Bitcoin Alums Announce New Digital Currency Metronome
The blockchain firm Bloq on Tuesday said it has created a rival to bitcoin called Metronome that will go on sale in December.
The announcement is significant because the founders of Bloq are longtime fixtures in the world of bitcoin, and are claiming that Metronome addresses flaws in how the original crypto-currency, which is now worth around $100 billion, is created and distributed.
“Today, bitcoin faces existential threats from forks, developer drama and so on. Knowing what we know and having a clean sheet of paper, we asked what what would we build and the answer is this,” Jeff Garzik, CEO of Bloq and a longtime bitcoin developer, told Fortune by phone.
One of the features that distinguish Metronome from bitcoin is it will be sold in a series of auctions. This is different from many other digital currencies, which rely on miners who use large amounts of computer power to extract “coins” and make them available for public use.
The initial Metronome sale will take place over several days and will entail a reverse auction in which the initial price will be set very high—probably $500 says Garzik—and then drop until it meets market demand.
According to Matthew Roszak, a co-founder of Bloq and a longtime bitcoin investor, the reverse auction process will give a broad number of people a chance to own Metronomes, and will prevent people with deep-pockets taking outsize positions in the currency.
Here are some more details about how the auction process from the Metronome (MTN) announcement:
Upon launch, an initial supply of 10 million MTN tokens will be issued, with 8 million MTN tokens sold in a descending price auction (“DPA”) for Ethereum’s ether currency (ETH). Each day thereafter, new MTN tokens will be sold in a DPA at the rate that is the greater of 2,880 MTN per day, or an annual rate equal to 2.0000% of the then outstanding supply per year, providing a predictable supply over time. 100 percent of the ETH proceeds from the initial and daily auctions will remain within the Metronome smart contract system to provide liquidity to the MTN marketplace. Bloq will retain a 2 million MTN author retention, and will not receive any ETH proceeds from the auctions.
Note that Bloq will keep 2 million units from the original sale, which the company says will go to supporting the new currency. In all of the subsequent daily auctions, Metronome’s protocol calls for the proceeds to be disbursed in an automated fashion under the terms of a smart contract.
Remarkably, such smart contracts will also determine the entire future course of Metronome, and will not be subject to human overrides.
According to Garzick, the new currency’s code has been “battle tested” by elite auditors and can’t be subverted by hackers—which is what befell a project called the DAO that involved venture capitalists putting $60 million into investment fund overseen only by smart contracts.
Bloq is confident this will not occur this time, and that Metronome is set to run and conduct daily automated auctions in perpetuity.
Another features of Bloq is that it will be “cross-blockchain,” meaning it will ride atop existing digital currency infrastructure—specifically the Ethereum and bitcoin-based networks—and also let owners transfer Metronomes across them.
While this promises flexibility, one potential downside is that Metronomes can be exposed to the same risks as their underlying network. This means that, if the bitcoin or Ethereum network become compromised or vulnerable to attack, the Metronomes could be vulnerable too.
Garzick’s response to this is that such problems will be averted because the smart contracts that define Metronome instruct the currency to seek out stability.
“When existential threats hit, it will automatically switch to somewhere safer,” he said.
If this is the case, then the value of Metronome should stay the same across different networks, and its longterm success will not be determined by the individuals fates of bitcoin or Ethereum.
Much of this is likely to be beyond the comprehension of the average crypto-currency investor, who typically wants to buy a little bit of bitcoin and leave it at that.
It should also be noted that Bloq is hardly the first outfit to come up with a new crypto-currency (there are literally hundreds of them), and that some people are warning the whole phenomenon represents a bubble.
But if the Metronome project succeeds—Garzik and Roszak say developers will soon build the interfaces that make it accessible to ordinary consumers—it could create a serious longterm rival to bitcoin.