will trend up.

It's important at times like this to remember: there will only ever be 21 million Bitcoins. The same coins can be used again and again with no deterioration in quality, yes, but more importantly if big companies start using Bitcoins -- and this is already starting to happen -- then a place that does millions of dollars in business per day will certainly cause some ripples by supporting BTC. In another year, we could easily be looking at five digits for Bitcoin.

I've mined and sold a lot of BTC over the past few years, but I'm glad that I've finally reached the point where I don't need to sell BTC to cover expenses. That means I can join the ranks of the true believers and simply sock away everything I earn going forward. I won't be surprised if 20-30 years from now when I'm retired, most of my retirement savings consist of BTC that I can live off for the remainder of my days. Now if I can just get universities to accept BTC for tuition, I might have my kids' education paid for as well in the coming months.

Monday, November 10, 2014

Hashlet ROI Projections with HashCoin ICO

I had an email from a reader that I just responded to, and after running the calculations I figured this was worth sharing. The first question was easy enough: does the amount invested right now affect the time to ROI? The simple answer is that, generally speaking, the amount invested initially doesn't really change the ROI. Whether you invest $250 or $10,000, if you do the same thing with the money you will hit ROI in the same amount of time. The much bigger factor is the time of investment, difficulty/payout rate from Hashlets, and the current price of Bitcoin (and future price of HashCoin).

These are of course very difficult to predict with any sort of accuracy, so what you end up doing is making a guess. The reader said he had $250 to invest (or "risk" if you prefer), so here are some numbers I put together using the information from the past few posts as well as projections made by GAW. Note that the Hash Market prices can fluctuate quite a bit, so I just took the current minimum prices for Hashlet Prime and Zen Hashlet for these estimates.

Let's say you go and buy six Hashlet Primes right now with $255 on the Hash Market ($42.50 per Prime, though it's been as low as $35 or so in the past week). The hope is obviously not to hit ROI strictly through mining but to get there via Hashbase and HashCoin. Starting with an optimistic forecast, let's say HashCoin really does sell for $4 to early purchasers who mine HashPoints, and then it goes up to $20. In ~30 days when HashCoin is supposed to launch you would have roughly 3000 HashPoints (worth nominally $30 -- note that you might be able to Double Dip on the HashPoints Pool to earn as many as 4500 HashPoints), so you can use those to buy 7.5 HashCoins. Those HashCoins then end up being worth $150 when the fiat ICO takes place. You would have $150 in HashCoins plus your six Primes, and the Primes could very well go up in value also -- maybe to $50 or even $75 each. So best-case, in a month -- more likely two, as I expect HashCoin/Hashbase launch won't happen in exactly 30 days -- you could end up with $450 to $600 off of an initial investment of $255.

As a second alternative, since Zen Hashlets can also do HashPoint and are far cheaper (around $13.50 each on the Hash Market, though I've seen them priced as low as $11 or so in the past week), you could use $256.50 and buy 19 Zen Hashlets. Using the same numbers as before, in 30 days you have ~9700 HashPoints, which you can use to purchase 24.25 HashCoins at $4, and those go up to $20 and so you have $485 worth of HashCoin at that point. You also still have the 19 Zen Hashlets, but I wouldn't expect those to hold value as much so let's say they're worth $12 each; that's another $228, so all told you might get $715 out of the initial $256 investment.

Those are both "best-case" options, however; a less optimistic scenario is that HashCoin's launch is pretty rough and the price doesn't actually stay anywhere near $20 for fiat but drops to $2-$4. With the less successful launch, Primes and other Hashlets are not as viable so they don't hold their value as well -- let's say Primes drop to $25 each and Zens drop to $5 each.

Using these "pessimistic" numbers ("worst-case" as usual is that HashCoin/GAW ends up as a massive failure and you lose everything, but this is highly unlikely), scenario one gives you $15-$30 worth of HashCoin and $150 in Primes, so in one month you would have a potential value of $165-$180 from your $255 investment. Going forward from there, if you continue to make $10-$30 per month, you'd hit ROI in ten months total ($2 HashCoins and $10 per month) or potentially as soon as three and a half months ($4 HashCoins and $30 per month).

Scenario two gives you $48-$96 in HashCoins with $95 in Zen Hashlets, so you're at $143 to $191 in one month, and then $10-$30 per month from continued mining with the 19 Zen Hashlets. ROI would occur in twelve months ($2 HashCoins), but you might hit ROI in as little as two months ($4 HashCoins and $30 per month).

Given the above, "risking" $250 or so isn't a bad idea -- if you can't afford to potentially lose $250 then you've got much bigger problems to worry about, right? I wouldn't necessarily go crazy and invest your life's savings into Hashlets right now, but back in August I had about $7000 worth of cryptocurrency holdings (mostly in Darkcoin at the time) that I ended up exchanging for Bitcoin and buying ASICs and then Zen Hashlets. If I had lost everything, it would have been a bit painful, but I could continue living without too much trouble -- I just wouldn't have any Bitcoin savings left. Instead, I've nearly doubled the value of my investment, and I continue to earn about $400 per month -- and that's if I do nothing but mine for Bitcoin.

By the time HashCoin actually launches, if all goes well I should be able to buy close to 800 HashCoins (give or take). That means in a month I should have at least another $1600 earned (at a value of $2 per HashCoin) and potentially as much as $16000 if HashCoin really hits the "projected" $20 per coin. Not bad for a $7000 investment. And I'm still kicking myself for not buying Hashlets when they first launched at $14.95, back before they became Hashlet Primes. I could have had about 450 Primes, which even now would be worth close to $20,000. Hindsight is always 20/20, though.... :-)

Short summary: if you're interested in getting in on Hashlets, it's not "too late". Estimated returns are lower now than what you would have made if you had the foresight to invest back in August, but you could still easily double (or triple, or even quadruple) your value in the next year. You could also lose everything, yes, but that's very unlikely -- maybe losing half would be a better estimate of the real floor. If you haven't joined already and are interested, drop me a note and I'll send you an invite, and you can get started. I'd love to see some of you take the $250 challenge outlined above and see if you can hit ROI in as little as a month or two, or if it ends up taking six months or more.

Last note: HashCoin is officially supposed to launch in just 14 days. If it really launches at that time and the HashPoints Pool is turned off for Zen Hashlets, that will obviously change the ROI projections outlined above, making Primes a safer bet. HashCoin will start with the ICO (Initial Coin Offering) for HashPoints, then open up to fiat investment. I don't know how long that will actually last, and it's still not clear when precisely HashCoin mining will be opened up to the public. I guess we'll know in a couple weeks! I'm guessing 30 days before it really gets going, which is why I used that figure for the above calculations.

Thursday, November 6, 2014

Further Thoughts on HashCoin and the ICO

Not everyone over on Hashtalk is drinking the cool-aid, though plenty are. Here is a good post for instance that echoes many of my thoughts.

As I noted in the last update, my biggest concern with HashCoin/Hashbase is that there's apparently 8% of 1.2 billion HashCoins being "premined" for the ICO. Only a portion of that is going to be sold to miners for HashPoints at 400 HashPoints per coin (apparently), and the rest is "being valued at $20 per coin". Only according to Josh (GAW's CEO), that's the supposed minimum and it will "probably be a lot higher". I might have some nice beachfront property I'm willing to sell you for a song as well... any takers?

Let me put it this way: 8% of 1.2 billion times $20 is a hell of a lot of money, and $30 million as a reserve to prop up the price won't do jack squat. In fact, $30 million would actually guarantee a price of just $0.3125 per HashCoin, while the value of 8% ICO at $20 is $1,92 billion. And we're also hearing talk of "way more than $20 -- probably $75 per coin in the first year." So we're not saying $1.92 billion, but $7.2 billion in the first year as the market capitalization of the currency.

Realistically, even $4 per HashCoin is probably overly ambitious for a new cryptocurrency with 1.2 billion coins. Maybe in 10 or 15 years it won't be, but at that point the coin will be well established and useful -- or it will be dead and buried.

Counting coins mined and assuming the payout rate will be somewhat similar to other coins (e.g. starting out with higher block rewards and gradually trailing off), we have a target of mining all of the 1.2 billion HC in 15 years. Thus in one year I think it's safe to expect we'll have at least 15-20% of all HashCoin planned already mined, possibly as much as 25%. (That's including the 8% ICO premine.)

At $4 per HC, that would be $720 million to $1.2 billion. Again, how far will a $30 million reserve go in propping up a base price of $4 per HC? And at $20 we would have a market capitalization five times that high (basically matching or exceeding the current valuation of Bitcoin). If there are real companies (e.g. Walmart, Target, Amazon, etc.) on board, the reserve should probably be closer to $250 million, or even $500 million, at the very least -- and $1 billion would make me feel a lot better about things. But who would put that much money into an untested cryptocurrency?


It sounds a bit too reminiscent to things like GuarantCoin, UroCoin, GPUCoin, and any number of alternative cryptocurrencies that aren't doing so well. Okay, URO isn't dead yet, but their tactics still don't lend much credibility to what they're doing. Anyway, I digress....

I do think that going "all in" on HashPoints is the best bet right now for Hashlets, especially Zen Hashlets, because what else are you going to do? Mining on Zen Pool is generating about $0.1015 per MH, so by switching a Zen Hashlet over to the HashPoints Pool you're only giving up a potential profit of $0.0215 per MH per day. I've got close to 500MH in Hashlets (mostly in Zen Hashlets, plus some Primes I got by converting my Lightning X6 ASICs), and the potential to earn roughly $10 per day compared to $75+ in HashPoints means the only viable options are to sell or mine HashPoints.

Put it another way: if I buy HashCoins at 400 HashPoint per coin, then to match the value of what I would have otherwise made by mining on Zen Pool I only need HashCoin to stay at about $2 or more. That's certainly not an impossibility, especially when you consider all the other people that are likely to buy into HashCoin at $4 per coin (in HashPoints), so rather than selling my Hashlets and "getting out while the getting's good", I'm taking a calculated risk.

Here's another interesting thought: there are probably at least 500,000 Hashlet Primes and another 500,000 Zen Hashlets in existence right now. (There could be more, or perhaps less, but that's at least enough to get us started.) One million Hashlets on the HashPoints Pool means 17 million HashPoints are generated daily (give or take). Let's just assume this goes on for a month; at that point there will be at least 500 million HashPoints available, and if all of that goes into HashCoin we're looking at 1.3 million HashCoins being purchased by miners in the initial ICO. That sounds like a lot at first... until we again recall the 8% premine/ICO, which means 96 million HashCoins will exist.

So if the ICO for HashPoints is only 1% of the total premine, and the actual fiat ICO is at $20 per HashCoin, I'm guessing only a small fraction of the premine will end up being sold. That could mean GAW will hang onto the remaining chunk of the ICO and hopefully use it to prevent inflation (and not sell it on the open market for less than, say, 10% above the current price). But until some big company like Walmart, Target, or Amazon actually comes forward and says, "Yes, we are working with Hashbase and will accept their cryptocurrency -- which definitely doesn't sound like it's a done deal, though there have "been talks" -- this is all pie in the sky talk.

Let's be blunt: when Josh says things like "People that sell their Primes on the Hash Market are going to be very sorry once Hashbase comes online", he sounds like a used car salesman. He might be right, and we definitely don't know everything about what's happening behind the scenes, but then some used car salesmen actually do tell the truth -- and they still sound like liars while they're doing it. Real businesses that are worth hundreds of millions of dollars (or even billions of dollars) don't have to make such grandiose claims in advance. Let's just hope GAW doesn't pull a Zalman/Moneual on us....