Estimated reading time: 14 minutes, 21 seconds
We sit down with Danny Johnson of Pinkcoin. Danny started Pinkcoin in 2014 as one of the first Proof-of-Stake chains.
Pinkcoin’s goal? To revolutionize charitable giving by bringing it into a blockchain via a cryptocurrency. Danny had quite a unique introduction into cryptocurrency. Check out his story in our interview!
“With every tech innovation, there’s a lot of hype surrounding it – blockchain especially.”
This is just Part 1!
What is Pinkcoin?
Pinkcoin is a cryptocurrency that was founded in May of 2014. It’s use case – if I can sum it up to the shortest tagline possible – is a blockchain based donation platform for social impact and social good causes. So it is a Proof-of-Work/Proof-of-Stake hybrid cryptocurrency, in which we leverage our Proof-of-Stake consensus mechanism to allow users the ability to forward their staking rewards to charitable organizations we partner with. Or they can keep it for themselves and have self-interest, or share a little bit.
Then beside that we have what we call our Donate4Life platform which are different pools. I think there are eleven or twelve of them right now. The pools are of Pinkcoin that are just sitting there that can never be spent. Only one way: receiving addresses that people can donate and contribute to. And those staking rewards that those pools generate are forwarded to partner organizations.
So we kind of created our own technology to allow for donations and giving through cryptocurrency, which is kind of rare. Especially in 2014, when everyone was all about self-interest and making the most amount of money possible. We just wanted to do something different.
Why does charitable giving need a blockchain?
Well, because typically in charitable giving you can make a donation one-time or monthly. There’s no transparency in that donation. You don’t know where those funds are going or what causes they’re contributing to. You have no idea how the organization is spending those resources or whether the funds are going to the cause they’re saying.
I think on average it’s like 85% administrative costs for most organizations. So it’s a really high overhead, and only 15% or less or thereabouts of the donation actually gets to the end cause.
So the blockchain allows for complete transparency in the giving process. You can see from start to finish where your funds are going. You can know with certainty that there’s no – at least with Pinkcoin – no administrative fee being taken out with any donation.
It just seemed like the perfect vehicle to help kind of bring the giving process to the new age, and kind of disrupted an archaic, terrible giving model. It just seemed right for disruption. It’s archaic. It hasn’t changed in centuries, and the people that are doing are not very keen to change. So we can now kick-start that, and we’re all about it.
Where did the name Pinkcoin come from?
So in May of 2014, we launched. There was a cryptocurrency called Blackcoin that had launched maybe two months before that was a Proof-of-Stake coin. I think it was either the first or one of the first Proof-of-Stake coins, and it was very successful.
So, pink as the universal color of compassion kind of associated with giving, with charity, with National Breast Cancer Foundation; with a lot of these things. We kind of wanted to piggyback on the success of Blackcoin and launch Pinkcoin. We thought it just made sense at the time. So that’s kind of it, in a nutshell, how it happened.
At that time, why Proof-of-Stake?
With every tech innovation, there’s a lot of hype surrounding it – blockchain especially. So you had the phase in 2014 — and even still until now — where we’re like anonymous sending transactions are a big thing. And if you have anonymous sending, people are more inclined to invest because it fits this perceived technological advantage that people think is out there. You’re able to hype this with this technology to make people interested. It’s just another selling feature.
Proof-of-Stake was pretty new. It hadn’t been really explored that in-depth, in terms of being actually experimented with in a main net. Proof-of-Work was expensive, or still is. You require a lot of people to buy expensive hardware to then use its resources, and pay electricity to contribute to your blockchain. So the barriers to entry to that are very real. And to entice people to use that — to buy the machines or if they already have them, use it on your blockchain — is pretty difficult.
If they don’t have the financial incentive, and there’s no way to make sure that it’s the most profitable thing to mine out there. So if you don’t have that securing your networks and rewarding people in exchange for spending all this money, essentially, you’re gonna have a less secure blockchain.
Because we couldn’t guarantee those things, there’s a lot of competition out there for Proof-of-Work coins, and not much for Proof-of-Stake. We thought it would be an interesting way to experiment and use this new technological advancement in blockchain, and give people the opportunity to help secure our network and validate transactions, while just holding coins in their wallet and sticking. So it kind of satisfied a number of things for us in that it incentivized people and helped us have security, distributing the coins people are interested in.
How was Pinkcoin distributed?
Pinkcoin was distributed initially via a short Proof-of-Work window. I’m using the x11 algorithm. This is like the second or third x11 algorithm out there. Then after all the coins were distributed into the marketplace Proof-of-Stake kicked in for 1% annual returns on whatever coins you held.
We learned some extremely valuable lessons in the economics around how we designed the Pinkcoin blockchain. So one, because we’re one of first Proof-of-Stake coins, we learned that giving 1% interest, if that’s your only consensus mechanism, is not enough to give people the incentive to make them want to hold coins in their wallet and contribute to the security of the network.
So after two and a half years of the Pinkcoin blockchain going continuously Proof-of-Stake exclusively, we foresaw that there just wasn’t enough support in the network. Because we had 30 second block times, which led to quick transactions and a speed advantage, there was a lot of bloat on Pinkcoin blockchain. There was a lot of, what we call, orphan transactions, where two people will see the block and compete to solve it first. Then one person gets it while the other person doesn’t get it, and their transaction becomes orphaned. Well, that transaction stays in the blockchain.
After two and a half years, roughly one-third of our entire blockchain was orphaned transactions because of the quick block times. So before seeing that there was all these kind of bloating issues, it would take two weeks to download the entire blockchain if you wanted to start staking after two and a half years. This is because it had gotten so large that it was like 45 or 50 gigabytes, unless you had a bootstrap which reduced the time.
But we decided we needed to do something to to ensure the future of the Pinkcoin blockchain. And to ensure that people that were holding and supporting our network, and had an opportunity to continue doing so in a way that wasn’t just a duct tape together tragedy.
What changes did you make to your first PoS blockchain?
So we decided to create a brand new blockchain through a one-to-one coin swap. We used the lessons we learned in that first iteration of our blockchain to improve and ensure our network safety and security over the indefinite future and planning for success over long term.
So what we did was created this new blockchain that was a Proof-of-Work/Proof-of-Stake hybrid on the script algorithm. We added a second Proof-of-Stake consensus mechanism that we call Flash-stake (FPoS), which would allow throughput of more transactions during peak times, throughout the day globally.
We game-ified the Proof-of-Stake rewards. Rather than just having a fixed 1% interest rate, for whatever you held it was fixed reward blocks — kind of like Proof-of-Work blocks are. So instead of 1%, there’s a 100 block rewards or 150 coin block rewards. Everybody who’s staking has access to to those rewards. The more coins you have doesn’t necessarily matter to have greater access to that that reward. So it kind of makes it more fair, but also gamifies it in that, because we have this Flash-Proof-of-Stake — which is 150 coin reward block for four different one-hour periods throughout the day on one minute block times. Whereas the regular PoS is six minute block times, 100 coin rewards.
We made it so that people could do some some game theory. They could figure out if it made more sense for them financially to turn their machines off and only stake during the peak times, or run it all day 24 hours a day, and kind of get this the user network wait to mine/stake the lesser reward blocks that are more spaced out. While also giving the users, who are trying to get transactions through, a vehicle to make sure that they’re through in a timely manner. Because the block times then average down to a minute and a half — 90 seconds.
Are mining block rewards different from stake block rewards?
So we have the 50 coin reward blocks every two minutes on Proof-of-Work. 100 coin reward blocks, which is every six minutes for 20 hours a day. Then 150 coin reward blocks every one minute, for four hours of the day. That ensures that we have ample support to make sure that people are securing the network by contributing their mining or computing power to verify transactions and secure our network.
And it makes sure that there’s a lot of stakers. It’s not just reserved for the 1%, because it doesn’t matter how many coins you have. Everyone has the same access to getting these rewards. So we have a lot of people contributing to staking that have a theoretically small amount that are helping us out.
Then we’ve, in our Donate4Life platform, we’ve additionally rewarded smaller users by having three of our pools contribute back to stakers to give them additional incentive to help support our network with the Acorn, Elder Tree and Rain Cloud.
What are some organizations that Pinkcoin has contributed to?
So in addition to our Donate4Life pool partners, we’ve had what we call flash campaigns. There will be some major event in the world that we decided we wanted to support. So we’ve had a number of these. We had a flash campaign for Hurricane Harvey, where we allow people to donate any cryptocurrency that is on Bittrex, and we would convert that into the USD for them. Then send it to the cause. So we raised $6,000 for that.
Then we had Hurricane Irma. Which Hurricane Harvey was 12 hour process, where we were like, “Alright this is what we needed to do. It’s happening right now. It’s immediate. Let’s just get something up and donate to this.” So we donated to the Houston SPCA over like a 72 hour period. Then Hurricane Irma was right on his back, and we had a little more time to plan for it. We got some some friends of ours to give away some gifts for donating to the cause.
We were able to have Bittrex.com — one of the leading cryptocurrency exchanges — act as escrow to ensure that people were comfortable and confident that we weren’t just going to take their money. That campaign generated $30,000 in donations, which Bittrex then matched for $60,000 worth of fundraising. We donated $20,000 each to Center for Disaster Philanthropy, Direct Relief, and Habitat for Humanity.
Then at the end of last year, we did a last minute flash campaign over 55 hours to one of our advisors, this guy Colin LaHaye — Colin Crypto on Twitter. He is a big social-media influencer and one of the vault leaders in the space. He had an organization that he worked with and he liked a lot called Solar Kits for Change. He wanted to donate $10,000 to them directly, but he asked if we would help work with them to see if we could help raise a little more. Then he would match whatever we raise up to ten thousand. So we did a 55 hour flash campaign, and we ended up raising an additional $10,000 for that. So the total was a $20,000 donation. They empower small business owners in Africa — some of them are hairdressers and barbers — with solar panels to power their businesses. In small African towns and villages where there isn’t access to electricity, it kind of empowers small business owners, who otherwise wouldn’t have access to electricity.
What is Donate4Life?
We have some interesting partners that we work with. One of which is an organization out of Toronto, Canada called Cardiac Kids. They work with the sick kids hospital in Toronto to help kids that were born with congenital heart defect with the funds for their open heart surgeries that they have to have throughout their life to help manage their ailment. So we’ve been working with them for a little over a year, and they are the recipient of our charity pool.
We have an organization out of Switzerland called Zwischenraum that is a Montessori School that educates their students on blockchain using Pinkcoin as their example. We’ve been working with them for about eight months.
We’re also announcing one next week (mid-June 2018), that’s called the Digital Citizens Fund. It’s this woman Roya Mahboob, who was named one of Time’s Most Influential People in 2013. She was the first, and youngest, female CEO in Afghanistan. Her organization empowers Afghani women through teaching them how to code.
We have a bunch of organizations we work with in that capacity, as recipients of our Donate4Life pools. We’ve got a bunch of them. Mostly smaller organizations that actually use the funding, and would help them in getting more donations to their organizations through marketing, by saying they are partnered with a blockchain organization. We don’t go after the big guys, you know? Red Cross wouldn’t be able to do much with a partnership with us. We’re trying to start small, really grass-roots, and work with an organization that could really benefit.
What do you see for the future of blockchain and cryptocurrency?
I think we’re just scratching the surface as to what blockchain can do, and what percent of the population knows about it. And then what tiny percentage population is actually transacted with it and experienced it firsthand.
So I think as we get more and more people interested in blockchain and bitcoin, and more people who have used it, we’re gonna start getting more and more talent. That’s gonna help accelerate just what bitcoin and crypto can do help to us accelerate discovery in that regard. So I think the future is so bright for blockchain and crypto.
I don’t really know that I can articulate just what my thoughts are. I think there’s a small use case that we’ve discovered, which is obviously the store value, transaction speeds, borderless remittance. All this stuff that we’ve discovered. And then we’ve discovered the ICO fundraising use case. But we’re not even close to the real impactful use cases that could change the world. We’re not close to getting our medical records on the blockchain, and being able to have interoperability between different organizations to share data that could really help bridge that informational gap that companies and individuals and governments and organizations can really benefit from.
I think that’s kind of where we’re going, and the more people that we spread this incredible knowledge of ‘what blockchain is and what it’s capable of’ and inspire them to enter this space, in a way that’s not intimidating to them. I think a lot of people when they first enter — before they actually jump in and and transact with it — really are intimidated by the perceived technological barriers to entry and the jargon that’s used, and all this stuff. So they don’t actually get in.
If we can help alleviate some of the perceived barriers to entry and get this next generation of crypto enthusiasts in the door and help them kind of realize their potential and realize this burgeoning industry, and the benefits that it could have to, not just them personally or financially, but the greater world through stuff like what Blockchain WTF is doing… I think, man, the sky’s the limit.
I don’t think I can narrow it down to just like a couple of talking points. I really don’t know what it’s capable of. I just know that it’s capable of so much more than what we’ve discovered it to be so far.
You can check out Part 2 here! And check out Pinkcoin here!
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