Development Update #15

Summary:

Development is exhausting. We pushed too hard to get to launch and underestimated the time and effort required. Getting things working has been easy, but 90% of the effort is in achieving quality and has been impossible to budget for.

We are distributing development further. The project is being split into bite sized pieces, documented with specifications and additional developers are being hired to work on the individual components. Developers from the community who help with the development effort will receive generous allotments of coins.

New infrastructure is being developed to facilitate collaboration between the project teams. We are expanding project capacity to work on multiple components concurrently. Additional full time developers are being hired, we are writing source code tutorial for using Skycoin libraries and creating a wiki for documenting project milestones and components.

Community Organization:

The community and number of developers has now grow to the size where adhoc communication between the individual developers is breaking down. We are starting a wiki, a project board like Trello and maybe a message board to coordinate development and marketing.

White Papers:

We are writing academic and technical whitepapers. The academic whitepaper lays out the theoretical and mathematical foundation of Skycoin’s distributed consensus system and its inspirations. The academic paper is focused on the mathematical formalisms, assumptions which allow us to prove security guarantees.

The technical papers outlines implementation details, milestones and software architecture. The technical paper is focused on security as a process and defense in depth.

Marketing:

The Skycoin project incorporates a variety of concerns and objectives and its important that we create documentation and brainstorm about how to communicate to the media and public. The community needs to help create simplified, high impact messages for communication to potential new users.

Strategy:

We are writing marketing materials that clearly explains the capacities and strategic position of Skycoin vs alternatives such as Etherium, Ripple, Maidsafe, Mastercoin, Open Transactions, Color Coins, Protoshares and Bitcoin.

We feel that Skycoin is not as locked in to a particular model and is positioned to adapt and improve on any new technologies that have been suggested by competitors. Skycoin is adapting a standardized, coin agnostic “gateway protocol” which we believe improves upon Ripple and Open Transactions. Skycoin’s infrastructure for personal blockchains gives Skycoin the ability to coop and implement crypto-assets, contracts, scripting languages and cross chain transactions if these become popular. Skycoin’s wire protocol and service architecture allows third parties to implement distributed services which expose computing resources for coins (like maidsafe). Skycoin is also the only coin with a coherent strategy for user acquisition and adaption based upon utility instead of marketing.

We also believe that standardization of exchange APIs and “distributed exchange” will completely eliminate the network effects that Bitcoin has previously benefited from. With the distributed exchange service, there will be one API and numerous exchanges implementing the API. Different coins will be instantly, effortlessly and invisibly convertible to each other at the current spot prices. A person holding Dogecoin, Skycoin or Bitcoin will be able to make payments in any currency at the spot price, from a single wallet (the Skycoin wallet).

Once Bitcoin’s network effects have been eliminated, coins will compete based upon security, usability, speed and price stability. Traditional proof of work coins will not be as competitive as emerging alternatives which offer higher security, faster transactions and lower operating costs than mined coins. People will earn coins through providing services instead of mining.

Many new coins will likely be associated with geographic regions (Iceland), groups (native American tribes), companies (reddit) or be issued for specific purposes (time shares, gift cards). Mining becomes both a security risk (51% attack) and overhead. Ubiquitous, society wide adaption of crpytocurrencies will require moving beyond Proof of Work for securing the blockchain and will benefit from standardization between coins. Skycoin’s consensus system is both distributed, immune to 51% attacks (perfect security) and very low cost to run.

Bitcoin and proof of work coins allow anyone with enough hashing power to revert transactions. Higher security in Bitcoin means higher mining costs and higher network overhead. Mining also creates new coins to create an incentive for miners (to waste money), which makes existing coins less scarce and less valuable. Coin creation dilutes the equity of existing coin holders.

With recent advances in scripting languages and digital contracts we expect the development of collateralized digital assets which track fiat currencies such as the United States Dollar and Euro. We expect these assets will replace legacy bank transactions for payments to exchanges and may displace the legacy banking system for some types of international payments. Skycoin is being positioned to take advantage of and benefit from these advances, should they occur.

We believe that transactions with counter parties will become increasingly important in the future. In order to issue options or receive a loan, each a node needs an identity and a reputation. Skycoin is developing a standardized identity, messaging and transaction receipt system (the gateway protocol) to support the development of transactions that are not currently feasible within the Bitcoin framework. This will enable, for example distributed systems of credit that bypass banks and credit card companies.

For instance you may say “I am willing to loan up to $5000 to my friend Adam at an 8% interest rate, with minimum monthly payment of 10% of the outstanding balance”. This will enable people to earn interest on assets and the resulting debts will be verified by cryptography, enforceable by reputation and potentially by court systems. The Skycoin project has designed and is beginning implementation of the infrastructure these transactions require.

Personal blockchains and the purposed scripting language for the gateway protocol is flexible enough to represent equity, convertible debt instruments, different classes of shares, vesting and voting rights. The purposed protocol has the potential to replace lawyers and paper with a machine executable scripting language for private equity transactions. Cryptoequities can be transferred without intermediaries, can be publicly traded and may enable crowd funding over the internet. The gateway protocol will expose and record the information required to automatically compute and document the basis of transactions for tax purposes.

The messaging protocol will enable merchants to send receipts for payments, send shipping tracking numbers and low friction reoccurring payments for payroll and renting equipment such as computer servers. Messaging is prerequisite for identity, reputation and more complicated financial transactions.

We believe that standardization of cloud computing will allow polling price information and provisioning servers from multiple providers over a common API. We believe cryptocurrencies offer a lower overhead, lower friction, automated payment options compared to credit cards, which require dealing with each service provider individually.

The Skycoin Project does not prescribe a single correct monolithic software entity. Skycoin exposes a framework of independent components as libraries and permits competition between different implementations. Developers are able to easily extend Skycoin and offer new distributed services.

Additionally, the Skycoin project is funding development of applications to drive user growth, spread awareness of Skycoin and improve the world we live in (the meshnet project, distributed exchange service).

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