Time for an update! First of all, say hello to some new faces on our Team page. Systems architect Amadeus and mathematician Jelle have joined our cause for integrating digital value systems. Now that we are growing, it is time to give the cryptosphere a peek at what we're doing. So we are taking the Internet of Coins to new places.
The word revolution comes from the latin revolutio, meaning a turn around. It could mean a modification of an existing constitution, or a complete change of it. However, revolution is almost always understood as a quick change. And that is exactly where my pitfall detector starts ringing.
In recent months we have seen many claims of "revolutionary" developments and technologies in the crypto scene. Next to a plethora of new coins being announced, there are also organizations claiming to have “the next big thing”. The many new hypes are often flashy enough to woo a great amount of users of cryptocurrency into investing their coins into these ventures.
Along with many revolutions that have happened in human history came not only rapid, significant changes in (geo)politics and social situations, yet most often also systemic instability and insecurity, loss of cultural identity, and destruction of value. Pitfalls, many of them historically documented, that come back with every revolution. And these mass-behavioural cycles, in circling back to zero, oust unwanted elements out of a system. What can we deduce from this? Revolution also means reinvention and reset, and the effects of this are not solely beneficial.
Evolution, on the other hand, is less often highlighted in social and cultural contexts. And yet in a manner of speech we often refer to positive development processes in society and in our cultures as evolutionary ones. Nature itself contains many forms of evolution and progression, and it forms a prime example for our own development.
When weighing evolution versus revolution, the Internet of Coins team has decided on attempting to navigate a more long term route. Instead of simply declaring another revolution, they seem to rather declare an evolution aimed at augmenting technologies that are already out there. It is the announcement of a project that is aimed at organic growth. Not reinventing wheels, but rather enhancing the current state of money-like informational commodities we call crypto currency.
It is possible to bring change step-by-step. To replace the current financial structure all of the crypto currency enthousiasts together need to create something so useful that it makes the current systems obsolete. This movement and the work it encompasses are of such magnitude that it cannot be done overnight. So we may want to choose our positions wisely
With the Internet of Coins project and the other decentralized options out there it may become realistic to start adding stability and overall constructive development to the cryptosphere. Together making strides towards being evolutionary, instead of just revolutionary.
In many a conversation, I have come across the argument that Bitcoin, or other cryptocurrencies for that matter, would never be regularly used by merchants because of the inherent price instability in the markets. There are those who contradict this opinion by pointing out that when Bitcoin is beyond its adoption phase its price will stabilize enough to enable it to be used just like fiat currencies. This discussion doesn't matter much to me.
Today, we had our first presentation on the Internet of Coins at the Amsterdam Bitcoinference Summer 2014. The presentation sheet itself is now added to the home page, providing a short explanation of the concept of decentralized blockchain interconnectivity. If you have any questions or remarks, please let us know.
We had some great talks and have seen several interesting presentations, for instance about the history of centralized exchanges which eventually led to Draglet and the interest for miners in the use of block-hiding strategies. We would like to thank Nicolas Courtois in particular for providing a refreshing critical view on the vulnerabilities of current Bitcoin technology.
So what's next? The Bitcoinference will last a few more days, after which we plan on visiting several other meetups; most of them in the Netherlands to discuss the consortium and the required technology for the Internet of Coins. In the meantime we will continue to work on our hybrid assets whitepaper and keep you posted via this website - or you can fire questions at us any time via Twitter.
Centralized exchanges can and will be hacked. The most recent example of this was BTER, with its loss of millions of NXT coins, and before that Vircurex, with a large loss of Litecoins. Even though the thief that stole from BTER has returned the greater portion of stolen value, yet another example of such a hack does not comfort the users of these exchanges.
For the project I run, this poses a problem. The hybrid asset STORMWIND was initially designed to counter pump-and-dump schemes in the market. Where do these mostly occur? On the centralized exchanges. It is becoming clear that to change this situation, we must decentralize an important aspect of the growing cryptosphere: inter-blockchain value exchange. Even though the STORMWIND portfolio is spread over 7 different exchanges, and value is diversified between many different cryptocurrencies, the losses incurred by each exchange hack make the project more risky, and less prone to be sustainable. Every unanticipated bite out of the trading capital increases the risk for asset holders. The hack at BTER, if left unresolved, could have resulted in a 5% loss of STORMWIND capital. This means at least several months of dividends in value - an unacceptable risk. This brings me to the inevitable conclusion that with such untrustworthy security among the exchanges STORMWIND in its current form cannot sustain itself. It must evolve, and the very notion of a hybrid asset should be decentralized to avoid these risks in the future. Technologies such as CounterParty, NXT, Ethereum, Codius, Open Transactions, etcetera, present us with a large toolchain to integrate cryptocurrency technologies and create a coherent network by connecting them all together. To me it seems we need to take this one step further to make a completely interconnected crypto-economy a reality. In the past weeks I have been in talks with several programmers and cryptographers about the possibility to decentralize the concept of a hybrid asset. Cryptocurrencies, Blockchain based assets, Multigateways, Smart Contracts, and Sandboxed Oracles need to evolve to become a decentralized meta-network. Evolving all these technologies to become integrated would make it possible to actually turn the idea of an network of coins into reality. For now, however, let's start closer to home, and make sure hybrid assets can traverse blockchains. This can bootstrap an Internet of Coins, and is a worthwhile first step.