Tuesday, August 5, 2014

A Tale of Two Bitcoin Presales: Swarm and Ethereum

One is done, and one has passed a major milestone.  One has a lot of bitcoin, and one has a whole lot of bitcoin. But the more interesting differences are under the covers of these two presales.  The two presales I am talking about are Swarm and Ethereum.

Swarm

Swarm ran it's first phase of the crowd sale from 17 Jun until 20 July.  A second phase was canceled based on feedback from early backers.They accepted payment via bitcoin and counterparty.  I will only be examining the bitcoin donations.


SwarmCoin fundraiser balance over time
One notable fact is that the input address was not created specifically for the fundraiser, either that or other parties were allowed to donate to the fundraiser before it was made generally available.  17 Jun 2014 (UTC) corresponds roughly to block number 306221.  This is where the large spike in donations occurred.  Note that there was a relatively quiet period on the donation address just before.  Donations ended on 20 Jul 2014 and no other donations have been seen.

Swarm coin appears to be either converting their BTC to fiat or storing their coin on an exchange of some sort.  Here is a representative donation graph (the 12GZL7... address is the SwarmCoin BTC exodus address).

Five Representative Swarm Coin purchases
Because the transactions are promptly gathered together into a transaction (usually with other than SwarmCoin addresses) and repackaged into other coins for other users, this indicates to me that some sort of an exchange is being used (although I am not sure which one).  The downside of this arrangement is it hides the real point in time balance of the swarm coin project.  The only people sure of their balance are them and their exchange.  This also shifts the security of the coins to the security of the accounts at the exchange.

Ethereum Phase 1

Ethereum started their crowd sale on 22:00 22 Jul 2014 and will continue through 2 Sep 2014.  The first two weeks were offered at a flat rate, and the remainder of the sale will see a gradual taper in the price.  The taper began on 6 Aug 2014.  This corresponds from blocks about 312027 to  314039.
Ethereum Pre-Sale through 5 Aug
Ethereum has quite a different shape than the swarm coin graph.  First, the balances are stored on the blockchain and are not siphoned off to some off-chain account.  This was done in the name of transparency.  Second, the exodus address had a whole lot less activity prior tot he sale.  Likely limited to software testing.

We also see that there are two distinct interest waves instead of one.  An initial wave over the first day or two spiked the sale up over 6000 coins.  A second, more produced wave near the ending of the flat sale occurred accouting for nearly half the crowd sale to date.

The transactions are all fairly boring.

The actual purchase transaction is in blue, with the two orange transactions belonging to the wallet the purchase came from.  The yellow transaction is done by ethereum.  One hundred bits are stored off into a constantly changing address and the balance is placed into the exedous address.  I am not sure why they set it up this way at this point.  The scripts on either side don't show any strangeness and are quite typical.  Perhaps we will see later or they are creating a pile of dust bunny coins to pay transaction fees with.

Since the balance is stored on blockchain the Ethereum crew is using an underused security feature of bitcoin: Multisig addresses.  The exodus address is 36PrZ1KHYMpqSyAQXSG8VwbUiq2EogxLo2, where the leading 3 means it is a pay to script hash address.  Because it is pay to script has the script needs to provide the script only at redemption time we don't know how secure the keys are.  To pay to one of these address we only need to know the address, not the content of the script that it pays out to.  Generally speaking these are multi-sig addresses, but they don't need to be.  For all we know the address is a pay to bearer script.

So until we see a coin cashed out of the 36PrZ address we won't know what the script is. Fortunately for us one such transaction has already been done in block 311815.  [I have yet to see a block explorer that decodes this properly, I will update that link to the first one who does]. From the script we can see that it is a 3 of 4 signature address, and I believe that the addresses are 14E2JwZLCEpKnjPuMsMciGLfBZ6no23skT, 159Hhu9oi9ti1X8fU8JN1SQAt7DVA8PgFR, 1LfztD3YYFrn3zjw1aQT3cGu3CjjZFq7q3, and 1KxmHFVLbfqWtTNpUQmDJdhhpGmyW8JBDH.  I may be wrong on the addresses, it appears a different (newer?) ECDSA curve is specified in the public key.

Conclusion

I like the way the Ethereum pre-sale is going better than the Swarm pre-sale.  My main reason is that they are keeping the balance on the blockchain where community members can audit it, rater than as some database row in an unknown exchange.  I know there are a lot of privacy advocates out there who want to strip the blockchain of all of the useful auditing abilities.  But there is too much value in a publicly traceable ledger of income and expenses.  Imagine if the Bitcoin Foundation shared publicly or with it's members the addresses of it's wallet.  That would go a long way to instill trust.