A new currency based on litecoin has gained more traction in two weeks than its predecessor did in a year.
Feathercoin lets cryptocurrency miners generate a new coin that's very similar to Litecoin, but with far less difficulty. For now, anyway.
Both feathercoin and litecoin are designed to be mined through a different technique than bitcoin. Bitcoin uses the SHA-256 algorithm, whereas the other two use Scrypt, a password-based key derivation function. The biggest difference with Scrypt is that it is biased against FPGA and ASIC miners ... normally the heavyweight machines of the cryptocurrency mining world.
FGPA and ASIC miners throw large amounts of custom-designed computing power at the mathematical problems used for mining. Scrypt, though, is designed using an algorithm that favors CPU and GPU miners. As a result, it makes it easier for those without large sums of money to get in on the cryptocurrency mining game.
"How these Scrypt coins apply today is that we know ASICs are coming out for SHA-256 coins," says Robert VanHazinga, a cryptocurrency specialist who makes his money on arbitrage, and also develops mining software for various clients. VanHazinga also developed cryptocoinexplorer.com, a block explorer for different coins.
"They can't do Scrypt encryption," he says of ASICs. "They can't do anything with it efficiently."
Part of the reason for that is Scrypt's use of memory-intensive operations, which are more suited to CPUs, and which have been adapted to GPUs for litecoin and feathercoin.
Unlike litecoin, which was designed to award 50 coins for every block found at the outset, feathercoin awards 200. Feathercoin will eventually have a total of 336 million coins. This is four times that of litecoin ... which in turn has four times the number of coins that will eventually be produced by bitcoin. (Bitcoin's hard limit is 21 million.)
"It joins the cryptocurrency family by positioning itself with litecoin in the same way that litecoin is aligned with bitcoin," states the feathercoin website. "It does not compete with bitcoin or litecoin, it compliments them [sic]."
Feathercoin calls itself an open-source internet currency.
"Bitcoin was 50 coins a block and now it's been halved," said VanHazinga, adding that feathercoin's designer is "experimenting by saying, 'Let's have 200 coins, and not put a limit, and let's see what this coin does.' "
So far, feathercoin is doing well. At the time of writing, 5.5 million feathercoins had been created. Mining pools have already been created, and the cryptocurrency is gaining value over litecoin. Its difficulty has also increased quickly (difficulty reflects how much computing effort is needed to find a new block for a given coin), and continues to increase with the number of people mining the coin. Feathercoins took one week to reach the same level of mining difficulty that litecoin reached in a year.
"To see feathercoin get to the difficulty level that litecoin took a year to get to, in a matter of weeks, is amazing," said VanHazinga.
The low difficulty at feathercoin's birth could be another reason for the currency's popularity. After the massive bitcoin rally in early April, many people might be looking to get in on the ground floor of another cryptocurrency opportunity. Litecoin's age means that its difficulty is now relatively high.
"You can't CPU-mine litecoin now with the difficulty and have it be worth it," VanHazinga said. Feathercoin's difficulty, on the other hand, is still low enough to make CPU mining worthwhile.
The other attraction of Scrypt-based coins is that mining servers can be repurposed. Both CPUs and GPUs can be reapplied either for SHA-256 or Scrypt-based mining. That isn't the case with ASICs, which are programmed with a specific algorithm. FPGAs, while theoretically reprogrammable, aren't good at Scrypt-based mining. This means that many previously involved in SHA-256 mining could decide to shift some mining capabilities over to the new coinage, to spread their risk.
"One of the concerns of bitcoin right now is because people have to invest in a specialized piece of equipment," said VanHazinga. "This isn't cheap. They're hugely expensive."
He added, "When ... the hash rate gets so ridiculous that they're not worth using anymore, you have a nice paperweight."