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April 19 was an interesting morning for BitSeeds co-developer Gabriel Aronovich. Multiple Petahashes of SHA-256d processing power were mutilating the BitSeeds blockchain. In a matter of hours 900,000 new BitSeed coins had been created. A rogue Bitcoin mining pool operator with vast access to ASIC computing power had “hacked” it. Since SHA-256d is similar to the algorithm used on the Bitcoin network, the operator was able to exploit the lack of mining competition on the BitSeeds network.
Bryce Weiner tells me it was a problem with BitSeeds’ blockchain difficulty regulator. This is the piece of the software code that regulates the creation of new coins.
“The network was so young there wasn’t enough data to properly retarget. The ‘attackers’ jerked the hashrate up and down which perverted the retarget calculations with bad data.”
This technical fiasco led to a “fork” of the BitSeeds blockchain. On the 21st of April, two days after the attack, the structure of the network changed. Proof-of-stake would replace proof-of-work. Holders of BitSeeds needed to update their wallet software.
Weiner sees it as a small victory against Bitcoin imperialism.
“We allowed the opportunity for bitcoin to attack the network and took precautions against long term damage should it actually occur. This scenario is known as ‘AltCoin doomsday.’ We survived it.”
BitSeeds was created to help save rainforest deforestation. BitSeeds provides a simpler, more robust, remittance network for the RainForest Foundation (RFF). The BitSeeds Foundation, a Nevada-based charitable organization, holds 100 million BitSeeds. On Bittrex, where inter-crypto trading occurs as XSEED, there is less than $26 of daily volume.
There has been interest, however. Suzanne Pelletier of the RFF tells me 500 BitSeeds were successfully auctioned for $0.70 per BitSeed. This occurred at a United Nations luncheon in New York City recently. Influential philanthropist Alex Soros also expressed his interest in the project. Payment processor Coin.co is collaborating with BitSeeds to help process the transactions of BitSeeds.
The Bitseeds Foundation consists of four “multi-sig” key holders. Together, they control 100 million BitSeeds endowment in their electronic wallet. In order for funds to be released from this account there must be 75% approval for a decision. This is also known as a 3-of-4 Multisig wallet.
Gabe Aronovich, a New York City entrepreneur, is the first key holder. After his time at JP Morgan, Aronovich helped develop co-working spaces in New York City and Denver, Colorado. Co-working spaces are rented monthly. They usually include desks and wi-fi access and are marketed toward self-employed individuals. The Denver location focuses specifically on cannabis-related startups.
Bryce Weiner, the second key holder, helped develop the underlying mechanics of the network. He proposed using the SHA-256d algorithm. His new proof-of-work solution aims to exchange donated hashing power for BitSeeds. The BitSeeds Foundation can monetize the hashing power and provide donors with BitSeeds as proof. This digital equivalent to seigniorage allows BitSeeds to attain value this way.
The third key holder is the RainForest Foundation. The 10% annual proof-of-stake yield means 10 million BitSeeds will be deposited into the foundation account. These will be used to promote the RFF.
Key-holder #4 is Coin.co. As mentioned earlier, Coin.co wants to start getting merchants to accept BitSeeds. Currently there are no BitSeeds-accepting merchants. However, Gabe Aronovich assures me that this will become a top priority once technology issues are solved.
“Someone is sitting in the shade today because someone planted a tree a long time ago.”
– Warren Buffett
Edit: In a previous version of this article, in the first paragraph – third sentence, we mistakenly reported, “In a matter of hours 70 million new BitSeed coins had been created.” The number of new BitSeed coins created in a matter of hours has now been correctly reported as 900,000 BitSeed coins in the first paragraph. We regret the error.