VCoin FAQ

FAQ

What is VCoin?

VCoin is a crypto-currency: an open source, peer-to-peer, pseudonymous, community-driven value transfer system. It allows individuals to make payments and transfer value without needing to seek permission or evade censorship.

No, really, what is VCoin?

Really? Really really? Okay. It’s an imaginary token. But then again, so is the dollar in your bank account, the bank is legally obliged to issue them as dollar bills on request but everyone knows that the bank’s database is where it’s at.

VCoin issues computer tokens instead of dollar bills. The computer tokens are cryptographic objects modelled as “coins” for simplicity. That’s why a cryptographic “wallet” (an application) is necessary to store the “coins”.

VCoins can be acquired in different ways, including joining in the collective activity of computer processing the current set of transactions for recording in the database. Payment for the processing is made in VCoin. There’s no bank involved so the processing of transactions has to be done collectively and the VCoin earned is designed to act as an incentive to continue.

How does a crypto-currency work?

The use of a crypto-currency to make payments and transfer value has a market value — what it would cost to make the same payments/transfers (transactions) under the centralised commercial banking system.

As part of an essential balance of interests, the network imposes modest and proportionately-scaled fees on transactions. The fees recompense those who devote compute power to processing everyone’s transactions, thus ensuring that the coin and network function as designed.

Why does it work?

To be successful in the long run, an altcoin community must achieve a balance of conflicting interests.

Merchants and spenders generate fees but they are very vulnerable to price instability and exchange rate fluctuations. However, change is the lifeblood of liquidity-bringing day traders who facilitate the back and forth flow of exchange transactions.

Investors in the coin have an eye to the longer term and often have little interest in transactions other than as an indicator of stability. Their main interest is in scarcity and in growing the value of their holdings through rises in the exchange price. Their gradual accumulation of coins puts a floor under the market which provides a degree of stability that supports merchants’ and spenders’ activities.

Ideally, anyone and everyone should be able to easily take an active role in supporting the network by contributing to the collective computing power necessary to process transactions and maintain the integrity of the public ledger. In practice however, the economies of scale for hardware and for motive power make it so much more profitable for miners to work in large, co-ordinated groups that “solo” mining is rendered pointless.

Achieving a balance is vital for the continued working of the coin. Imbalances make the coin an inefficient instrument. The more exteme the imbalance, the worse the performance of the instrument.

If a significant imbalance is allowed to persist, people will quickly lose interest.

Will just holding VCoin make me rich?

No, far from it. Just holding VCoin will sap the community’s collective effort. That in turn will reduce the potential value of your holdings — maybe even the actual value.

“The value of your <whatever> can go down as well as up.”

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