The alternative cryptocurrency world is one rife with pre-mine scams, predatory “initial coin offering” schemes and copy-paste experts masquerading as “developers.” Let’s be very clear: the ability to open up Qt and modify some forms and change a few values in existing source code is one I hope my son has by age six. If after that simple lesson, he claims to be a “developer,” I’ll be rather disappointed.
I’d also like to make another statement: while Satoshi Nakamoto, the original Bitcoin developer, was anonymous, he also never cashed in his coins. Wherever and whoever he is, his intentions were scientific, not greedy, in nature. Therefore, his anonymity makes sense while the vast majority of other anonymous developers do not. It is time this community question anonymity when it comes to financially-related projects. If they don’t attach their name to it, we’re crazy to invest our money in it. Sometimes our craziness pays off, but often enough it doesn’t.
The story of BitBean is a little different. It is a story of an idea being born, the developer trying to break the block chain then cash out, and two members of a nascent community stepping in to save the day.
Similar to other coins, BitBean had a short “proof-of-work” phase in which ten thousand blocks were found, for a total of 1 billion coins. However, because during the proof-of-work phase people were able to mint coins in the “proof-of-stake” way, only 606 million actual coins existed after the 10,000th block was found.
There were two main things that set BitBean apart from other, similar coins. The first was that it increased the block size limit of standard Bitcoin to twenty megabytes. In the words of the original developer, a man who never went by anything but “nokat” in all dealings:
Bitbean is pro Gavin’s proposal for the Bitcoin 20 megabyte fork. So Bitbean already made it’s maximum block size 20 megabytes!
This is in reference to the arbitrary increase in block size that Gavin Andresen has suggested. While no consensus has yet been reached about an increased block size, the overall feeling among many is that the size needs to be raised somehow, because at present there is a very irregular block confirmation time phenomenon.
The other thing that set BitBean apart was its method of proof-of-stake. Not unlike Netcoin for all intents and purposes, BitBeaners may only stake or “mint” coins if their wallet has been opened within the last six hours. Unlike Netcoin, however, there is a set reward, similar to proof-of-work mining, of 1000 coins.
Coins are supposed to be a payment system. Bitbean’s PoS encourages people to actually process transactions instead of hoarding their coins and only process a transaction once in a blue moon to only collect their interest which is not a good method for making a payment system.
Traders were therefore able to enter the BitBean currency with a minimal amount of funds and be able to “mint” several blocks a day, thereby increasing their holdings with little risk. Meanwhile Sha256 miners who were in the know were able to mine a lot of coins in a short period.
BitBean was taken seriously by the larger community. It landed on Cryptsy on February 18th, to the surprise of everyone including the current development duo, Tom C. of Albany, NY and Shawn K. of New Hampshire. It also began being traded on another popular exchange for alt-coins, Bittrex. The proof-of-work phase had only lasted three days, after all, so anyone who wanted to get in on the ground floor had only the option of purchasing the coins on an exchange. The speculation on the exchanges increased the value greatly, as you can see from the below chart. It didn’t reach crazy great heights, though, which made what happened next strange.
The lead developer, no-name nokat, pushed an update, the primary purpose of which was to change the transaction fees. He made this change a bit suddenly, but that wasn’t the odd thing about it.
The odd thing about it was that it would have broken the block chain, had the other developers not caught it in time. 11,407,538 BITB were transferred out of wallet address 2W4bxGDNu5keLZxz1oNqEntHagbL3KkXNs just before the exchanges updated their wallets with the addresses. This ensured that no one else would be able to dump along with nokat.
The way this was accomplished was by setting a “checkpoint” in the source code of the update that was for a block that had already been passed. What this meant is that anyone who synced the block chain after that point would be going off on a fork. If it was a mistake, according to the developers, it was a very novice mistake, which led them to believe that it was intentional, especially when combined with the knowledge that nokat had dumped such a significant sum of Beans on the market already. (At the time of the dump, roughly 3.5 BTC worth.)
Shawn K. says, “Seems obvious to me he planned it. […] Based on what I can see, I find it too hard to believe that he didn’t know the passed checkpoint was going to fork the chain.” In the words of Tom C., who was designated as “community manager” from early in the coin’s development stages:
I agree, considering the coding he had done before, he seemed perfectly capable to be able to push that update. Come on, a passed checkpoint?
Nokat sent a few last messages to Tom C., saying “I am a failure” and essentially giving up on the project. Interestingly, “failing” hadn’t stopped the anonymous developer from dumping in a sizable way.
The pair rescued the coin from the forked block chain, getting Cryptsy and Bittrex to roll back their wallets to the last known good code. The majority of the coin holders had not updated their wallets, so the actual fork damage appeared minimal. The new development team, while small, is working on implementing some important bug fixes and changes for the near future. When asked why they had wanted to take over, they said they didn’t want to see the same old scam happen.
They wanted to do something different, and bring BitBean back from life support to the thriving contender it had appeared to be early on. The ability to handle large numbers of transactions quickly is important to both of them, and their eventual goal is for brick-and-mortar stores to be using it in daily transactions, not unlike Bitcoin and others, but with the added benefit of encouraging merchants to hold their coins in order to quantify profit via staking.
New updates to the wallet are expected throughout the year. For a coin and community that have already been on such a roller coaster → rollercoaster ride, the benefits of long-term holding will hopefully outweigh the risks. For more information, visit BitBean’s current official website.