You would think a Twitter account that popped up Tuesday called "Coinye West" was a parody account created by some econ nerd-cum-Yeezy fan. It in fact is the handle of a new digital currency inspired by Kanye West that, as the creators confirmed to VICE Thursday, will launch Jan. 11. Confused yet? So were we. Here's a primer.
So Kanye has his own currency now?
Not exactly. It looks like West -- surprisingly, considering the lengths he'll go to for self promotion -- has nothing to do with it. Some techie monetary entrepreneurs -- who for the time being "want to stay sorta anonymous in case Kanye gets pissed off" -- are launching a cryptocurrency using West's likeness and some clever punning called "Coinye West."
Cryptocurrency ... excuse me, what?
Cryptocurrencies are digital monetary systems. Users can use these networks to buy and sell things online, usually anonymously and almost like PayPal, but in a decentralized fashion. You may have heard of Bitcoin, the 4-year-old form of digital currency that attracted congressional attention in November. It went on a boom-and-bust ride last year, with the price of a bitcoin skyrocketing above $1,000 in November only to crash 50 percent.
Because it is online, anonymous and decentralized, Bitcoin and other cryptocurrencies get a reputation as being especially useful for illicit purchases (it was the accepted currency of the recently shut down illegal drug trafficking website, Silk Road). However, the rise of BitPay, BitGive and other platforms that use Bitcoin have given it some legitimacy, and attention now has turned to how it could be regulated.
So how does this all work?
Similar to how a treasury prints cash, bitcoins are released in a process known as "mining," in which users' computers compete to solve algorithms to win bitcoins (the algorithm gets increasingly harder so that the race will occur every 10 minutes or so and the bitcoin rewarded is halved every four years, meaning the bitcoin supply is finite). Coinye's creators say they will release their own front-end mining program called CoinyeMiner, which according to them will be more user-friendly than the mining programs used by other cryptocurrencies.
Wait -- they named the mining program 'CoinyeMiner,' and not 'Gold Digger'?
I know, missed opportunity. right?
What's the point of naming your weird online currency after a megalomaniac, Kardashian-loving rapper?
Well, this is the point: attention. For these currencies to work they must have users, and the more users they have the more stable they'll be. Just last month, some Internet geeks created a cryptocurrency called Dogecoin – inspired by 2013's Meme of the Year, a Shiba Inu dog named Kabosu – and its value surged 900 percent in a week while its competitor currencies stumbled.
"There was this trend effect of people thinking it was associated with something cool and trendy," says Reuben Grinberg, a lawyer in the financial institutions group of the law firm Davis Polk & Wardwell LLP. The Coinye creators likely are hoping for a similar effect. "My guess would be is that they're trying to profit on something associated with [Kanye's] name."
As Coinye creators told VICE, "We chose to represent Kanye because he is and always has been a trendsetter, and he's always keeping things unique."
Should I buy Coinye?
Though the Coinye creators say their program will be more accessible than other cryptocurrencies, they haven't really specified how.
"As more people get involved in mining this currency, it's going to be difficult for everyday people to get access to these coins and it's going to be people with professional setups who profit the most," Grinberg explains. So you might be better off sticking to the more established Bitcoin.
Also worrisome, Grinberg says, is the kind of users Coinye seeks to attract: Kanye fans, rather than economists, math whizzes and techies who are known to get involved in cryptocurrenices. Cryptocurrencies are very risky, and non-economists buying in out of a love for Kanye could lose a lot of money if they don't know what they're doing.