The number of Bitcoin hard forks in existence today is a lot larger than most people think. In fact, there are probably half a dozen projects out there people have not even heard of yet. Bitcoin Interest is not your average hard fork, though, despite the currency being distributed to Bitcoin holders at a 1:1 ratio come January. It’s a very different project that doesn’t even aim to replace Bitcoin.
Bitcoin Interest is an Interesting Creature
Although any project using the term “Bitcoin” will be heavily scrutinized, it doesn’t mean such concepts cannot be successful in their own way. The team behind Bitcoin Interest has come up with a rather interesting plan to create a new ecosystem without competing with Bitcoin directly. It’s still peer-to-peer electronic cash with full decentralization, but it will promote holding onto one’s coins first and foremost.
The Bitcoin Interest project rests on three critical pillars. Technology and community are obvious focuses, as both are vital to any cryptocurrency these days. It is the savings aspect that will intrigue a lot of people, as it is something we don’t see in Bitcoin itself. By parking their coins, users will earn interest. It sounds very similar to how proof-of-stake works, and it may turn out that way when the code is revealed to the public.
According to its website, users will earn BCI coins through two separate rewards schemes. The more significant reward is issued to miners for keeping the network alive. A small portion of each block will be sent to the interest pool, which is referred to as “enhanced proof of work”. The interest pool reward will start at 1.08 BCI and will be cut in half as more blocks are found on the network. It’s an interesting approach, to say the very least.
Unlike what one would expect, Bitcoin Interest has no fixed interest rates. It all depends on how many coins are parked overall as well as by yourself. This is pretty similar to how most staking rewards are issued in a normal proof-of-stake ecosystem. However, there are two interest “cycles” to choose from. There are both weekly and monthly periods available, which opens up a lot of interesting opportunities.
As a result, the weekly interest pool will collect 30% of each block reward. The monthly pool, on the other hand, will claim 70% per block. It is an interesting scheme, although no one should be surprised if most miners aren’t too happy about this at first. After all, they risk missing out on a significant amount of money. With 30% claimed for one pool and 70% claimed for the other pool, it is evident storing coins for the long term will yield better results.
At the same time, there is no indication that Bitcoin Interest will be limited to this interest-only model anytime soon. Miners will be able to mine this new currency at a much lower difficulty than Bitcoin itself. Moreover, the developers want to nullify any advantage gained by ASIC miners and promote GPU mining first and foremost. It seems Bitcoin Interest will rely on the Equihash algorithm to achieve all of this. We have seen other Bitcoin hard forks embrace this algorithm as well.