Skycoin and Skywire are two separate components of the Skycoin Project. Skycoin is the blockchain. Skywire is the mesh network.
Skycoin was built first. It can stand on its own. It was created to address problems that Bitcoin has. The biggest problem that Bitcoin has is mining, which leads to the centralization of Bitcoin. The other problems that Bitcoin had mostly related to cryptography or software bugs, leading to problems such as transaction malleability.
Skycoin developed a new consensus algorithm called Obelisk that eliminates mining (or other alternatives such as Proof-of-Stake). This is what the whitepapers are about. The consensus algorithm uses a web-of-trust mechanism to secure the network. Each node in the network has a small listed of trusted peers. You share blocks with each other. If there’s bad blocks, such as a block that contains a double spend, you reject it and so do your trusted peers. There can be many malicious nodes in the network, but it will have no impact if you do not trust them.
Skywire was developed to address problems with the internet itself. There are many attack points especially for governments since they have large control over the infrastructure. But also large ISPs are pretty bad to their customers. All of these problems are due to the centralization of the internet.
Skywire itself can operate without Skycoin. It would not be the first meshnet software out there. There have been several attempts at building meshnets but none of them have grown very large, because it has been an all-volunteer effort. By integrating Skycoin with Skywire, individuals can earn money for running the internet, instead of large ISPs. This is the only sustainable path for democratizing the internet infrastructure. In addition, the skywire network has much higher security and privacy than the current internet.
Any kind of application that works over the internet, can also work over Skywire. Videos, file storage, VPNs, all of it. Using Skywire will be free, but users can pay nodes in the network for forwarding their traffic, to receive better bandwidth and priority service. This provides long term demand for Skycoins. Initially, the Skycoin Project will use some of the undistributed coins to subsidize operators of nodes on the Skywire network, to get it going. Over time, the subsidy will be replaced by users drawn to the network for the applications that run over Skywire.
The Skycoin blockchain and the Skywire network are able to stand on their own without the other, but mutually benefit together. Skywire provides a utility purpose for Skycoins, and Skycoin provides a financial incentive to expand the Skywire network.
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