UPDATE (15:34 BST): Updated with comment from Oona Rokyta, chief purpose igniter for Aleph.
Tel Aviv-based venture capital fund Aleph has announced the first of a series of $50,000 bounties aimed at spurring activity among developers and entrepreneurs in Israel’s bitcoin space.
The fund is calling for the development of a bitcoin block chain-ready system that reduces transaction costs for an ‘appcoin’ to be used in conjunction with Aleph’s entrepreneur-focused social platform project, Karma. The finalist will receive a $50,000 convertible note reward.
Appcoins are defined as “protocols with a currency or token system built in, where the token system generates the emergent value to fund the development of the protocol”, according to Vitalik Buterin, programmer, writer, and co-founder of Bitcoin Magazine.
Aleph has outlined the key requirements for the bounty, which dictates that any system must be functional and practical, serving as a model for potential deployment. Most importantly, any submission must demonstrate the capability of delivering the lowest possible effective per-transaction fees.
The bounties are open to any Israeli developer or development team. There is a 15th June entry deadline for those who wish to participate, with final submissions due by 24th September via a Github repository.
Aleph’s chief purpose ignitor, Oona Rokyta, framed the decision to launch the bounties as a way to improve conditions and foster direct engagement with bitcoin entrepreneurs in Israel, saying:
“The bounties are a vehicle to reduce development friction in the entrepreneur community with a reward that ultimately empowers the winning team to build something they have full control over.”
This bounty is the first of what Aleph expects will be a series of such offerings, which will act as catalysts for further innovation in Israel’s growing bitcoin ecosystem.
Focus on costs and practicality
Submissions, according to Aleph, need to satisfy certain key areas in order to qualify for the bounty.
The low transaction fee requirement states that any system need not provide a minimal guarantee based on single transactions. Instead, Aleph is looking for a solution that provides low cost sustainability “across many transactions and long timeframes”.
Furthermore, submissions need to be capable of integrating successfully with the bitcoin block chain, thereby enabling the network to certify transactions. Transactions need to be signed onto the block chain within 168 hours of initially taking place.
Aleph is searching for a system that is capable of being integrated at the time of review, including use within the Karma platform. Functional systems that are in the early stages of development and capable of demonstration would fit within this requirement.
The Karma platform will potentially use a bitcoin-based currency that will act as a vehicle for rewarding peer-to-peer cooperation between users, the fund said.
Ultimately, the technology could form the basis of an internal messaging system within the platform as suggested in an 18th June blog post on Aleph’s official site.
But as founder Eden Shochat wrote, current costs make such a concept unfeasible from an economic perspective:
“Bitcoin transaction rates are too high if the underlying asset doesn’t have significant currency-oriented value. We found that practically-speaking the cost per transaction is $0.20 – which is fine if you’re making infrequent and sizable transactions, but not if you want to apply the bitcoin blockchain to say email correspondence or chat systems.”
Rokyta told CoinDesk that, ultimately, Aleph hopes to support bitcoin innovations that address a wide range of challenges affecting the ecosystem today.
Most importantly, she said, developers need to begin looking at how digital currencies can adapt within the structures of the traditional financial system.
“In many ways, it’s more comfortable to stay in the hacker mentality and work on wallets, white label exchanges / payment providers, and mining equipment but we believe the bigger opportunities lie in analyzing other parts of the global financial stack that are ripe for replacement.”
She added that “the more challenging and “ripple effect” kind of bounty challenges excite us”.
Ultimately, the bounties will form part of a strategy that involves identifying both problems and solutions that are impeding broader bitcoin adoption, both in Israel and beyond. This includes working with central bankers and financial companies, as well as researching and supporting new approaches to existing challenges.
Lightbulb concept image via Shutterstock
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