Altcoins targeting specific communities are starting to emerge. This month sees the introduction of two separate cryptocurrencies aimed at musicians. Songcoin and FUNK each take different political and technical approaches to helping the independent music economy.
Songcoin is the brainchild of Pimovi, a subsidiary of Australian natural gas exploration firm The Chancellor Group.
Co-founded by Kasian Franks, who formerly founded now-defunct multimedia search firm SeeqPod, Pimovi is a digital entertainment company, eager to get involved in the cryptocurrency space.
Songcoin is designed not only to accommodate donations from fans, but also as a means of running contests and promotions – almost as a kind of loyalty points system that can travel between different bands and labels.
“We decided that the first phase should be providing musicians with tip jars. Fans can acquire Songcoins and can use them to tip musicians, and then as the circulation increases, the value would increase and the musicians would have another form of revenue,” Franks said. “We would step in as a company and do everything that we wanted to do to support it.”
Pimovi, 61% owned by the Group, has some muscle behind it. It has Rax Saxena of Cisco Systems, and formerly of JP Morgan Chase, Bank Of America And PricewaterhouseCoopers, on its advisory board. On the technical side, it has Dylan Durst, described as one of the co-architects of namecoin, advising.
The architecture of the coin was originally to be based on namecoin, but Franks said that the firm switched to litecoin, before finally settling on bitcoin. Now, it’s effective a bitcoin clone, with the same SHA-256 proof of work, reward block, and difficulty. Which begs the question: why wouldn’t musicians simply use bitcoin instead?
“The way I always answer that question is, why doesn’t the world have one credit card? The world has hundreds or thousands of them, serving different industries,” Franks says. “They all build in incentives and various ways that their customers specific to their industries can benefit. We can use Songcoin to create further incentives for music fans.”
Franks says that this extends into running services atop the coin, partnering with musicians for contents and promotions, but also with ticket houses and merchandisers to provide discount sales.
A marketing play
This seems to turn it into a marketing play, rather than a technological innovation. Songcoin will be premined, with the premined proportion amounting to far less than 50%, said Franks, although Pimovi hasn’t decided what proportion will be premined yet. The premine will be used for initial giveaways to promote the coin (known as ‘faucets’, in the cryptocurrency world).
But Franks maintains that bands are interested. He will work with the Merlin Group, he says, which represents many indie labels, and he already claims to have one large band interested.
Naturally, Franks sees big things ahead for the coin. “We are closely watching Auroracoin with its $230 million market cap along with its distribution designed for Iceland’s population. We see the music listening population as being much larger obviously,” he said.
He begins the premine in a week, and expects to provide wallets on Windows, OSX and Linux in around two weeks. Miners will be able to begin mining around then, too.
While Franks is using the bitcoin source for Pimovi’s coin, Simon de la Rouviere has chosen a Scrypt-based mechanism for his. De la Rouviere, co-founder of bitcoin-based digital content sales site Min.io, has launched the Cypherfunks, a network of musicians with its own cryptocurrency, called the FUNK.
Anyone can join the Cypherfunks, says de la Rouviere, who describes participants as a “decentralized band”. All musicians have rights to everything produced, and it can remixed and shared by participants in the collective. It is essentially crowdsourced, open sourced music.
The currency, like Songcoin, will be used for musician tip jars, and can also be used for donations. If members of the collective want to mount a project or play at a venue, then others could donate the cryptocurrency to help.
Venn diagrams of crypto currencies
De la Rouviere has his own argument for why musicians shouldn’t simply use bitcoin.
“Each cryptocurrency encompasses its own network, acting as stock in that network,” he said. “So if it is a new project that can’t necessarily fully fit into another cryptocurrency, it is better to create a new currency for it. Think of it in terms of venn diagrams: each cryptocurrency overlapping with others.”
The coin will have a two-minute block time, and will initially distribute 100,000 coins per block, an amount that will be halved every year for four years. From year 5 onwards, the block reward will be fixed at 5000 per block, and there will be no cap on the number of FUNKs.
“The infinite supply decision was difficult to make, because it untested at the moment. The reason for it was that if the coin also acts as stock in the idea, there might not be enough transactions in the future for the miners to sustain themselves just on transaction fees,” de la Rouviere said.
The coin will not be premined, he said. “Everyone needs equal stake in the idea for it flourish fully.”
De la Rouviere also sees potential for micropayments with the cryptocurrency, which will be traceable in and outside the Cypherfunks community, and he is working on various micro payments schemes, including a project based on PayFile, a micro transaction system initially developed by bitcoin core developer Mike Hearn.
This would allow users to pay for files downloaded on a per-kilobyte basis. “This could work well for things like streaming of MP3s,” he said, “but the jury is still out whether users would want to do it this way.”
In any case, members of the collective are all supposed to own the music, which makes micro payments a bit tricky, unless it’s donation-based, he points out.
“An idea is for each song sold (in say BTC or Doge), it is used directly to buy up FUNK on the market and then donate that FUNK to either projects within the community or just directly to the miners (as tx fees).”
The emergence of two musician-focused coins in the same month shows opportunity for a disruption in the independent music economy. With altcoins sprouting weekly and all of them targeting different communities, we’re sure these won’t be the last.
DJ image via Shutterstock