The altcoins and other “investments” I like, Part I

Disclaimer: I am not a financial adviser. This should not be taken as financial advice. I am merely sharing some coins and other opportunities I like. Please do your own research and only invest what you can afford to lose.

The second half of 2015 has brought one interesting development. From my perspective (which is definitely not exhaustive) it seems there has been a decrease in half baked new coin launches and a few launches of new coins which come with a full fledged and well funded development team and a comprehensive plan of action. In other words these coins are approached more like a business venture. Just as importantly, some coins which launched one or two years ago with those solid fundamentals in place are continuing to progress and gain traction and value, looking good as long term investments.

Another great development of 2015 has been the emergence of solid places to park Bitcoin for growth at a decent rate of return. This allows for a Bitcoin holder to profit from more than mere speculation (buying low and selling high). This article will summarize some of these opportunities first.

BTC Jam: How does your Bitcoin grow? BTC Jam is a crowd sourced loan service for people who have a good idea that needs funding and who are willing to take the loan and make their payments all in Bitcoin. Any user can request a loan, and they get a page in which to pitch their own credentials as well as the soundness of their idea. Other users can then pitch in small or large amounts to fund their loan request. If the loan funds at 70% or more within a specified period of time (usually ten days), then the loan is issued.

I invested in various loans in the early days of BTC Jam. As with anything in crypto, some of the loans paid back at handsome profits and others defaulted. BTC Jam has since greatly improved its credit rating system, giving lenders the opportunity to selectively invest their funds. But back then the big issue was that choosing and then monitoring all those loans was quite time consuming.

A few months ago, BTC Jam came up with the autoinvest program. A lender can choose a program based on criteria such as borrower credit rating, length of loan term, and whether or not the repayments are a set amount in Bitcoin or tied to a Bitcoin/USD index. The lender also sets the total investment amount, whether funds from repaid loans get reinvested, and how much will be contributed for each loan. The end result is that once you’ve set up your investment program all you need to do is deposit funds and the rest is automatic. Your funds will get put into loans that match your criteria, and you can sit back and collect the payments. The projected rates of return are pretty decent, from around 10% to 35% APR depending on the level or risk you are willing to take. The actual rates of return are determined by how many borrowers actually repay vs. default. A certain number of defaulted loans is to be expected, and when BTC Jam projects a rate of return, it takes this into account.

If you need to withdraw some of the BTC instead of reinvesting it, all you have to do is turn off the autoinvest program for a while. You can turn it back on anytime you want. The minimum amount you can invest in an autoinvest program is one Bitcoin. However, you do not have to deposit that entire Bitcoin all at once. You can start off with a small amount and gradually add more over time. Your funds will be sent to loans that match your criteria as the loans are requested and the funds come in.

I personally have found the BTC Jam autoinvest programs to be a great mostly hands free way to grow my Bitcoin. After trying various types of programs I have for the time being settled on a conservative one which only invests in loans that repay in straight Bitcoins (no indices) since it’s my stash of Bitcoins I’m hoping to grow. One disadvantage of this opportunity is that liquidity is low unless you specifically invest in only short term loans (I invest in all term lengths). Some of the loans can last for as long as a year with monthly payments, which means it will take an entire year to get your principle plus interest out unless the borrower repays early (which some of them do). BTC Jam autoinvest program should be viewed as a long term investment, but once you are invested in a large number of loans, some funds can be skimmed off as payments are made.

Lending to margin traders on Poloniex I’ve written about this lucrative opportunity before and it is still a viable option for growing your Bitcoins. The advantage is that the repayment rate is as good as the trading platform, which so far has been excellent. When a borrower takes out a loan in order to participate in margin trading, the repayment is automatic. If the borrower’s balance drops to the point where he won’t be able to make good on the loan, the platform automatically closes his trading position and repays the loan. Then your funds are free to go to another borrower. In other words, as far as the loaning itself goes, your risk is extremely low. The only thing you really have to worry about is the entire exchange defaulting, which unfortunately has happened far too often, but again, Poloniex has thus far showed no signs of that being imminent.

The other disadvantages of this opportunity are that interest rates fluctuate wildly. They can run as high as 0.18% a day for Bitcoin (which would amount to over 700% return a year!) and as low as 0.02% a day. Sometimes you get a good return, and other times you don’t.

Because the rate of returns fluctuate so wildly, you have to monitor your loans a lot more intensely. If you put out a loan offer at 0.15% and the going rate plummets to 0.03%, then your loan will most likely get closed by the borrower (who will be looking to borrow at a lower rate), and then your offer will sit in the open offers section until either the rate goes back up or you cancel the offer and reissue it at a lower rate. On the flip side, if you keep a loan offer out at a low rate of return and the rate goes up, then you will not be able to take advantage of the higher rate. Barring the use of an automated bot, you have to log into your account at least once a day and keep an eye on what’s going on, making adjustments as needed.

Rental Starter Fund on Havelock Investments This fund is run by a real estate investment company in Ohio. The owner of the company, Brandon Schlichter, frequently buys, rehabs and rents out properties, or he buys, rehabs, and resells them. Profits from his activities are distributed among shareholders as quarterly dividends. I’ve had money in Rental Starter for over a year now, and have been happy with the transparency and frequent communication from Brandon. He conducts most of his communication with investors through a proprietary channel on Slack which all shareholders are invited to join. In the Cryptoworld, good communication is much rarer than it should be, and Brandon goes above and beyond the call of duty in this regard.

The current annual rate of return is low, currently around 2% according to Havelock, so this isn’t exactly a Bitcoin growth stock. However, Brandon is always looking for ways to improve his profits and share them with investors. He’s currently considering expanding his offerings into managing properties for large real estate investors.

The price of the stock is currently fairly low at 0.0065 BTC, so this is a decent time to buy in. I’ve seen the stock as high as 0.014 BTC in the past. I suppose some profits can be made buying and selling the stock. However, I consider it to be a long term buy and hold asset.

The three opportunities I mentioned are not the only ways to grow Bitcoin, but they are ways that have worked for me for a long time and that I feel comfortable recommending. With that said, this should not be taken as investment advice, but merely as information. If you want to try one or more of these possibilities out, please do your research, start small, and only invest what you can afford to lose.

In Part II, I will talk about altcoins that I consider to be good investments at the moment.

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Paycoin microprime is back

In the cryptoworld a lot of things don’t pan out. Some opportunities turn out to be outright scams. Others turn out to be bad investments despite the most sincere intentions on the part of the founders or developers. Either way, you lose your investment. I have had quite a few experiences with crypto investments of various kinds not panning out. I have lost quite a lot of cryptocoins when opportunities I personally invested in went belly up.

Paycoin was one of those failed opportunities. Or so I thought. My “decision” to invest in Paycoin was actually not one I made completely freely. Back when I wanted to try my hand at Scrypt mining, I bought a hosted mining package from GAW Miners. The package turned out to be Zen Cloud which only allowed mining in select multipools. I ended up purchasing a whole new set of hardware, but I had it delivered to a bona fide data center so that I could mine in whatever pool I wanted to. However I did keep my “hosted” equipment on Zen Cloud.

I was going to request delivery of my hosted equipment, but then an email from Zen Cloud informed me that I’d be given some additional hashing power, plus I’d heard that people had trouble getting their hosted equipment delivered, so I just bought all new hardware which I had delivered while keeping the hosted equipment where it was.

Eventually my hosted equipment morphed into Hashlets, and then into Hash Stakers, and possibly one or two renditions in the mean time. I knew at that point that it was all digital, not actual hardware, but it was easier to go down the GAW/Zen Cloud path so I did. I ended up with nearly twice as much “hashing power” as I’d originally “bought,” all in the form of “immortal hash stakers.”

These immortal hash stakers “mined” Paycoin. I had enough of them to produce about a half a Paycoin each day. Zen Cloud gave me quite a few PayCoins to get started, because I had been “pre-mining” them back when the multipools were not producing much Bitcoin. I wasn’t particularly enamored with Paycoin itself so I sold a lot of them as they were staked (“mined”) and figured I could enjoy that little trickle indefinitely.

Then all kinds of drama started happening with Josh Garza, the founder of GAW Miners and the acting director of Zen Cloud. All kinds of accusations flew around about how he was a scammer and how Paycoin and everything associated with it were just a bit Ponzi scheme.

I never quite bought the idea that Garza was a scammer–I believed then and still believe now that his intentions were good. It also seemed to me that the whole Paycoin concept was genuine, even if it didn’t work out entirely as planned.

However, the increasing amount of drama made it clear to me that Paycoin and hash stakers were no longer a good investment–if they were ever a good investment in the first place. The plummeting price of Paycoin helped make that clear. So did the announcements of Zen Cloud’s eventual closure.

At some point Josh Garza got locked out of the back end of Zen Cloud and it was taken over by people involved in the PayCoin Foundation. These were people who believed in the coin, but for whatever reason came to the decision that Josh Garza could not be trusted. It was essentially a hostile takeover, but I do not know the details and don’t really care to.

My hash stakers continued to kick out new Paycoin at the promised rate for about a month after the takeover, but it was made clear that they would stop soon. Then one day, they all coughed up their embedded Paycoins and that was it. I transferred my newly liberated Paycoins to an exchange and dumped them.

I did inquire on the Paycoin Forum as to whether or not there was ever any possibility of the hash stakers working again, or at least getting refunded, and no one seemed to know for sure. Some people were talking about mounting a class action lawsuit against Josh Garza and GAW Miners. Others were finding other ways to stake their Paycoins. New sites came up which allowed for the Prime stakers to be auctioned off for discreet periods of time. Or you could “rent” their use by sending a certain amount of Paycoin to be staked. All of those possibilities essentially required starting over with fresh Paycoins. None of them represented any sort of renumeration for actual funds spent on Hash Stakers (with the expectation that they would stake forever).

At that point I concluded that I had lost close to two Bitcoins in the affair and I certainly wasn’t interested in having anything more to do with it. By that point I had gotten used to losing cryptocoins that way, so I chalked it up to more hard won experience. Once I dumped those last Paycoins I never logged in again. I put all my hash stakers on the market, but knew that was a long shot. I’m not even sure the new management of Zen Cloud supported or honored a hash staker marketplace. None of mine sold.

The last thing I expected was for hash stakers to return in any form.

This morning I received an email from Zen Cloud concerning its final shut down. What? Zen Cloud hadn’t shut down already?

It turns out that people who believe in PayCoin but not in Josh Garza have been working hard to essentially decentralize the hash stakers. The way Garza set it up, there were three different minting or staking rates for Paycoin. One was the usual way which was to run the QT wallet and unlock it for minting. I did try that at one point and never got anywhere. This was the lowest and least likely staking rate. The highest staking rate was the prime controllers. I’m not sure exactly what prime controllers are, but they can stake at a rate of around 25% APR. Once the PayCoin foundation people ousted Garza from the project, those prime controllers got put out for bid where people could rent them for up to six months at a time. You can still do this now. The third staking option was the MicroPrime, with a rate somewhere in between the regular staking wallet and the prime controller. Hash stakers were essentially MicroPrime wallets. You could also buy those for a set period of time, but early adopters who had hashlets had the option to convert them to “immortal hash stakers,” and that was the option I chose. But when Garza was running the show, the only way to own hash stakers (or MicroPrimes) was to host them through a Zen Cloud account. This meant that all the MicroPrimes were centralized and therefore vulnerable to all the issues that come from a network that is controlled by a single entity.

This morning I received news that my Zen Cloud account has a private key for me which once I import it, will convert my regular QT wallet into a MicroPrime wallet. Practically this means that my QT wallet will mint at the same rate that my hash stakers used to. If I can just get the rest of the Paycoin block chain downloaded (no easy feat I’m finding), I can then import the private key and voila: a truly decentralized MicroPrime wallet. My understanding is that this wallet will stake at the higher rate for as long as I keep it unlocked and loaded with coin.

I logged into my Zen Cloud account as soon as I could and located the private key. I also found a nice stash of Paycoins roughly corresponding to the total size of all my hash stakers. I suspect that when I import the private key, those Paycoins will show up in my QT wallet.

I then downloaded and installed the most recent version of the Paycoin QT wallet and it’s been working hard to download the Paycoin block chain ever since. For some reason it is having a really tough time downloading the last month’s worth of blocks. My intention is to import the private key, send the Paycoins from my Zen Cloud account to my wallet (if importing the key doesn’t take care of that), and then try to stake with it. If the wallet really truly stakes like the hash stakers did, then that would be the best possible outcome I could have expected.

Even if the staking doesn’t quite work out as smoothly as the hash stakers (after all I had no way of knowing how the numbers on my account were truly acquired), it is truly refreshing to know that at least in this one case, there are people hard at work trying to make things right by all the former GAW/Zen Cloud customers. They are trying to actually deliver what Zen Cloud promised. Assuming my very own MicroPrime wallet does a good job of staking new Paycoins, a great feature is that this wallet will be controlled only by me. I will not need to log into a centralized account in order to access coins that are rightfully mine.

Now if my wallet can just get the block chain downloaded already…

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Faucets have come a long way

Thanks to faucets, no one getting involved with cryptocurrency for the first time need ever begin emptyhanded. Let’s say this is the very first day of your journey into the cryptosphere. You know that you need a wallet so you head over to Coinbase to set up your account, link to your fiat bank, and obtain your very first Bitcoin address. If you fully verified your Coinbase account, including enabling two factor authentication, then you will have already been given a Dollar’s worth of Bitcoin.

You can then head over to the Bitcoinker faucet and collect one thousand satoshis every fifteen minutes. Bitcoinker actually gives you two claim options. You can either take a straight 1000 satoshis claim or you can try your luck and collect either 200, 300, or 2500 satoshis. I personally always take the thousand. Once you have claimed, Bitcoinker sends your earnings to Faucetbox where they combine with earnings from any other faucets which use the service. Once your total earnings reach 13000 satoshis, Faucetbox sends you a payment with its next payment run. Let’s say you manage to collect from Bitcoinker three times an hour. In just over four hours you will have your first Faucetbox payment queued. It can take up to twenty-four to forty-eight hours for you to see it but you will get paid. If you just kept claiming, that first payout could be a lot larger than 13,000 satoshis.

Faucets provide small but significant earnings I use Bitcoinker as an example of a starter faucet because you can claim so frequently, but let’s say you also claimed from Bitcoin Zebra, Moon Bitcoin, and Weekend Bitcoin five times a day (these are hourly faucets). You would then also receive weekly payouts directly from those faucets in addition to your Faucetbox payout.

Depending on how frequently you visit the faucets you can easily have your first 100,000 satoshis, or 0.001 BTC in your wallet by the end of your very first week in Cryptoland. This is not even counting the Dollar’s worth of Bitcoin that Coinbase will give you just for verifying your account.

Based on today’s Bitcoin price, 0.001 BTC is 22 cents. Not even one Dollar. Not even a quarter. Because it’s worth so little, the recommendation I’m about to make as to what you should do with it may surprise you. I’m going to tell you to invest it.

No investment too small Let’s say you went to a fiat investment firm’s office and told them you wanted to open up an account. When they asked you how much you wanted to start with you showed them your twenty-two cents. What do you suppose might happen?

Besides the broker in his fancy suit trying very hard to not laugh in your face, you would be stymied by account minimums. I recently learned of a mutual fund that was supposed to be a good child investment fund. The minimum amount needed to get started was one hundred Dollars and the minimum automatic monthly deposit was twenty-five Dollars. I don’t personally know of any kid who gets that kind of allowance money. If those are the minimums for a child investment fund, then what do you suppose they are for an adult investment fund? Is it any wonder that only the rich can afford to invest?

It’s different with Bitcoin. You really can start with just twenty-two cents. And actually, if you were to exchange your Bitcoin for Dogecoins you could invest with even less, but I’m going to keep it to Bitcoin here just to make it simple.

So how would you invest twenty-two cents worth of Bitcoin? You deposit it into your Poloniex Bitcoin wallet and then lend it out to the margin traders. My previous article describes that process in greater detail. My tutorial takes you through the steps. If you want, you can even visit the faucets using your Poloniex address and leave Coinbase completely out of it.

The current daily interest rate you can get by lending out your funds on Poloniex is 0.08%. Let’s do a little math to see what that might do to your twenty-two cents by the end of the year. We’re going to assume compounding every three days and a 300 day year since a typical two day loan offer may take a few hours to fill and start earning interest. In other words, we’re going to be very conservative, accounting for a total of 65 days of time that your twenty-two cents are not being loaned out. We’re also going to assume that each time you are paid interest you lend it out as well by adding it to your main loan. Please keep in mind that current performance is not a sure indicator of future performance, but just what is happening right now.

I put together a simple spreadsheet to show what is going on. Given the above parameters, by the end of the year, your twenty-two cents would have grown into nearly twenty-eight cents assuming the price of Bitcoin stayed the same. Your 0.001 BTC will have grown to 0.00127 BTC.

So gaining six cents in one year is hardly anything to write home about. But what if you kept visiting faucets and kept adding in twenty-two cents on average, every three days? In that case by the end of the year you would have $24.89, or 0.1131 BTC. That’s still not enough to retire on, but it’s significant, especially when you consider that all the principal came from faucet visits, in other words, BTC that was just given to you because you asked for it. It’s also only one year of faucet claiming.

Risks of investing your Bitcoin on Poloniex Going from twenty-two cents a week to a whopping $24.89 sounds like an amazing return on investment. So what are the risks? Let’s be clear on what they are. I may miss some but here are the ones I see based on my experiences.

1. Poloniex could get hacked and you could lose all your funds. Although Poloniex has a good reputation for keeping their customers’ funds secure and customers can do much to secure their own funds by choosing a unique robust password and enabling two-factor authentication, there are always hackers out there who would rather put their efforts towards stealing other people’s money rather than earning and growing their own. The reality is that in the Bitcoin world security breaches and thefts happen. As far as I know Poloniex is the only exchange currently offering margin trading. However I am guessing it’s only a matter of time before the other reputable exchanges begin offering it as well. Once other leading exchanges also offer margin trading, I would highly recommend placing funds in them and lending there as well. That way if one falls, you don’t lose everything.

2. The interest rate you get for lending could substantially decrease. I personally think this outcome is likely for two reasons. First, a 0.08 percent daily interest rate amounts to an annual interest rate of 29%. No fiat bank offers that and no legitimate Bitcoin investment offers that. The rate on Poloniex is subject to what the margin traders are willing to pay and can change at any moment without notice. When word gets out that people can get this kind of killer interest on their Bitcoins I’m sure Poloniex will be flooded with loan offers which will put downward pressure on the rate. I’m undoubtedly cutting my little financial scheme’s useful life short just by publishing this article. Second, margin trading is popular right now because the margin traders perceive it to be profitable. According to this tutorial, what margin trading does is increase the amount of funds which can be used to buy a security. This means that if the price of the security goes up the investor will profit much more than if he was only able to trade with his own funds. The flip side of margin trading is that if the investor loses, he could actually lose more money than he put in. Margin trading will be popular as long as it’s profitable for the margin traders. As long as margin trading is popular the interest rate on lending will be high. Due to the volatility of Bitcoin in general I am working on the assumption that lending interest rate is also going to be volatile. In other words, there’s no way to predict what the rate will be tomorrow. In just two weeks I’ve loaned out Bitcoin for as low as 0.03 percent and as high as 0.22 percent. As I write this, I’ve offered most of my Bitcoin at 0.0797 percent because my previous loans at higher than 0.08 percent were returned and the going rate has dropped. UPDATE: The BTC lending rate is now hovering around 0.07 percent as of June 11, 2015.

3. The price of Bitcoin could drop. Although Bitcoin is hovering at the same low it’s enjoyed for months now, there’s no particular rule that says it can’t go lower. This isn’t exactly applicable to faucet earnings which are free to begin with, but would make a huge difference if you read this article and decided to start buying Bitcoin and then lending it out. You might not be able to cash it out at the same price you paid for it.

There are risks to lending to the margin traders, but I believe those risks are much lower than the risk the margin traders themselves take on. In the fiat world, the ability to lend funds to the margin traders is reserved for the brokerages through which they invest. Poloniex has graciously opened up the lending privilege to all of its users. Poloniex takes a fifteen percent cut of all accrued lending fees. We get to keep the other 85 percent. This is another way in which the cryptosphere provides opportunities to small time investors or even outright poor people that are closed to them in the fiat world. Not only do we get to invest whatever meager funds we have, we also get to lend those funds to other investors. The same rules apply to small time investors as to the big ones: whether it’s twenty-two cents a week or $22,000 a month, only invest what you can afford to lose.

Faucets have evolved Now that we’ve covered what to do with faucet earnings so as to grow them from insignificant drips into an actual income stream, let’s talk about the original purpose of this article, which is to explore the ways in which faucets have evolved.

When I first got involved with Bitcoin I did what the Bitcoin educational websites of the day advised, which was to get an address and then visit some faucets. At the time the price of Bitcoin was $90. I never formally gathered data or anything, but many of the faucets I was visiting paid out 100 satoshis per claim, and you could claim every half hour or hour. Actually, when I first started, the faucets paid out once every twelve to twenty-four hours. You really couldn’t get much from faucets. They were kind of a novelty and a way to get something into your very first Bitcoin wallet.

As small as those initial faucet claim amounts were I do remember it making the getting into Bitcoin exciting. The faucets paid out directly and so my wallet would receive several deposits a day. When I combined that with higher paying earning sites I could actually watch my Bitcoin grow.

Since that time faucets have proliferated all over the Internet. The basis of a faucet is that it draws consistent traffic to a website. People will visit the website to collect the faucet drip. The website owner then counts all the visitors and then tells advertisers how many visitors they get in a given period of time. This traffic determines the rates the advertisers will pay to place ads on the site. The owner then profits from the advertising revenue and uses a portion of that revenue to pay out the faucet claims. This is why faucet sites are always chock full of ads. A faucet is essentially one huge and often obnoxious billboard. But it pays us something so we put up with it.

Obviously faucets are profitable to their owners, as evidenced by the sheer number of them today. Competition among faucets for that elite group of faucet visitors has grown quite fierce. This has resulted in higher payouts and more interesting faucets.

While I used to be quite happy claiming 100 satoshis from a faucet every half hour, today I will not even consider a faucet that pays any less than 200 satoshis and I’m passing by a lot of faucets which pay 500 and under because now I can find plenty of faucets paying 1000 satoshis to keep me busy. If I can claim 1000 satoshis every fifteen minutes from Bitcoinker, why would I bother with a faucet that only pays out 200 satoshis an hour? Actually, 1000 satoshi claims are becoming the norm, with many faucets frequently paying out more. For example, Bitcoin Zebra randomly dispenses 1000, 2000, or 3,000 satoshis.

I’ve started to notice a certain consolidation of faucet sites. There is a group called Bitcoin Aliens which has bought up a number of faucet and earning sites, including longstanding earning site CoinAd. Bitcoin Aliens has also launched a number of faucets, all of which they promote as being high paying. They even have a faucet app. If you frequently claim from faucets, you probably have been paid by Bitcoin Aliens.

The good news is that you get more bang for your Captcha solving prowess. This means that more than at any other time, faucet earnings actually amount to significant amounts of Bitcoin–Bitcoin which can then be invested and increased.

There’s only so much that faucets can increase the claim amount, so faucet owners are trying other strategies to compete for your visit. For example, while I was writing the first part of this article I received an email from the Free Bitcoin faucet announcing its new prize lottery. Each time you make a claim (up to once an hour) you win two free lottery tickets. Each ticket gives you a chance to win some kind of jackpot. Free Bitcoin used to be the highest paying faucet I knew about. It dispenses between 800 and 900 satoshis per hour, with small chances to win larger amounts up to between 0.8 and 0.9 BTC. But that was before I knew about the other faucets which paid at least 1000 satoshis per claim. Because of the other faucets paying higher I stopped visiting Free Bitcoin as much, especially this week. Rather than increase its lowest claim amount to compete with Bitcoin Zebra, Weekend Bitcoin, and other higher paying faucets, Free Bitcoin simply introduced a new way to win a grand prize. Each time you make a claim you get two more chances at winning that prize. So if you stick with playing Free Bitcoin, even though you’ll get less up front than you would from Bitcoin Zebra, you might still play it for the two tickets. I know I will be, especially after being told that the prize pool is likely to exceed six Bitcoin by the time winners are drawn. I wouldn’t pay for a lottery ticket (more on that later), but I’m happy to play more frequently for the free ones. And I still get the regular faucet claim.

Another interesting faucet gimmick that I really like is gradually increasing the claim amount since the last visit. Three faucets which do this are the ones I call the Moon faucets: Moon Bitcoin, Moon Dogecoin, and Moon Litecoin, all of which I visit at least once a day. There’s also one called The BTC Generator. If I visit Free Bitcoin right now, I will earn 889 satoshis. If I visit Free Bitcoin an hour from now I will earn another 889 satoshis. If I go twelve hours before I visit Free Bitcoin again I will earn 889 satoshis on my next visit. The only thing that changes the amount is if the price of Bitcoin changes in some radical way, as Free Bitcoin’s claim amount is tied to the price of Bitcoin. It’s set so that the fiat value of the highest claim amount is two hundred Dollars. In contrast, the claim amount I can get from Moon Bitcoin will keep increasing the longer I wait to make my next claim. This is true for the other Moon faucets as well. Now the Moon faucets are set up so that you’ll get the most from claims if you consistently claim every five minutes, rewarding frequent visitors more than the occasional ones. The longer you go between claims, the slower the accumulation gets. Still, the claim amount you can get will continue to accumulate for up to a month. This means that when I wake up in the morning and hit up the Moon faucets, the amount I claim is quite nice–over 2000 satoshis for Moon Bitcoin and close to 400,000 litoshi for Moon Litecoin. The Moon faucets all promote themselves as being the faucets where you choose when to claim.

Another gimmick I’ve seen faucets do is to have the faucet be a simple game or tell a simple story. There’s a faucet where your claim is vaguely connected to growing a virtual tree and another one where you vote for the cutest of two cartoon animals. Basically, there’s something else about the site to interest you in coming back besides the faucet drip.

So far, though, no matter how you slice it, claiming from faucets is still all about solving that Captcha or other type of challenge which tells the website you are indeed a human and not some automated bot. But what if a faucet could get away from requiring the Captcha challenge, or make solving the Captcha a part of a game, and still satisfy the advertisers? What if the faucet itself was a game?

The rise of faucet games It turns out that there are at least three online games which are essentially faucets, but which also integrate in-game goals which keep visitors coming back. Two of them have completely eliminated the need for visitors to solve a Captcha. The other one integrates the Captcha solving into the game. I play all three of these games and one thing I have found very interesting about them is that they are all set up to make cashing out minimal at first. In fact, to really get ahead in these games it is necessary to reinvest all one’s earnings back into the game. In other words, these faucet games have figured out a way to bring in consistent and sustained traffic with very little expense and with a built in reward structure for the truly dedicated visitors.

My Bit Mine is an economic strategy game where you as the player get to build up a mine–the kind that mines gold, metal, coal and other valuable minerals. You start off with just yourself and a cart to get into your mine. You mine by completing a Captcha challenge every five minutes. Each time you do, you get five units of gold. I found out from the exchange to Bitcoin feature that one unit of gold is worth on tenth of a satoshi, so basically, this faucet gets you to fill out a Captcha every five minutes for less than one satoshi as the reward. You do it, though, because the game is fun. Since the first upgrade you can buy, another worker, costs 600 gold, it would take you quite a lot of typing every five minutes to come up with enough gold. Fortunately the game provides an additional way to earn gold. You go to the St. Bernard Lake page and grind for gold at a pretty similar rate. To claim that gold you have to, (can you guess?) complete a Captcha challenge. But at least you’ll get to make your first upgrade in half the time. Eventually with enough upgrades it won’t be worth your while to pan for gold at St. Bernard Lake, but it’s an important feature for new players. As long as you have the St. Bernard Lake page open, the game actually harnesses your computer’s resources to mine real cryptocurrencies. The upgrades you can buy consist of various mine related things, but all of them help you to either acquire more gold each time you solve the Captcha or increase the time period between solving Captchas. When you accumulate enough excess gold you can exchange them for satoshis and cash them out. Initially, though, they all go straight back into the game. Since I started playing I’ve bought my way up to only needing to fill the Captcha every fifteen minutes. I still visit St. Bernard Lake and I also make a claim from the Bitcoinker faucet each time, since its interval is also fifteen minutes. If I stop “mining” by completing the Catpcha, then my accumulation of gold merely pauses until I return to the game. I’m fairly sporadic about it–leaving the mining page open and solving the Captcha when I think about it. The game starts off slow but intensely–all that Captcha solving–but as you upgrade it gets more fun and interesting.

Chicken Coins is a very simple game where you raise chickens, they lay eggs for you, you sell the eggs, and buy more chickens. The chickens will live forever unless you don’t keep them fed in which case they die and you have to start all over. The in-game currency is called “silver” and it has a built in exchange rate (1000 silver is worth 0.001 BTC)–one silver is worth 100 satoshis. When you sell eggs, one third of the proceeds gets put into a withdrawal account, meaning you can cash them out, and two thirds get credited to you as game currency which you have to reinvest into the game. You can trade withdrawal silver for in-game silver but you can’t go the other direction.

As a new player you are given one bag of feed and one grey chicken which produces 9 eggs an hour. Each egg is worth one satoshi, or 100 eggs is worth one silver. In the beginning the game would be inordinately slow–it would take a year for your starter chicken to lay enough eggs for you to be able to buy a second one–if it weren’t for the game bonus that you can collect every twelve hours. The first few chickens you buy will all come from that bonus, so at the beginning of the game you make sure to log in every twelve hours just to collect that bonus. The game allows you to speed up the process by depositing Bitcoin and converting it to in-game silver. However I do not recommend anyone do that. One thing about faucets is that they don’t necessarily last forever. One day the whole site could be gone and you’d lose all your funds and earnings. Play the game by collecting the bonus, buying more chickens and feed and gradually getting to the point where the amount of eggs they all produce yields you a significant amount of silver. At first you only log in twice a day. Eventually you’ll have enough chickens that you’ll want to log in more often. It’s a fun little game if you can be patient in the beginning.

Then there’s Farm Satoshi. It’s the most sophisticated faucet game I know about. Other than the proliferation of ads on every page you might even forget that it is a faucet. The game has the right balance between amount of available in-game currency and being able to buy animals, feed, and water at a reasonable rate and fairly quickly yield more funds from selling produce than what you started with. You never have to complete a Captcha once you have registered. You just play the game. Between navigating from your ranch warehouse to your animals to the market to the bank, you have plenty of time to notice ads, enough to keep the advertisers happy. How much you get to cash out depends on how intelligently you play the game. That, and getting referrals.

The fact that in Farm Satoshi you need referrals to level up is one major downside in an otherwise wonderful game. I think getting rewarded for bringing in referrals is great. But I don’t like it when bringing them in is an absolute necessity. I think Farm Satoshi could incentivize bringing in referrals by paying you a certain percentage of what your referrals claim, which they already do. They could also have special (particularly lucrative) animals in the game that only open up when you’ve gotten a certain number of referrals. But to in any way tie one’s ability to play or advance in the game to gaining referrals is a major drawback and I hope they change it soon. On the bright side, even if you don’t get your initial three referrals and get stuck playing at level 6 for a long time, you can still profit quite nicely and cash out plenty of satoshis which you can then lend out on Poloniex. Not only that, Farm Satoshi is the most fun and interesting faucet out there. It’s actually fun to play, as opposed to wanting to get in, solve that Captcha and get out as quickly as possible.

UPDATE: I learned about a week ago that Farm Satoshi removed the referral requirement for leveling up. Apparently many of the players complained about it. Now you can register an account and play all you want without having to worry about getting referrals. They did make leveling up more difficult in terms of what you have to accomplish within the game than it was before (mostly, increasing your warehouse space is much more expensive), but leveling up is now completely within each player’s control as it should be. Referrals do add to players’ earnings so they are still good to get, just not necessary. If you were turned off to Farm Satoshi by the referral requirement, then know that it’s gone and you don’t have to worry about it any longer. In my mind, the dropping of the referral requirement now makes Farm Satoshi the undisputed best Bitcoin earning faucet game around.

Faucet caviats Faucets have come a long way since the early days. They can provide a steady and significant, though small, stream of Bitcoin earnings to anyone with Internet access willing to take the time to make the claims. There are a few caviats to be aware of when it comes to faucets to make sure that the experience is as positive as possible.

Believing the ads I don’t want to tell you to never pay attention to ads you see on faucet sites. After all, they are the bread and butter of those sites, and therefore, your earnings. Often the ads are for legitimate products and if you become a customer not only are you bettering your life (you actually needed or wanted the product, right?), but you are helping to support the faucet and keep it open for you and others to continue to earn from it. If you buy from an advertiser, know that you will be spending more money than you’re likely to ever earn from the faucet, so just make sure it’s a good product that you would buy anyway.

Unfortunately, many of the ads are for products that are not legitimate or particularly beneficial. If you fall for those ads, you will lose your faucet earnings and probably much more. You will see many ads for gambling sites. You have to make your own decision about gambling but just make sure that you are aware of what it is and what the risks are. I have no problem with a gambling site that clearly discloses that is what it is. The sites I really want to warn you about are those so called “investment” sites which claim to provide an astonishingly high rate of return. I mentioned before that the annual rate of return I’m currently getting by lending to margin traders on Poloniex approaches 29 percent. I’m skeptical that it will last because in my mind it’s pushing the envelope in terms of returns that are even possible. You will see ads for “investment” sites claiming to be able to do way better than Poloniex. Some of them are called Bitcoin doublers and claim that in a month or two or less, you can double the amount you put in. All of those sites are some form of Ponzi scheme and should be avoided. Never put money into them. The site will inevitably fold in the near future and you will lose your funds. These Ponzi schemes all give some vague basis for their high earnings. Some claim to mine cryptocoins with the latest technology; some claim to be very good at arbitrage trading. I’ve seen a few that claim to excel at Forex trading. Others just say they are some kind of super financial genius (or made up of a team of super financial geniuses) and just know how to pick the right investments and want to share their bounty with you. Some of the sites look shady, but others look very sophisticated and credible. Believe none of them. If you put funds into those sites, it’s only a matter of time and you will lose them when the site closes. These sites are worse than the gambling sites because they do not disclose that they are gambling sites, and as such lure people looking for legitimate opportunities into essentially gambling, because when you put money into a site like that, you are essentially placing a bet that the site will still be there when it’s time to cash out.

The bottom line is while visiting faucets you will see lots of ads for sites which claim to offer unbelievable returns. Don’t believe them and you’ll be fine.

Putting money into faucets One gimmick that some faucet sites are using is something called a multiplier. You pay a one time fee that allows you to increase the amount you claim. For example, you might pay to have the faucet dispenses multiplied by 2, 5 or 10 times. It sounds good, especially if you are a heavy faucet claimer. However, keep in mind that faucets come and go. If the faucet runs out of funds and can no longer pay out claims, then what happens to your “investment?” I believe faucets are for the most part legitimate operations and the owners have good intentions. However, it is possible that they start losing money and have to close down. That is not a big deal if you’ve been claiming from that faucet–you just can’t claim anymore. But if you’ve put funds into it and now you can’t claim, those funds are lost. My point is that anytime you buy a faucet multiplier you are assuming the faucet will be around long enough for you to make back in claims what you put in, and that is simply not a safe assumption for most faucets. They come and go. They’re great while they last. Take the amounts you can claim for free and then do something worthwhile with them, invest them in some way, such as lending  to margin traders on Poloniex rather than investing in the faucet itself.

Keeping a good life balance Faucet claiming can be quite time consuming and can turn into a constant thing if you don’t watch it. There are so many faucets and many of them pay quite well compared to what faucets used to pay. Some of them are also very interesting games. It’s tempting to want to claim from all of them, or at least all the ones you know about. If you spend too much time claiming from faucets you will burn out, not to mention miss out on living life because you’re spending too much time on the computer. You can rationalize it by saying that at least you’re earning, but there comes a point where you have to let it go.

A good faucet strategy is to choose several that you consider the best, and hit those up once, twice, or three times a day. You won’t earn as much as you would if you were claiming from each one every hour, but you’ll be earning consistently, and maintaining your life balance.

It’s good to always remember that no matter how good faucet earnings are, especially compared to what they used to be, they still do not come close to minimum wage. If you have a job, you will earn more per hour doing your job than you will claiming from faucets. Claiming from faucets should never interfere with your normal work–it’s more of a break time activity, or something to do when transitioning from one computer activity to another. Interrupting your work to claim from faucets will reduce your work productivity, and that could lead to loss of earnings and opportunities further down the road–a scenario you definitely don’t want.

Faucets are a great way to get started in Bitcoin without having to invest any fiat into it. But once you have gotten started and have learned the ropes a bit, you do not need to obtain your Bitcoin exclusively from faucets. You can buy your Bitcoins outright, or you could earn them in some more lucrative way than faucets. You could give up something small, like a cup of specialty coffee, and use those funds to buy Bitcoins instead. Although in that scenario you would be paying for your Bitcoin, it might be cheaper for you in terms of time than it would for you to try to obtain it through faucets.

It’s always fun to get Bitcoin for free, so I know that in one way or another faucet claiming will be a part of my day for the foreseeable future. I just have had to learn to not overdo it, and to sometimes take a break. Ultimately, my hope is to grow my Bitcoin earnings (by whatever means I acquired them) in a more passive way. Lending to margin traders on Poloniex is one way I can recommend. Another way is to use those Bitcoin earnings to buy one or more alt coins which are currently undervalued and hold onto them until their price improves. I spend a significant portion of my faucet earnings on DNotes because I believe DNotes will be worth more in the future than they is today, not to mention I can let them earn interest by socking them away in a “Retirement” CRISP in the DNotes Vault.

Final faucet thoughts Faucets have come a long way since the early days. This means that you have lots of choices about which faucets you will frequent. You can select for the highest paying faucets or the most fun and interesting ones. Some faucets include free tickets to win a jackpot in addition to the claim amount; others are games which are both fun to play and potentially lucrative (by faucet standards). You don’t have to be a regular visitor of every faucet out there; in fact, you’ll do better by consistently visiting a handful of faucets that you consider to be the best ones. Choose them carefully. Enjoy the experience and the earnings, be wary of the ads, don’t overdo it, and take a break from time to time.

 

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Margin trading on Poloniex

Crypto trading platform Poloniex opened up margin trading two weeks ago. I did not see a single news article about this in CoinDesk which I keep tabs on or hear any mention of this being written up in any other crypto news source. Articles about Bitcoin Pizza day, the sentencing of former Silk Road operator Ross Ulbricht, and who Xapo is hiring seemed to be more interesting.

And yet to me, the arrival of margin trading on Poloniex is huge news.

The reason is simple. The flip side of margin trading, the lending of funds to the margin traders, represents the closest thing in crypto to an honest and low risk way to grow one’s Bitcoin (and a few altcoin) holdings while still maintaining liquidity. The rate of return isn’t bad either. The last time I calculated it I got an annual rate of return of twelve percent assuming funds always out on loans. The daily interest rate has double or tripled since then–depending on when you happen to check the order book.

Since the very beginning of my own involvement with cryptocurrencies, back when the only cryptocurrency I had anything to do with was Bitcoin, I was on the lookout for a good way to have whatever Bitcoins I managed to amass earn interest so that my stash would grow. Earning small amounts of Bitcoin was fairly easy between faucets and task sites. But the real fun for me lay in watching the already earned Bitcoins grow into more Bitcoins. In short, I was looking for a way to turn Bitcoin into a passive income stream.

This deep desire unfortunately made me vulnerable to scam websites. I still cringe when I remember the sinking feeling of realizing that I was never going to get my entire half Bitcoin back–because I’d sunk it all into one of those high yield investment programs masquerading as a mining operation, and the site just disappeared one day. Barely a month into the world of Bitcoin and I’d gotten scammed out of everything I’d worked for to date.

I learned to avoid the High Yield Investment Program and Ponzi sites after that. Fortunately I only made that mistake once. But that didn’t necessarily help me avoid the troubles with Bitcoin interest earning sites where the operators were honest and well intentioned, but either the business model was faulty and not profitable or the site got hacked. I wound up as a victim in the Inputs.io/CoinLenders demise. I lost over four Bitcoin in that debacle at the time that the Bitcoin price was pushing a thousand Dollars. Ouch.

I also tried putting Bitcoin into various Bitcoin stocks. Most of them turned out to be garbage. Even the rare good stock had liquidity issues, in that you couldn’t just cash out anytime you wanted to. While we’re on the subject the one Bitcoin stock that has worked out very well for me is the Rental Starter fund on Havelock Investments. No, I did not pay the current going rate for it. Right now it seems to be holding its value nicely, to the point where if I wanted to sell a few shares for some quick cash I probably could. However, that particular stock went undervalued for months. The reason? Trolls on the Bitcoin Forum.

The DNotes Retirement CRypto Investment Savings Plan was a breath of fresh air. It is a straightforward program in which you deposit DNotes into an interest bearing account and they get credited with a monthly bonus. The only problem is you have to lock up the funds for a minimum of five years. The minimum five year lockup is a great feature for DNotes, and it will be great for individual investors five years down the road, but it represents zero liquidity today.

For the past two years, I simply have not been able to find a good way to just earn interest on my Bitcoin (or any other cryptocoin for that matter) while still keeping them accessible in case I decide to spend or sell them.

Now I finally have a way, thanks to Poloniex. I’ve been happily lending out my Bitcoin at around 0.04 percent interest a day. Today the market rate shot up to 0.22 percent and I couldn’t be happier. I set my loans with two day terms, the default term Poloniex sets, so when I decide I no longer want to lend out those funds I simply turn the autorenew button off and wait for the loan to come due. If I leave autorenew on, then the loan will automatically get offered again at the same interest rate. This means that to some extent I can let the process go along on its own. However, the interest rate itself changes so I need to make adjustments accordingly.

I posted a guide on CryptoMoms giving more details about how the lending feature works. The really awesome part about it is that you can offer a loan with as little as 0.001 Bitcoin on hand. As I’ve demonstrated more than once on my CryptoMoms Could I retire on faucets? thread, just one week of aggressive faucet claiming can yield that starter amount. That tiny starter amount can be loaned out at interest while you’re hitting up the faucets for another round. This is literally a financial dream come true.

It also illustrates so perfectly what I absolutely love about cryptocurrencies. You literally can start with nothing but time and an Internet connection, and you can use those resources to little by little accumulate and grow a stash of coins. Of course you have to work those faucets and earning sites pretty hard. But now, thanks to margin trading on Poloniex, the little bit you worked so hard to get last week can now start working for you.

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Earning and learning through gaming

Yesterday I let my imagination run wild thinking about the perfect online learning game. I then did a little bit of research to see what it might take to find a game programmer who would be interested in designing such a game. I wasn’t too encouraged by the results. This thread gives a great overview of the general attitude held by game programmers towards being approached with the opportunity to work on someone else’s idea. The bottom line is that someone with a great gaming idea has two options: learn how to program games and build the game herself, or pay someone to do it up front. Since I’m not prepared to take on either option, my perfect learning game will remain a dream for the time being.

Meanwhile, the online games that are out there do provide some great opportunities for learning and practicing basic skills even if that wasn’t the designer’s conscious intention.

Take Farm Satoshi, for example. It’s a game where you buy farm animals, keep them fed and watered, and sell their products (eggs, milk, wool) using real satoshis as the game currency. Each animal lives for a certain amount of hours (ranging from two to twenty) and consumes a certain amount of feed and water per hour. This brings up all sorts of questions, such as how much total feed and water must I have in my warehouse to ensure that my animals will produce for the next three hours.

The first day that my daughter and I played the game we bought a few animals without considering their needs. Because we’d spent all the money to buy the animals, we had none left over to feed them. This meant that the animals did not produce until we were finally able to feed them. We ended up with a warehouse filled with expensive nonproductive animals. Fortunately in the game the only consequence of not feeding the animals is they don’t produce. They still live out their normal lifespan. Obviously in real life the consequences of not being able to afford feed would be far worse.

The next day we were determined to do better. I worked up a spreadsheet which calculated exactly what each animal needed for the duration of its lifetime and what it cost to maintain each animal per hour and for its lifetime. I figured if we just bought all the necessary food and water along with the animal, then we could set it and forget it for several hours at least.

I explained to my daughter that I’d run these calculations and I’d show her how I did it. I was not going to just hand her the answers. I went on further to explain that this would involve a fair amount of math. Math is not her favorite subject so she was not happy to hear it. However, when I said yes to her request to make this her daily math lesson instead of what she normally does, she was very eager to proceed.

So I took her through the steps. “If your white rabbit lives for two hours and eats five carrots an hour, how would you figure out how many carrots you need for the rabbit’s entire life?” I asked her. She thought about it for a minute, then said: “Ten!” She already knew that she had to multiply and just jumped straight to the answer. “Right, you would multiply the number of hours it lives by the amount of carrots it eats in one hour,” I said.

We made a chart of all five available animals and determined each one’s total food consumption. We then did the same thing for each animal’s total water consumption. I had my daughter do all the actual calculations. She will not sit down and do multiplication problems for no reason, but she was very interested in doing what she needed to do to get the answers to these particular questions.

Once we had made those charts, on her own initiative, she made some calculations to determine the total feed and water needs for all six of her animals.

This made her realize that she would have to buy more space in her warehouse to fit all the necessary food and water. She increased her warehouse space as much as possible but ran up against the referral ceiling. Whether it’s the overall game level or the amount of warehouse space for each type of feed, she can only go so far until she obtains her first three referrals.

At first we were frustrated, but then I realized it provided a new educational opportunity. If we filled up the warehouse to capacity, how much time could go by before we’d have to log in again and restock it? She worked out the math and we found that we could go about three hours between sessions.

Sure enough, three hours later, we found the status of the animals and their food and water stocks to be just as we’d projected.

Even more importantly, my daughter’s summary evaluation of the day’s math lesson was: “This was lots of fun!” I’ve never heard her use the word “fun” before in reference to having just spent a half hour doing math problems!

This experience illustrates a point that should be self-evident but has often been missed: purpose is very important to the learner. I remember when I was in elementary school, the most common exacerbated rhetorical question my classmates and I asked our teachers was: “When are we ever going to use this?” The teacher would sometimes throw out an answer like “When you need to balance a checkbook,” or just tell us to quit complaining and do our work. Since none of us had a checkbook to balance in fifth grade we weren’t satisfied with the answer.

If a child sees a purpose that is relevant to her life here and now, she will happily learn and practice the skill. At that point, it is no longer homework or a chore or something she has to get through, but a clear step towards meeting her goal. An online farming game like Farm Satoshi can provide that purpose even though it’s not intentionally an educational game.

I expect that we’ll be seeing more and more games that use cryptocurrencies as the game currency, and that they will get more and more sophisticated over time, even to the point where they become as fully featured as the Zynga Facebook games.

The educational and cryptoearning opportunities through playing games are going to explode.

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The perfect quest based learning game

A couple days ago I saw an advertisement for Farm Satoshi. The home page showed a gorgeous scene involving green grass, healthy corn fields, pine trees, mountains, a large lake and blue, blue sky. Play and earn free Bitcoin, the game invited…

Scrolling through the pages indicated that Farm Satoshi is essentially taking the Bitcoin faucet concept to the next level. Instead of just visiting an ad-heavy site and solving a Captcha, the users play an entire game involving buying and selling with satoshis as the game currency. Instead of the currency being strictly internal to the game, players can actually cash out their satoshis to a real Bitcoin wallet. The game strongly encourages it to be a Xapo wallet, but it turns out you can use any Bitcoin address you want to cash out.

My daughter happened to be passing by when I saw the Farm Satoshi ad, and she zeroed in on it immediately. “Mom, that looks like fun. Can we try it?” I had been thinking the same thing, so I registered an account and we started playing. Then she took over when I learned that the game only allows one account per home/IP address.

The concept of the game is very simple. You have a ranch and a warehouse. The ranch has space for animals and the warehouse has space for feed. You visit the market to buy animals and feed and water. Then the animals eat the feed, drink the water and produce eggs, wool, or milk at a predetermined rate per hour. You collect what the animal produces and sell it at the bank. You get paid in satoshis. You can then use the satoshis to buy more animals, feed and water, or to expand the space in your warehouse. As you level up, your ranch can house more animals and you’re able to buy a wider variety of them. You also get to buy larger amounts of feed and water at better prices. In order to level up you have to complete simple quest items, such as purchase your first bucket of water or a certain animal, cash out your satoshis, take out a bank loan, or sell your produce.

My daughter is currently stuck at level 6 because the last quest item she has to complete on that level is to get three referrals. The requirement to pick up referrals in order to advance in the game is a major disadvantage from the user perspective. That would be the first thing I’d change about Farm Satoshi. I think it’s great to be rewarded for getting referrals; I just don’t like it when you have to get referrals just to play.

Of course you can still play the game stuck at level 6. Your options are simply limited to five animals. My daughter picks the animals she wants to buy based on whim, but it’s actually possible to figure out which animal would be the most profitable based on what you pay to buy and maintain the animal and the price you can get for the animal product. You can also easily figure out how much feed a longer lived animal (animal lives are measured in terms of real hours) needs to be able to continue producing even when you’re not playing the game. You could theoretically set up your game to where you only need to log in once or twice a day to keep things going. Doing so, you could collect a nice steady stream of satoshis just like any other faucet, perhaps even better than most faucets. Even at level 6.

Not to mention it’s a whole lot more fun than solving Captchas!

I am pretty impressed with Farm Satoshi as a learning game on simple economics. More importantly, playing Farm Satoshi with my daughter has inspired me to think more about what the perfect quest based learning game would be like.

Quest based learning games are gaining traction in educational systems. They are computer games which tie accomplishing a virtual mission to learning and practicing concepts you learn in school–things like math and grammar. Any subject could be incorporated into a quest based learning game. The children enjoy the process because to them it’s playing a video game. They are motivated to learn the concepts because they need to do so in order to level up or complete quests.

Cryptocurrencies are just begging to be used as the currencies in these learning games. I mean, why not have the players earn something of value instead of game currency that’s only worth something within the game? Farm Satoshi has demonstrated that it’s possible to use Bitcoin as a game currency. I don’t think it would be difficult from a technical perspective to use any other type of cryptocurrency. A game will be more attractive if it uses a currency that is likely to be around for the long haul and appreciate in value. The game developer would just have to code in a way for the game currency to get transferred to a player’s actual wallet. Then a child can earn his allowance and learn while playing a video game.

In my opinion, the best type of quest based learning game would be a single game that allows the player to learn and practice a wide variety of concepts. Let’s start with the farming game concept.

For whatever reason, virtual farming games are extremely popular. Perhaps it’s because so many of us live in big cities and spend too much time staring at our computer screens and have lost some of that primal connection with nature. Rather than go out and grow a physical garden (or even a large pot or two), we seem to enjoy growing our own virtual farm. A few years ago I really enjoyed the Facebook based game called Farm Town (not to be confused with the more widely known FarmVille). What I liked about Farm Town was that I could grow crops and design my virtual plot of land any way I liked. That particular game was not quest based. You just got your plot of land, grew your crops, harvested your crops, and sold them. You could get your neighbors to harvest them for you if you wanted. I had a lot of fun arranging the space. If I got writer’s block during a writing assignment I’d spend about fifteen minutes on my virtual plot of land and that helped get the writing juices flowing again. Another advantage of virtual farming games (over the real thing) is that there’s no mess.

Since farming games are so popular I think the virtual farming concept is a great place to begin. A simple farming game involving crops and animals is already full of potential for teaching math, economics, science and even writing. If the farming game allows the player to set up and arrange an actual (virtual) plot of land complete with fields, buildings, decorations, and trees, then you also add all kinds of skills in design and layout. Not only that, kids (and grownups) really enjoy it. Farm Satoshi currently does not have that feature, but other farming games do. My perfect farming quest based learning game would definitely have that feature. The kids can use some of their earnings to buy in-game decorations for their plot of land, and their parents via a linked parents’ account can limit how much of their earnings they spend that way so as to encourage cashing out, followed by real world saving or investing of their earnings.

Starting as Farm Satoshi does with the concept of buying animals, collecting and selling their produce while also having to maintain them with feed and water, the opportunities to incorporate learning concepts are rich. Let’s start with simple math. The player can use each animal’s information to calculate their total cost to maintain the animal throughout its life, exactly how many units of feed and water the animal will consume, and the total revenue the animal will bring, as well as its net profit. Initial levels can be those simple math problems, but as the player levels up, the problems could evolve into actual profit/loss calculations and projections. Such problems can be inserted into the game as requirements to complete actions the player might want to complete, such as purchasing animals or feed.

Since the game concerns raising animals, and could very easily also include growing crops (my perfect farming quest based learning game would definitely have crops), the game could also include all kinds of scientific facts about each type of animal or plant. Facts could be initially presented, but then the player could be made to take a quiz or in some other way demonstrate mastery of those facts. Some of the game quests could involve setting up various virtual experiments where the player gets to test and report results on raising different breeds of animals or growing different types of crops on different types of terrain with varying amounts of fertilizer, etc. Of course, these virtual experiments wouldn’t necessarily tell you what the actual results would be in the real world, but they could educate the player on how experimentation and other aspects of the scientific method work.

The game could also incorporate steps taken in setting up and running a business. A simplified form of whatever legal licensing and other paperwork requirements real farmers typically have to do could be put into the game. Perhaps the farmer wants to spray for a pest, so he would have to first obtain a pesticide applicator’s license. Perhaps he wants to become a certified organic grower, so he would have to take the steps needed to achieve that certification. The players could be asked to complete some exercises to simulate annual tax preparation. My point here is that much of what a real life farmer has to do to run his business could and should be part of this virtual farming learning game.

Another aspect of farming that could be part of the game is hiring and managing workers. The workers can be fictional characters in the game (not other players or anything), but they can come with many of the characteristics of real world workers. Some of them do a great job and end up staying with the farm and given great responsibilities for years. Others don’t work out.

Regardless of all the challenges that the virtual farming players are hit with, it is important that attaining profits is not only possible, but likely, as they play the game. Although some limited virtual experience with bank credit, debt, or having an unprofitable year should be part of the game, overall, the players should profit, even if that means detracting from real world experience. The profits don’t have to be excessive but they should be the norm to keep the players satisfied and interested in continuing to play the game.

Writing is another skill that a quest based learning game can hone, simply because it is such an important life skill. First of all, typing games designed to teach players how to type and then practice it should be worked into the game. A typing game could just be added as one of several requirements to complete a quest or level up.

Even more important than the physical act of typing, writing composition skills should also be incorporated. Players can be given various writing assignments such as writing a business plan to the bank to get a loan, or writing up a flier containing a description of their farm in order to market their produce. These writing assignments could be automatically checked for proper spelling and grammar, but then could be submitted to a live person for complete review and feedback. That person could be a player’s parent or it could be someone hired by the company which develops this game.

In the case where a particular learning concept or skill doesn’t easily fit into the farming theme, the game could be expanded to include other themes. For example, the farmer wins a vacation to an archaeological dig or a trip to Hawaii to study erupting volcanoes. First the farmer would have to set up his farm to run smoothly during his absence (a life skill in and of itself). Second, these diversions could be handled as mini quests within the larger game.

I could probably go on for much longer about what skills can be incorporated into the game. Really, the limits are the game developing team’s imagination and the ability to code these components into the game. I would propose setting up the game in such a way that it would be easy to expand its capabilities as time goes on. Then a simple version of the game could be released and players can expect that more will be added on a regular basis. New requirements to level up can simply be added to the more advanced levels for players who have already surpassed those levels. The ultimate goal should be for the game to cover as many of the subjects that are necessary to a child’s school education as possible, and then some. It could be a complete self-paced learning program.

The game should have a player account and a parent account. The parent account would allow the parent to track the child’s progress through the game as well as the specific skills and concepts the child is being exposed to. There should be a way for parents to add currency to their children’s accounts as rewards for real life accomplishments. The parents should also be able to have their own player accounts–the game will be so much fun for their children, so they should be able to play too. The game could be set up to allow for family members to interact with each other inside the game. There could also be a way for players to interact with other players as long as that can be done safely. However, interaction with other players should always be optional to progressing within the game. There should never be requirements for referrals or neighbors or getting other players to do anything.

I’ve mentioned before that the game should be set up to be profitable most of the time to the players. This isn’t to say that they should profit no matter what they do, but simply that as long as they make basically good decisions (i.e., feed and water their animals) profitability should be very attainable. So called acts of God which would destroy profitability can be part of the game but in a very limited way so as not to overly frustrate the players. Each player should be able to regularly cash out some of his or her earnings to use in real life. Having said that, the game should not allow for excessively high cash accumulation either. An inflated money supply in a game tends to destroy motivation to participate. The virtual learning world Always Ice Cream, a game my children sometimes play, is a case in point. Its in-game currency, ice cream scoops, is so easy to earn and there are comparatively few options to spend it that my children own thousands and thousands of scoops they don’t know what to do with, and they have no motivation to play any of the learning games to earn more scoops–which essentially defeats the whole purpose of paying for the game from the parents’ point of view. In contrast, the Jump Start 3D downloadable learning games available to paid members seem to handle this balance quite well.

As important as it is for the game to be profitable to the players, it is even more important that it is profitable to the company that develops and manages it. Although I’m no expert on gaming profitability, I do have a few ideas for how a game that actually pays its players could maintain its own profits.

One obvious way is to make the game ad supported. A game with all the features I described is likely to be popular both with children and with parents, and with a lot of adults who don’t have children at home as well. The website hosting the game is likely to get lots of traffic so that should lead to plenty of advertising revenue, some of which would be put back in the game to fund players’ accounts. There are obviously challenges with having ads in the game, especially when it comes to keeping the environment safe for children. I don’t know if those challenges make advertising a viable option or not, but it’s worth exploring.

A second possibility is to charge for the game. My personal preference is a one time lifetime membership which buys an account for two parents and up to ten children. Monthly, quarterly, and annual billing options can also be offered. The parents would pay for the game on the basis of all the learning in store for their children–the kids getting to earn their allowances while playing would be viewed as a nice bonus. The parents should be able to pay for the game in the game currency itself, and part of their fee would go towards funding their children’s game accounts. Discounts on price could be offered as a reward for referrals or contributing to the game in other ways.

A third possibility would be to keep the game completely free, but sell a number of mobile apps and other products related to the game. A related possibility could be to have associated websites such as a forum for just the adults and have those sites be ad supported with their revenue used to subsidize the game.

I’m sure there are other possibilities for keeping the game profitable for everyone involved. Whichever way it works out, ideally the game would be profitable to the players and to the company hosting the game.

If I could design the perfect quest based learning game, it would be very close to what I just described. Is there a game designer out there who wants to take this on?

UPDATE: The founder of DNotes had this to say when I posted a shortened version of this idea (with DNotes as the in-game currency) on the CryptoMoms forum: “I will be very supportive of educational games for children and will personally reward game developers with DNotes if there is an interest.”

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What’s behind DNotes’ price stability?

The DNotes currency is now known as the most stable altcoin in terms of price, but why is that? How did DNotes manage to set out to be a stable currency and then consistently succeed for over a year? The following are my theories.

Value beyond the coin DNotes launched quietly on February 18, 2014 and almost immediately built and launched the CryptoMoms website and forum. On the Internet, websites and forums, particularly those with traffic, are assets. The DNotes team put as much effort into promoting its online assets as it did in promoting the coin. Right from the beginning DNotes became associated with something of value. You might decide to never own a single DNote, but you still might get a lot of benefit out of being part of the forum.

Further down the road came the DNotes vault, a very nice online wallet at the beginning but which now has a section completely devoted to interest bearing accounts. These interest bearing accounts, promoted as Retirement CRISPs, are very attractive because with the exception of proof of stake wallets, which at this time require a healthy dose of technical knowledge to use successfully and some trading platforms that require logging in to make a daily claim, they are the only cryptovehicles paying out stable interest rates. And you don’t have to do anything other than set up and fund your account to collect interest.

Lots of giveaways If you did join the CryptoMoms forum in those early days, you would have had a difficult time getting very far without being offered a generous amount of DNotes to get started. I picked up DNotes for posting comments and retweeting items–in other words, basically for free. While at the time I wasn’t interested in buying DNotes, I wasn’t going to turn down the opportunity to get them for free. This meant I had to put in the effort to get a DNotes address, which meant I had to find out a bit more about DNotes. The DNotes team still offers giveaways at different times, especially once a new DNotes product is launched. I’ve received generous contributions to each of my childrens’ CRISP accounts as well as my own “retirement” CRISP just for posting the addresses on the giveaway thread. Giveaways are a very useful way to spread a new currency around by putting it in the hands of people who wouldn’t otherwise get it, and the DNotes team has made much use of that strategy.

Encouraging saving Usually when a new altcoin is launched there is really only one thing to do with it: trade it for something else. Because of this often the sole measure of a coin’s health is in trading volume. A “healthy” coin has lots of people buying it because they believe they can sell it higher later, and lots of people dumping it because they got in early or they’re able to mine it inexpensively. All new coin development teams talk about some time in the future when you’ll be able to spend it anywhere, but that seldom materializes. In the mean time, everyone watches trade volume and that’s about it.

When DNotes launched, the team did not indicate any interest or desire to get people to trade it or even to accept it in payment for anything. The team actually promoted DNotes as sort of an anti-speculating coin, never once worried about trade volume, and simply encouraged people to buy a few DNotes here and there and then hold onto them. No promises were made about high future values, other than to mention that the team was planning for a gradual increase in value over time. However, the DNotes team pointed out that cryptocurrencies in general, being a new technology, have appreciated in value since they began and have the potential to appreciate even more in the future. To that end, it made good sense for people to pick a good one, then buy a little of it at a time at weekly or monthly intervals. I remember reading one forum post encouraging people to give up their morning specialty coffee (or equivalent) once or twice a week and use the money to instead buy DNotes. DNotes were promoted as something that could complement someone’s investment portfolio, but which should never make up the entire portfolio. Lots of education about investing and saving up for retirement was thrown into various forum threads and I believe lots of people started putting aside five or ten dollars a week to buy DNotes. It was just so… doable.

In other words, DNotes promoted and nurtured a culture of buying and holding right from the beginning. When people are buying and holding a coin, the price does not suffer rapid drops due to massive dumping, and will tend to trend upwards, especially as more and more people buy and hold it a little at a time.

At first people were encouraged to use their regular wallets to hold onto their DNotes, but then the DNotes vault was released and people now have a safe online wallet in which to accumulate DNotes. All the various CRISP accounts associated with the DNotes vault further promoted the culture of saving. Now we can save for our children’s future, our own retirement, and even our college educations, and there are more possibilities coming down the line.

The DNotes vault is backed up by an amount of DNotes which exceeds the sum total of all individual account holders’ deposits. This is to ensure users will not lose their funds in the event of a breach. The DNotes vault also uses a secure offline transaction signing process to secure its funds, making it unlikely the backup funds will ever be needed. This conscientious attention to security and having backup funds on hand further encourages savings by taking out as much of the risk as possible. While no one can guarantee what the price of DNotes will be a year from now, as an account holder I can be reasonably confident that the DNotes I put in the vault today will still be there a year from now.

Tying up funds Related to encouraging savings is having a way to tie up new DNotes as they are mined. I mentioned that all funds kept in the DNotes vault are backed up by an equivalent amount of DNotes, which right now is fourteen million. There is also a fund holding close to one million DNotes out of which all the interest bearing CRISPs are paid their monthly interest. Out of an available supply of just under 100 million DNotes, fifteen million is tied up in the DNotes vault.

In addition, all the DNotes vault interest bearing accounts lock up funds for five, ten, fifteen, or twenty years. The longer you are willing to tie up your funds, the better the interest rate, but in the cryptosphere, five years is a very long time to commit to tying up funds, especially considering some coins don’t last that long.

The “Retirement” CRISPs were only released several months ago, after DNotes established itself as the most stable altcoin, so it’s a bit of a chicken and egg question here. Everyone who puts DNotes away into a “Retirement” CRISP is actually making an investment not only in themselves but in sustaining any part of the price of DNotes that’s determined by scarcity. However, the reason people have the confidence to put away their funds in these “Retirement” CRISPs is because even before “Retirement” CRISPs existed, the DNotes currency had a stable value which trended upwards over time. The “Retirement” CRISPs are building on the culture of saving by rewarding it, and by incentivizing people to essentially remove their DNotes from the market for a long time.

The role that tying up so many DNotes has on the current price cannot be underestimated. Many altcoins launch with big dreams and plans. But often times for many reasons, those dreams and plans are delayed. However, the supply of the coin keeps growing as its rate was set in motion at launch. Only, because of the delays in implementing all those features that are supposed to add value to the coin, the increased supply has nowhere to go. This causes people to dump the coin and that pushes the price down. The coin’s reduced value means the development team has fewer resources to put to work in developing those value added features–they were counting on being able to sell the coin as development funds were needed. This leads to a death spiral that will eventually kill the coin. It is actually very important to have a way to tie up new coins as they are mined so that the coin’s supply only grows at a rate that is equal to the growth of its actual economy.

Soon to launch NeuCoin has set up some kind of vault system for early investors which only releases the coin to them over a period of several years following its launch (anticipated in July of this year). This prevents the big investors from dumping and also motivates them to invest their time and talent into making sure the coin will still be viable when their initial financial investment has been fully released. That step alone could be the difference between NeuCoin’s success or failure even though there is actually a lot to love about NeuCoin. Although DNotes didn’t take the same strategy of tying up coins from day one, they now have a good long term and highly rewarding system for investors big and small to voluntarily tie up their own funds for as long as twenty years from any given day.

Reaching out to women Before it became cool to talk about the massive gender gap in the cryptosphere, I was pretty aware that as a woman I was definitely in the minority. I’m also pretty sure that my gender neutral forum moniker spared me from some of the more disagreeable aspects. I think most people on Bitcoin Talk assume that I’m a man and respond to me accordingly. Some people have written about discrimination against women in the Cryptosphere and I’ve honestly not experienced any of that. But there are certain things that women simply do better with in general than men do, especially nerdy, computer geeky sorts of men. One of these things is gracious communication. Women are naturally better at it. This tends to make us better educators, better at welcoming new people, and better at diffusing potential conflicts before they even start. I’m not saying this is true across the board, but in general. My experience with interacting on predominantly male dominated forums has pretty much been a matter of operating in a world that’s largely devoid of the feminine social graces. Not everyone is like this but there is a general tendency for people to be very abrupt in their responses, show little patience for the very basic questions (sometimes even accusing the person asking the question of being too lazy to do their homework before asking such an ignorant question), and for certain types of conflicts to needlessly escalate. Throw a few trolls into the mix and the social aspects of the cryptosphere can be just as volatile as the currencies themselves.

Not only is this a turnoff to women, but it is also a turnoff to many men, especially those whose livelihoods have depended on their ability to communicate graciously. It’s hard to say exactly how much development of Bitcoin and other cryptocurrencies has stagnated as a result of the gender gap and the alienation of many men as well, but I have no doubt it is significant.

On a more practical note, regardless of how much more visible power men may hold in society compared to women, it is common knowledge that for the most part it is the women who hold the household purse strings. The man may be the one earning most of the household income, but the woman is most certainly the one who spends it. How insane is it to develop a currency that exists in a world that excludes most women? And yet, that is how Bitcoin is. That is how most altcoins are.

DNotes is specifically reaching out to women, inviting them to get involved in cryptocurrencies, and providing them a very nice place (CryptoMoms forum) to learn the ropes and ask all their questions. Anyone asking a question on CryptoMoms can expect a gracious reply, even if the question has been asked many times before. The atmosphere of CryptoMoms is that of looking out for the common good, and generally women find that attractive (as opposed a the dog eat dog, every man for himself atmosphere).

If DNotes succeeds in alleviating some of the cryptocurrency gender gap by drawing in significant numbers of women and getting them to acquire DNotes, they won’t have much else to worry about. If a critical mass of women decides that DNotes is good money, then it’s good money. If that critical mass of women lets on to retailers that they have a wallet full of DNotes that they’d love to spend at their establishment, then merchant adoption will happen on its own because retailers understand this dynamic very well.

It doesn’t matter which cryptocurrency was first, nor which one has the best or most innovative platform. The currency that will be king is the one which the women adopt. The DNotes team has a major head start in making that happen for DNotes.

Lack of trolls Trolls can exist in the male or female variety, and they can diminish the value of whatever they are running down if left unchecked, especially in the cryptosphere. I personally own an investment that was undervalued for months because of trolls. If you run a forum, you need to be prepared to moderate and censor trolling behavior. The DNotes team either has a great forum moderator or DNotes simply has an invisible troll repellant shield, but trolls don’t seem to be much of an issue, and that is good for its price among other things.

Thoughtful planning and patience I am not too familiar with the DNotes strategic plan as a whole, but I do know that there is one and that it is well thought out, and I get bits and pieces of it here and there. I know that part of its plan was to intentionally solve many of the challenges posed by Bitcoin, including the gender gap and volatility. I also know that merchant integration isn’t a priority until year three because successful merchant integration requires the foundation being laid in year one and two. As people suggest new ideas to the DNotes team, they are always considering how each idea fits into the overall strategy. Only ideas that fit are implemented, saving other good ideas for a better time.

There is also a willingness to wait for the right time to launch a new feature and also to make sure the feature is fully tested and developed before it is launched and announced. Half-baked ideas are not promoted in the hopes of drawing in more investors. Along with that comes a resistance to making decisions based on externals such as trading volume or price. Right now the price of DNotes is trending downwards, but no one is panicking about it. They have their plan and they’re moving forward with it regardless of what the short term circumstances look like. Adjustments are made in light of the bigger picture.

No preannouncements This is key to eliminating a lot of unwanted volatility and other kinds of drama. While many altcoins will announce a new feature in its platform long before it’s even ready to release or will release it while still very buggy, DNotes doesn’t announce anything until it’s not only ready, but here. If no one knows about an upcoming wonderful feature until it’s released, then it’s pretty hard to speculate on how said upcoming feature will positively affect the price. Instead, the new features are released with appropriate press releases and promotion but no hype or fanfare and the price reflects the added value after the fact. The DNotes price chart has a number of stair step increases in price that coincide with the release of new value added features, such as the DNotes vault and the various CRISPs.

DNotes has enjoyed a stable and overall upward moving price for its entire lifetime, an incredible accomplishment for a cryptocurrency. It turns out there are quite a few factors contributing to its price stability. When all (or most) are considered together, then the price stability makes a lot of sense.

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How I got into DNotes

I’m not sure exactly how or when it happened but DNotes has become my all time favorite cryptocurrency. It actually feels like it’s always been this way, even though my involvement in the cryptospace does predate DNotes’ launch.

I first heard about DNotes through Bitcoin PR Buzz. I remember reading a quote by the founder Alan Young where he stated very confidently that DNotes was designed from the ground up to be very stable (so stable that it wouldn’t work very well for speculators) and to gradually increase in value over time. Intrigued, I looked at the website and learned that it was a pretty ordinary Scrypt coin as far as the specs went. My first thought after that was “Yeah, Right!”

By that time I had seen plenty of new coins launch with great fanfare and lots of dreams for worldwide adoption and a fiat value approaching (or even exceeding) that of Bitcoin itself. And they all followed a fairly predictable pattern. First came the hype and excitement. Next came the launch. Then came the quick spike in value on the trading platform. Next came the dump followed by the ski slope (the line on the chart showing the coin losing value). Then came the burnout, and finally the death of the coin as the last exchange carrying it dropped it. Some coins continue to be mined and traded but their value has been stagnant for a long time now.

That was behind my skepticism regarding DNotes. After all, it was just another Scrypt coin. I even remember reading an early post on the DNotes Bitcointalk Announcement thread saying this coin shows no innovation.

I’m a lousy speculator, but for some reason I took Alan Young’s claim that Dnotes would not be a good coin to speculate on as a challenge. I spent about 0.01 BTC and bought DNotes at 61 satoshis each. Then I held onto them for a while. Back then the price did jump around a fair amount and I thought I could trade it back and fort a few times. Then the price shot up to over 300 satoshis. I sold, thinking I’d done good. I put in a buy order for lower than what I’d sold. But it wasn’t meant to be, as the DNotes ascent in value had only begun. The coin’s value has now settled down for the time being at 4700 satoshis. Yes, I do occasionally mentally kick myself for selling my first ones at only 300! Today a day trader might be able to do OK buying low and selling high over and over again, but it would take a large amount to make it worthwhile. Also, there’s no telling how long DNotes will hang out at its current price before the team implements the next phase in its well thought out plan, causing the price to very quickly shoot up to a new plateau, leaving any day traders who’d just sold in the dust.

After I got left in the dust I continued to watch DNotes without getting further involved for a while. DNotes was never super profitable to mine–not if you needed to sell some of what you mined to pay the bill–so it didn’t interest me that much as a coin to mine. I actually had some great runs mining, holding and then selling new coins which did appreciate dramatically for a while before they finally crashed and burned. But DNotes was never good for that sort of thing.

While I was watching it, the DNotes team continued to maintain the CryptoMoms forum, which was launched pretty much at the same time DNotes was (as far as I can tell). I had an account there but was only minimally involved in those early days. But I did think it was really smart to build a website and forum dedicated specifically to getting more women involved in cryptocurrencies. Women generally hold the household purse strings and whichever cryptocoin development team gets them involved will probably have nothing else to worry about ever again. Then they launched Firefighters for Digital Currency. Those sites were part of the DNotes plan to build assets with actual value into the DNotes package. I thought that was smart too.

At some point I started mining DNotes as my default option for my most powerful rig when it wasn’t rented out or used to mine what I thought might be a hot coin. Eventually I asked my contact at the data center to switch the operating system for my three smaller rigs from Minera to Hashra, because for some reason the DNotes mining pool would not accept shares from the rigs while they were on Minera. There were plenty of other pools out there not accepting work from Minera but the last straw came when I simply couldn’t put all my rigs on the DNotes mining pool. All my rigs are now on Hashra and both I and my renters are much happier.

My logic for choosing DNotes as my default option was that after watching it for one year, I became reasonably confident that the value was not going to suddenly drop, leaving me unable to sell what I’d mined in order to pay my colocation bill. Whenever things in real life got too busy or interesting for me to spend much time monitoring my mining operations, DNotes became the solid coin of choice to mine. It was truly a set it and forget it type of coin.

At that time the price of DNotes was hanging around 2500 satoshis.

Then one day after not paying attention for a few weeks I logged into AllCoin and found that the price of DNotes had gone up to over 4000 satoshis.

What happened? I wondered. It didn’t take long for me to find out that the DNotes vault is what happened.

The DNotes price would enjoy another price surge reaching a high of over 7000 satoshis before gradually, and I really mean gradually, dropping down to its current value of just under 5000 satoshis. Coinciding with that price uptick was the successful launch of CRISP for children, retirement CRISP, and CRISP for students, all building off the DNotes vault itself. CRISP stands for CRyptocurrency Investment Savings Plan.

I never downloaded the QT wallet for DNotes, so my main wallet is the DNotes vault. At first glance it looks like a regular online cryptowallet. But it now has some enhanced features. One great feature is that you can generate as many addresses as you want, and each address is a separate subaccount within your vault account. This means that you can have multiple accounts for multiple purposes. During the CRISP for children promotion I set up a separate address for each of my children and have been putting DNotes into it monthly ever since. I also set up separate addresses for me and my husband and have been funding those as well. When DNotes becomes accepted as a currency at more places where I would spend money, I could set up different accounts for different home budget items, kind of like the Envelopes system of budgeting. It costs nothing to transfer DNotes between vault accounts. Right now I’m looking at these initial accounts as future spending money for each member of my family.

The retirement CRISPs are five, ten, fifteen, and twenty year interest bearing accounts where you lock up the funds for that period of time. The accounts accrue monthly interest ranging from 8.4 to 12 percent a year while they are locked up. In that sense they function a little bit like a super high yielding bank certificate of deposit, but more flexible, because you can add funds at any time.

Needless to say I’ve set up Retirement CRISPs for each of my family members as well, and they too get funded monthly. Although I do play around with mining other coins with my smallest rig, the vast majority of my unrented hashing power is now dedicated to mining DNotes. It will be that way until I manage to sell my hardware. Yes, it’s for sale (if interested, PM me on Bitcointalk or CryptoMoms forum). Even after I stop mining DNotes (as in, I sell off my hardware), I will continue to buy them. In fact, it’s the thought of needing a source of funds for buying more DNotes that has motivated this sudden resurgence in contributing content to the Devtome. Every post I write here is mirrored on the Devtome and I get paid in Devcoins for my contributions. I’ll be using my earnings to buy DNotes :)

In the last few months I have gotten more involved in the CryptoMoms forum and it’s my experience there which has solidified my enthusiasm for DNotes as a truly stable and lasting currency. The most obvious thing I have noticed about the DNotes team is that it is generous. I have participated in several giveaways through the forum and they have all been substantial. We’re not talking about little bitty faucet drips here. Just to give one example, as instructed I posted a nickname and address for each of my children’s CRISP accounts that I had started. Each one was gifted with 1000 DNotes. That is close to ten Dollars’ worth at today’s prices. That has by no means been the only giveaway I or my family members have benefited from. The DNotes team is fostering wide adoption of the DNotes currency by putting it into other people’s hands. They encourage us to pay it forward as we meet and educate people about DNotes and cryptocurrencies in general.

Another aspect of my involvement with CryptoMoms which has been very encouraging is that my contributions are very much appreciated. I’ve started putting together guides on how to navigate the cryptosphere. I responded to a request for such guides that came with a promise to pay for them. I’ve gotten paid for two so far and my third one is brand new so I expect it will be compensated within the week. I’ve also started a thread exploring the possibility of building a little DNotes nest egg entirely from faucet earnings.

But it’s not just getting paid. It’s being thanked for my support and efforts. It’s knowing that people on the forum are going to be polite and have good manners. So far I have seen no trolls or flaming anywhere on the forum. That, in and of itself, is a rare and commendable accomplishment in the cryptosphere.

In other words, ordinary people with little or no prior involvement in cryptocurrencies can come to the CryptoMoms forum and know they’ll be welcomed and can feel comfortable asking any question they want. And they might just pick up some DNotes at no cost (to them) to get started.

And that’s why DNotes is now my absolute favorite altcoin.

 

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The drama factor

It’s been quite a while since I’ve updated here, but I’ve stayed involved in the cryptosphere the entire time. In the past six months or so many new altcoins have joined the scene. The NEM platform and associated XEM currency finally did launch (it only took a year!). The SEED coins I worked so hard to mine and have been staking ever since appear to be well on the way to becoming a dead coin, as BitTrex, the only trading platform supporting it, finally dropped it due to low volume. I keep my wallet unlocked in the hopes that the new developers will succeed in reviving it someday. At the very least SEED served as a valuable learning experience on how Proof of Stake (POS) really works. A few days ago I bought a million PIGGY coins. Since they were only eight or nine satoshis each that million cost me less than twenty dollars. PIGGY has potential as it is positioning itself as the first truly child friend cryptocoin. The QT wallet is very cute and the official faucet quizzes the child about some fact most children learn in grade school. And it stakes very well–my million+ PIGGY coins are churning out around 90 new ones a day. This has potential for paying out my children’s allowances one day. I managed to get in on another Proof of Stake coin set to launch this July. Neucoin is positioning itself as the big one, and if all the ads on major crypto news sites are any indication, it has the marketing budget to make sure of it. When you read the details you find founding members with a lot of clout in the real world. I didn’t buy any, but I did manage to score several thousand by providing some requested feedback in the form of a couple surveys. I’m looking forward to that launch.

And then there’s Paycoin…

Paycoin is the brainchild of GAW Miners. If you recall, GAW Miners is the company which sold me what I thought was hosted mining hardware. The “hosted” Black Widow and Furies eventually morphed into Prime Hashlets which were supposed to be always profitable and mine forever. Only they didn’t really mine. I don’t think anyone knows exactly what they did. As Scrypt mining costs escalated during that time, GAW Miners determined that mining really wasn’t profitable and they were going to launch a new coin instead. Paycoin was going to be a proof of stake coin on steroids. But it only really staked (at least for me) in a “wallet” called a Hash Staker. There was much fanfare about everyone converting their Prime Hashlets to Prime Hash Stakers, and the Paycoins were supposed to be floored at twenty dollars apiece (they are worth around nine cents now). Throughout this entire process (if it truly can be called that), GAW Miners kept giving away digital hardware to their loyal customers. Apparently I was a loyal customer because I got gifted with some extra “hash power” turned “hash staking power,” and figured that no matter what happened I wouldn’t have too much trouble recouping my original investment (which mind you was intended to be for simple scrypt miners).

But there was one factor I’d failed to consider: the drama factor. OK, there are lots of opinions flying around about GAW Miners and whether or not they are legit or fraudulent, and whether or not they actually are the subject of a Department of Justice investigation, and whether or not the disgruntled former employees who pulled stunts such as making wild accusations on Reddit and locking GAW CEO Josh Garza out of the Paybase platform are telling the truth or flat out lying. I’m not interested in trying to figure any of that out. I mention it only to illustrate what I mean when I refer to the drama factor.

It was insane trying to keep up with anything going on with GAW. Since I’ve been involved, their forum has migrated twice and been riddled with technical difficulties and infighting (lots of stuff flying around about whether or not users who post negative comments are justifiably banned). I’d try to log into my ZenCloud account (which holds my scrypt miners, I mean my Hashlets, I mean my Hash Stakers) and I’d find the entire site or parts of the site not working right. Then I’d log into the forum and search for some kind of explanation of what was going on. Usually there was an explanation but you had to know where to look for it. An hour or two later after reading through a couple threads I figured the issue was under control. One or two issues cropping up here and there is to be expected, but it seemed pretty constant with GAW Miners.

Then there were all the accusations I referred to earlier concerning the integrity of the CEO, which he refuted with his version of the story and expressed outrage over the death threats he had received and the naked pictures of his wife that somehow got leaked. Seriously.

And all this time the price of Paycoin kept dropping and dropping and dropping. A valiant attempt was made for around thirty minutes to maintain a twenty dollar price floor, but then it was brought to the company’s attention that this sort of thing is actually illegal. It was also very expensive.

The last time I logged onto the forum I read a post by the CEO explaining his side in yet another scandal that I knew nothing about, and I thought, I just don’t have time for this.

Meanwhile…

The price of Bitcoin gradually dropped from a comfortable $800 to under $250. During that time the price for renting hash on Mining Rig Rentals kept dropping. So you have Bitcoin losing value and the price for hash rental (which is priced in Bitcoin) decreasing. And yet the data center monthly fee, payable in US Dollars, remains the same. Needless to say, running Scrypt miners became completely unprofitable, as in I now pay hard earned US Dollars just to keep them going. To make matters worse, none of the Scrypt coins are particularly profitable to mine either. It’s actually now cheaper to just buy them on a trading platform.

Looking for a way to keep my fledgling mining operation afloat I bought some shares in LTCGear from the NXT asset exchange. At the time, LTCGear was paying very well and I figured if I bought enough shares the weekly payouts would help offset the cost of running my own hardware.

And then LTCGear quit paying. That story is another tale involving much drama. The jist is that the site had poor security and got hacked and some payouts were redirected to the hackers’ addresses. Chris, the owner of LTCGear, apparently caught the breach early before it resulted in a major loss and has been working frantically trying to unravel the problem and repair the site ever since. Only it’s a long process because LTCGear is a one man show. One of these days it will all be sorted out and shareholders will get paid again (maybe). Both the Litecoin and Next forums were abuzz with posts of latest developments and plenty of people claiming to be shareholders demanding their payouts.

For the first month of the drama (which coincided with the already busy Christmas season) I stayed glued to the forums and even the IRC channels in hopes of some good news. After about six weeks of this I gave up. I never sold off my shares, but I gave up on the dream of a quick resolution to the situation. At some point I decided that if my shares ever pay out a massive dividend I will sell them as soon as that happens.

Every week or so I log into my GAW Miners ZenCloud account and send the Paycoins my Hash Stakers have staked straight to the trading platform and dump them. I have all of my Hash Stakers up for sale and hope there’s one final surge of hope within that organization that might incentivize someone to take them off my hands at my preferred price. I’m not too optimistic of that happening. But I can at least buy a few DNotes for each Paycoin I dump.

I’ve watched DNotes from just a month or two after that coin launched. I remember reading that this coin was designed to not be good for speculation, that its value would be stable and trend upwards from day one. I thought, “Yeah right!” And I watched. And the entire first year of DNotes’ existence, that’s exactly what it did. Now it’s my favorite coin to mine and will be for as long as I have mining rigs.

Over the past few months I got more involved on the CryptoMoms forum, launched by the DNotes team. People are very polite there and it’s not a super busy forum. It’s made up of people who have a substantial life outside of crypto. There’s not a whole lot going on and I can catch up on everything in under twenty minutes. There are occasional announcements from the DNotes team about innovations just around the corner (or I can just read the press releases), and then without fanfare those innovations happen. I’m an eager participant in pretty much every one of those innovations. I’ve started contributing more to this forum because it has the same solid, built to last and grow feeling that DNotes has, and my contributions are truly appreciated.

About eighteen months ago I stumbled into a Bitcoin asset which has done extremely well for me. It’s the Rental Starter fund on Havelock Investments. As the name implies, it’s backed by a real estate company–a very good real estate company. Monthly dividends pay out like clockwork. I purchased the bulk of my shares between 0.003 and 0.005 BTC each. They are now worth 0.017 BTC each. The founder and CEO of Rental Starter holds monthly investor meetings. I used to participate in them but it very quickly became clear that they knew what they were doing and were doing quite well. I didn’t have to be constantly monitoring the situation for breaking news.

The original way that Rental Starter communicated was through the Bitcoin forum. But like with many threads on the Bitcoin forum, Rental Starter’s thread got hijacked by trolls. The trolls were so bad that it depressed the share price for months at a time. When I heard (from one of the early investor chats) that the trolling had negatively affected the share price I scraped together Bitcoin and bought all I could. Rather than take on the trolls, the CEO simply moved communication elsewhere, first to an IRC channel, and now to Slack (and I still need to respond to my Slack invite). He didn’t focus on the negativity, just moved on and kept buying, renovating, and renting out properties. It took awhile, but the share price finally recovered–to the point where I can hardly afford to buy any more. I’m so glad I bought as many as I did while the price was low. I’m so glad I’m sitting on that one good investment.

Somewhere between pondering my strange apathy regarding participating in Rental Starter investor meetings, the easygoing yet productive atmosphere surrounding CryptoMoms and everything else associated with DNotes, and the contrast between all the angst with GAW Miners and LTCGear, I came to an important conclusion: when making any investment decision, you can’t just look at the numbers; you also have to take into account the drama factor. There are hidden (and not so hidden) costs involved in trying to stay on top of a volatile situation, and even if you manage to make money on that investment, does it really compensate you for all the time and worry you put into it trying to keep up with what was going on? How about the sinking feeling that you should have logged into the forum five days ago because that’s when something happened that should have prompted you to sell out, but since you missed the news it’s too late?

Even if the people running a company embroiled in drama are ethical and truly have their investors’ best interest at heart, even if all the worst accusations turn out to be false and everything turns out to be fine in the end, I have determined that all the drama makes it a bad investment. It’s just not worth it. When it comes to investments, drama is toxic.

From now on I will be carefully monitoring the drama factor of any new projects I get involved with. If I see it up front I’ll stay away. If I don’t see it until after I’ve invested, then I’ll look for the earliest available exit and move on.

Not the easiest lesson to learn, but I’m glad to have learned it. And I’m glad to have a stake in at least two very solid, drama free endeavors: DNotes and Rental Starter.

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The alt coin that stands out from the rest

With the exception of the scam coins and the ones which were never serious ventures to begin with I’m a firm believer that every alt coin that is launched, even if it fails, brings something valuable to the cryptospace. A quote attributed to Thomas Edison comes to mind: “I have not failed. I’ve just found 10,000 ways that won’t work.” Although Bitcoin itself is a new invention, the disruptive technology of our time, spinning off all kinds of innovations which are already improving people’s lives, as a currency, let’s face it, Bitcoin is already a dinosaur. We’ve encountered the problems with it, but because the code is hard wired and we count on it to continue as it is, Bitcoin really can’t change. It can’t adjust to the actual demands of the potential consumer. While an improvement on ACH transfers or credit card payments that take two days to post, not to mention the exorbitant fees associated with both, no one is calling one hour long transaction confirmation times instant anymore.

Where Bitcoin can’t afford to experiment, alt coins have no problems with it. Have an issue with the way Bitcoin works? Launch an alt coin that addresses that issue better than all the other ones and see what happens. Many coins will fail in the process, but eventually one will find a way that does work, and that coin will rise to the top for a while until someone finds a way to improve on it. We’ve seen this happen already with NameCoin, which specializes in decentralized domain registrations, DevCoin, which was invented to reward open source development, NextCoin, which arose to address the high energy and environmental impact of coin mining, speed up transaction confirmation times, and pioneer the concept of the decentralized asset exchange, and Franko, which is basically a cryptocurrency designed to serve a particular geographical region, to name but a few. We’ve also seen some pretty notable attempts, though these coins have an uncertain future, to do unique things with a coin. Take UFO Coin, which was launched as a means to pay people to contribute their experiences with the paranormal and extraterrestrial to an online collection. Or how about DataCoin, which intends to use its block chain to store important data–the kind you might see in WikiLeaks, for example. If you think data stored in the block chain is not unalterable, then you have never tried to delete the block chain from each and every personal computer with a wallet. This could mean thousands or even millions if the coin truly takes off.

Alt coins are showing us what is possible with this disruptive technology called cryptocurrency. The truth is that each cryptocurrency is not just a currency–a token used to pay for goods and services. Cryptocurrencies are payment tokens, but they are so much more. We’re only beginning to scratch the surface of what is possible with this technology. Some of the innovations are more focused on what the block chain can do apart from tracking transactions.

I must confess that I’m a somewhat frustrated Internet merchant, or more accurately, potential Internet merchant. I’ve at times attempted to sell products–high quality products I truly believed in. I did fine as long as people were willing to pay in cash. But accepting credit cards was a completely different story. From the monthly fees just to have the privilege to the per transaction fees which cut into my profits (they always charged the highest for the small timers like me), I could never sustain a business model which accepted credit card payments. Online payment processors were not much better as all the fees were still there. Worst of all, it didn’t work at all if what I had to sell was something which cost a small amount, like a Dollar or less. You do realize that when you use your credit card to pay for a $1.35 candy bar at a convenience store, the store is likely losing money on the deal, right?

But a Dollar, certainly no more than two or three Dollars, is what people are willing to pay just to try something out. If you have the type of product that sells at that price you’re kind of out of luck. There have been a few innovative companies which focused on micropayments, but I’m not sure if it’s truly feasible given the rather large cut traditional financial institutions like to enjoy.

Bitcoin has made it possible to pay anyone in the world a tiny amount on a personal level. I have bought and sold items informally with Bitcoin as the payment token. It has allowed me to as a writer take on international clients without having to deal with the costs of international money transfers. A Bitcoin transaction costs a few cents no matter how large or small it is or how many miles separate the two parties, and that is great news for the small transactions.

But in order to accept Bitcoin payments as a retailer, you still have to go through a payment gateway. Entire companies have formed around processing Bitcoin payments for merchants. Although their cut is much smaller, they do still take their cut. And they can be tricky to integrate. Some payment gateways do accept other alt coins. Although much improved, you haven’t solved the basic problem of having third parties involved in each and every sale.

Until two days ago I was not aware of a single cryptocoin which contained a built-in payment gateway feature. Two days ago I discovered AriCoin, which does exactly that, sweetening the deal by making it a completely no fee interface. After a few hours of trying to figure out which coin to mine with my Scrypt mining rigs, I noticed this beauty running at nearly 200% the profitability of Litecoin on the Hash-2-Coins multipool and decided to give it a whirl. This led me to seek out further information about the coin.

AriCoin has actually been around since July of this year, and as is customary, came with an announcement on the Bitcoin Forum which included coin specifications and where you could mine it. However, unlike the typical alt coin launch with lots of fanfare followed by a spike in network hash rate followed by an epic dump and price collapse on the exchange from which many coins never recover, this coin “launched” in beta testing mode. It’s not difficult to become a beta tester, but you do have to give it a bit of effort. First you have to provide an email address. Then you get invited to AriCoin’s private forum. In order to gain access to the more interesting part of the forum you have to introduce yourself. But you can’t just throw up a post saying “hi there” with a few smileys. You actually need to share a bit about yourself and how you can contribute to the project. Once you impress the AriCoin team with your introduction, you get invited to become an actual beta tester. You get a link to the online wallet and you can start testing out the features.

The developers are more than happy to provide you with the funds to carry out your beta testing. I was given over a thousand ARI within a few hours of being accepted as a beta tester. Basically as soon as I started posting I got tips. I used those funds to test out the various features starting with the send money option. You can send ARI to anyone with an email address, and pretty soon you’ll be able to send ARI via Facebook and Twitter as well. No more having to carefully copy and paste those long strings of letters and numbers we know as addresses, though that is still an option.

I found some bugs, which I reported, and which got addressed. That’s what being a beta tester is all about–reporting the bugs so that the developers can fix them. There are also some features which are cool and innovative but a bit confusing. In any case, the platform is being worked on as I write this. The developers are hoping to move out of the beta testing phase soon and are putting the finishing touches in preparation. But even the transition out of exclusive beta testing isn’t going to be a hyped launch. The developers are taking the patient and organic approach to growth.

Sending and receiving transactions is all well and good–all cryptowallets do that. The real cool part is the payment gateway component. It’s definitely in its early stages, but it’s functional. I could use it to put up a digital product for sale right here on my website, and I probably will in the next week or two. In the mean time, you can check out my test product. If you accidentally click on the pay and confirm button while you are logged into your AriCoin wallet you will be out a penny. However, you can easily make that back by putting up your own test product and mentioning it on the private forum. The developers are happy to buy to help you experience it. Although the payment page is rather uninteresting visually–not much in the way of cool graphics–you can see how easy it would be to integrate it into an online retail platform. You post a picture of your product and irresistible description, and all you need is a buy now button connecting to the payment page. The buy now button is in development, but a simple text link would probably work for now. The point is you don’t need some fancy expensive shopping cart platform just to be able to sell something on your website or blog! If the product is a digital download then the entire process is hands free for you, and you don’t pay a penny for it.

Although I haven’t tried it yet, the payment gateway feature allows for recurring billing and soon will include a free trial period option. This could allow me to resurrect my earlier (but currently on hold) desire to build a merchant directory on this website. I got bogged down in the process of integrating all the various components and third parties, but with AriCoin there won’t be a third party. I still have to figure out the directory plugin, though, so we’ll see about that :)

The potential this coin has to completely revolutionize the online retail space is mind boggling. This brings up the fact that AriCoin has a tip feature which can be integrated into any website. Typically people who contribute content on their own sites do it for free and hope to earn some revenue through various forms of leasing ad space or posting affiliate links. And the obsession is with traffic and clicks and click conversions, all in a day’s work for the Internet marketer. But with tipping features, writers essentially can earn income directly from the content, greatly reducing the need for third party advertisers willing to pay out a pittance for clicks and affiliate sales. You still have the incentive to generate traffic to your site, as you’ll need a lot of people tipping a small amount for it to really make a difference, but you don’t have to try to match your audience to third party products any longer. And as mentioned before you can easily sell your own products.

After just a couple days of mining and testing AriCoin I can’t say enough good things about it, and I can’t even begin to put into words the incredible upward potential this coin has. The only reason I hesitate to talk it up even more has to do with mining. Because AriCoin is largely unknown right now it is not heavily mined. The block reward is high, at 500 ARI per block, and the network hash rate is low, usually much lower than one GH/s. This means that I can mine a lot of coin with relatively little hashing power. If word gets out to the mining community my own mining profits will go down.

But in the end everyone will benefit once AriCoin gets more widely adopted. I anticipate that the reduction in individual rewards for miners will be more than compensated by a major increase in the coin’s exchange rate. If you do not mine, you can pick up some AriCoin on Cryptex. You are also welcome to rent my rigs :)

Once AriCoin gets on major exchanges such as my favorite, Cryptsy, it should trade in as many markets as possible, not just against Bitcoin, but also against all the other major alt coins. The reason is simple. AriCoin already has the most user-friendly wallet and payment gateway interface (and that’s even without all the bugs being fixed). It is so much more advanced than anything the other leading alt coins have that it makes more sense to be able to easily trade your favorite alt coin to AriCoin in order to use it to buy something from an online retailer. I’d like to see AriCoin on Cryptsy trading with Bitcoin, Dollars, Devcoin, Next, LiteCoin, DogeCoin and plenty of other alt coins which have become successful for their unique contributions to the cryptospace.

The proof, of course, will be in the merchant adoption. With so many of the adoption obstacles removed I don’t anticipate that being much of a problem.

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