Internet of Coins to Create a Trustless Environment
The basic idea underlying the entire venture called Internet of Coins is to eliminate blind trusts on third parties for the security of your value transfer. The idea is to get rid of any centralized exchange, federated partnership, or multi-gateway that makes transactions expensive.
Internet of Coins aims to create a decentralized, self-sustaining economy by implementing inter-blockchain connectivity which is sustained by a hybrid P2P meta-network to leverage each of its participant’s strength in numbers.
The idea which was conceived during the summer of 2014 was basically to create a trustless environment in which the security of your value transfer is not dependent on the assumption that you are to trust the person on the other side of the network willing to trade.
Further, it is the platform’s dream to integrate all coins into an interconnected and financially liquid nervous system. Existing wallets will not require any tinkering or adaptations to have their blockchains and value systems hooked into this decentralized network.
It is not their intention to impose any limits on the creativity which is overflowing in the current developments in cryptocurrencies. Rather, they would like to see it continue in parallel without any restrictions. And they would definitely like to save countless innovations with valuable technology from abandonment.
Internet of Coins plans to bring all of this into action by enabling every cryptocurrency user to create hybrid assets that interconnect value systems and blockchains.
Internet of Coins, though, looking to create a trustless environment, is trustworthy itself. They are currently under assessment by rating agencies Smith & Crown and ICOrating. Internet of Coins is already listed at Cyber Fund. Through their cooperation with established escrow partner NLnet, they aim to provide a solid basis for long-term continuity.
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.