WARNING: STRATEGIC PLAN IS OUTDATED
The Strategic Plan shown below was largely written prior to NeuCoin's launch in September 2015 - and is now largely outdated. During the spring and summer of 2016 the NeuCoin Project has encountered some major challenges and as of November 25, 2016, the NeuCoin Growth Foundation issued the following statement:
NeuCoin Project update: Foundation to cease supporting NeuCoin services, destroy its remaining coins and dissolve itself
Nearly 3 years after the NeuCoin Project was born, the founding team and the NeuCoin Growth Foundation have concluded that the Project’s plan to create a leading consumer-driven digital currency based on the premise of distributing tokens to all participants that help drive growth and adoption – consumers, service providers, distribution partners, miners, developers, etc – has proven unfeasible, at least with the current team, structure and resources.
The cryptocurrency community showed lower support than expected to the Project as evidenced by the lack of value and trading volume of NeuCoin on the exchanges, but an even greater challenge proved to be the significant fraud associated with the “freemium” model of distributing tokens. As a result:
- The Foundation has been unable to strike the necessary distribution partnerships, as partners are not interested in working with a cryptocurrency that has very little value, volume or community involvement. The Project’s most recent release - the Facebook game SongQuest, a pilot aimed at demonstrating how NEU distribution can benefit third-party game publisher partners - has not performed in a way so that it can serve as a blueprint for any meaningful distribution partnerships.
- The Foundation has not been able to sell sufficient NeuCoin tokens to continue operating its services, nor to fund continued development, marketing, infrastructure, site maintenance or user support, nor to handle the future enforcement of sale-restricted NeuCoins and distribution as they come unrestricted.
Given these challenges and lack of financing, the NeuCoin Growth Foundation has made the decision to cease supporting all of its services, hand over consumer distribution vehicles to partner Jango.com, destroy all of its remaining NeuCoin holdings and dissolve itself – according to the following schedule:
- Growth Accounts on MyNeuCoin will be terminated shortly, as soon as next week. All deposits that were placed in Growth Accounts will be returned along with accrued Rewards through the termination date to the Growth Account holders’ MyNeuCoin accounts. Growth Account Rewards will be calculated as follows: the number of NEU deposited in the Growth Account TIMES the number of days the Growth Account was active TIMES 0.5%. This formula gives all GA-holders, regardless of which type of GA they had created, a premium over the original rates.
- The GetNeuCoin website, the NeuCoin Forum and all user support services will be shut down in the near future.
- The MyNeuCoin online wallet will be shut down in the next several months, but no sooner than one month from now. For the six months after the MyNeuCoin service is terminated, account holders will still be able to use their account credentials (email and password) to log in and obtain the private keys to their NeuCoin holdings. They will be able to use these private keys along with a downloadable wallet to access their NeuCoins.
- Within the next several months (but no sooner than 1 week from now) 50% of all sale-restricted NeuCoins, all of which are held in trust by the Foundation, will be destroyed; the remaining 50% will be released to their owners as unrestricted NeuCoins. This is necessary because with the Foundation dissolved, there will be no future entity to enforce the sales restrictions. Destroying 50% and releasing 50% without restrictions was deemed as the most fair to both restricted NEU holders and non-restricted NEU holders.
- In order for some entity with technical resources to support NeuCoin’s continued consumer distribution, a longer-term partnership has been established with existing distribution partner Jango.com. The Foundation will transfer 300M Neu to the Jango team (excluding Dan Kaufman, who has not had any role or ownership in Jango since 2013) as follows: a) 200M as compensation for NeuCoin tipping platform implementation and user acquisition over 2015 and 2016; for continuing to distribute NEU to Jango users and other consumers; and for continuing to maintain the NeuCoin.org website, blockchain explorer and source code publication on Github; b) 100M to be used for distribution to consumers.
- After all of the above has been completed, the Foundation will destroy all of its remaining NeuCoins and dissolve itself. At this point, NeuCoin will be entirely decentralized with a total supply of NeuCoins equalling approximately 1.5 billion, all of which will be unrestricted.
To everyone who has supported NeuCoin over the past years, the founding team is truly sorry that the Project’s ambitious overall strategy and consumer product releases did not work out as planned. We have worked extremely hard on what we believed could break cryptocurrency into the mainstream, investing years of time and nearly $1 million of our own capital. We very much regret this disappointing outcome for everyone involved.
In any event, NeuCoin will continue to exist going forward as a fully decentralized cryptocurrency with a much lower coin supply. In an optimistic scenario, the Jango team might be able to solve the problems with freemium distribution. We all hope for this outcome that could lead to widespread consumer adoption of NeuCoin and the development of an organic ecosystem.
A decentralized cryptocurrency designed for online microtransactions
demonstrating tangible utility over traditional currencies by developing microtransaction applications for games, tipping and premium content
founded by a team who has launched multiple consumer services with millions of users
backed by highly accomplished strategic angel investors
100 million Neucoin tokens presold to users for 4,012 Bitcoins
launched in September 2015
first consumer applications launched in December 2015: the Solitaire Racer game on Facebook and an artist tipping platform on Jango Internet Radio
second game pilot, SongQuest, released on Facebook in September 2016
Cryptocurrencies, or digital currencies, offer significant potential benefits over traditional currencies, including greater privacy, lower transaction fees, simpler and faster international transactions, and the ability to make small digital payments of $.01 to $1.00 (“microtransactions”), thus enabling new digital business models and behaviors not feasible with legacy payment methods.
The leading cryptocurrency, Bitcoin (market cap of all coins $3 billion), has mostly attracted computer experts, speculators and niche users who want to keep their transactions out of sight. But it hasn’t been popular with regular consumers, few of whom find it easy or useful. Moreover, Bitcoin’s proof-of-work (“PoW”) mining design, in which all Bitcoins ever created are awarded to miners, has several drawbacks, including inherently high costs, conflicts of interest between miners and Bitcoin holders, and increasing transaction fees in order to maintain security long term. While Bitcoin does enjoy sizable network effects, it has left the door open for competitors.
Source: Coinmarketcap.com, blockchain.info, coingecko.
Note: market caps are based on the total supply of coins that currently exist (100B in cases of both Ripple and Stellar), including the coins held by Ripple Labs Inc. and the Stellar Foundation.
The two most valuable “altcoins” Ripple ($1.4 billion market cap) and Stellar ($400 million, just months after launch) eschewed expensive PoW mining. Opting for a different technology using consensus algorithms based on trusted nodes, these altcoins can keep transaction fees low in the long run and - crucially - distribute coins to participants other than miners. This is a huge competitive advantage over Bitcoin.
Ripple’s founders and early investors opted to keep some of the cryptocurrency for their own profit and to sell some of it to investors, using the proceeds to develop a platform for international transfers and payments - an application where cryptocurrencies have the potential to offer more utility than fiat currencies. While Ripple never disclosed how much of the cryptocurrency would be kept as profit and how much would be sold and used for all coin holders’ benefit, investors still bought the cryptocurrency because they could see real utility (and hence potential for future demand) being created.
The not-for-profit Stellar is taking the opposite approach. Prior to launch it sold 2% of the entire supply for $3 million, kept 3% to cover future expenses, and pledged to give away the remaining 95% to users and charity. This strategy could lead to a large user base if users hold onto their free Stellar instead of simply selling them, but doesn’t answer how utility will be developed. And since consumer demand is ultimately driven by utility, real adoption may never come.
In summary, Bitcoin has network effects and a growing ecosystem, Ripple is developing real utility for international transfers and Stellar has the potential to attract a large number of users. However, none of them, let alone the hundreds of other altcoins out there, are (a) easy, (b) free to try out, and (c) useful for mainstream consumers. As a result, consumer adoption of cryptocurrency is still flat.We believe that a cryptocurrency could in fact achieve mainstream adoption if it were free to try out, easy to use, and offered some real, immediate utility to make consumers want to come back for more. This is NeuCoin’s vision.
People behind NeuCoin - experienced, consumer-oriented and successful
1. NeuCoin was created by an experienced team of entrepreneurs and technologists that previously founded multiple companies with millions of users in the music, gaming and shopping sectors - hundreds of millions of users in total.
2. NeuCoin has $2.25 million of initial funding from its founders and strategic angels with ability to help NeuCoin forge strategic partnerships and drive consumer adoption. NeuCoin’s angels include the co-founder of King (Candy Crush Saga), Head of Growth at Facebook, SVP of Business at Uber, President of Hotwire, the Producers of American Idol and X-factor, multiple founders of consumer internet companies sold for $100M+, and dozens of others top tech, media and VC executives.
3. Strategic Advisors include the co-founder and Chief Architect of King (Candy Crush Saga), a Core Developer of Peercoin and the Chairman of the Bitcoin Foundation.
Core strategy - use coin distribution to drive growth and increase utility, with a focus on microtransactions
4. NeuCoin is the first cryptocurrency to be strategically distributed to reward and incentivize all participants who help increase its utility and value:
- Some for free to consumers to try using NeuCoin and for recruiting other users
- Some to companies that make NeuCoin useful: content providers that accept micropayments in NeuCoin, exchanges, payment processors, wallets, etc.
- Some sold to purchasers, with proceeds used to fund code development, user acquisition, and projects to further develop utility, with a focus on micropayments
5. NeuCoin is the first cryptocurrency that is easy and free to get started, and useful from day one with a number of fun, consumer-friendly services making it easy for mainstream consumers to discover, earn and start using NeuCoin tokens.
- Onboarding websites such as GetNeuCoin - a game-like tutorial designed to convert mainstream users in a fun and educational way
- An online wallet - MyNeuCoin - that is as user-friendly as any leading Bitcoin wallet (Circle, Coinbase) with several ways to earn and use NeuCoin tokens
- A consumer-friendly cloud mining service that lets users effortlessly earn PoS awards through “growth accounts”
- Easy and intuitive without tech jargon on the front-end, but heavy security and robust Blockchain.info style handling of private keys on the backend
6. NeuCoin demonstrates real consumer utility versus fiat currencies by developing microtransaction applications (from $0.01 to $1 value) for online/mobile games, tipping and premium content. Pilot partners include RadioAirplay.com, an artist promotion company with over 250,000 independent musicians as customers; Jango.com, an online music service with over 8 million monthly listeners; the multiplayer Facebook game Solitaire Racer and the multiplayer Facebook game SongQuest.
- Platforms will be tested and optimized with pilot partners and then rolled out for use by any content provider looking for tipping or micropayment solutions
- Platforms will be powered by freemium distribution of NeuCoin tokens to users, who will be able to try premium content for free - a significant advantage over micropayment platforms using Bitcoin (because 99.9% of consumers don’t have Bitcoin, and it’s not easy to get)
- Participating content providers will receive user acquisition bounties for every new user converting to NeuCoin
NeuCoin Growth Foundation - well-financed, decentralized, accountable
7. NeuCoin’s core code development, user growth programs, and projects to increase utility were originally supported by three non-profit foundations based in the Isle of Man: the Code, Growth and Utility foundations. In March 2016, the three foundations were merged into one: the NeuCoin Growth Foundation, which has a single mission – to increase the long-term value and utility of NeuCoin. The foundation is overseen by independent Council Members and Advisors, but are ultimately controlled by coin holders (1 coin = 1 vote).
Technology - secure, efficient, decentralized
8. NeuCoin chose a Proof of Stake (“PoS”) technology design instead of an inefficient Bitcoin-style PoW design or a centralized consensus algorithm protocol like that of Ripple and Stellar. This choice was made in order to distribute the coins strategically, keep transaction fees low and security high in the long term, and still maintain decentralization. See the Technology and Economics Overview section below or the Neucoin Technical White Paper for a more detailed analysis of NeuCoin’s PoS design versus PoW and consensus algorithms.
Economics – rewards early buyers, enhances security, fully transparent
9. NeuCoin’s economic model uses very high PoS awards, starting at 100% per year in year one and gradually declining to 6% by year ten. The total coin supply began with a 3 billion pre-mine and was originally estimated to grow to 100 billion over ten years, with the actual number dependent on the percentage of coins that are mined over time. However, in March 2016 the NeuCoin Growth Foundation decided to reduce the total supply by destroying 70% of the foundation's holdings. The new estimated total supply after 10 years is 10 billion (please see http://blog.neucoin.org/post/141053866351/neucoin-to-eliminate-50-of-coin-supply-and for more details). A limited number of coins were also awarded to PoW miners for five months following launch, to engage the community that will most likely become active PoS miners long-term.
NeuCoin’s high-mining-awards model offers several benefits:
- Rewards early NeuCoin buyers and adopters for holding onto their NeuCoins while NeuCoin’s mainstream utility is still evolving
- Coin prices should be less volatile and remain intuitive for consumers
- Incentivizes PoS miners to stake many coins and operate many nodes, either individually or via cloud-mining services, solving a critical security issue with previous PoS coins
10. Three billion pre-mine allocation:
- 2.4 billion held by the three non-profit foundations
- 0.2 billion - Code foundation
- 1.4 billion - Growth foundation
- 0.8 billion - Utility foundation
- 0.2 billion retained by team for $1 million of work invested (restricted for use or sale)
- 0.1 billion sold to initial seed investors for $250,000 (restricted for use or sale)
- 0.2 billion sold to strategic angel investors for $1 million cash invested (restricted for use or sale)
- 0.1 billion pre-sold to users in the crypto-community for BTC 4,012 (unrestricted for use or sale)
In contrast to virtually all previous cryptocurrencies with pre-mines, all NeuCoins held by the founding team, seed and angel investors are subject to strict re-sale provisions for five years, so that holders may only sell 2% of their holdings per month in the first year, 3% per month in year two, 4% per month in the year three, 5% per month in year four and 6% per month in year 5. In march 2016, sales restrictions were extended so that holders may only sell 6% per month in years 6-10.
The NeuCoin Growth Foundation uses proceeds from coin sales to directly fund projects that increase the utility and consumer reach of NeuCoin, which in turn, increases the value of NeuCoin.Bitcoin does not benefit from this virtuous circle. Bitcoin miners spend nearly $1 million per day in electricity and hardware costs in pursuit of roughly $1 million worth of newly issued Bitcoins. Hence, $1 million of new capital must be invested into Bitcoin, either by the miner himself (if he keeps the coins), or by another investor (if he sells them to cover his costs). If this nearly $350 million per year could be re-directed from mining operations to consumer marketing (including giving a little free Bitcoin to new users), utility building, and core development, chances are Bitcoin would already have reached mass adoption. Or if this $350 million of investment per year were not met with $350 million of forced supply, chances are Bitcoin’s price would be much higher. This is the opportunity cost of PoW mining.
Ripple avoided PoW mining and sold some of its currency to investors, investing the proceeds in a single application where cryptocurrencies have a potential advantage over fiat currencies: the international financial transfer market. NeuCoin is following Ripple’s approach, but has chosen to focus its resources on another domain where cryptocurrencies hold an advantage over traditional payment methods: micropayment-enabled business models for digital content. NeuCoin believes that this market has great potential for a cryptocurrency, but only if there is zero friction to try out, not Bitcoin with all its hurdles to consumer adoption. NeuCoin’s freemium approach to user acquisition (like Candy Crush or Spotify), combined with the rolling out of micropayment platforms for premium content providers will ignite this market.
Unlike most other cryptocurrencies, purchasing NeuCoin is not simply speculating that one will be able to sell later to another speculator at a higher price. It is participating in a thoughtfully designed plan to create real utility in a cryptocurrency, starting with a solution for micropayments on a broad scale. The goal is to make NeuCoins actually useful as credits on a micropayments platform, so that there will be demand - not from speculators - but from users.
Seed and angel funding
The creation of the NeuCoin cryptocurrency and network, as well as the online wallet MyNeuCoin was funded by $2.25 million in seed and angel funding from the NeuCoin Project’s founding team and a large group of accredited strategic angel investors.
Presale of tokens
Over April 28 - May 1, 2015, the NeuCoin Project conducted a presale of 100 million NeuCoin tokens to Bitcoin owners for use on the future NeuCoin microtransactions platforms.
Over 1,000 people participated and the presale sold out in less than three days. The average NeuCoin token price was approximately 24,900 NeuCoin tokens per Bitcoin (less than $.01 per NeuCoin).
The presale proceeds were not used to develop the cryptocurrency itself (which was paid for by NeuCoin’s founders and strategic, accredited investors, see above). All proceeds from the token presale (4,012 Bitcoins) were held in the multisig address 3MrNuksZ1VePU3dGiSQFiouWerJUJgDkfH until the cryptocurrency launched and the tokens were delivered on September 23, 2015. Following NeuCoin's creation and launch, all presale proceeds were transferred to NeuCoin’s three Isle of Man-based, non-profit foundations and used to support the decentralized cryptocurrency through core development, consumer marketing and development of microtransaction applications.
For further details, see the NeuCoin Presale Purchase Agreement.
The NeuCoin decentralized cryptocurrency, along with MyNeuCoin, an easy-to-use online wallet and consumer mining service, and the consumer onboarding website GetNeuCoin launched in September 2015. The first consumer microtransaction applications, the Facebook game Solitaire Racer and a tipping platform on Jango Internet Radio, were released in December 2015. The Facebook game SongQuest was released in September 2016.
Cryptocurrencies such as Bitcoin are like cash over the internet. They use open-source, peer-to-peer technology to quickly and securely transfer units of value between parties who need not know or trust each other, with no central authority, middlemen or banks. Provided there are multiple parties who agree on their value, cryptocurrencies can offer significant benefits over traditional payment methods and currencies:
- No control by central governments or banks and therefore greater privacy
- Lower transaction fees, with savings shared by consumers and merchants
- Micropayment-based business models that weren’t previously viable
- International payments and transfers without exchange fees or friction
For this to happen, however, the cryptocurrency needs to be both useful and widely adopted, which presents a difficult dilemma: how can a cryptocurrency attract lots of users before it has benefits? … Or how can it develop those benefits without lots of users? The solution to this problem is through coin buyers, who provide an interim valuation and liquidity in the hope that the cryptocurrency becomes useful, is widely adopted by users and therefore, goes up in value.
Bitcoin began in 2009 as a technological experiment on how to create a decentralized peer-to-peer currency using cryptography. The anonymous programmer behind the experiment, using the pseudonym Satoshi Nakamoto, published his open source code and invited others to download the software and participate. All the participants in the network kept track of the decentralized, anonymous ledger of Bitcoin holders - a process called “mining.” As a reward for mining, every ten minutes a single miner would be awarded with free Bitcoin, with the odds of winning based on the number of computations performed (called “proof-of-work” mining).
The genius of Bitcoin’s design was in how it attracted legions of miners to run Bitcoin client software. They got to be part of a fascinating open source project created by a mysterious genius, provided security to the network, and sometimes got lucky and “mined” free Bitcoins. It was like a game that only tech-savvy people could play. But without necessarily realizing it, miners also functioned as investors – they “invested” computing power and electricity to acquire Bitcoin. As more and more miners joined in and mining became more competitive, ever more computing power and electricity were needed to acquire incremental coins, driving up their “value.”
Eventually, with a critical mass of Bitcoin holders and a material valuation per coin, some merchants began accepting the cryptocurrency – particularly those that wanted to stay out of sight (e.g. drugs, gambling, and Silk Road - see cryptocurrency benefit #1 above). This attracted consumers who wanted to buy from those merchants along with speculators who saw Bitcoin’s larger potential or just wanted to make a quick buck. Attracted by Bitcoin’s growing utility and value, entrepreneurs entered the picture and started building exchanges, wallets and payment processors that made Bitcoin easier to use. This in turn led to a virtuous cycle of well-capitalized mining operators joining in, more investment, more service providers, some mainstream merchants, and more users, culminating in Bitcoin’s positive network effects and its $4.5 billion market capitalization.
Bitcoin has garnered plenty of investor support. But it hasn’t been a hit with regular consumers who don’t care about avoiding banks or government oversight. Despite its massive media attention, Bitcoin has been used in transactions by fewer than one million people. For a regular consumer, it is still hard to understand, difficult to obtain and complicated to use. Most consumers ask: why would they spend the time and effort to figure out how to use Bitcoin? What would they do with Bitcoin that they can’t already do with regular money? Bitcoin just doesn’t yet offer enough mainstream utility or benefits over traditional payment methods to motivate new users to try it out.
Bitcoin’s progress has been hampered by a “free rider” problem. The costs of effectively marketing Bitcoin (ideally giving some away for free) and building truly useful applications for it are high. But these high costs must be borne by individual companies, while the rewards would be spread across all existing Bitcoin holders. This misalignment of costs and rewards is holding back utility development and consumer adoption. The risk for Bitcoin is that the speculators who are holding up Bitcoin’s value may not be willing to wait long enough for utility to develop so that actual users would buy up their holdings. Bitcoin’s price action over 2014 suggests that this may already be happening.
Bitcoin showed that a cryptocurrency promising theoretical future benefits could attract investors. Moreover, since Bitcoin is open source, developers can create their own cryptocurrencies quite easily. The first competing cryptocurrency (or “altcoin”) to seize the opportunity was Litecoin, a simple fork of Bitcoin launched over a weekend in late 2011 that made it easier for miners with lower-grade computers to obtain mining awards. By then, Bitcoin mining had become dominated by well-capitalized mining companies using specialized mining equipment (ASIC machines) that made it impossible for hobbyist miners to even cover their electricity costs. Litecoin simply switched to a new mining algorithm that existing ASICs couldn’t exploit. As thousands of miners migrated from Bitcoin to Litecoin, investors soon bid the market cap of Litecoin past $1 billion, though it later fell all the way back to $70 million, partly due to Litecoin mining itself becoming more centralized.
Following Litecoin’s success, a virtual stampede of competing altcoins or “crypto 2.0 coins” entered the market. Most were opportunistic side projects: coins like Mooncoin, BBQCoin, Potcoin, Sexcoin, Hobonickels, etc. that slapped new names on copies of previous coins. Many were “pump-and-dump” schemes, playing to the altcoin trading market and nothing else. There have been exceptions though, which brought technical innovations, interesting marketing ideas, and sometimes had small teams and limited funding. For instance, Darkcoin provided more anonymity than Bitcoin; Dogecoin was so cheap and cute that users started “tipping” it to others; Auroracoin “airdropped” the coins for free to all citizens of Iceland. All the altcoins mentioned above kept Bitcoin’s proof-of-work (“PoW”) security, and none of them have shown any serious potential for mass adoption. The altcoins that have achieved and maintained the highest valuations (discussed below) used different forms of security, because proof-of-work has some significant drawbacks.
In PoW, network security is based on the total computational power of all the miners in the network. And computational power deployed by miners is strictly a function of financial payments made to miners. Hence, network security is directly determined by payments to miners. In its early years, when the price of Bitcoin was very low, the Bitcoin network provided minimal security. Bitcoin is highly secure today because payments to miners are high enough to pay for a tremendous amount of computing power. For security to stay high, payments to miners must stay high.
Miner payments are actually composed of two components: new Bitcoin awards and transaction fees. Currently, each day miners receive roughly $1.25 million worth of new Bitcoin plus $15,000 of transaction fees. But every four years, the number of Bitcoins awarded per block gets cut in half. To maintain security, transaction fees must increase to make up the difference. Over time, increasing transaction fees could remove one of the key potential benefits - lower costs - that cryptocurrencies could have over traditional payment methods.
A second, widely recognized drawback of PoW mining is its tendency to become centralized. In Bitcoin’s early years, when Bitcoins had little value, mining was highly decentralized among tens of thousands of individuals using consumer-grade computers - and this true peer-to-peer nature was considered one of Bitcoin’s core benefits. Today, this is changing.
First came mining pools, in which large numbers of miners combine resources and share mining awards in order to receive frequent, predictable payments rather than waiting and hoping for a single large award. The largest pools have already breached the point of having a majority of the network’s computing power, where they would have the capability of seriously harming the network. Second, hobbyist and small-scale miners have been getting knocked out of business, pool or no pool. When a miner with access to capital enjoys lower overall costs than the competition, it simply buys more computer power, driving up the difficulty of earning mining awards, and knocks the least efficient competitors out of business. In fact, Bitcoin mining is rapidly becoming controlled by a handful of companies with tens of millions of dollars of the most efficient ASICs, operating from facilities with the very lowest electricity and cooling costs on the planet (e.g. Iceland and northern Sweden). Today, the very largest miners are raising private equity based on business plans describing a market where three or four miners control 60-80% of the network’s computing power.
Centralization of PoW mining is problematic for several reasons. First, centralization of mining power represents a severe security risk. Any entity (or entities working together) that controls 51% or more of the network’s computing power can seriously harm the network. Second, when there are only a few, highly-capitalized entities that control the network, the entire network becomes susceptible to government control and regulation of these few entities. Third, centralized Bitcoin miners do not always have the same interests as Bitcoin holders. The former are motivated by earning a return on their mining investments while the latter want to increase the value and utility of the cryptocurrency. What’s more, it is miners who have effective control over transaction fees and could set them higher than Bitcoin users would wish. Miners could also stop proposed changes to the Bitcoin protocol that would be in the best long-term interests of Bitcoin holders.
In June 2012, Peercoin introduced the first alternative to proof-of-work, called proof-of-stake (“PoS”) mining. In PoS, miners compete for newly issued coins based not on computing power utilized, but on the number of coins owned. This innovation effectively eliminated the operating costs (computing and electricity) of mining, replacing them with the capital costs of holding coins. In PoS, an attacker would have to acquire a high percentage of the total coin supply, versus a high percentage of total computing power in a PoW design. Hence, security levels are dependent on the market value of the coin. Once a PoS coin achieves a material value, it would be extremely expensive for an attacker to buy up a large percentage of all coins, as the attacker’s massive purchases would cause the price to rise and rise.
Since there are virtually no operating costs for PoS mining, transaction fees can start and stay extremely low. Moreover, PoS doesn’t suffer from the same trend towards centralization that PoW does, because all PoS miners earn the same rate of return on their coins (akin to an “interest rate”) regardless of computing hardware. Last and perhaps most important, PoS opens up the possibility of distributing coins to participants outside of miners. They could be distributed in any way the coin’s creator might devise.
As for Peercoin, its anonymous creator (under the pseudonym “Sunny King”) failed to use this last advantage to Peercoin’s benefit. Peercoin actually implemented an auxiliary PoW mining component, not to help with security, but simply as a mechanism of distributing coins to PoW miners, who constituted the majority of people interested in cryptocurrencies at the time of Peercoin’s launch. On the strength of its PoS innovation, Peercoin reached a $150 million market cap. But without a team, funding, or a plan to attract users and grow utility, it has fallen back to less than $8 million.
The two altcoins with the highest market caps after Bitcoin, Ripple ($1.4 billion) and Stellar ($400 million just months after launch), are also non-PoW altcoins. They both maintain the integrity and security of their cryptocurrencies through what they call a “consensus algorithm” based on trusted nodes.
Crucially, both Ripple and Stellar took full advantage of not having to give all coins to PoW miners, using cryptocurrency distribution as a strategic tool. Ripple has used its cryptocurrency to raise funds for utility development (and as the source of massive profits for its creators and corporate investors). Stellar is simply giving away nearly all its cryptocurrency for free to consumers and charities. Ripple and Stellar also have impressive teams and substantial financial backing.
In the case of Ripple, its founders individually kept 20% of the total coin supply and put the remaining 80% into their for-profit company, Ripple Labs. Ripple Labs then raised $9 million of investment from Google Ventures, Andreessen Horowitz, and others. Unconventionally, Ripple Labs’ entire source of profits will be derived from selling off some of its cryptocurrency holdings to distribute the fiat currency proceeds to its owners. But at the same time, Ripple Labs also uses the proceeds from selling its cryptocurrency holdings for all of its development, marketing, operating and administrative expenses.
What is controversial about Ripple’s business plan is that it has never disclosed how much of the cryptocurrency would be kept as profit (30%, 50%?) and how much would be sold and used for all coin holders’ benefit. Given that Ripple’s market cap is higher than all other altcoins put together, it’s clear that investors haven’t been overly concerned. They have seen Ripple hire a large, experienced staff and forge partnerships with established financial companies. Investors believe that Ripple has the resources, team and credible plan to develop better utility than both traditional currencies and Bitcoin in a single use case: international transfers and payments.
Unlike most other cryptocurrencies, Stellar is a true “non-profit” project. Prior to launch, the Stellar Foundation sold 2% of its entire future cryptocurrency supply for $3 million to the payment processor Stripe, which has committed to donating any future profits it makes on these coins to charity. The foundation is retaining a further 3% of its cryptocurrency supply to sell over time to pay for core development, marketing, operations and admin expenses. Stellar bet the farm on user acquisition, committing to give away a full 95% of the cryptocurrency for free: 50% directly to users who simply connect to Stellar using facebook, 19% to holders of Bitcoin, 1% to holders of Ripple, and 25% to charities serving the financially under-privileged.
This plan is commendable and may in fact allow Stellar to acquire a larger user base than Bitcoin. However the Stellar Foundation may in the future wish that it had retained more coins to fund utility development. As it is, Stellar will have to rely on outside parties to do the hard work of building infrastructure and applications, as does Bitcoin. Stellar may also regret its commitment to simply giving its cryptocurrency away with no strings attached, as opposed to making users “earn” their free coins by performing some activity, such as completing a tutorial, or using the coins in some way. There is a particular danger that the Bitcoin holders immediately exchange all the free Stellar (19% of the supply) they receive for Bitcoin, which could devastate the price of Stellar.
By understanding the strengths and weaknesses of Bitcoin and other cryptocurrencies, a few clear opportunities and success factors for a new cryptocurrency can be identified.
- First, it needs a strong, experienced team with substantial financial backing; the days of anonymous founders stepping back to let “the community” do all the work ended with Bitcoin.
- Second, it should focus on building utility for specific consumer use cases where cryptocurrencies have inherent advantages over traditional payment methods and where Bitcoin has not been successful - for instance, micropayments.
- Finally, it should use a security mechanism that doesn’t require awarding all coins to miners. Ideally, it should sell some coins to fund utility development (like Ripple), give some coins away to help user acquisition (like Stellar), and - unlike any cryptocurrency thus far - award some coins to companies that help make the coin useful, addressing Bitcoin’s “free rider” incentive problem. In sum, it should distribute the new currency in proportion to value added in growing the coin’s user base and developing its utility.
* Note: Many Bitcoin backers believe that proof-of-work is the only way to provide adequate security for a cryptocurrency, and that therefore none of Ripple, Stellar, Peercoin, BitShares (5th highest crypto market cap), NXT (8th highest crypto market cap), etc are viable. Given that Ripple’s market cap is 25% of Bitcoin’s, it’s clear that many investors (including Google, Marc Andreessen, Stripe) disagree, as do we. NeuCoin could have chosen to use a proof-of-work design with a large pre-mine to carry out its plan. Instead, NeuCoin opted for a proof-of-stake design that we believe provides superior security, allows for much greater decentralization lower transaction fees in the long run, and avoids the inherent problem of misalignment between coin holders and centralized proof-of-work mining companies. See NeuCoin’s comprehensive Technical White Paper for an in-depth discussion of proof-of-work versus NeuCoin’s proof-of-stake design.
NeuCoin believes that a cryptocurrency could achieve mainstream adoption if it were free to try out, easy to use, and offered some real, immediate utility to make consumers want to come back for more. This is NeuCoin’s vision.
NeuCoin’s plan to get there is to use coin distribution as a strategic tool to create a virtuous cycle of token buyers and adoption that keeps growing the cryptocurrency’s utility. By using the foundation's pre-mined coins and capital from token buyers to build real utility for regular consumers and effectively acquire and retain mainstream users, NeuCoin aims to be the first cryptocurrency for online microtransactions to reach mass adoption.
NeuCoin’s proof-of-stake design solves the mounting cost and increasing centralization problems faced by proof-of-work systems. In addition, since it doesn’t require awarding all coins to miners, it enables distribution of the cryptocurrency in any way the coin creator deems to have the highest strategic value for the growth and adoption of the coin - a true blank slate.
To make a cryptocurrency viable, consumers, the service providers that make it useful, and buyers are all critically important. To incentivize participation by all these actors, NeuCoin’s non-profit foundation will award coins to each constituency in proportion to the value they bring to NeuCoin. Besides achieving the fairest possible distribution of the cryptocurrency, this design also maximizes its long-term value.
To optimize for growth and adoption, a large share of the foundation’s endowment will be given to consumers in exchange for engaging with, trying out, and referring friends to NeuCoin. Another large block will be awarded to companies that help NeuCoin grow its user base and become more useful: game publishers and content providers that accept microtransactions with NeuCoin tokens, exchanges, wallets, consumer mining services, payment processors, remittance services, discounted group shopping services, marketing and distribution partners and other key services to NeuCoin users. Finally, some will be sold, with proceeds used by the foundation to increase the value of NeuCoin through consumer marketing, utility development, and core coin development.
For consumers to want a cryptocurrency, they have to be able to do something with it that they can’t do better with traditional payment methods. NeuCoin already offers more utility and consumer-friendly services than most cryptocurrencies: the ability to earn and use NeuCoin tokens through the Facebook games Solitaire Racer and SongQuest, the tipping platform for listeners and musicians on Jango Internet Radio, the onboarding quiz GetNeuCoin, as well as MyNeuCoin, an easy online wallet and a web-based mining service that lets consumers grow their coins without ever having to even see the word “mining” or any other tech jargon.
Microtransactions may be the killer app of cryptocurrency, giving consumers access to new types of commerce not viable with traditional payment methods, such as <$1 transactions for playing or leveling up a casual game, tipping, pay-per-view, ad-free content, tiny amounts of work or advice, small donations, etc. To quickly build utility in this key strategic area, NeuCoin is developing prototype online/mobile games based on popular, generic games that will demonstrate how NeuCoin can be incorporated into game experiences - giving out free NeuCoins as a reward for playing, winning, leveling up, etc. The first of these games, Solitaire Racer on Facebook, was released in December 2015. A second game NeuCoin-integrated game, SongQuest, was released on Facebook in September 2016.
Having a meaningful user base of NeuCoin-holding players will be an important leverage point as the NeuCoin Growth Foundation works with leading game publishers with large existing user bases to integrate NeuCoin. NeuCoin has also entered partnerships with leading players in the music and artist promotion spaces to develop microtransaction platforms for tipping and paid premium content. The first of these partnerships, the artist tipping platform on Jango Internet Radio, was released in December 2015. These pilot partners will help optimize consumer experience, conversion and monetization, and are meant to act as case studies that can demonstrate how it can be attractive for third party service providers to integrate NeuCoin. They can use NeuCoin distribution as an added value and retention tool to reward their users for certain behaviors - spending more time on the site, logging in more often, inviting more players, watching more videos or ads, reading more articles, tweeting about or liking the service provider on Facebook, leaving comments, tipping content creators, etc.
In today’s digital economy, offering a free entry-level service is key to easing consumers into a new consumer experience. After having a positive first experience some users will buy more, or find ways to earn more. This has been a critical success factor for growth and conversion for premium consumer services like Dropbox, Skype, Viber, Whatsapp, Spotify, Candy Crush Saga.
NeuCoin’s distribution strategy enables it to fuel its marketing with freemium tokens (giving users a few free NeuCoin to get started). This minimal friction is key for user adoption.
With NeuCoin, consumers can easily earn NeuCoins by investing their time and attention. It's analogous to Proof-of-Work miners investing computing power - only regular consumers can participate and earn rewards for doing something they enjoy. That's NeuCoin's path to millions of users.
NeuCoin's Radical Idea - Distribution as a Tool for Mass Adoption
NeuCoin's vision is distribution to ALL who create value and utility - to massive numbers of end users, to service providers like exchanges and payment processors, and to content creators that integrate NeuCoin as a means of microtransactions, like game developers, content publishers, musicians, photographers, filmmakers, writers, etc - along with the miners who secure the network.
This distribution approach offers a tremendous competitive advantage over virtual currencies like Bitcoin that are distributed only to miners, which are unable to encourage consumer adoption by giving users small numbers of tokens to easily try out.
How NOT to distribute a virtual currency - for free, in exchange for nothing
Simply handing out free tokens, aka "airdrops," whether to all the citizens in a country or the whole world, or to all Facebook or Twitter accounts, or to all holders of other cryptocurrencies - doesn't work. It just leads to the new recipients selling, exchanging or forgetting their new tokens, which to them are nothing more than funny money. Also, this kind of distribution leads to massive amounts of abuse from fraudsters using software robots or click farms to create multiple accounts and obtain more tokens in order to dump them.
How NOT to distribute a virtual currency - for free, in exchange for nothing
Bitcoin miners earn tokens for securing the Bitcoin network by investing computing power and electricty, ie Proof-of-Work mining. With NeuCoin, the majority of the token supply will also be earned by miners who secure the network through Proof-of-Stake mining (see the Technology & Economics Overview below and the NeuCoin White Paper for an explanation of how this differs from Bitcoin's method).
However, in the case of NeuCoin, a pre-mined supply of NeuCoins are also given to consumers through "freemium" marketing programs, so that they can try NeuCoin out without any cost or hurdles. But crucially, these NeuCoins are never simply handed out for free - but consumers have to earn them by investing time and attention.
The BEST way to distribute a virtual currency - rewarding users for USING the tokens
Investing time and attention doesn't mean a few quick clicks to collect a freebie. Rather, users may spend hours trying to win a game to get 5 cents worth of NeuCoins to spend on power-ups. Or log in weekly to a publisher site in order to refill his balance to tip content providers with. It's similar to Bitcoin mining in the early days, except the consumers are spending their time on something that they consider fun - and they are earning tokens that they have an immediate use for.
This type of earning-by-using won't just prevent fraud, it also rewards people for doing something that they already like doing and gives them an even better experience - with no change in behavior. You wouldn't play the NeuCoin-integrated game just to earn the coins because the pay-outs are too small to be worth your time. But if you like the game anyway, you might play the NeuCoin version of Solitaire or Name-That-Tune instead of another one, so that you can earn some extra NeuCoins. Plus you might challenge your friend to a game, where the winner gets a couple of more coins. Especially if those NeuCoins can be used across multiple games, akin to airline miles.
This also makes it more attractive for service providers to integrate NeuCoin. They can use NeuCoin distribution as an added value and retention tool to reward their users for certain behaviors - spending more time on the site, logging in more often, inviting more players, watching more videos or ads, reading more articles, tweeting about or liking the service provider on Facebook, leaving comments, tipping content creators, etc.
Real engagement, real use, real value. Giving massive numbers of mainstream consumers their first crypto experience, earning and using "freemium" NeuCoins in a way that improves their online experience and makes them want to come back for more. That's how freemium distribution can lead to mass adoption.
People who get in early on NeuCoin - who help create the first core of users and holders - will be highly rewarded for adding this value. NeuCoin’s economic model uses very high PoS awards, starting at 100% per year in year one, 80% in year two and gradually declining to 6% by year ten.
NeuCoin will attract users and grow utility in gradually evolving stages. Marketing will target different segments over time: it will concentrate on the early adopters and cryptocurrency community in the early months and later shift its focus to mainstream consumers.
Prior to launch, the NeuCoin Project built out basic infrastructure and initial things for consumers to do, and set the stage to rapidly develop utility for NeuCoin, with a focus on micropayments.
- Developed the core NeuCoin code and mining resources, as published on http://www.neucoin.org/download and https://github.com/NeuCoin/neucoin
- Published the industry’s most comprehensive white paper explaining the advantages of proof-of-stake versus proof-of-work, as published on http://www.neucoin.org/whitepaper/
- Set up security infrastructure
- Built an online wallet - MyNeuCoin - that is as user-friendly as any leading Bitcoin wallet (Circle, Coinbase) - but with Blockcghain.info style decentralzied handling of private keys
- Built a consumer on-boarding website - GetNeuCoin - a game-like tutorial designed to convert mainstream users in a fun and educational way
- Built a consumer-friendly mining service that lets users effortlessly earn PoS awards through a simple web interface called “Growth Accounts”
- Built a Blockchain Explorer, a web interface to monitor the NeuCoin blockchain, available on https://explorer.neucoin.org.
- Started development on two prototype online/mobile games ( the first being Solitaire Racer, released on Facebook in December 2015) to demonstrate to game publishing partners how NeuCoin can be incorporated into game experiences
- Created partnership with RadioAirplay.com, an artist promotion company that works with 250,000 emerging musicians
- Created partnership with Jango.com, a streaming music service with 7 million monthly listeners, to develop a NeuCoin tipping platform
- Created partnership with MondoMedia, a video content producer with the largest animation channel on YouTube to develop a premium content micropayments platform
- Secured initial listings on cryptocurrency exchanges Bittrex and Cryptsy
- Created a robust vault service to store and control the sale-restricted portion of founding teams’, angel investors’ and partner companies’ sale-restricted NeuCoins
- Obtained best in class legal, regulatory and jurisdictional advice
Main Objectives for Year One
- One million or more users
- Major partnerships with quality content providers and games accepting using NeuCoin for microtransactions
- Integration with leading exchanges
- Demonstrating the security of NeuCoin’s PoS design
- Voting mechanism in place for NeuCoin holders
Introducing Microtransaction Solutions
In December 2015, NeuCoin rolled out its first two consumer applications for prototype online microtransactions: the NeuCoin-integrated Facebook game Solitaire Racer and a tipping platform and user reward program on Jango Internet Radio. A second NeuCoin-integrated game, called SongQuest, was released in September 2016.
- Platforms will be powered by freemium distribution of NeuCoin tokens to users, who will be able to try premium content for free - a significant advantage over micropayment platforms using Bitcoin (because 99.9% of consumers don’t have Bitcoin, and it’s not easy to get)
- Participating content providers will receive user acquisition bounties for every new user converting to NeuCoin
- Platforms will be tested and optimized with pilot partners and then rolled out for use by any content provider looking for NeuCoin tipping or micropayment solutions
Kickstarting NeuCoin Tipping with Jango Internet Radio
In December 2015, NeuCoin launched its partnership with RadioAirplay, an online music promotion company with over 250,000 independent musicians as customers, and Jango Internet Radio, a streaming music service with 7 million monthly users. On Jango, 7 million monthly listeners listen to custom playlists of their favorite music and get to discover and interact with 250,000 emerging artists matching their musical taste. The NeuCoin Growth Foundation is giving all registered Jango listeners 25 NEU to tip their 5 favorite emerging artists. Listeners also get rewarded with NEU for trying it out, as well as for spending more time on the site. The tipped artists will be able to use the NeuCoin they receive to gain even greater exposure on Jango and other promotional benefits.
Solitaire Racer on Facebook - The First Pilot Showcasing How a NeuCoin-integrated Game Could Appeal to Mainstream Consumers
The multi-player Facebook game Solitaire Racer, launched in December 2015, showcases how any game - starting with Solitaire, one of the most popular casual games of all time - can be made more appealing when players can use and win virtual tokens in a game thatv they already like. Solo players win NEU when completing decks: the faster they play, the more they win. Even more fun, rewarding (and viral), players can enter speed tournaments or race against each other in head-to-head matches agains opponents who are dealt the exact same cards.
SongQuest on Facebook - The Second Game Pilot Aimed to Serve as a Blueprint for Partnering with Successful Third-party Games
SongQuest is the second NeuCoin-integrated game pilot aimed at demonstrating how a few “freemium” NEU can be distributed to mainstream consumers in a way that also benefits game publisher partners. It is a “name-that-tune” type of music trivia game (a broad appeal, popular genre with millions of players) in which players listen to music clips and race to guess the name of the song or artist. Choosing from several genres and nearly 1,000 playlists, players can play against the clock in solo mode, against strangers in tournaments, or challenge their Facebook friends to play against each other for specific playlists. Players can earn NeuCoins by winning tournaments and solo challenges.
These pilot partners will help optimize consumer experience, conversion and monetization, and are meant to act as case studies that can demonstrate how it can be attractive for third party service providers to integrate NeuCoin. They can use NeuCoin distribution as an added value and retention tool to reward their users for certain behaviors - spending more time on the site, logging in more often, inviting more players, watching more videos or ads, reading more articles, tweeting about or liking the service provider on Facebook, leaving comments, tipping content creators, etc.
The details of NeuCoin’s technology are explained at length in the 39-page technical white paper, “NeuCoin: The First Secure, Cost-efficient and Decentralized Cryptocurrency”, as well as summarized in a 5-page abridged version.
NeuCoin uses an innovative PoS technology design and economic model to maximize both security and the long-term value of the decentralized cryptocurrency. This design solves the mounting cost and increasing centralization problems faced by proof-of-work systems like Bitcoin, as well as the security and centralization problems with earlier proof-of-stake coins. As such, NeuCoin is the first peer-to-peer cryptocurrency, regardless of technology, that is secure, cost-efficient and decentralized in the long run.
Cryptocurrencies using a traditional proof-of-work (PoW) design require the network’s miners to solve a computationally hard problem in order to generate the next block in the blockchain and receive a mining award. Since miners compete based on computer resources, the operating costs of performing these computations - electricity and hardware - are constantly being driven up to the point where they approach the value of the coins being awarded. This competition assures that in order to take over of the ledger, an attacker has to control at least 51 percent of the network’s computational power (hashpower). As a result, the cost of security for PoW cryptocurrencies approximates the value of the coins being minted, with the miners who provide the security earning very little profit for their work.
Proof-of-stake (PoS) is an alternate method of generating blocks that doesn’t require high mining expenditures. In PoS, miners compete based on the numbers of coins they own rather than on computing resources. In effect, miners receive coin awards that are akin to “interest” on their coin holdings, incurring close to zero operating costs (just the capital cost of holding the coins). Security in PoS designs is driven by the value of the coins, because in order to modify transaction history, an attacker would have to control 51 percent of the coins held by miners at any one time. The cost of staging an attack is driven by (a) the value of the coin, which will grow exponentially as the attacker increases demand and (b) the number of coins staked by miners at any one time.
The cryptocurrencies that pioneered PoS mining - Peercoin and NXT, along with their followers such as Blackcoin, Novacoin and others - all chose to have very low POS mining awards, perhaps in order to minimize coin inflation, and perhaps due to the fact that POS mining has immaterial costs. In any case, these low POS mining awards have resulted in low numbers of miners operating nodes and low numbers of coins being staked. This, in turn, has led to less-than-desired security levels, as it would be relatively inexpensive for a bad actor to buy enough coins to perpetuate a 51 percent attack (because it would only need to buy enough coins to control 51 percent of the coins being staked at any one time). In addition, any coin with a low price will be particularly vulnerable to an attack.
NeuCoin uses an innovative PoS model with high minting awards. The PoS awards start with extremely high award rates - 100% per year - and decline linearly over ten years to 6% per year, where they remain indefinitely. The estimnated total supply after 10 years in 10 billion, but the actual total supply of coins is dependent on the number of coins that are mined over time (whether by individual miners or through PoS mining services such as the one offered by MyNeuCoin.com).
This design has the following key benefits:
- Creates high grade security by incentivizing coin holders to partake in the mining process and keep their nodes up and running at all time, thereby fixing the principal security flaw experienced by other PoS coins with low mining awards – NXT, PPC, BLK, etc.
- Rewards early adoption by buyers, consumers and ecosystem partners, incentivizing them to hold onto their coins and become real partners and evangelizers for NeuCoin.
- Enables the NeuCoin Growth Foundation to distribute coins to value-creating ecosystem participants without controlling too large of a holding at any one time. Given the foundation's continual coin distribution, by year 2 it will no longer own a majority of the coins, and by year 4 it will own no more than 3 percent of the coin supply.
If 50% of coins were to be mined after year 10 when the award rate equals 6%, then the supply of coins will continue to grow at the rate of 3% per year after year ten. This rate of growth is beneficial for two main reasons
- It allows for continuous PoS rewards, which makes it possible for NeuCoin transaction fees to stay low - unlike other coins that must raise transaction fees when coin minting ends in order to pay for network security.
- With coin supply growing more slowly than fiat currency monetary growth (which averages the rate of economic growth plus the rate of inflation)the economy as a whole, there will be a mildly deflationary effect, tending to slowly increase the value of each NeuCoin over time.
For details of NeuCoin’s technology, see the 39-page technical white paper, or the 5-page abridged version.
NeuCoin’s core development, consumer marketing, and projects to increase the coin’s utility was originally handled by three independent non-profit foundations based in the Isle of Man – the Code, Growth and Utility foundations. In March 2016, the threee foundations were merged into one: The NeuCoin Growth Foundation, which has a single mission – to maximize the long-term value of NeuCoin. The foundation is overseen by independent Council Members, who are aided by Advisors with experience in cryptocurrencies, consumer marketing, economics, finance and regulatory matters. The foundation will ultimately be controlled by NeuCoin holders (1 NeuCoin = 1 vote).
By the time of launch, NeuCoin’s three non-profit foundations were funded with 2.4 billion NeuCoin tokens and approximately $1 million.
The merged NeuCoin Growth Foundation's goal is to sell sufficient NeuCoin tokens through private sales or exchanges to fund the following year’s cash needs. However, when NeuCoin prices rise, the foundations may sell additional coins, with the excess cash obtained kept as a “rainy day” reserve. When prices fall, fewer (or zero) coins will be sold. Over time, the foundation must continuously determine what the optimal use of its NeuCoin assets are - optimal from the perspective of maximizing the value of NeuCoin. The foundation's goal is to distribute its coin holdings within three years of launch.
The NeuCoin Growth Foundation is managed by an Executive Director and overseen by Council Members whose compensation packages are tightly linked to the growth in the market capitalization of NeuCoin. Furthermore, the foundation has an “Enforcer,” whose oversight role is to ensure that the Council Members are following the objectives and rules of the foundation and the results of coin holder votes as discussed below.
The initial Council Members were recruited and appointed by NeuCoin’s founders and will serve for an initial term of three years. In the first year, the Council Members will be primarily composed of members of the NeuCoin Project team (however not founders). By the end of year one, the foundation will recruit two independent Council Members and some of the NeuCoin Project team Council Members will resign from the Councils. After the first term, Council Members will stand for re-election for consecutive three year terms.
Within a year after launch, NeuCoin holders will effectively take full control of the NeuCoin Growth Foundation. Using a voting mechanism currently under development, NeuCoin holders will be able to “vote their coins” (1 NeuCoin = 1 vote). With a majority vote, coin holders will be able to:
- Remove Council Members and Enforcers
- Change the compensation of Council Members and Enforcers
- Change the Foundation Rules
- Change the Budget
- Force the Council Members and Enforcers to take any action that a majority of coin holders believes will increase the value of NeuCoin
How the NeuCoin community can monitor the team's, angels' and foundation’s token holdings over time
There are huge potential benefits to a cryptocurrency that uses a premine to:
- acquire a large user base through giving out small numbers of tokens to large numbers of users
- finance the development of the cryptocurrency’s utility over time
However, all cryptocurrencies that follow this strategy (Ripple, Stellar, NeuCoin) face the challenge of winning the trust of their communities: specifically, how can users trust that the founders and insiders will in fact use the premine over time in a way that benefits all of the crypto’s holders, as opposed to primarily the founders or insiders themselves.
The below will explain the steps that the NeuCoin Project has taken and will be taking to demonstrate that the foundation, founding team and insiders are indeed working to benefit the wide community of NeuCoin holders.
Tokens restricted for use or sale
Unlike any other cryptocurrency project, all members of the founding team, angel investors, and service providers of the NeuCoin Project have agreed to the imposition of use and sale restrictions on the NeuCoin tokens they have received or will receive. Restricted coins become unrestricted according to the following schedule:
- 2% of holdings per month in the first year,
- 3% per month in year two
- 4% per month in the year three
- 5% per month in year four
- 6% per month in years 5-10
- After year 10, all restrictions expire
Illustration of how the re-sale restrictions work in practice
Consider an angel who owns 1 million NeuCoin tokens on the day of launch. For the first month after launch, the angel cannot sell any NeuCoins; indeed the angel does not even have any access to the private keys for his/her tokens. During the month, assume the angel’s NeuCoins grow to 1.08 million due to POS rewards. At the end of the month, 2% of 1,080,000, or 21,600, would become unrestricted and sent to the address of the angel’s choice. At the beginning of month two, the angel has 1,058,400 restricted NeuCoins. During the month, assume this restricted coin balance grows 7.9% from POS rewards to approximately 1,142,000 coins. At the end of the second month, 2% of this balance, or 22,840 coins, become unrestricted, and will be sent to the angel’s address. And so on.
Publicly visible addresses and verifiable transactions
All NeuCoin tokens owned by the foundations, as well as all restricted NeuCoins (whether owned by founders, angel investors or service providers) are held and mined in published addresses clearly visible and verifiable on the NeuCoin blockchain, which can be monitored on https://explorer.neucoin.org. For an overview of these addresses, please see https://explorer.neucoin.org/overview.
Each of the three original foundations has two kinds of publicly visible addresses: Core Accounts for long-term holdings and Distribution Accounts for near-term transactions. After the destruction of the Utility Foundation's and Code Foundation's coins, following the merger of the three foundations and completed reduction of the remaining foundation's reduction coin holdings (see http://blog.neucoin.org/post/141053866351/neucoin-to-eliminate-50-of-coin-supply-and for more details), only the NeuCoin Growth Foundation's addresses will remain.
The entire founding team shares one address for their restricted NeuCoin tokens, which is controlled by the NeuCoin Growth Foundation. At the end of each month, 2% (in year one) of those token holdings that become unrestricted are distributed to team members. Likewise, all of the angel investors’ restricted NeuCoin tokens are held in a single segregated address controlled by the NeuCoin Growth Foundation, and again, at the end of each month the NeuCoin tokens that become unrestricted are distributed to the individual angel investors. In the same manner, all restricted NeuCoin tokens awarded to service providers (exchanges, distribution partners, game developers, contractors, etc) that increase the utility and value of NeuCoin are held in an additional segregated address controlled by the NeuCoin Growth Foundation, and again, at the end of each month the NeuCoin tokens that become unrestricted are distributed to the individual owners. All of the balances held by these entities along with the monthly transfers will be visible on the blockchain, which can be monitored on https://explorer.neucoin.org, and easily verifiable by any outside party.
Reports on distribution of NeuCoin tokens and sales for fiat
The NeuCoin foundation is publishing quarterly NeuCoin distribution reports, with details on material transactions, on https://explorer.neucoin.org/distribution_reports. These reports also include any sales of NeuCoin tokens on a monthly basis.
Upon creating the decentralized cryptocurrency, the NeuCoin Project’s four founders donated NeuCoin’s source code and the pre-mined coins to the NeuCoin foundations. 200 million sale-restricted coins are retained by the founders and other members of the NeuCoin Project team in exchange for contributing over $1,000,000 of unpaid work from March 2014 through the time of launch in the summer of 2015 (value of $.005 per coin).
While the founders led the NeuCoin Project during its development phase, they relinquished control of the decentralized cryptocurrency upon its launch and will not serve as Council Members or Enforcers of any of the foundations or their subsidiaries or affiliates. However, the founders have committed to continue working for the NeuCoin Project for three years after launch, providing marketing, business and technology development services. The foundations originally set aside an additional 300 million sale-restricted coins (plus PoS awards earned on these coins) to release to the founders over the three years following launch as compensation for their providing an additional $2.25 million of unpaid work (value of $.0075 per coin). However, in March 2016 the founders forfeited their right to 200 million of these coins following the foundation's reduction of its coin holdings (see http://blog.neucoin.org/post/141053866351/neucoin-to-eliminate-50-of-coin-supply-and for more details).
NeuCoin was created by an experienced team of entrepreneurs, developers and marketers, along with a committed group of designers, game developers, security consultants, public relations and legal advisors. NeuCoin’s founders previously created five consumer internet companies – in the music, games and shopping fields – that each reached many millions of consumers.
Daniel Kaufman, Co-Founder, Strategy
Serial entrepreneur for 22 years, active investor in technology ventures and real estate. Magna cum laude BA in Political Economy from Williams College, awarded the Sloan Fellowship in Political Economy and named the "Class of 1960" Economics Scholar. Dan founded:
- Dash, Time Magazine’s “Internet’s Best Shopping Tool” in 1999 and raised $51 million
- DirectRevenue, an online contextual advertising company that partnered with music and gaming companies to acquire a user base of 150 million and reached $40 million of annual revenue
- Jango, a top 5 US Internet radio service with over 20 million registered users and 8 million monthly listeners
- Cable TV networks in Azerbaijan and Armenia, a management consulting company specializing in digital content and communications, a real estate portfolio of over 1,000 apartments, and many others.
Johan Sandstrom, Co-Founder, Marketing and Communications
19 years of experience as an entrepreneur and creative executive in online media, marketing and entertainment. Summa cum laude BA in Political Science from Stockholm University. Co-founder (with Dan) and CMO of Jango. Co-founder and EVP of Spray Network, a top 5 European portal, employing 700 people in nine countries, and sold to Lycos Europe for $572 million. Film producing credits include Kill Your Darlings, starring Alexander Skarsgard and John Savage, selected for Tribeca Film Festival and distributed by Sony Pictures.
Ophélie Pubellier, Co-Founder, Technology
Ophélie discovered and started mining Bitcoin back in 2011. As an executive and consultant, she has helped several French tech companies with software development, system architecture and network engineering, including Iliad, a leading French telco group and Typhon and Stockho Hosting, two hosting and outsourcing services groups. Ophélie graduated from 42 and EPITECH, a top European Computer Science school.
Scott Walker, Co-Founder, Business Development and Marketing
An entrepreneur and investor in tech, media and advertising for 20 years, Scott made early investments in Bitcoin mining operations with partner Brock Pierce. Also a founding partner of Crypto Currency Partners, with investments including Kraken, BitFury, Xapo, Bitgo, Ethereum. Scott co-founded:
- New Motion, Inc, a mobile entertainment company where Scott also served as CEO, which was eventually merged with Traffix, Inc in 2007, and culminated in a combined public entity known as Atrinsic (NASDAQ: ATRN), with over 200 employees and revenues of over $130MM per year
- Mindset Interactive, an advertising software company which was sold to BroadSpring in 2004, Inc after having achieved over $10MM in annual revenue.
- Net Page Communications, an ISP which was sold to Net Guard Technologies in 1997
Sandrine Ayral, Head of Community
Previously a member of Coinbase remote team, covering news related to Bitcoin on TechCrunch and Rude Baguette. Business development for a Parisian startup, EasyLife Pack, part of the founding team of TheFamily, a startup accelerator, worked for a Parisian VC fund, advised over 10+ startups with their business development and fundraising strategies at Le Camping, another accelerator. Graduated from ESSEC, a top French Business School with a specialization in Corporate Finance.
Mark Bridges, Business Development and Marketing
After a 13-year corporate career in Asia and North America in finance, consumer tech and manufacturing, with senior positions at Swire Pacific, Honeywell and Johnson Matthey, Mark has spent the past 12 years investing and working with tech and media startups in Hong Kong, Canada and France. Focusing on business development and marketing, Mark’s recent engagements include Exicon, GreenOwl Mobile and SPIDEO. BA Honors in Asian Studies and Economics from Trinity College.
Maël Nison, Core Coin Developer
Ludovic Pouvreau, Back-end Developer
A former member of French telco giant Iliad’s web development team. Graduated from EPITECH, a top European Computer Science school. Ludovic has been involved in several technological projects at his school and also taught the theory and practice of C, C++ and ASM.
Alexandra Grasland, Front-end Developer and Designer
Alexandra has worked as a front end developer for a number of French companies, including the job board start-up Keework, hardware developer Freebox, media giant Vivendi and educational group Ionis. Alexandra graduated from EPITECH, a top European Computer Science school, where she was also an assistant teacher in C, PHP, SQL and Unix System.
Sylvain Laurent, R&D Engineer
Formerly R&D Engineer at Hexaglobe, a french high availability content delivery company, Sylvain joined the NeuCoin development team in the early months. He graduated from EPITECH where he was part of LSE, a security laboratory within the school while being president of Prologin, a national development competition in France. Last summer, Sylvain and his team won NDH, an annual security competition in Paris.
Guillaume Louvigny, Back-end Developer
Guillaume has worked for french telco giant Iliad for over two years prior to joining NeuCoin's web development team. He also graduated from EPITECH.
Kourosh Davarpanah, Evangelist
Co-founded a logistics startup in Paris that received seed funding from French serial entrepreneur and billionaire Xavier Niel. Former mergers-and-acquisitions analyst at Lazard Frères. Graduated from Columbia University and Ecole Polytechnique (France’s leading engineering school).
Serial entrepreneur and Chairman of the Bitcoin Foundation
Co-Founder and Chief Architect, King (Candy Crush Saga)
One of Peercoin's Core Developers
NeuCoin's Strategic Angels include several top tech, media and VC executives and entrepreneurs who have founded a number of successful consumer Internet companies that have sold for $100 million plus.
Invited to invest based on their ability to forge partnerships and help drive consumer adoption, the Strategic Angels saw the potential for a freemium, consumer-friendly coin to reach consumers on a large scale.
NeuCoin's Strategic Angels include:
Co-founder, Co-CEO, Neuehouse, premier co-working/hospitality provider valued at $180M; previously founder, Dstillery, ad tech firm with $100M annual revenues, Integral Ad Sciences, ad tech firm with $50M annual revenues.
Founder and CEO of leading booking software MrOrange, MrJet (acquired by Ebookers/Orbitz), founder of Jetweb, Jetset, Trippa, Badoo, and many more.
CRO of LiveAuctioneers; previously founded Livelook (acquired by Oracle); former VP Allen & Co.
Investor and corporate finance advisor, former Director of Leveraged Finance at Merrill Lynch; previously Morgan Stanley Dean Witter.
Founder/CEO of game developer Wellevue. Founder and former CEO of cloud-based viral video marketing platform Incloode. Co-founder of the Spray group, including pan-European interactive agency network Spray, which merged with Razorfish and listed on NASDAQ as the world's largest interactive services firm with an eventual $5B valuation, and Spray Network (pan-European portal sold to Lycos Europe for $572M). Board member of marketing services software developer Wendia International and real-time video software company Arkaos.
Partner, Graviton Investment & Capital Advisers, an investment and corporate finance firm. Founder and former investment manager of tech/energy VC fund Alpha One. Board member of Maha Energy, RF Coverage, Eu-Supply Holdings, Widespace, PiaCare and Debitech.
Managing Partner at KBS+ Ventures, Chief Digital Media Officer at the Media Kitchen, previously VP of Billboard.
Bill and Gideon Friedman
Real estate investors owning over $1B of assets; Bill was previously founder and CEO of Tarragon Corporation.
Private equity investor in property, internet and retail. Board member of fashion brand Acne Jeans, Sweden's leading insurance broker Insplanet, online grocery retailer Matsmart.
Head of Growth at Facebook (responsible for "ads in your timeline"); formerly Founder of Swaylo (acquired by Facebook); previously General Manager of Shopping.com.
Producer of top television shows American Idol, Hollywood Game Night, The Winner Is, Celebrity Family Feud and Britain's Missing Top Model.
Private equity investor, material holdings in leading HR software company GlobeSoft and publicly traded packaging company Fasty, board member of publicly traded global communications consultancy Intellecta.
Managing Director & Global Strategist, EII Capital Management; previously Executive Director, JPMorgan investment management; VP - Strategic Planning, Lend Lease.
CEO, Swedish subsidiary of 3 (Three), the world's largest 3G mobile operator with 27 million customers. Chairman of online ad production platform Bannerflow, 2013 Swedish "Telecom manager of the year" award, former CEO Vodafone Stores Sweden and CEO Campuz Mobile.
Founder and CEO, renewable energy conglomerate OX2; co-founder of the Spray group, including pan-European interactive agency network Spray, which merged with Razorfish (where Johan was also EVP) and listed on NASDAQ as the world's largest interactive services firm with an eventual $5B valuation, and Spray Network (pan-European portal sold to Lycos Europe for $572M), where Johan also served as CEO.
President of Hotwire, Chairman of eLong (Nasdaq-traded leading Chinese travel company), former President and VP positions at Expedia.
Professor of Entrepreneurship, Columbia University Graduate School of Business; Director, Columbia University Entrepreneurship; Director, Venture Lab, Columbia University Technology Ventures; previously founded several health care and technology ventures.
CEO of leading web agency Acne Digital, founder and former Chief Creative Officer of leading Swedish web agency Starsky, acquired by top ad agency network McCann.
Founding partner of Fintan Partners, hedge fund with over $1B of assets; previously Founder of AM Wealth Management.
SVP of Business at Uber; previously COO Klout, Senior Vice President, Tellme Networks, Special Assistant to the US Secretary of Defense, Investment Banking Associate, Goldman Sachs.
Co-founder, Co-CEO, Neuehouse, premier co-working/hospitality provider valued at $180M; previously founder, Dstillery, ad tech firm with $100M annual revenues, Integral Ad Sciences, ad tech firm with $50M annual revenues.
Henrik Hancke Nielsen
Executive Producer at FremantleMedia North America, one of the world's largest TV production companies, shows include X-Factor, The Apprentice, the Idol and Got Talent franchises, The Price Is Right, and Family Feud.
Co-founder of Convertro, an online marketing optimization platform sold to AOL for $101M; previously founded numerous online marketing and online dating companies.
CEO of Dstillery, leading ad technology firm; previously Director of Search and Analytics, Google; CEO of Deja.com; President ESPN Internet Ventures; Founder/CEO of Spy Magazine.
Head of Customer Experience at Magine TV, a leading European cloud-based TV broadcast platform. Former Head of Sales and Service at IF, the largest insurance group in Scandinavia, with 6,800 employees and 3.6 million customers.
Chief Strategy Officer, XAPO (Bitcoin wallet that has received $40M of VC capital); previously, co-founder, general partner of Arpex Capital; co-founder Vidavee, sold to Vignette.
CEO of investment company Proventus. Awarded "Young Global Leader" at World Economic Forum in Davos. Chairman of Nordic Broadcasting Oy, Artek, Tom Dixon, Royal Swedish Dramatic Theatre. Member of the European Council on Foreign Relations and the Advisory Boards of Sotheby's and Maiyet.
Managing Director of online dating service Meetic ($440M IPO in 2005, acquired by IAC for $489M in 2011); Co-founder of group buying site Groupolitan, sold to Rossel, Belgium's largest media group. Board member of Viadeo, Vinogusto, Forecastis.
Partner at Alipes, private equity company controlled by IKEA founder Ingvar Kamprad.
Chief Creative Officer, top advertising agency Lowe Brindfors; previously Chief Creative Officer at Ogilvy & Mather New York, world top 5 ad agency network. Ex Creative Director of top agencies BBH and Fallon.
Co-founder and former CEO of Mediaplanet North America and Conversionplanet, leading content marketing company with 400 employees in 15 countries. Founder and Exec Chairman of Rchery, startup mobile direct marketing platform.
Co-founder and Chief Architect, King.com, NASDAQ-traded leading mobile game developer (Candy Crush Saga, largest game developer on Facebook, $4.5B valuation); co-founder of the Spray group, including pan-European interactive agency network Spray, which merged with Razorfish and listed on NASDAQ as the world's largest interactive services firm with an eventual $5B valuation, and Spray Network, a pan-European portal sold to Lycos Europe for $572M.
Top commercial film director, award winning commercials for Audi, VW, Coca-Cola, Burger King, Amazon, Volvo, Comcast, etc.
Owner of MondoMedia, YouTube’s number one animation channel. Chairman of Talent Inc. Co-founder of the Spray group, including pan-European interactive agency network Spray, which merged with Razorfish (where Jonas also served as EVP and Vice Chairman) and listed on NASDAQ as the world's largest interactive services firm with an eventual $5B valuation, and Spray Network (pan-European portal sold to Lycos Europe for $572M); co-founder of Lovefilm, the Netflix of Europe, acquired by Amazon. Former owner and board member of Hyper Island, former Chairman of Acne.
Producer of top television shows X-Factor, Eurovision Song Contest 2014, Talent and many more.