Altcoin is a straight-up competitor for Bitcoin. I won't bore you with the historical details and piles of insider jokes attendant, let it suffice to say that it's a direct awkisation of the Bitcoin codebase (0.6.something iirc) and nothing else.
Altcoin also has a problem recently, like so :
atcbot [ATC Diff] Current Diff: 1878190.93 Est. Next Diff: 129090.06 in 1979 blocks (#46368) Est. % Change: -93.13
Let's understand what's going on gazing upon this graph :
Nice, huh ? Now let's try and make sense of it. On the X axis, blocks. On the Y axis, difficulty. The first, purple section represents a normal mining interval : for two weeks miners mined. The second, red interval represents an attack. Someone controlling 100x as much hashpower as the previous group of miners sets to mining. For a vanishingly small interval of about three hours, that someone will receive 99% of the block rewards, corresponding to a total of about 2k blocks. Then difficulty recalibrates, going up 100x. Which takes us to the gray questionmarked third zone. What happens there ?
Suppose the market value of the coin in question is just about at the level implied by the purple zone. The attacker loses nothing by dumping 100x as much hashpower on this chain for a few hours : the coins he gets are minted at the previous difficulty. Whether he had mined slowly or quickly, he gets the same reward, which is why purple and red surfaces occupy the same area : to get x blocks at y difficulty you need z total hashes, no matter in what hash/second debit. After the attacker leaves, however, the good folk of the purple persuasion find themselves into quite the quandry : either support the coin by mining for 2k blocks at 100x the hashpower supported by the fundamentals, or else quit altogether. As before, it doesn't matter at what speed this occurs : they can continue at their purple rate for 140 weeks, or just a little under 3 years, to get to that magical difficulty recalibration block and see difficulty drop 99%. Or else they could maintain the attackers' rate for two weeks just as well, because again, not debit is in question but total hash. Which total hash has a cost, which is fixed.i
There is no practical defense from this attackii : it will always be possible for an attacker with vastlyiii superior hashing power to swoop in, drive difficulty into the heavens, and leave. At worst, the coins he's thus mined become worthless - but they are no more worthless than all the other coins everyone else holds. At best, he gets to do it again in two years or whatever. He suffers no real cost for this attackiv and there exists no practical deterrent. Bitcoin itself had in the past been vulnerable to something very similar, but fortunately that window is now closed.
I explained a while ago the financial mechanisms that automagically heal hardforksv, but the same effect discussed above equally well applies in the case of Bitcoin competing with itself : should it shard, the main shard will mutilate the smaller ones, starting with the biggest one. Because that's how systems work in nature.
So for the benefit of all the derps derping about "cryptocurrencies" : there is no such thing. There's Bitcoin and that's it, because there can only be one. All the rest of the crap exists only inasmuch as a) it stays theoretical or b) it stays small enough nobody cares. Where a) and b) are only distinct in the derp point of view, otherwise they're the same thing. But good luck with all the community[-of-retards] driven, super-duper-innovative, ultra-mega-creative, asic-resistant, future-of-revolution-and-everything altcoins.
Meanwhile back at Reality Ranch, there can only be one.vi———
- If you're curious, currently something in the 2 to 3 satoshi per MH per day range, which means the dollar cost of one hash currently stands at about 0.00000002 × 600 ÷1000000 ÷ 24 ÷ 3600 = 1.38 to 2.08 × 10-16 dollars.
For comparison : gold costs ~1.3k dollars per ounce. Meanwhile gold also weighs 196.96655 kgs per kmol. Seeing how a troy ounce is 0.031103 kgs, and there's a total of 6.02214129 × 1026 gold atoms in each kmol (as is the case for all substances), it then comes to pass that each ounce contains ~9.5 × 10 22 gold atoms, making each gold atom worth about 1.36 × 10-20 dollars. So roughly speaking, each hash is worth something like 10k atoms of gold, a subatomic fortune. [↩]
- Bitcoin itself has a 400% baked in maximum increase each period, but what practical difference does it make ? Force the attacker to keep hashing for an extra 8 or so hours ? Big whoop, what's eight hours buy you ?
Suppose you recalibrate difficulty each block instead. Big whoop, so attacker drives your difficulty up 100x and now you only have to mine six days for negative returns instead of two years. So what ? You're still underwater, and once you recover he can still do it again.
This is also the reason each and every altcoin messes with the Proof of Work algorithm, but what's that supposed to do ? Inasmuch as your coin can be mined, your attacker can by definition mine it too, and there you go. [↩]
- That vastly is one of the main reasons Bitcoin needs, needs so much hash. Until the day Bitcoin mining uses up 50%+1 of all electricity generated on planet Earth, this theoretical avenue remains open, if very theoretical.
Verily it is the consumer of worlds, this thing. [↩]
- Theoretically speaking if mining cost is actually above market value then he spends that sliver, which may well explain why Bitcoin has historically seen this situation a majority of the time - the invisible hand at work. Nevertheless, that sliver's not significant. [↩]
- Suppose tomorrow Bitcoin splits into two independent chains, BTC-A and BTC-B. This necessarily means that any current holder of Bitcoin has his holdings doubled : if he owned 1k Bitcoin before, he now owns 1k BTC-A and separately 1k BTC-B. These will also each have a market price, different from one another. It is not possible that both those market prices exactly match the holder's estimation of value, which means that one coin will be in his eyes overpriced while the other underpriced. This means he will sell one and buy the other. These effects quickly aggregate, and within days, probably within hours one of the coins is discounted to the point mining it is no longer an affordable proposition, which makes mining cease and that's it, problem solved. [↩]
- Which is, incidentally, why all the effort lately. You're not the only ones to have realised this, the super-duper-ultra-mega lemmings in the government basement finally modeled this innovative revolutionary observation a few weeks ago. [↩]