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.
Going cross-blockchain
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 Rosnak say developers will soon build the interfaces that make it accessible to ordinary consumers—it could create a serious longterm rival to bitcoin.
“‘Tis what it ’tis.”
Call it a statement on the times, but Bloq CEO Jeff Garzik isn’t exactly expecting a warm reception from some circles to the news his startup is launching a new token.
Long a controversial figure at the center of the debate on how best to scale the public bitcoin blockchain, Garzik’s company is today announcing what it believes will be a solution to the infighting he perceives as keeping money out of the established cryptocurrency market.
Revealed at Money2020 in Las Vegas, Bloq is unveiling metronome, a cryptocurrency that seeks to claim a series of firsts in crypto-economics, including offering users the ability to switch the same token back and forth between blockchains as desired.
“It’s sort of a best-of-all-worlds cryptocurrency,” Garzik said, describing it as a “boxcar” that could ride on top of any compatible blockchain.
Garzik told CoinDesk:
“You can run it on the etheruem, ethereum classic, quantum. That’s one of the key ways that this is self-governing, for the first time, you’re not tied to a single blockchain, you can run metronome contracts on any EVM compatible blockchain.”
As for how it will impact the Bloq business model, today focused on enterprise services, Garzik and co-founder Matt Roszak indicated they believe the project is consistent with the firm’s “multi-token, multi-network” vision for blockchain development.
Launched in 2016 with the goal of bringing Red Hat-inspired services to bitcoin, Garzik echoed a familiar refrain in an interview, voicing his belief bitcoin is still destined to form the “root of an Internet of blockchains,” others of which may have different use cases and attributes.
In this light, Garzik framed metronome as seeking to offer a utility to those who want a more reliable store of value and foundation for distributed applications.
“We feel that there is a consistent demand for a cross-chain option. I point to the major uncertainty of proof-of-stake and proof-of-work, where the proof-of-stake system is going to change the money supply, but [ethereum] hasn’t stated how much it will change,” he said.
That said, Garzik said metronome isn’t exactly a bid to replace the prevailing public blockchains available on the market, so much as to tailor them to a different audience.
“You can expect the bitcoin maximalists’ from the ethereum maximalists’ reactions, but it’s building on the strength of existing blockchains, it’s not trying to elbow them aside,” he said.
No ‘existential risks’
But if some of the more acrimonious debates in the cryptocurrency world seem besides the point, Garzik’s involvement appears to have left him with inspiration for his latest work.
As outlined in the metronome white paper, one of the chief selling points of the token is that it boasts “zero founder control” after its launch, and as such, is resistant “to the whims of individual or community discord” by functioning as a series of smart contracts.
All told, metronome is comprised of four types of smart contracts, which allocate the distribution of new tokens, regulate supply and liquidity and move funds between accounts.
Praised as a feature by the Bloq team, Roszak believes this sophisticated automation will encourage large investors who have yet to put money into public cryptocurrencies for fear of the seemingly erratic decision-making by developer groups to do so.
“When they analyze cryptocurrency, the analysts engineers and economists sitting at the committee, they’re saying they pick the top two – bitcoin and ether. Then they say, well there’s forks, ‘civil wars,’ ‘proof of Vitalik,'” Roszak posited. “They’re cryptographically secure but these components create surprise and risk.”
In contrast, Roszak framed the Metronome token as “fixed and locked in stone,” attributes he suggested should counter these concerns.
However, Roszak seemed to shirk the idea that the nascent state of blockchain technology could pose problems given the fixed nature of the distribution system of the cryptocurrency. Rather, he sought to stress that while the monetary network is set, flexibility will be provided in the ability of the token to port the system between blockchains.
“Having that rigidity of knowing exactly what the token does and behaves, that certainty, seeing that mintage curve, is not available in any other cryptocurrency,” he said.
Monetary network
Equally unique, however, is how the token will seek to operate on launch.
As described in its announcement materials, metronome is opening with an initial auction of 10 million MTN, with 8 million MTN being made available to the public and 2 million being set aside for Bloq as the principal development team.
Any proceeds of the sale will be sent to smart contracts that will manage the distribution of the funds, which Garzik said will distribute the proceeds “over decades” to metronome users.
As an example, there will be a stable allocation of new metronome tokens daily, with about 2,880 MTN created during the first 40 years.
Here, too, Garzik sees metronome as offering an innovation in a market where most cryptocurrencies are scheduled to reduce their supplies to zero.
“That’s one of the worries about the bitcoin-type supply curves, and it’s assumed and hoped that that will pay to sustain the system. But, that’s just a hope,” Garzik said.
Still, it’s here where metronome perhaps could run into issues similar to the ones it’s seeking to avoid in its design. Noted in the white paper is how certain groups could take steps to alter the supply rate.
“A consortium could agree to fork the MTN supply with a new MTN contract on the same or different chains, by exporting funds they control to the new fork,” the white paper reads.
That such decisions could also form the subject of infighting is not addressed in the paper.
Sale details
Armed with this roadmap, Bloq is moving ahead on the launch of the token, setting a date for the first week of December for its token sale.
According to Roszak, the Metronome code has undergone three audits since it was first written, from Ethereum Foundation member Gustav Simonson; Demian Brener, CEO of smart contract review services provider Zeppelin; and Martin Swende, security lead at the Ethereum Foundation.
On release to the public, Bloq will aim to use a descending price auction model by which tokens become less expensive to purchase as the sale progresses.
Yet, it was the current state of the code that was perhaps the biggest selling point of a sale.
“Today, you can raise money with a good idea, but as some of these things get pressure-tested, you’ll have to launch with code, then you’ll have to launch with users,” Roszak said.
He concluded:
“We’re launching with code that’s ready.”
Jeff Garzik, one of a handful of key developers who helped build the underlying software for bitcoin that is known as blockchain, has seen its shortcomings firsthand. So he decided to create a better digital currency.
He’s calling it Metronome and says it will be the first that can jump between different blockchains. For example, coins that are used for applications on the Ethereum blockchain will be able to move to Ethereum Classic before jumping onto Qtum or Rootstock, which connects with the bitcoin blockchain, said Garzik.
The mobility means that if one blockchain dies out as the result of infighting among developers or slackened use, metronome owners can move their holdings elsewhere. That should help the coins retain value, and ensure their longevity, Garzik, co-founder of startup Bloq that created metronome, said in a phone interview. It will be unveiled Tuesday at the Money 20/20 conference in Las Vegas.
“Institutional investors should be very excited to see something like this,” Matthew Roszak, the other co-founder of Bloq and chairman of industry advocate Chamber of Digital Commerce, said in a phone interview. “We’ve built a thousand-year cryptocurrency, something that’s built to last.”
That’s a concern for many digital currencies. Infighting among developers and various supporters, and the slow pace of enhancements on the bitcoin blockchain have helped to limit use. Both bitcoin and its main rival, ethereum, have split into several versions.
More splits could be coming — partly, thanks to Garzik, who is a proponent of and a developer for an upgrade to the bitcoin network called SegWit2x, which offers one way to speed up transactions. That split could happen in November.
Read more on the new iteration of bitcoin, known as bitcoin gold
New blockchains are also being launched every month, creating uncertainty for investors and leading to wild swings in many cryptocurrencies’ prices. While bitcoin’s price has increased nearly sixfold this year, a split-off version, bitcoin cash, is down 23 percent since its inception in July, according to CoinMarketCap.
While seeking to side-step some of these challenges, metronome will have some of its own. It’s starting out with zero users, compared with 35 million active bitcoin users a month. There are more than 1,100 tokens and currencies competing for users, according to CoinMarketCap. The token will first be issued on ethereum, and support for ethereum classic and other blockchains is expected within months.
Metronome’s coins will be produced and supported by autonomous distributed software that isn’t controlled by anyone, and can’t be changed. This software will auction off metronome, beginning in December, and keep and use the proceeds to boost the currency’s price. The rest of the project will be open sourced, so anyone will be able to build applications with metronome in mind.
Bloq will provide developer tools for corporate users. The company and others that helped create and promote the cryptocurrency will retain 2 million metronome coins, out of an initial trove of 10 million to be auctioned off in December. Every 24 hours, 2,880 new coins will be added to the supply.
Read more on the pace of initial coin offerings
Metronome sidesteps a problem that’s common for consumers that want to jump from one blockchain — say, bitcoin — to another. They have to go to an online exchange, and sell their bitcoins and buy another cryptocurrency. That includes exchange fees, plus the risk of losing out on any appreciation of the currency they dump. With metronome, they won’t have to do either.
Metronome owners will be able to receive a digital receipt for removing their coins from one blockchain. They can send the receipt to another blockchain, to add metronome there.
The new cryptocurrency will make it easy for people to sign up for recurring subscription payments, and let numerous payments to be sent in one batch, Garzik said.
“If I had a clean slate of paper this is what I would design,” Garzik said. It remains to be seen if others will agree.