Today I saw I’d had a notification on Twitter that I’d been sent some AppleBytes: “Your #artwork is so beautiful! I am sending you 350 #AppleBytes @ArtistGift @AppleByteMe

AppleByteMe

At first I just ignored it thinking it was some obscure marketing that didn’t make any sense to me, but then I came back and thought I would check it a little more. It’s an exercise to see how you decide if something has merit or not, and is legitimate or not. I think you need to check where else it is referenced and who is talking/blogging about it. This is what I have learnt.

AppleByte went live May 1, 2014, and claims that since then has grown by word of mouth to a user community in the tens of thousands, 35,000+ on social media alone.

In Phase I the AppleByte Foundation raised $50,000+ to fund the development and server infrastructure for the digital currency, AppleByte. That work was completed in 2014. However, the phase 2 funding on indiegogo only received 4% of the $50,000 goal it had set when the campaign ended on 8 April 2015.

How does it work?

This is directly quoting from their website:
“AppleByte is a person to person digital currency. With applebytes, art lovers can now support their favorite artists directly. When a fan sees an artist’s work they appreciate, instead of just liking or faving them, fans can give them AppleBytes (which can then be converted to cash, used at restaurants, concerts, movies, theaters, etc).

Just like at your bank, your account balance and transactions are stored on a server. But, as a digital currency, AppleByte’s account data resides on a peer-to-peer (computer-to-computer) network that consists of all the computers logged into the network. These computer “nodes” are paid with AppleBytes for contributing their computer power to the network. This process is called mining.”

That seems to be a too oversimplified description of the mining process. A more expansive explanation relating to Bitcoins is given on coindesk.com.

Digitial Currency and LETS

I got side tracked in my investigation, travelling down a route I have gone before about Bitcoins and LETS. At first it seemed to me that AppleByte is a form of LETS (Local Exchange Trading System) on a global level. But actually it is an alternate cryptocurrency. I’ve heard of Bitcoins, but I didn’t realise there are so many other cryptocurrencies. A list of altcoins is available on this site: http://altcoins.com/

I’ve so far found Bitcoins hard to get my head around.  Bitcoins are like electronic cash. The video below sort of explains them, but there is this ‘mining’ issue.

I learnt a lot from the following video. But if you are tempted to watch it, I have to give that a warning that the presenter is American and talks very fast and loud. If you look at the video on Youtube rather than the embedded version, there are a lot of useful notes and links in the description.

This is where I learnt that there are thousands of cryptocurrencies and there’s a lot of garbage. The big issue is how stable a cryptocurrency is. Bitcoin is the most stable, but it’s exchange rate with national currency fluctuates a lot.

Bitcoins are not controlled by any banks. Computers across the world act as nodes. The nodes hold a ledger which holds the records of all of the transactions that have taken place with the Bitcoins. Anyone can have a node. The ledger is about 25GB at the moment. You need the right equipment and a big bandwidth to operate a node. In the video the kind of equipment needed to mine and how to do it is explained. But also words of caution about weighing up the cost of equipment, electricity and data bandwidth against the likely payback. Also the computing involved generates a lot of heat and the equipment can be noisy, so you need to take that into account in where to locate it. (On the AppleByte site it mentions using a laptop and to be aware of reduced processing speed and the heating up issue).

As well as mining these currencies you can get them by exchanging standard currencies or by being paid them. For Bitcoins, you need a Bitcoin wallet, which you can create using an online service or software on your own computer. You get a hash number, a private key and a public key. Other people need the public key to pay bitcoins into your wallet. You need the private key to make payments or to exchange Bitcoins to conventional currency. How you keep your private key safe either from theft or loss is very important as without it you cannot access your wallet. For that reason, an online service that manages it for you with a logon and password account makes some sense. For example through https://www.coinbase.com/

Back to the original question

Is AppleByte a scam, a great idea or a damp squib? All of this has been a deviation, but I hope puts the AppleByte into context. AppleByte is not a scam, it is an alternative cryptocurrency to Bitcoin. It is less well known, and not listed on altcoins. It will be less stable and more risky to be involved in than Bitcoin. If someone sends you some AppleBytes, you need to weigh up the risks of registering an account. My gut feeling is it will ultimately fail, which means if you put national currency in you may not be able to get it out again. I am basing that on both the lack of funds raised in the second phase of the indiegogo project and the lack of evidence of take up on Twitter. It is, for now, an interesting experiment for supporting the arts. One to keep an eye on.

Advertisements