A Treatise on Altcoins

Why am I writing this document? Because when I first entered the world of cryptography, there were certain common-sense maxims which were passed around such as to design a cryptosystem, you must first think like a cryptanalyst or anybody can make a cryptosystem which they themselves cannot break. For most people, these maxims could be summarized simply as don’t roll your own crypto. Anyone who flouted this golden rule, without decades of schooling and experience, was rightly dismissed as a crank or a troll. Of course, there were a few people who didn’t subscribe, and they would spend years repeating their half-baked ideas, conspiracy theories, factoring algorithms and NSA-proof cryptography on sci.crypt. These people were often ridiculed but just as often sincerely advised to seek mental help. I hope for their sake that some of them have since done so. At no point were their ideas taken seriously, used, or, god forbid, invested in. However, shortly after the turn of the 21st century, Adam Back discovered a novel type of cryptography called proof-of-work which enabled a distributed consensus cryptosystem. This cryptosystem was used in 2009 by Satoshi Nakomoto to develop the first decentralized cryptocurrency — Bitcoin — which was also the first experimental cryptosystem to see billions of dollars poured into it by people who had no understanding of its mechanisms. By that time, the benefits of doing cryptography in the open had long since been made clear, so Bitcoin’s reference implementation was fully open-sourced. This allowed anybody to see the code, and anybody to fork it to develop their own cryptosystems. Of course, “developing your own cryptosystem” is the purview of only cranks and researchers, so it was reasonably assumed that none of these “altcoins”, as they were called, could ever be plausibly presented for public use. Boy, were we ever wrong on that one. The purpose of this document is twofold: