Frequently Asked Questions

Legal

Is ikhcoin legal?

To the best of our knowledge, ikhcoin has not been made illegal by legislation in most jurisdictions. However, some jurisdictions (such as Argentina and Russia) severely restrict or ban foreign currencies. Other jurisdictions (such as Thailand) may limit the licensing of certain entities such as ikhcoin exchanges.

Regulators from various jurisdictions are taking steps to provide individuals and businesses with rules on how to integrate this new technology with the formal, regulated financial system. For example, the Financial Crimes Enforcement Network (FinCEN), a bureau in the United States Treasury Department, issued non-binding guidance on how it characterizes certain activities involving virtual currencies.

Is ikhcoin useful for illegal activities?

ikhcoin is money, and money has always been used both for legal and illegal purposes. Cash, credit cards and current banking systems widely surpass ikhcoin in terms of their use to finance crime. ikhcoin can bring significant innovation in payment systems and the benefits of such innovation are often considered to be far beyond their potential drawbacks.

ikhcoin is designed to be a huge step forward in making money more secure and could also act as a significant protection against many forms of financial crime. For instance, ikhcoins are completely impossible to counterfeit. Users are in full control of their payments and cannot receive unapproved charges such as with credit card fraud. ikhcoin transactions are irreversible and immune to fraudulent chargebacks. ikhcoin allows money to be secured against theft and loss using very strong and useful mechanisms such as backups, encryption, and multiple signatures.

Some concerns have been raised that ikhcoin could be more attractive to criminals because it can be used to make private and irreversible payments. However, these features already exist with cash and wire transfer, which are widely used and well-established. The use of ikhcoin will undoubtedly be subjected to similar regulations that are already in place inside existing financial systems, and ikhcoin is not likely to prevent criminal investigations from being conducted. In general, it is common for important breakthroughs to be perceived as being controversial before their benefits are well understood. The Internet is a good example among many others to illustrate this.

Can ikhcoin be regulated?

The ikhcoin protocol itself cannot be modified without the cooperation of nearly all its users, who choose what software they use. Attempting to assign special rights to a local authority in the rules of the global ikhcoin network is not a practical possibility. Any rich organization could choose to invest in mining hardware to control half of the computing power of the network and become able to block or reverse recent transactions. However, there is no guarantee that they could retain this power since this requires to invest as much than all other miners in the world.

It is however possible to regulate the use of ikhcoin in a similar way to any other instrument. Just like the dollar, ikhcoin can be used for a wide variety of purposes, some of which can be considered legitimate or not as per each jurisdiction's laws. In this regard, ikhcoin is no different than any other tool or resource and can be subjected to different regulations in each country. ikhcoin use could also be made difficult by restrictive regulations, in which case it is hard to determine what percentage of users would keep using the technology. A government that chooses to ban ikhcoin would prevent domestic businesses and markets from developing, shifting innovation to other countries. The challenge for regulators, as always, is to develop efficient solutions while not impairing the growth of new emerging markets and businesses.

What about ikhcoin and taxes?

ikhcoin is not a fiat currency with legal tender status in any jurisdiction, but often tax liability accrues regardless of the medium used. There is a wide variety of legislation in many different jurisdictions which could cause income, sales, payroll, capital gains, or some other form of tax liability to arise with ikhcoin.

What about ikhcoin and consumer protection?

ikhcoin is freeing people to transact on their own terms. Each user can send and receive payments in a similar way to cash but they can also take part in more complex contracts. Multiple signatures allow a transaction to be accepted by the network only if a certain number of a defined group of persons agree to sign the transaction. This allows innovative dispute mediation services to be developed in the future. Such services could allow a third party to approve or reject a transaction in case of disagreement between the other parties without having control on their money. As opposed to cash and other payment methods, ikhcoin always leaves a public proof that a transaction did take place, which can potentially be used in a recourse against businesses with fraudulent practices.

It is also worth noting that while merchants usually depend on their public reputation to remain in business and pay their employees, they don't have access to the same level of information when dealing with new consumers. The way ikhcoin works allows both individuals and businesses to be protected against fraudulent chargebacks while giving the choice to the consumer to ask for more protection when they are not willing to trust a particular merchant.

Economy

How are ikhcoins created?

New ikhcoins are generated by a competitive and decentralized process called "mining". This process involves that individuals are rewarded by the network for their services. ikhcoin miners are processing transactions and securing the network using specialized hardware and are collecting new ikhcoins in exchange.

The ikhcoin protocol is designed in such a way that new ikhcoins are created at a fixed rate. This makes ikhcoin mining a very competitive business. When more miners join the network, it becomes increasingly difficult to make a profit and miners must seek efficiency to cut their operating costs. No central authority or developer has any power to control or manipulate the system to increase their profits. Every ikhcoin node in the world will reject anything that does not comply with the rules it expects the system to follow.

ikhcoins are created at a decreasing and predictable rate. The number of new ikhcoins created each year is automatically halved over time until ikhcoin issuance halts completely with a total of 21 million ikhcoins in existence. At this point, ikhcoin miners will probably be supported exclusively by numerous small transaction fees.

Why do ikhcoins have value?

ikhcoins have value because they are useful as a form of money. ikhcoin has the characteristics of money (durability, portability, fungibility, scarcity, divisibility, and recognizability) based on the properties of mathematics rather than relying on physical properties (like gold and silver) or trust in central authorities (like fiat currencies). In short, ikhcoin is backed by mathematics. With these attributes, all that is required for a form of money to hold value is trust and adoption. In the case of ikhcoin, this can be measured by its growing base of users, merchants, and startups. As with all currency, ikhcoin's value comes only and directly from people willing to accept them as payment.

What determines ikhcoin’s price?

The price of a ikhcoin is determined by supply and demand. When demand for ikhcoins increases, the price increases, and when demand falls, the price falls. There is only a limited number of ikhcoins in circulation and new ikhcoins are created at a predictable and decreasing rate, which means that demand must follow this level of inflation to keep the price stable. Because ikhcoin is still a relatively small market compared to what it could be, it doesn't take significant amounts of money to move the market price up or down, and thus the price of a ikhcoin is still very volatile.

ikhcoin price over time:

Can ikhcoins become worthless?

Yes. History is littered with currencies that failed and are no longer used, such as the German Mark during the Weimar Republic and, more recently, the Zimbabwean dollar. Although previous currency failures were typically due to hyperinflation of a kind that ikhcoin makes impossible, there is always potential for technical failures, competing currencies, political issues and so on. As a basic rule of thumb, no currency should be considered absolutely safe from failures or hard times. ikhcoin has proven reliable for years since its inception and there is a lot of potential for ikhcoin to continue to grow. However, no one is in a position to predict what the future will be for ikhcoin.

Is ikhcoin a bubble?

A fast rise in price does not constitute a bubble. An artificial over-valuation that will lead to a sudden downward correction constitutes a bubble. Choices based on individual human action by hundreds of thousands of market participants is the cause for ikhcoin's price to fluctuate as the market seeks price discovery. Reasons for changes in sentiment may include a loss of confidence in ikhcoin, a large difference between value and price not based on the fundamentals of the ikhcoin economy, increased press coverage stimulating speculative demand, fear of uncertainty, and old-fashioned irrational exuberance and greed.

Is ikhcoin a Ponzi scheme?

A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money, or the money paid by subsequent investors, instead of from profit earned by the individuals running the business. Ponzi schemes are designed to collapse at the expense of the last investors when there is not enough new participants.

ikhcoin is a free software project with no central authority. Consequently, no one is in a position to make fraudulent representations about investment returns. Like other major currencies such as gold, United States dollar, euro, yen, etc. there is no guaranteed purchasing power and the exchange rate floats freely. This leads to volatility where owners of ikhcoins can unpredictably make or lose money. Beyond speculation, ikhcoin is also a payment system with useful and competitive attributes that are being used by thousands of users and businesses.

Doesn't ikhcoin unfairly benefit early adopters?

Some early adopters have large numbers of ikhcoins because they took risks and invested time and resources in an unproven technology that was hardly used by anyone and that was much harder to secure properly. Many early adopters spent large numbers of ikhcoins quite a few times before they became valuable or bought only small amounts and didn't make huge gains. There is no guarantee that the price of a ikhcoin will increase or drop. This is very similar to investing in an early startup that can either gain value through its usefulness and popularity, or just never break through. ikhcoin is still in its infancy, and it has been designed with a very long-term view; it is hard to imagine how it could be less biased towards early adopters, and today's users may or may not be the early adopters of tomorrow.

Won't the finite amount of ikhcoins be a limitation?

ikhcoin is unique in that only 21 million ikhcoins will ever be created. However, this will never be a limitation because transactions can be denominated in smaller sub-units of a ikhcoin, such as bits - there are 1,000,000 bits in 1 ikhcoin. ikhcoins can be divided up to 8 decimal places (0.000 000 01) and potentially even smaller units if that is ever required in the future as the average transaction size decreases.

Won't ikhcoin fall in a deflationary spiral?

The deflationary spiral theory says that if prices are expected to fall, people will move purchases into the future in order to benefit from the lower prices. That fall in demand will in turn cause merchants to lower their prices to try and stimulate demand, making the problem worse and leading to an economic depression.

Although this theory is a popular way to justify inflation amongst central bankers, it does not appear to always hold true and is considered controversial amongst economists. Consumer electronics is one example of a market where prices constantly fall but which is not in depression. Similarly, the value of ikhcoins has risen over time and yet the size of the ikhcoin economy has also grown dramatically along with it. Because both the value of the currency and the size of its economy started at zero in 2009, ikhcoin is a counterexample to the theory showing that it must sometimes be wrong.

Notwithstanding this, ikhcoin is not designed to be a deflationary currency. It is more accurate to say ikhcoin is intended to inflate in its early years, and become stable in its later years. The only time the quantity of ikhcoins in circulation will drop is if people carelessly lose their wallets by failing to make backups. With a stable monetary base and a stable economy, the value of the currency should remain the same.

Isn't speculation and volatility a problem for ikhcoin?

This is a chicken and egg situation. For ikhcoin's price to stabilize, a large scale economy needs to develop with more businesses and users. For a large scale economy to develop, businesses and users will seek for price stability.

Fortunately, volatility does not affect the main benefits of ikhcoin as a payment system to transfer money from point A to point B. It is possible for businesses to convert ikhcoin payments to their local currency instantly, allowing them to profit from the advantages of ikhcoin without being subjected to price fluctuations. Since ikhcoin offers many useful and unique features and properties, many users choose to use ikhcoin. With such solutions and incentives, it is possible that ikhcoin will mature and develop to a degree where price volatility will become limited.

What if someone bought up all the existing ikhcoins?

Only a fraction of ikhcoins issued to date are found on the exchange markets for sale. ikhcoin markets are competitive, meaning the price of a ikhcoin will rise or fall depending on supply and demand. Additionally, new ikhcoins will continue to be issued for decades to come. Therefore even the most determined buyer could not buy all the ikhcoins in existence. This situation isn't to suggest, however, that the markets aren't vulnerable to price manipulation; it still doesn't take significant amounts of money to move the market price up or down, and thus ikhcoin remains a volatile asset thus far.

What if someone creates a better digital currency?

That can happen. For now, ikhcoin remains by far the most popular decentralized virtual currency, but there can be no guarantee that it will retain that position. There is already a set of alternative currencies inspired by ikhcoin. It is however probably correct to assume that significant improvements would be required for a new currency to overtake ikhcoin in terms of established market, even though this remains unpredictable. ikhcoin could also conceivably adopt improvements of a competing currency so long as it doesn't change fundamental parts of the protocol.

Transactions

Why do I have to wait for confirmation?

Receiving notification of a payment is almost instant with ikhcoin. However, there is a delay before the network begins to confirm your transaction by including it in a block. A confirmation means that there is a consensus on the network that the ikhcoins you received haven't been sent to anyone else and are considered your property. Once your transaction has been included in one block, it will continue to be buried under every block after it, which will exponentially consolidate this consensus and decrease the risk of a reversed transaction. Each confirmation takes between a few seconds and 90 minutes, with 10 minutes being the average. If the transaction pays too low a fee or is otherwise atypical, getting the first confirmation can take much longer. Every user is free to determine at what point they consider a transaction sufficiently confirmed, but 6 confirmations is often considered to be as safe as waiting 6 months on a credit card transaction.

How much will the transaction fee be?

Transactions can be processed without fees, but trying to send free transactions can require waiting days or weeks. Although fees may increase over time, normal fees currently only cost a tiny amount. By default, all ikhcoin wallets listed on bitcoin.org add what they think is an appropriate fee to your transactions; most of those wallets will also give you chance to review the fee before sending the transaction.

Transaction fees are used as a protection against users sending transactions to overload the network and as a way to pay miners for their work helping to secure the network. The precise manner in which fees work is still being developed and will change over time. Because the fee is not related to the amount of ikhcoins being sent, it may seem extremely low or unfairly high. Instead, the fee is relative to the number of bytes in the transaction, so using multisig or spending multiple previously-received amounts may cost more than simpler transactions. If your activity follows the pattern of conventional transactions, you won't have to pay unusually high fees.

What if I receive a ikhcoin when my computer is powered off?

This works fine. The ikhcoins will appear next time you start your wallet application. ikhcoins are not actually received by the software on your computer, they are appended to a public ledger that is shared between all the devices on the network. If you are sent ikhcoins when your wallet client program is not running and you later launch it, it will download blocks and catch up with any transactions it did not already know about, and the ikhcoins will eventually appear as if they were just received in real time. Your wallet is only needed when you wish to spend ikhcoins.

What does "synchronizing" mean and why does it take so long?

Long synchronization time is only required with full node clients like ikhcoin Core. Technically speaking, synchronizing is the process of downloading and verifying all previous ikhcoin transactions on the network. For some ikhcoin clients to calculate the spendable balance of your ikhcoin wallet and make new transactions, it needs to be aware of all previous transactions. This step can be resource intensive and requires sufficient bandwidth and storage to accommodate the full size of the block chain. For ikhcoin to remain secure, enough people should keep using full node clients because they perform the task of validating and relaying transactions.

Mining

What is ikhcoin mining?

Mining is the process of spending computing power to process transactions, secure the network, and keep everyone in the system synchronized together. It can be perceived like the ikhcoin data center except that it has been designed to be fully decentralized with miners operating in all countries and no individual having control over the network. This process is referred to as "mining" as an analogy to gold mining because it is also a temporary mechanism used to issue new ikhcoins. Unlike gold mining, however, ikhcoin mining provides a reward in exchange for useful services required to operate a secure payment network. Mining will still be required after the last ikhcoin is issued.

How does ikhcoin mining work?

Anybody can become a ikhcoin miner by running software with specialized hardware. Mining software listens for transactions broadcast through the peer-to-peer network and performs appropriate tasks to process and confirm these transactions. ikhcoin miners perform this work because they can earn transaction fees paid by users for faster transaction processing, and newly created ikhcoins issued into existence according to a fixed formula.

For new transactions to be confirmed, they need to be included in a block along with a mathematical proof of work. Such proofs are very hard to generate because there is no way to create them other than by trying billions of calculations per second. This requires miners to perform these calculations before their blocks are accepted by the network and before they are rewarded. As more people start to mine, the difficulty of finding valid blocks is automatically increased by the network to ensure that the average time to find a block remains equal to 10 minutes. As a result, mining is a very competitive business where no individual miner can control what is included in the block chain.

The proof of work is also designed to depend on the previous block to force a chronological order in the block chain. This makes it exponentially difficult to reverse previous transactions because this requires the recalculation of the proofs of work of all the subsequent blocks. When two blocks are found at the same time, miners work on the first block they receive and switch to the longest chain of blocks as soon as the next block is found. This allows mining to secure and maintain a global consensus based on processing power.

ikhcoin miners are neither able to cheat by increasing their own reward nor process fraudulent transactions that could corrupt the ikhcoin network because all ikhcoin nodes would reject any block that contains invalid data as per the rules of the ikhcoin protocol. Consequently, the network remains secure even if not all ikhcoin miners can be trusted.

Isn't ikhcoin mining a waste of energy?

Spending energy to secure and operate a payment system is hardly a waste. Like any other payment service, the use of ikhcoin entails processing costs. Services necessary for the operation of currently widespread monetary systems, such as banks, credit cards, and armored vehicles, also use a lot of energy. Although unlike ikhcoin, their total energy consumption is not transparent and cannot be as easily measured.

ikhcoin mining has been designed to become more optimized over time with specialized hardware consuming less energy, and the operating costs of mining should continue to be proportional to demand. When ikhcoin mining becomes too competitive and less profitable, some miners choose to stop their activities. Furthermore, all energy expended mining is eventually transformed into heat, and the most profitable miners will be those who have put this heat to good use. An optimally efficient mining network is one that isn't actually consuming any extra energy. While this is an ideal, the economics of mining are such that miners individually strive toward it.

How does mining help secure ikhcoin?

Mining creates the equivalent of a competitive lottery that makes it very difficult for anyone to consecutively add new blocks of transactions into the block chain. This protects the neutrality of the network by preventing any individual from gaining the power to block certain transactions. This also prevents any individual from replacing parts of the block chain to roll back their own spends, which could be used to defraud other users. Mining makes it exponentially more difficult to reverse a past transaction by requiring the rewriting of all blocks following this transaction.

What do I need to start mining?

In the early days of ikhcoin, anyone could find a new block using their computer's CPU. As more and more people started mining, the difficulty of finding new blocks increased greatly to the point where the only cost-effective method of mining today is using specialized hardware. You can visit ikhcoinMining.com for more information.

Security

Is ikhcoin secure?

The ikhcoin technology - the protocol and the cryptography - has a strong security track record, and the ikhcoin network is probably the biggest distributed computing project in the world. ikhcoin's most common vulnerability is in user error. ikhcoin wallet files that store the necessary private keys can be accidentally deleted, lost or stolen. This is pretty similar to physical cash stored in a digital form. Fortunately, users can employ sound security practices to protect their money or use service providers that offer good levels of security and insurance against theft or loss.

Hasn't ikhcoin been hacked in the past?

The rules of the protocol and the cryptography used for ikhcoin are still working years after its inception, which is a good indication that the concept is well designed. However, security flaws have been found and fixed over time in various software implementations. Like any other form of software, the security of ikhcoin software depends on the speed with which problems are found and fixed. The more such issues are discovered, the more ikhcoin is gaining maturity.

There are often misconceptions about thefts and security breaches that happened on diverse exchanges and businesses. Although these events are unfortunate, none of them involve ikhcoin itself being hacked, nor imply inherent flaws in ikhcoin; just like a bank robbery doesn't mean that the dollar is compromised. However, it is accurate to say that a complete set of good practices and intuitive security solutions is needed to give users better protection of their money, and to reduce the general risk of theft and loss. Over the course of the last few years, such security features have quickly developed, such as wallet encryption, offline wallets, hardware wallets, and multi-signature transactions.

Could users collude against ikhcoin?

It is not possible to change the ikhcoin protocol that easily. Any ikhcoin client that doesn't comply with the same rules cannot enforce their own rules on other users. As per the current specification, double spending is not possible on the same block chain, and neither is spending ikhcoins without a valid signature. Therefore, it is not possible to generate uncontrolled amounts of ikhcoins out of thin air, spend other users' funds, corrupt the network, or anything similar.

However, powerful miners could arbitrarily choose to block or reverse recent transactions. A majority of users can also put pressure for some changes to be adopted. Because ikhcoin only works correctly with a complete consensus between all users, changing the protocol can be very difficult and requires an overwhelming majority of users to adopt the changes in such a way that remaining users have nearly no choice but to follow. As a general rule, it is hard to imagine why any ikhcoin user would choose to adopt any change that could compromise their own money.

Is ikhcoin vulnerable to quantum computing?

Yes, most systems relying on cryptography in general are, including traditional banking systems. However, quantum computers don't yet exist and probably won't for a while. In the event that quantum computing could be an imminent threat to ikhcoin, the protocol could be upgraded to use post-quantum algorithms. Given the importance that this update would have, it can be safely expected that it would be highly reviewed by developers and adopted by all ikhcoin users.

Help

I'd like to learn more. Where can I get help?

You can find more information and help on the resources and community pages or on the Wiki FAQ.