There’s Bitcoin, the asset and hedge against fiat currencies and the politics of their central banks.
And then there’s Bitcoin, a fundamental innovation around a distributed public ledger of transactions. Many crypto-currencies try to split or play with the distinction between the two.
An early attempt was the Ripple, from OpenCoin. But the team behind that startup split. Co-founder and Mt. Gox creator Jed McCaleb left to go work on other stealth projects.
Now he’s re-appeared again with a new non-profit called Stellar, that’s being backed by Stripe. Joyce Kim, who founded a company that OpenCoin acquired called SimpleHoney, is also leading the non-profit.
The similarities are obvious. Stellar is a decentralized protocol for sending and receiving money in any pair of currencies. It’s not exactly a competitor to Bitcoin; it’s meant to facilitate transactions in all kinds of currencies from the majors like the yen, dollar and euro to other emerging-market fiat currencies.
That protocol is paired with a crypto-currency called the Stellar. They’re starting out with a fixed amount of Stellars that they’re freely gifting to new users. This is very different from Bitcoin, which must be mined through machines solving complex cryptographic problems in exchange for small amounts of the currency awarded at fixed time intervals.
Kim has argued in the past that this is a more egalitarian approach. Mining means that only people with high technical skill or the capital to operate now-expensive mining hardware get access to new Bitcoin. But Stellar is distributing half of its initial amount to anyone who will sign-up for it through the program. Stripe is getting 2 percent of Stellars in existence in exchange for $3 million.
A quarter of the Stellars will go to non-profits via an ‘increased access’ program, while another 20 percent will go to existing Bitcoin holders based on a snapshot of the blockchain on a specific date in the future. The remaining 5 percent will go toward operational costs. If the value of Stellar’s payment network increases, so will the value of the Stellars that the non-profit holds.
Also, unlike Bitcoin, the Stellar economy has a built-in inflation rate of 1 percent indefinitely.
Stellar’s board has Stripe co-founder Patrick Collison, Khosla VC and former Square COO Keith Rabois along with McCaleb on the board. Also advising the non-profit are security expert Dan Kaminsky, Joi Ito, Ronaldo Lemos, Linda Stone, Y Combinator’s Sam Altman, AngelList’s Naval Ravikant, Jackson Palmer, Greg Stein, and WordPress’ Matt Mullenweg.
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