“Anyone can have their own cryptocurrency.” (Bob’s Law)
BitSeeds is like some other cryptocurrencies, with a combination of proof-of-work and proof-of-stake mining. This PoS+PoW combination is particularly apt for the RF, because it is vastly less CPU- and energy-sucking than Bitcoin’s pure proof-of-work, which is appropriate for the RF’s overall goals. This may also be why they want to create their own cryptocurrency rather than Bitcoin.
What Is It?
The cryptocurrency itself would do little for rainforests without additional infrastructure. In addition to the base software, the BitSeeds Foundation provides wallets , which both hold coins and let you participate with a stake in the mining pool (PoS). (I’m still waiting for a MacOSX wallet)
Another piece of the puzzle is a motivation to buy or mine BitSeeds:“For every coin emitted on the BitSeeds network, the Rainforest Foundation and the BitSeeds Foundation has committed to planting one tree.” Buy BitSeeds, and you contribute to this campaign. “Join the Movement. We Can Reforest the Planet, Together.”
In addition, holding BitSeeds and contributing them as your stake to the mining pool will pay 10% interest. This stake earns a profit for the foundation, so essentially you are loaning the cryptocurrency to the mining enterprise, which pays you interest and keeps the profits. (I think this is what is going on–let me know if I am wrong.)
BitSeeds also has an arrangement with one on line exchange (initially) to let people buy BitSeeds for Bitcoin or dollars. I’m assuming that the BitSeeds foundation will be selling coins to achieve the underlying goal of fundraising.
I note that, despite some of the BitSeed rhetoric, key aspects of this system are definitely centralized. This is appropriate, since the purpose is to support the RF, which takes responsibility for the larger goal. If you don’t trust the RF, you shouldn’t get involved with BitSeeds.
(Caveat: My remarks are based on careful reading of the BitSeeds pubic web pages., along with educated guesses.)
What Would Success Look LIke?
The goal is “sustainable funding”, which means continued income to the foundation for a long time.
Assuming no major technical failure or security breech, people will put money into the foundations coffers in exchange for BitSeeds. They may also trade BitSeeds with each other or buy things, though these transactions do not benefit the rainforest (except maybe through transaction fees—I’m not sure.)
In exchange, the Rainforest Foundation uses the funds to plant seedlings and care for forest and other ecosystems.
Sustainability will require the income to cover and exceed the cost of seedlings and other operations.
The proof-of-stake mechanism is intended entice people to buy and hold BitSeeds, and collect the (small) interest. The PoS pool generates BitSeeds for the foundation, which can be sold to support operations.
At some point there may be products for sale (e.g., RF themed merchandise), which might be sold for BitSeeds. Sales of BitSeeds would flow to the RF. Maybe. (BitSeeds would work sort of like mileage points or Pokemon cards.)
From the information I have to date, it is not clear how this scheme will be sustained over the long term. I assume (but cannot confirm) that the 10% interest payments are sustainable from the PoS mining.
Obviously, the whole scheme is exposed to exchange rates. If BitSeeds rise sharply against the dollar (or BTC), there may be a lot of (energy guzzling) speculation and cashing out. Of course, that would also let the RF accumulate dollar (or BTC) reserves. If BitSeeds drops against the dollar or BTC (which is likely), there could be a downward spiral. Trees get planted, but the “endowment” shrinks and stakes are worth little.
BitSeeds are actually “pegged” to seedlings, and I’m pretty sure that the exchange rate (e.g., against the dollar) will be highly correlated to the BitSeed to Tree ratio. Higher exchange rate (BitSeed/$) means more trees per BitSeed, and vice versa. If and when one BitSeed is worth less than the cost of planting one seedling, then the Rainforest Foundation loses money on every BitSeed mined. Oops. Does everything depend on the BitSeed/$ rate staying above some level which may rise in the future with the cost of operations?
(OK, this is not my field of expertise. Please let me know if my analysis is off, and educate me on how this really works.)
We’ll have to see what happens.