FAKEBTCLOL A trustless BTC to XCP Burn Peg?

bitcoin Nov 8, 2021

Ok ok, I know I'm doing a lot of weird burn address sh*t lately but, hear me out with this one. It's a fun, silly experiment.

Long story short, since the Rare Pepe collection is - by all sources of officialdom - completed. Pepe artists and newcomers discovering it were left with a fire in them to make more Rare Pepe-esk nfts.

User created NFT memes are I think the most interesting form of NFTs. Since their corporate counterparts are frankly bland and in many cases feel 'soul-less'.

So, a new group was started called Fake Rares, which kind of mirrors some of the founding ideas of rare pepes with some new rules and limitations. Like that you need to burn a shitcoin of their making (which is way to expensive now) in order to be added to their collection.

Anyway presented with this idea I thought of a thing I wanted to make and created this.

FAKEBTCLOL is funny looking, yes. But that's not all it is.

The bitcoin address you see at the bottom of the card is real, you can see it here.

This address has no private key, thus can not be spent. I created it with this tool, it is super easy. (Just know it doesn't accept some characters because they look too much like other characters, google it its a bitcoin address thing).

I then minted the NFT associated with it, with a supply exactly the same as Bitcoin's. In other words. There's 21,000,000.00000000 units of FAKEBTCLOL in existence.

Now before you yell at me for creating a shitcoin. Have a look at this link. I sent literally all of the supply to an address I do not control. I literally make zero money off this weird thing.

I put all FAKEBTCLOL tokens on a BTC dispenser. A weird kind of trustless vending machine for NFTs that the Rare Pepe people invented years ago. This dispenser lives on the Bitcoin blockchain with the help of the Counterparty protocol.

All the FAKEBTCLOL were put on the dispenser, literally all of them. And the only way to get any FAKEBTCLOL is to send an equivalent amount of Bitcoin to the burn address above.

That's right, the price for 1 FAKEBTCLOL is 1 Satoshi. (Is it worth it? I don't think so! but more on this later.).

When you send any such amount to 1egendaryBurnMagic1o1xxxxxxuKQhK5, you get an equivalent amount of FAKEBTCLOL back (use a counterparty enabled wallet to see the FAKEBTCLOL asset, like Freewallet.io or Counterwallet.io).

Try it with like 5 sats if you like, or w,e minimum your wallet will let you. Maybe Counterwallet.io will let you send that small an amount. Though 2k sats might be the minimum otherwise.

This is effectively a one way peg of Bitcoin to a Counterparty asset that mirrors Bitcoin's supply perfectly.

Also note that the only way to cancel that dispenser is to sign a transaction with the private key corresponding to the burn address 1egendaryBurnMagic1o1xxxxxxuKQhK5, which ... doesn't exist.

So that dispenser should be there forever now. :D

Why FAKEBTCLOL is probably worthless

Now, before you send any btc to this dispenser. You need to understand, there is absolutely no way to get your BTC back. That BTC sent is gone forever. You are effectively shrinking the total supply of BTC by sending to it. There is no reason what so ever to think anyone will accept your FAKEBTCLOL in Bitcoin's place, since it's a higher layer asset not recognized by most wallets.

The funny thing about it is that by being on top of Bitcoin it actually inherits some of Bitcoin's security guarantees as well as some of it's network effects, since it moves across bitcoin addresses. Though it is probably as secure as the Counterparty layer two is, which I think we can safely assume is less secure than Bitcoin it's self.

Anyway as you can see, some people as dumb as me already send some sats to it to get some FAKEBTCLOL xD. To be perfectly clear I've only bought like 10k sats from this dispenser, I'm really not sure it is worth anything other than the experiment and the artistry of it.

Now, why in the world would I do this?

Well it is obviously an experiment and good fun I think. But the problem I was trying to address is much more real.

Dispensers -as awesome as they are- never the less have some significant limitations.

One of them is that they only work in one direction. In other words, you can only sell a Counterparty asset for BTC. You can not in turn sell any BTC in exchange for a Counterparty asset.

Another way of putting this is that Dispensers can NOT dispense Bitcoin. They can only dispense Counterparty assets. This is probably because dispensers use 'trustless' escrow logic that is supported by the smart contracting language of the Counterparty protocol. And Counterparty is a layer two thing. So it cant escrow the assets a layer below it.

This limitation creates a gap in the market. The gap is that there is no trustless way to offer X amount of BTC for a Bitcoin NFT, you can only sell an NFT for X amount of BTC.

It's as if there was an exchange where you could only post sell orders, but could not post buy orders. Sellers have no good signal as to where the buyers are, and how much they are willing to pay, they HAVE to guess. This cuts the price discovery of BTC denominated NFTs in half. And as a result motivates secondary shitcoin markets like XCP and PEPECASH to develop.

Why? well because as Counterparty assets XCP and PEPECASH are on the counterparty second layer and thus can be trustlessly escrowed and traded against NFTs,  meanwhile Bitcoin can not. This is what I am curious to try and solve.

So, technically FAKEBTCLOL CAN be escrowed and traded trustlessly against Rare Pepes and other Counterparty NFTs. However, if you get paid in FAKEBTCLOL, there's no guarantee anyone will buy it from you for Bitcoin.

So that's why it is a one way peg.

Anyway I could keep talking around this idea, but I think this blog is long enough, let me know what you think!

I'm on twitter @juansgalt if you have any thoughts on this whole thing. Cheers.

Oh yeah, and you are worried that I'm encouraging the destruction of bitcoins with stuff like this, to not despair. It will technically increase the value of your hodl, so. You Are Welcome. : )




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Juan Galt

Teaching You How To #Bitcoin since 2014.

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