February 17, 2018

How to create your own billion dollar cryptocurrency

Everyone can create their own cryptocurrency - but not everyone can create their own cryptocurrency that's also worth billions of dollars, like bitcoin, which has a market value of USD 180 billion. A cryptocurrency closely related to bitcoin is bitcoin cash with a market value of USD 25 billion.

While researching the difference between bitcoin and bitcoin cash I discovered that one of the guys behind bitcoin cash is Rick Falkvinge. I'm Swedish, so I recognized him because a few years ago he created a political party called Piratpartiet (The Pirate Party), which used to be a big part of the Swedish political scene but has since then disappeared. What has he been doing since then?

It turned out that Rick Falkvinge has been buying bitcoin and then he created bitcoin cash because he disagreed with the developers of bitcoin. The main difference between his views and the views of bitcoin is that a cryptocurrency should be more decentralized. If you research bitcoin and bitcoin cash you realize that there's a small war going on between the believers in each cryptocurrency, so I'm not going to argue which one is the best because only time can answer that question.

If you research bitcoin cash, you will find a text written by Rick Falkvinge called Official Statement from the CEO of Bitcoin Cash. In it, he tells why a cryptocurrency should be developed like a swarm. A swarm? What is he talking about? Luckily, Rick Falkvinge has written a free book on the subject called Swarmwise: The tactical manual to changing the world. In it he tells the story of how he created Piratpartiet and why the political party disappeared and how you can create you own decentralized organization. These are the key concepts from the book:
  1. You need an idea that you know can work from a theoretically point-of-view. Be provocative. If you are not making somebody angry, you're probably not doing anything useful. 
  2. The idea has to generate enthusiasm on its own - no advertising campaign is needed. It should be enough to mention it to someone, but it needs to have a realistic, understandable goal that energize people to change the world for the better. It also need subgoals and you need to be able to measure the progress towards the goal and the subgoals.   
  3. People have short attention span, so you need to keep them interested by having a signup page or a forum where people can collaborate. This will make a structure so people can self-organize by doing tasks without first asking for permission, which is good because you can't control all parts of the swarm on your own. 
  4. As the swarm is organizing itself into different groups, you notice that each group gets a leader. Make sure to form a relationship with each leader. But remember that this leader is not a boss and can't thus give orders. What they should do is to communicate what should happen and start doing it and the people interested will follow automatically. If someone sees something they don't like, they should contribute with something they like, and not complain about what they don't like. You should celebrate if someone takes a risk but failed, and not criticize, because it will prevent people from trying new things.   
  5. To kickoff the swarm, all members should do some task, such as collecting signatures. This task has to be realistic and has to be a step closer to the goal. It will also get people to know each other. 
  6. The swarm will copy the behaviors of the leader, and yes the swarm needs a leader to inspire each other to greatness. The only way to have the swarm behave well is to behave well yourself by leading by example. To be able to lead by example you need to take care of yourself by sleeping and exercising. You also need to be honest, if the swarm is encountering trouble, be honest about it and suggest a solution to the problem.   
  7. As the swarm grows, you have to make sure that no self-organized group gets more than 150 people. If so, you need to create subgroups. The core group should consist of no-more than seven people, which is the optimal group size or the group will become too inefficient.
  8. Members of the swarm will translate your goal to their own goal. For example, the idea behind bitcoin is to create a decentralized currency, but some believe in bitcoin because they don't trust banks and others believe in bitcoin because a bitcoin transaction is less easier to track than a regular currency. This will make it easier to market the goal because the friends of the members of the swarm will listen more to their own friends than to you and your personal goal. 
  9. You need to make sure that the swarm is visible in the real world and not just online. For example, when you walk around you see shops that have put up stickers that they accept bitcoin. 
  10. Conflicts within the swarm will happen as the swarm develops. But you need to be aware that a small amount of conflict is a step of progress and it's a phase all groups have to go through before they become efficient. Also mistakes will happen, but even big companies make mistakes, and mistakes should be expected because you need these crazy ideas that often end up as mistakes as long as you learn from them. You should reward good behavior, such as initiatives or helping others, with attention and ignore bad behavior.  Also remember to have fun because people enjoy having fun and will join your swarm to have more fun.
  11. You need help of your swarm to recruit new people to the swarm. Members of the swarm have to talk with people they know. To make it easier you need a weekly newsletter to let people know what's going on. Make sure it's written so someone who's new to the swarm understand everything in it. When measuring new people you should not measure Twitter follower or Facebook likes, but people themselves. Many people on Twitter are not really interested in you, but in promoting themselves by following you.  
  12. You need to be able to activate the swarm when needed. The addition of 25 people from your swarm to a discussion on the Internet will convince someone who's just reading the discussion that your swarm's goal is something to follow. If you control the perception of who's the winning team, you become the winning team. It's important to note that the swarm should discuss the goal and not promote it - people don't need to see more ads. Neither should you forget the long-tail: even the smallest blogger is important and reward all people for their interest in your swarm and answer all comments, even if the comment is rude you need to be nice and polite.  
  13. Use old media like newspapers to your advantage. Make it as easy as possible for journalists to write articles by providing detailed press releases and photos. The long-term goal is that when journalists are writing an article about your goal, then they should write an article about you and not someone else. If the media starts to ridicule you then it's a good sign and a step forward from not being mentioned at all.
  14. Never take success for granted. When the swarm is successful, don't forget that success doesn't last. Just because you are popular today doesn't mean you have to be popular tomorrow. 

I think the ideas from the book are interesting and they are at least a starting point if you have your own currently worthless cryptocurrency. The ideas behind cryptocurrencies and decentralized organizations are new, so I guess we will see many more ideas on how to best grow such organizations.

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