Iceland may be the first nation to get its own cryptocurrency, but if Payu Harris has his way, it won't be the last. This week, he hopes to mine the genesis block for mazacoin, an altcoin for the native American nation in the US.
Specifically designed for the Traditional Lakota Nation, mazacoin is initially being targeted at the Oglala Lakota Nation, which is Harris' own tribe. He works at Kimitsu Asset Management, which is focused on creating a bitcoin-based native American tribal cryptocurrency.
Harris is launching the altcoin under the Bitcoin Oyate Project, and hopes it will give native American communities some fiscal autonomy.
"One of the favorite tactics used by the Dept of Interior and the local State Government is to threaten to freeze bank accounts if the tribe takes a position that could challenge a State or federal interest," he alleged.
Harris argued that the tactic has been used several times before against tribes operating casinos. "An independent crypto currency would eliminate the State/Federal ability to freeze accounts and tamper with lawful tax revenues," he said.
The mechanics of mazacoin
Mazacoin (MZC) is based on the Zetacoin altcoin, which is in turn based on bitcoin's SHA-256 proof of work implementation. This coin will have a block target of 120 seconds, and a block reward of 5000 MZC.
Unlike bitcoin, there won't be a cap. The developers expect 2.4192 billion of the coins to be mined in the first five years, with a further million per year. Removing the cap is intended as an anti-deflationary measure.
The coin won't all be mined by the community, however; there will be a limited two-stage pre-mine. Harris said that this is meant to build up a reserve of the coins, so that others without the ability to mine can still be a part of mazacoin and can exchange goods and services for it on a local exchange. It's an anti-hoarding measure, he suggested.
During the first pre-mine, 25 million coins will be created for the Lakota nation as a cryptocurrency reserve, which will be used for future price stabilization. A second pre-mine will generate another 25 million MZC, which will be given to a new entity: the Mazacoin Tribal Trust.
The Trust will award MZC grants to individual tribal members, businesses, or charities within the Lakota Nation. Grants will range up to 50,000 MZC for charities.
Anti-deflation is an important feature for a coin like mazacoin, which is designed to be used practically by the native American community, said 'Anonymous Pirate' (AP), an anonymous Canadian cryptocurrency expert and self-described hacktivist who created the coin for Harris. He also runs CryptoDirect, a trading site for altcoin miners.
"Bitcoin will always be useful, as a store of mass value like gold bars. But gold bars are not what you bring to the corner store to buy groceries," said AP. "The ideal merchantable value for mazacoin would be between 3 and 5 dollars USD. That would make it portable and easy to use/adopt."
Harris sees the pre-mine as a means of fairly distributing wealth. "The crushing poverty makes the redistribution necessary if we are to ensure that mazacoin is circulating in the tribal economy," he says.
According to the US government census, the median household income of single-race native American households was $35,410 in 2012. This is just over two thirds of the national average. 29% of native Americans were in poverty that year, which is almost twice the national average.
One other way for tribal communities to get in on the coin is to mine it. Harris says that there is talk of a mining pool based on a tribal reserve, and he had been collecting donations for GPU-based miners.
“Bitcoin will always be useful, as a store of mass value like gold bars. But gold bars are not what you bring to the corner store to buy groceries.”
Harris wants mazacoin to stretch beyond those borders to be used by other tribal groups. Governance of the coin will vary between tribes, he explains.
"If a tribe forms a update or brings up a direction they feel is important, representative for each tribes Economic Development Administrations or crypto currency development directors can come together and vote on adoption by other regions or tribal governments," Payu concluded.
Mazacoin plans to mine the genesis block this week, and has scheduled a public launch for the coin on Feb 20th.
Native American image via Shutterstock