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Pump 'n Dump Alt Coin: Growthcoin

Introduction

Growthcoin is one of the few alt coins I have jumped on because I loved the concept behind it. Essentially it dealt with the fact that it had a pretty strong PoS (Proof of Stake) backing, rather than relying primarily on PoW (Proof of Work). If you are not already familiar with what the PoS is, it is essentially just interest earning on any coins that you hold. The longer you hold them, the more interest you gain. From the coin's point of view this is great because it is deemed as being harder to attack (with the 51% attacks) since you would not only need a majority of the hash rate, but also own a majority of the coins already. Having both of these situations locked down is much more difficult than just finding a way to overpower the hashing, so the chances of it happening are pretty low. As part of this, with the higher the PoS rate, the less chance there is that this attack will happen because everyone's holdings are pretty much constantly increasing. And from the user's point of view this is great as well, because you get free interest on your coins, rather than just sitting around holding them. But what happened with Growthcoin?

Initial Thoughts On Growthcoin

When I first heard about the coin, I had mixed feelings. Of course, before jumping on something new some due diligence is needed. This is especially true when dealing with something that can have a cost associated with it. Even if we are not looking at how many Bitcoins would be lost by mining another coin instead, we still have the real costs such as electricity and wear and tear. So really, making a bad choice causes you to lose money on two separate fronts: potential and real.

I had the chance to jump on Growthcoin at the beginning, but even so I still had to ask the important questions of where the coin was going and how it was going to get there. To explain it like I did to someone on the forums, “a million coins that have no value still have no value.” In other words, if the coin had no plans to create its own value, it will never be worth anything, no matter how long they are held on to for.

Of course, like we see pretty often in the Bitcoin world, ignorance takes over and I got flamed for not knowing that it was going to be “big.” Just like any other coin, though, Growthcoin would need the community's support and a push to give it value. Just throwing out something new and exciting does not instantly make it worth something. Until people are shown why it is worth something, it will always be valueless. To top it all off, the creator of the coin refused to give any information at all as to the plan for the coin and the marketing strategy that would help push it out to the consumers. I asked multiple times and was either ignored or thrown out some random answer that did nothing to help explain what was going to happen.

My Actions

I decided that, despite the red flags I had already seen, I would go ahead and give the new coin a go. The plan was to go ahead and hit the coin while it was at a very low difficulty and see where it went from there. The downside to this is that I strongly disagree with the “pump 'n dump” behavior. When I go to a new coin, my goal is never to farm it as fast as possible so I can convert it to Bitcoin. Instead, I feel that each coin can bring something new to the table and they can all end up with value as a result. It all just depends on what the backers want done with it.

What happened from the very beginning of my mining was a little unexpected. It started out slow, but gradually sped up (the entire network's hash rate). It grew from a difficulty of less than 1 to as much as 20 at one point, and fluctuated around 14 or so for quite a while. This led me to believe that there would be enough backers to give the coin some value, so I went ahead and stuck with it for a period of around 4 days. I figured if there were this many people on it (we were at a few hundred MH/s) that people must believe in it. Sadly, throughout this period the creator never returned to the forums.

During the first day, the Growthcoins were going at a rate of 0.4 BTC per thousand. By day 4 they had dropped to the point where you were lucky to get 0.1 BTC per thousand. Now they are at a fraction of that and are still going down in value constantly. Why? Because they are good for nothing other than trading in for Bitcoins. Sure, you can earn more by holding on to them, but without any true value associated with them they are nothing but an intermediary currency. And even though they do have an interest rate of 100%, that is not really enough to make them worth holding on to.

My Evaluation

The only thing I can really take from this entire event is that Growthcoin was created as a pump 'n dump coin. The entire purpose of its creation was for the owner to jump on at the beginning, sell as many as he could right after they gained a little value, and then ditch the project in favor of something else. The fact that he has not even been around since the release shows that there was never any real intention to make the coin a success. If there were, he would at least be around to help further its progression. Just throwing a coin out in to the wild and hoping everyone else does the work will never make any of them a success. A coin's success, especially with something like Bitcoin on the market, requires a strong developer and community backing. If either of these are missing, the coin will never have any real value. Sadly, this is where Growthcoin has landed itself.

As a result of giving this coin a chance and it failing, I have decided to be even more selective on any future coins I jump on. Whether or not the community backs a coin from the beginning or it gets a decent amount of hash rate, I will have to make the determination after I have spoken to and analyzed the creator's plan of action. Otherwise I will just end up in the same situation I am in now: with multiple lost days of revenue and nothing to show for it other than a worthless coin. While it may end up getting some value down the road, at this point it can be written off as trash, and it would have been much better to just avoid it. After all, more Bitcoin could have been mined in the same period of time and then traded for Growthcoin, lending itself to enhanced revenue in that over those 4 days I would have a lot more coins.

Supposedly, based on some community members, someone may try to take over the Growthcoin project in the future. The issue is that this is not happening right now, and so it is still up in the air. People make claims that they will be doing things all the time, but actually following through with that is an entirely different story. While I certainly hope that something does occur, and I am holding my coins just in case, I am not really counting on it.

E-currency


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