I’ve decided to start doing some postings on cryptocoin mining and the economy starting with this review of Magi Coin. I’ve found this a very interesting and exciting thing to be involved in now, I hope I can give out some good information based on my experience. Alternative currencies are quickly starting to drive new economic activity and present new opportunities the world over, find out more about it at – Alternative currencies are bigger than Bitcoin
First off I’m not an economist but I have studied the issues independently; my background is in computer science and have experience in 3D. I have some investment in Magi coin but I’m not one of the larger holders. As such I can’t claim to be unbiased so please as always do your own due diligence and do not take this as investment advise.
“Magi is proof that the universe loves us and wants us to prosper… Or was that beer?” – Lightsplasher.
Community is a major part of the big three for evaluating any cryptocurrency, along with correct operation with active developer support and a good dispersement of funds. In a short time Magi has been developing a very interesting and supportive community as one look at the bitcoin talk thread should show. Bitcoin talk Magi
A lot of international support is starting to form with translations encouraging communities all over the world. Hanging out at the IRC channel is an adventure in time zones as people starting their day off intermingle with people retiring for the evening. Both giving and receiving make this a fun channel to visit and ask questions IRC Magi
Magi trades under the symbol XMG which is nice in that it follows international guidelines for valuables that are traded without association to any sovereign nation, such as gold XAU or recent bitcoin XBT.
Historically most of us have been used to thinking about things in terms of supply and demand, with scarcity and technical superiority primarily driving value. With open source software we are finding that it is very easy for clones of coins to come out without much innovation or thought on making things fair. It is more difficult to build a strong community and Magi is growing well in this regard.
Magi coin grew out of Magic coin after it ran into troubles when the scrypt asic miners started hitting the market. Many coins at this time were experiencing issues and the solution for the Magic coin involved a release of a newly designed coin with the option of a coin swap.
ProspectiveThe combination of a longer block time and smaller block rewards and good technical operation should keep this coins value high. I would expect that the lower PoS rate of about 5 percent would function to keep the coin price more stable as compared to coins with much higher PoS rates of upwards of 100 percent.
I think that the market cap will grow slowly on this coin with a long PoW phase dispersing coins to a larger number of individuals. There maybe issues with liquidity as lower coin production may struggle a bit with increasing demand.
Investments come with risks and rewards and it is interesting to compare investment in Magi verses a stock or retaining fiat currency. The value of fiat tends to drift around as governments and banks try to control the countries economy and production by lowing the international value, printing fiat or making (or refusing to make) loans. Fiat remains strong in most countries, however, we have all heard stories of people requiring a shopping cart full of bills to pay for a loaf of bread.
Stocks are a share of a company that supposedly give you some voting right but in actually the board of directors structure things such that typical shareholders don’t effectively have any control and very few pay any dividends. Investment in stocks help corporations which may have questionable ethics because the very nature of the corporate structure by law is required to maximize profits for shareholders and we are seldom seeing that this profit motivated behavior is in true alignment with the greater good – hence the need for all kinds of government regulations. Stocks can become worthless if the company goes insolvent where as cryptocoins can become worthless through technical issues, lack of community backing, better opportunities, creating coins faster than demand, or global governmental intervention.
Getting involved in Magi gives you many opportunities to add support in the growth of the community and pays around 5 percent PoS. I think of it as loosely organized worker owned cooperative where everyone can help out and grow their investments. The stronger the community becomes the better able it will be to solve any technical issues that come up or resist other factors that might disrupt the peer to peer network.
I would list this as a good long term opportunity, but please do your own research and again don’t take this as investment advice.
There is a whole host of technical details out there perhaps enough to overload some of us. The best place to look for details is the bitcoin talk thread as this seems to be updated with the most current information but of course the ultimate authority is the source code freely available on git.
The coin can only be mined on the CPU at this time which is very helpful in distributing it to a wide number of people. The block rewards are structured such that it discourages large mining farms by decreasing the block rewards when the hash rate increases the difficulty past a certain point. (More on this under PoW below)
Some highlights of interest are that the block time is 3 minutes on PoW and 1.5 minutes on PoS. This is nice in that it is fast enough to get coins on and off the exchange without waiting for too long a time and yet it is also slow enough that the block chain does not grow too fast.
My qt wallet runs under Ubuntu 14.04 using 209 MB of memory and typically has around 60 connections after running for some time. The coin stakes blocks with a very low orphan rate and I’ve never experience issues synchronizing the wallet or getting connections. This combination has kept the coin very stable and because it does not operate so close to network limits I would expect this.
Being a mix of PoW and PoS blocks make this a very secure coin and helps avoid some difficulties that can happen. Smaller coins running PoW only can have problems if a large miner comes and goes leaving the difficulty so high that all the smaller miners can’t solve a block for a long time. There can also be issues with time drift or 51 percent attacks on smaller hash rate PoW coins. Also, PoS only coins can sometimes stall a bit if they are not structured well or dispersed largely enough. Magi avoids these issues by being a mix of PoW and PoS.
Having good support makes this coin a pleasure to operate as helpful community members are very willing to lend a hand. The developer is very active and knowledgeable and the coin is open source and compiles easily under Ubuntu. I would expect more development support as more people are invested in the coin.
In my opinion a major innovation of this coin is the way in which proof of work (PoW) blocks are mined. The coin is geared specifically to optimize the block reward for the community of smaller CPU miners who consistently mine the coin. If the hash rate rises above the optimal level the block reward can go down to zero and if it falls too low it decreases as well. This has worked well providing reasonable block rewards for much of time so far and seems to have discouraged GPU mining or multi-pools.
When a big miner joins the system, rather than get the lions share of the coins, it ends up dropping the block reward down and the coin pays out poorly. If the smaller miners keep mining the returns for the big miners will become minimal and then return back up for the smaller miners when they leave. This has the nice effect of balancing out the coin rewards better among the miners.
One of the big problems facing any new coin is the relative unbalanced nature of the hash speed that individual miners are able to obtain. As coins go up in value it becomes more tempting for people to pool large resources to gain the majority of the hash rate of a coin. This can cause problems with the technical operation of the coin and its long term value.
The long term success of any coin is therefore based on a certain level of restraint and cooperation. Coin mining to a degree is somewhat like harvesting fish from the ocean. If someone goes out with a huge bottom trawling net and takes all the ocean creatures, killing many in process that they don’t need, they could reap a large short term profit for themselves, however, short term profits for individuals do not necessarily translate into long term success for everyone. Magi coin seeks to tame the shark infested waters or at least get things back on a more even keel. 🙂
Proof of Mining or (PoM) is way up there on the fun factor and also one of the great innovations of this coin to me. Miners sign up for PoM to get additional payment for their hash rate. They need to consistently mine at one of the pools supported by PoM within guidelines. This is geared towards trying to help new miners get started, evening out the hash rate more between miners and is a opportunity for others to donate towards the long term success of the coin. Funding for PoM has come from the coin swap and donations.
The PoS blocks (technically UTXO) stake currently at a very low difficulty and I would expect it to remain this way for some time. The PoS rate is around 5% with blocks eligible for minting in a couple of hours and it can be run easily on a wallet by starting the wallet and unlocking it – the time estimate (hover mouse over pick axes) for how long it will take to mint a block is a rough estimate.
I’ve never experienced a block not splitting after minting and this combined with the low difficulty and short wait time, dusts the wallet out pretty fast. By “dusting out” I’m referring to the condition where blocks become so small that they can’t mint in the max PoS time period, which in Magi’s case is five days. Usually with a PoS coin the max time serves to indicate when blocks stop gaining weight, however, in Magi’s case coin blocks exceeding the max time have zero weight and no chance of minting.
So if you end up with a lot of smaller older blocks you will need to combine them using the advanced coin control into an address (this address can be the same address they came from). Magi tends to pay out PoS in really small amounts and can be a bit high maintenance, it would be nice to have an option to set a block split threshold. Additionally if you wait too long and try to combine a great many very small blocks at once into on large one you may end up getting a “transaction creation failed error”, so it is best to combine frequently if your running PoS.
The nice thing about having it setup this way is that people can’t store the wallet for a long time and then run PoS minting coins with high coin weight blocks, spiking up the difficulty suddenly and potentially quickly minting many blocks in a row.
If PoS difficulty climbs as the number of coins grows, it figures that larger block size will be needed to mint before this 5 day maximum and this could shut out smaller investors if the coin value were to rise significantly. As with anything, this is difficult to predict but things could always be changed if they become an issue.
One of my personal favorite coins, did I mention magical? Lots of dedicated progress made in a short time with a technically well functioning coin. A great fun loving friendly community.
I’m sure there are many details and links that I have left out, please feel free to post additional details below.
Thank you for reading, and if you find this helpful or just want to make my day, please donate any amount to my tip address for XMG: 9Romi8ZpevAwcu218gNsuCrv8i9Li6oarj