What is Skycoin?
Skycoin is more than just a cryptocurrency project, it is an ecosystem, and the currency bit is just a factor in the system. What Skycoin does is to eliminate some of the common challenges that are experienced in blockchain projects such as mining of rewards.
Skycoin is built to use energy efficient software, and to offer the fastest transaction speeds that would give companies like Visa a run for their money. To do this, Skycoin is built in 5 components, all which are important to realizing the ultimate dream of the Skycoin ecosystem. These are:
- Skycoin – a very fast and secure currency that is supported by bandwidth
- Fiber – a decentralized open blockchain network
- Skywire – a decentralized mesh internet that is fully anonymous
- Skysuite – a complete suite of decentralized applications
- Skyminer – the hardware and access point for Skywire
More importantly, the idea behind Skycoin is to bring forth a project that would be a champion for private internet access and unmatched security, which are currently lacking not just in the conventional financial markets, but also in a number of blockchain projects.
What is the problem that Skycoin Solves?
Resource constraints
In the early programming when Bitcoin was first released, there were several problems and loopholes that made it prone to attacks. One of these was a miscalculation that the process of mining would somehow end up producing an economic incentive which would make decentralization appealing to users.
However, this was not to be. Instead, proof of work ended up concentrating influence within a select category of miners, users who supply most of the resources needed at a cheaper power cost.
These groups eventually have the power to control the network, orchestrating some of the largest changes to the network, such as forks.
In fact, according to the founder, control over mining would be one of the biggest threats to the Bitcoin project that was not cryptographic in nature.
This is because it made 51% attacks a reality. As long as one user can influence and amass more than 50% of the hashing power, they have complete control over the network.
As such, the operation of the Bitcoin network was effectively inefficient, both environmentally and economically.
Besides, as the network kept growing, there would be an insane spending on electricity, which beats the purpose of coming up with a revolutionary project in the 21st Century.
We live in a time when electricity costs are at an all-time high, and a revolutionary project should have addressed these, among other fundamental concerns.
Since the consumption of power on Bitcoin was estimated to be in the tens of millions of dollars each month, this beat the concept of sustainability. Therefore, Bitcoin would be its own enemy, killing itself from within, crashing under its own weight as more people joined the network.
Centralizing a decentralized network
Proof of Stake algorithms have managed to address the risk of 51% attacks. However, one thing that they have been unable to do so well is deal with centralization.
According to experts, PoS networks are actually more susceptible to centralization than the PoW networks.
In PoS, voter power is determined by the size of the user’s holdings in terms of the currency in question. This also means their influence on the technical changes that are expected on the network. Regardless of their processing ability, such participants are also able to mine a specific portion.
In so doing, this increases barriers to instigating a 51% attack on the project. The reason is that it would generally cost more to acquire coins on the open market than the financial gain from attacking the network. Therefore, initiating an attack would be pointless.
Besides, if an attacker were to successfully become the main shareholder on a network, they would be the worst hit from the attack they instigate, considering the subsequent market response and stability concerns on the network once news of an attack goes out.
In order to prevent such attacks, PoS has simply created an impulse similar to PoW that centralizes the network.
Majority shareholders on the network have the power to make any changes on the network without considering the influence of the miners, businesses, community, and developers on the project.
This centralizes voting power, shifting the control of power and the network to a few individuals, which goes against the basic requirements of a ledger-based crypto project.
How does Skycoin Solve the problem?
In light of the challenges that have been addressed above, Skycoin introduced Obelisk.
Obelisk is a distributed consensus solution. It distributes influence on the network in a web of trust approach. This means that there is no mining in Skycoin. Instead of mining, nodes are created on the project.
Nodes include things like Skyminers and computers. Every node can subscribe to a number of trusted nodes. In this way, influence on the network is determined by the number of subscribers that are available on the specific node.
The following are the in-depth solutions that Obelisk brings to the Skycoin project, and helps to deal with the risks that are associated with traditional blockchain projects:
- Low energy consumption and high scalability
Computationally, this project was built to be one of the most affordable alternatives to PoW, hence a scalable algorithm was mandatory. Block making and the algorithm are designed to work on simple, budget hardware. The idea here is that the more access people have to the network, the harder it is to centralize it.
- Robust defense system
One of the benefits of using Obelisk on the Skycoin network is that by design, this consensus algorithm was built to withstand even the most organized attacks in the form of malicious nodes. The algorithm can converge so fast and is not iterative. This makes it easier to run it on a mesh network.
- Protection against 51% attacks
The Web-of-Trust consensus is one of the reasons why it is possible to avoid 51% attacks on Skycoin.
The consensus makes it impossible for any individual to amass the required power through centralization. There is no mining of incentives on Skycoin, so it is not vulnerable to the challenges that PoW and PoS networks experience.
In the unlikely event that attackers manage to pool resources and cause a disruption on the network, there will be a minute effect on all the other users. This is because they would need to have a private key for any of the users in a transaction to effect the damage.
- Concealed IP addresses
All nodes are addressed through the cryptographic public keys. The IP address, therefore, is only accessible and read by the nodes that are connected directly to the node in question.
- Independent clock synchrony
The calendar date/time method does not work in this algorithm. Instead of using the wall clock, Skycoin uses block sequence numbers. These numbers are validated and extracted from validated consensus and blockchain messages. This is how the internal time in the nodes is calculated.
What makes Skycoin better than the competitors?
One of the advantages that the Skycoin project enjoys over most of the competing projects on the blockchain at the moment is that they have been around much longer.
This is actually one of the oldest projects on the blockchain at the moment, meaning that they have had a lot of time to fine tune through so many challenges.
Skycoin was designed to be an infrastructure project, based on the concept of decentralization. It uses a unique algorithm, Obelisk, which is all about trust. By implementing Obelisk, what Skycoin has done is to move away from the challenges that most of the blockchain projects currently experience, especially those that are running either Proof of Stake or Proof of Work. The following are some of the other features that make Skycoin stand out:
- Speed
This is one of the fastest projects on the blockchain at the moment. Transactions are completed in as short a time as 2 seconds. There are no fees or bottlenecks that usually slow down most of the other networks, thereby making this a strong competition not just for other blockchain projects, but also for credit cards and payment systems such as Apple Pay.
- Fees
Instead of charging people fees to use the Skycoin platform, transactions are paid for in Coin Hours. This is a unique form of currency that is only paid to Skycoin holders for every hour that they hold coins in their wallets. This is actually a good idea as it basically pays users returns for the time they keep the project alive and active.
- Security
Skycoin is about money. Therefore, it only follows that security will always be a priority in this project. What they have done is to bring on board some of the best cryptographic security standards that are used in the blockchain realm.
This is to make sure that true to the concept of decentralization and the blockchain, transactions once commuted cannot be interfered with. In so doing, Skycoin is one of the projects that is safe from the obvious risks that other projects face like the risk of 51% attack, malleability, duplication of transactions and reversals.
- Privacy
The structure of Skycoin is unique. It was built to adopt the CoinJoin protocol without any challenges. Having been integrated into the project, transactions from different wallets are mixed together, making sure that it becomes impossible for anyone to identify them.
This gives users on Skycoin a level of privacy that most blockchain projects can only theorize about.
- Sustainability
One of the biggest concerns that most people have with investing in blockchain projects at the moment is whether or not they are stable. A lot of projects have been raised in the past, but flopped because they could not live up to the sustainability concern. This is not the case with Skycoin.
What Skycoin lacks is the need for unnecessary computational resources that are common in PoS and PoW systems. Therefore, Skycoin is one of the most resource-conscious projects you will come across on the blockchain. In fact, it is so simple and easy, you can run it on a 30-watt cell processor without any challenges.
- Incentive
Another feature that sets Skycoin apart from the other projects is the way it is run. This is more than just a cryptocurrency. There is a lot of value on the Skycoin blockchain. Instead of making money from transactions, users on Skycoin earn from the provision and consumption of network resources.
- Utility support
It is virtually impossible to tell what makes the value of certain projects rise or fall. This is because no one really knows what is backing them. Skycoin, on the other hand, is supported by bandwidth. This is the real asset that makes the project stay alive, and it is what people are incentivized to provide.
How can Skycoin be categorized?
Skycoin is one of the most advanced blockchain platforms in the world, dubbed as the new internet for the new world. The developers are people who were some of the earliest contributors to Ethereum and the Bitcoin project who are committed to making it an ISP independent, infinitely scalable and utterly secure project. Skycoin is supported by computational power, storage, and bandwidth, and is seen as the one project that is in line with the original Satoshi vision for blockchain technology.
What’s Skycoin’s vision on Security?
Skycoin has put in place several measures to make sure that the project remains safe and secure for users. One of these is to limit the influence of human interactions which usually are responsible for most attacks on PoS and PoW networks. This has been made possible through Obelisk.
Accountability of nodes to the Skycoin community and to 3rd party audits and the fact that the consensus method is a transparent one further strengthens the element of collective decision making on the Skycoin project. Other than that, this also makes this a very democratic network, and fully decentralized.
Examples of Skycoin use cases/applications
The following are some of the applications to which the Skycoin is currently being put to use, given the benefits discussed above:
Fiber
This is a launchpad for secure, scalable and decentralized applications that are operated by third parties. Since a lot of businesses are currently interested in implementing blockchain architecture for one reason or the other, this is a necessary solution.
On Fiber, every coin has its own blockchain that can be customized depending on the needs of users, while at the same time still enjoying the benefits of running Skycoin technology, such as zero transaction fees, very fast transaction time and low consumption of energy.
Spaco
This is one of the first decentralized applications that were built on Skycoin through Fiber. Spaco runs data storage and transfer through a P2P encrypted internet browser. It is built to withstand and block spam and is one of the most versatile projects, capable of building secure applications for future use.
Resources
https://coincheckup.com/coins/Skycoin
http://skycoin.wikidot.com/faq
https://downloads.skycoin.net/whitepapers/Skycoin-Whitepaper-v1.0.pdf