Paycoin microprime is back

Author's note: This article is part of an ongoing blog about my adventures in the world of alternate currencies.

In the cryptoworld a lot of things don't pan out. Some opportunities turn out to be outright scams. Others turn out to be bad investments despite the most sincere intentions on the part of the founders or developers. Either way, you lose your investment. I have had quite a few experiences with crypto investments of various kinds not panning out. I have lost quite a lot of cryptocoins when opportunities I personally invested in went belly up.

Paycoin was one of those failed opportunities. Or so I thought. My “decision” to invest in Paycoin was actually not one I made completely freely. Back when I wanted to try my hand at Scrypt mining, I bought a hosted mining package from GAW Miners. The package turned out to be Zen Cloud which only allowed mining in select multipools. I ended up purchasing a whole new set of hardware, but I had it delivered to a bona fide data center so that I could mine in whatever pool I wanted to. However I did keep my “hosted” equipment on Zen Cloud.

I was going to request delivery of my hosted equipment, but then an email from Zen Cloud informed me that I'd be given some additional hashing power, plus I'd heard that people had trouble getting their hosted equipment delivered, so I just bought all new hardware which I had delivered while keeping the hosted equipment where it was.

Eventually my hosted equipment morphed into Hashlets, and then into Hash Stakers, and possibly one or two renditions in the mean time. I knew at that point that it was all digital, not actual hardware, but it was easier to go down the GAW/Zen Cloud path so I did. I ended up with nearly twice as much “hashing power” as I'd originally “bought,” all in the form of “immortal hash stakers.”

These immortal hash stakers “mined” Paycoin. I had enough of them to produce about a half a Paycoin each day. Zen Cloud gave me quite a few PayCoins to get started, because I had been “pre-mining” them back when the multipools were not producing much Bitcoin. I wasn't particularly enamored with Paycoin itself so I sold a lot of them as they were staked (“mined”) and figured I could enjoy that little trickle indefinitely.

Then all kinds of drama started happening with Josh Garza, the founder of GAW Miners and the acting director of Zen Cloud. All kinds of accusations flew around about how he was a scammer and how Paycoin and everything associated with it were just a bit Ponzi scheme.

I never quite bought the idea that Garza was a scammer–I believed then and still believe now that his intentions were good. It also seemed to me that the whole Paycoin concept was genuine, even if it didn't work out entirely as planned.

However, the increasing amount of drama made it clear to me that Paycoin and hash stakers were no longer a good investment–if they were ever a good investment in the first place. The plummeting price of Paycoin helped make that clear. So did the announcements of Zen Cloud's eventual closure.

At some point Josh Garza got locked out of the back end of Zen Cloud and it was taken over by people involved in the PayCoin Foundation. These were people who believed in the coin, but for whatever reason came to the decision that Josh Garza could not be trusted. It was essentially a hostile takeover, but I do not know the details and don't really care to.

My hash stakers continued to kick out new Paycoin at the promised rate for about a month after the takeover, but it was made clear that they would stop soon. Then one day, they all coughed up their embedded Paycoins and that was it. I transferred my newly liberated Paycoins to an exchange and dumped them.

I did inquire on the Paycoin Forum as to whether or not there was ever any possibility of the hash stakers working again, or at least getting refunded, and no one seemed to know for sure. Some people were talking about mounting a class action lawsuit against Josh Garza and GAW Miners. Others were finding other ways to stake their Paycoins. New sites came up which allowed for the Prime stakers to be auctioned off for discreet periods of time. Or you could “rent” their use by sending a certain amount of Paycoin to be staked. All of those possibilities essentially required starting over with fresh Paycoins. None of them represented any sort of renumeration for actual funds spent on Hash Stakers (with the expectation that they would stake forever).

At that point I concluded that I had lost close to two Bitcoins in the affair and I certainly wasn't interested in having anything more to do with it. By that point I had gotten used to losing cryptocoins that way, so I chalked it up to more hard won experience. Once I dumped those last Paycoins I never logged in again. I put all my hash stakers on the market, but knew that was a long shot. I'm not even sure the new management of Zen Cloud supported or honored a hash staker marketplace. None of mine sold.

The last thing I expected was for hash stakers to return in any form.

This morning I received an email from Zen Cloud concerning its final shut down. What? Zen Cloud hadn't shut down already?

It turns out that people who believe in PayCoin but not in Josh Garza have been working hard to essentially decentralize the hash stakers. The way Garza set it up, there were three different minting or staking rates for Paycoin. One was the usual way which was to run the QT wallet and unlock it for minting. I did try that at one point and never got anywhere. This was the lowest and least likely staking rate. The highest staking rate was the prime controllers. I'm not sure exactly what prime controllers are, but they can stake at a rate of around 25% APR. Once the PayCoin foundation people ousted Garza from the project, those prime controllers got put out for bid where people could rent them for up to six months at a time. You can still do this now. The third staking option was the MicroPrime, with a rate somewhere in between the regular staking wallet and the prime controller. Hash stakers were essentially MicroPrime wallets. You could also buy those for a set period of time, but early adopters who had hashlets had the option to convert them to “immortal hash stakers,” and that was the option I chose. But when Garza was running the show, the only way to own hash stakers (or MicroPrimes) was to host them through a Zen Cloud account. This meant that all the MicroPrimes were centralized and therefore vulnerable to all the issues that come from a network that is controlled by a single entity.

This morning I received news that my Zen Cloud account has a private key for me which once I import it, will convert my regular QT wallet into a MicroPrime wallet. Practically this means that my QT wallet will mint at the same rate that my hash stakers used to. If I can just get the rest of the Paycoin block chain downloaded (no easy feat I'm finding), I can then import the private key and voila: a truly decentralized MicroPrime wallet. My understanding is that this wallet will stake at the higher rate for as long as I keep it unlocked and loaded with coin.

I logged into my Zen Cloud account as soon as I could and located the private key. I also found a nice stash of Paycoins roughly corresponding to the total size of all my hash stakers. I suspect that when I import the private key, those Paycoins will show up in my QT wallet.

I then downloaded and installed the most recent version of the Paycoin QT wallet and it's been working hard to download the Paycoin block chain ever since. For some reason it is having a really tough time downloading the last month's worth of blocks. My intention is to import the private key, send the Paycoins from my Zen Cloud account to my wallet (if importing the key doesn't take care of that), and then try to stake with it. If the wallet really truly stakes like the hash stakers did, then that would be the best possible outcome I could have expected.

Even if the staking doesn't quite work out as smoothly as the hash stakers (after all I had no way of knowing how the numbers on my account were truly acquired), it is truly refreshing to know that at least in this one case, there are people hard at work trying to make things right by all the former GAW/Zen Cloud customers. They are trying to actually deliver what Zen Cloud promised. Assuming my very own MicroPrime wallet does a good job of staking new Paycoins, a great feature is that this wallet will be controlled only by me. I will not need to log into a centralized account in order to access coins that are rightfully mine.

Now if my wallet can just get the block chain downloaded already…

Next entry: The altcoins and other investments I like, Part I

Devtome Writers

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