Frequently Asked Questions

This is an unofficial FAQ that anyone can edit. It should not be considered at all authoritative. Please correct errors and add content.

How do I use Skycoin?

Skycoin is not ready for public use. After launch (the IPO), you will be able to download the Skycoin client, create a wallet, and then accept and spend Skycoins just like you can with other currencies.

What are the risks?

This list is not comprehensive, or authoritative.

To use Skycoin, you will need to run the Skycoin client software. As with any software you run, you are allowing it significant access to the computer its running on. Fortunately the source code is public for review it can be audited by yourself and other should you desire. This risk can be partly mitigated by running it inside a virtual machine.

Financially any money held in Skycoins can change value arbitrarily. Bitcoin is well known for its lack of stability, and its the most well established cryptocurrency. The value could easilly go way up, or down to 0. The developers claim they will make efforts to try and control this1.

The developers could horde most of the coins for themselves, appear to sell them to people who are actually themselves, abandon the prokect with the money from the IPO etc. There are lots of potential issues with the skycoin distribution, but at least theoretically as long as the developers hold a lot of coins, it's in their interest to keep their value up.

As for the Skycoins themselves, assuming the software holds up and the design works as intended (not guaranteed), they are quite safe as long as you, and only you, have access to your wallet file. Losing your wallet means losing the coins.

Like all major crypto currencies, any transactions you make will be irreversible. It's not like a credit card where you can get your money back if there is an issue. If you send to the wrong address, or someone steals a your wallet and transfers the money, you won't get it back unless the receiver decides to give it back.

Also like other cryptocurrencies, there are potential double spend attacks: just because you have received a transaction does not guarantee an attacker won't also be able to have spent that money elsewhere and you might not actually get it. Realistically it looks like Skycoin's design is pretty much resistant to this (and it won't consider a transaction final until it's pretty surely final) but it is still a theoretical risk venders should be concerned about.

There are privacy risks. Skycoins's design attempts to be more private than Bitcoin, but it remains to be seen how traceable transactions really are with Skycoin.

There may also be political, social and legal risks. Like any assets, gains are likely taxable regardless of Skycoin being considered a currency. It may also be completely illegal in some places, or have other consequences.

What about mining?

There is no mining. Skycoin is designed to be efficient, meaning the costs of operating the network should be small (and thus allow transactions to be cheap). This means no massive amounts of wasted power paid for by transaction fees, and it also means that the security of the system does not depend on miners. See the next section for coin distribution.

How are Skycoins distributed?

All the coins are created by the developers. They can distribute them however they choose. The claimed plan is to exchange them for goods (mainly Bitcoin and other cryptocurrencies) and services (contributions to the Skycoin project) just like you would expect anyone to do with a pile of money in their possession. In contrast to the Bitcoin model where the money goes to the people who waste the most work, its suppose to be given to people who contribute useful work and resources. This however can not be enforced.

The first sale will be the IPO (initial public offering), follow the the bitcointalk thread to stay up to date.

There are alternatives, like they could allow bitcoins to be destroyed (sent to unspendable addresses) to effectively convert them to Skycoin rather than selling them in an IPO. There are complexities with doing such things, but it is possible, and more enforceable. No proposal in this direction has been made.

How does Skycoin work?

See the whitepapers.
See also the bitcointalk thread

The overly short and thus inaccurate summery: There are a bunch of servers ("Obelisk" nodes) which are talk to each other to periodically reach a consensus on a set of transactions to add to a public ledger (Skycoin blockchain). This public ledger (like with bitcoin) provides enough information to know which accounts have how much money. To use Skycoin you run or talk to these servers and thus can determine how much money is in your accounts, and inform them of transactions you would like to make so they can include them. These servers communicate by signing and publishing their own public ledgers (personal block chains) recording their decisions and sources for them. This allows cross referencing and auditing to detect and servers that are harming the network with actions like telling different servers different things, or sending spamming the network with useless data. Anyone can create accounts (addresses), and there is no way (without the wallet that created it) to determine which accounts are part of which wallets.

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