Skycoin is bringing the decentralized internet to the blockchain with their Skywire, Obelisk, & Skyminer technology. Here's 11 things you need to know about SKY coin.
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Number 11: What Is Skycoin?
Skycoin is a blockchain-based project that, aside from cryptocurrency, tackles the development of energy-efficient custom hardware, the elimination of mining rewards, achieving transaction speeds that can hold their own with the likes of Visa, & the development of a “new Internet” that features improvements in terms of privacy & security.
Number 10: Why Was Skycoin Created?
First revealed to the general public in December of 2013, Skycoin is among the oldest blockchain projects & was created as a possible solution to the main problems within the Bitcoin network. The team behind Skycoin has recognized that Bitcoin’s immense computational energy requirements would lead to a centralization of mining pools in areas of the world where electricity is cheap. Moreover, the production of specialized mining hardware also tends to be under monopoly. The same centralization tendency can also be historically observed with Internet Service Providers. Since they control the physical architecture of the Internet, it means they also control the price & quality that users get. Not only that, but ISPs can also exploit customers further by selling their information to interested third parties. The Skycoin team aims to return to the initial ideals of decentralization put forward by Satoshi Nakamoto, while also building a truly decentralized mesh-Internet that puts control into the hands of the users; thus freeing them from their dependence on ISPs.
Number 9: Obelisk
In order to achieve true decentralization, Skycoin doesn’t rely on Proof-of-Work or Proof-of-Stake consensus algorithms. Instead, its developers use a new distributed consensus algorithm called Obelisk, which they describe as a “Web-of-Trust.” As the central component of Skycoin’s ecosystem, Obelisk improves security & greatly increases transaction speeds while also removing the need for mining resources & cycles of mining incentives. There’s extensive information available on the inner-workings of Obelisk in its whitepaper, & in this video I’ll mainly be providing a general description of its operational process. The web-of-trust means that influence is distributed over the network. Since there’s no mining involved, the web is instead made up of nodes; each of them subscribing to a list of trusted nodes and, as such, those with more subscribers have more influence in the network. Every node is given a personal blockchain that essentially represents a transparent “public broadcasting channel,” where each action is recorded & visible. There are no fixed ports, & nodes are addressed by their public cryptographic keys with their IP addresses known only by the nodes they connect with directly. Thus, communication & consensus decisions taking place on a node’s personal blockchain can easily be audited by the community without sacrificing privacy. Based on the personal blockchain’s public record, the network can sever ties with malicious or untrustworthy nodes. Following the same concept, the community can collectively change the balance of power within the network by collectively changing trust relationships, should it feel that power is too concentrated or not concentrated enough.
Number 8: What are the Advantages of Obelisk?
A major point to make is that—aside from being scalable & computationally inexpensive—Obelisk is also highly secure. It uses hidden IP addresses & protects against large-scale coordinated attacks from organized networks of malicious nodes. Even in the unlikely case that the network is disrupted, this has little impact on its users. In Skycoin, there’s no transaction malleability, & ties with intruders can quickly be severed upon detection. To do any real damage, bad actors would require a user’s private key in the transaction chain. There are 2 types of nodes in the network, a feature which further enhances security. Block-Making nodes send their input to Consensus Nodes, & even though their algorithms are separate from one another, both node types operate on the same data structures. Both Block-Making Nodes as well as Consensus Nodes perform fraud detection & authorship verification on incoming data. Perhaps one of the biggest advantages boasted by Obelisk is its decentralized & democratic nature, as choices are made through community consensus & not by a select few majority stakeholders.
Number 7: Coin Hours
There are no fees for Skycoin transactions. Instead, transactions cost Coin Hours. Users that want to earn Coin Hours simply need to hold Skycoin in their Skycoin desktop wallets. If a user holds one coin for one hour, they are given one Coin Hour. Similarly, holding 1000 coins for one hour generates 1000 coin hours. An exchange is in the works for converting & establishing exchange rates between Coin Hours & Skycoin. Coin Hours somewhat resemble gas in Ethereum; the key difference being that they operate as a parallel currency in the Skycoin ecosystem & are tradeable on exchanges.
Number 6: Skywire
The Skywire project is the team’s alternative to the Internet as we know it today. It aims to create a decentralized mesh network that’s cheaper, faster, more accessible, & that provides a higher quality service. Skywire has been in development for over 4 years, & the project has already taken its first steps towards developing 4 major aspects critical to building a new Internet. These are the communication protocol, the payment protocol, a hardware platform, & an application ecosystem.
Number 5: MPLS
Skywire moves away from TCP/IP & employs Multi-Protocol Label Switching (or MPLS) techniques to ensure the high-performance & highly-scalable movement of any data across any environment. MPLS means that movement through the network is established before traffic is sent out. Data packets are assigned labels that describe their route through the network. There’s no need to examine the packet itself & all forwarding decisions regarding the packet are made based on the label. MPLS is less computationally-demanding & more secure than the current model. Nodes on the packet’s route will only see its previous & next hop, & not its content, source, or destination. End-to-end encryption will ensure that those hosting traffic will not know the nature of said traffic. MPLS is also economically stimulating. Source nodes using Skywire will have complete control over routing protocol & will naturally opt to send traffic over routes with low latency, cost, & hop-count.
Number 4: The Skywire Payment Protocol
Every participating node within the Skywire ecosystem can benefit from its embedded payment protocol. Nodes basically act as micro-ISPs capable of automatic metering, billing, & settlement, & they earn SKY coins for powering the network. A blinded escrow system is used to automatically & periodically settle bandwidth payments. In essence, the Skywire mesh network pays users for supporting it.
Number 3: Skyminers
Skywire’s computing power, storage capacity, & networking capabilities are provided by custom-built hardware VPN units called Skyminers. These units will be cheap, easy-to-run, & energy efficient. Users will be able to operate Skyminers even if they don’t have a technical background, & the developers are working towards “plug & play” functionality to further facilitate the process. The open-source roots that the Skycoin Project has are also reflected in their approach to hardware, as Skyminer assembly guides & a parts list will be available to those who want to build their own machines.
Number 2: Fiber
Fiber is presented by the team as the “infinitely-scalable & highly customizable parallel peer-chain architecture of the Skycoin platform.” It enables third parties to develop secure, scalable decentralized apps. Fiber has already integrated with several companies & has been hailed by the team as an important step towards bringing the blockchain to mainstream business incorporation. It’s important to mention here that with Fiber, each company has their own blockchain, which can be fully customized to accommodate their needs. This blockchain comes with low energy consumption, fast transaction times, no transaction fees, & other benefits of Skycoin technology. This design is said to avoid congestion issues like those of Ethereum’s ERC20 platform. The Skycoin team has also created a new deterministic programming language called CX that builds more than just smart contracts. It’s described as being more versatile & more secure, & can be used to program FPGA chips or to create dapps & video games.
Number 1: Who is Behind Skycoin?
Synth is one of Bitcoin’s earliest developers & he started working on Skycoin around 8 years ago; fueled by the idea of building a decentralized Internet. He has a background in symbolic logic, distributed systems, & mathematics. Houwu Chen is another one of the project’s founding fathers. A former PhD at Tsinghua Univeristy, he authored the Obelisk whitepaper & counts himself as one of the creators behind Ethereum. The third Skycoin founding member is Steve Leonard, who wrote most of the Skycoin original software. Among its investors & advisors, Skycoin has Michael Terpin (founder & CEO of CoinAgenda), Mike Doty (co-founder of Ark & Bitseed), & Patrick Dai (the founder & CEO of Qtum).
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