Bitcoin Whitepaper Birthday Special: æternity’s 11 Advantages
The Bitcoin Whitepaper made me a life-long fan of bitcoin. The æternity one helped me realize that public blockchain technology could disrupt much more than money.
I love Bitcoin and I know everyone at æternity does, too.
It is the original cryptocurrency that unleashed the idea of borderless, public, permissionless, censorship-resistant value networks. For almost 11 years now Bitcoin has been the most well-known cryptocurrency and blockchain project. A “headless brand” that in 2019 could be considered a household name.
Bitcoin was the reason I entered the blockchain space in 2013 and I will always be one of its biggest fans.
Despite all that, Bitcoin is not perfect. And maybe it doesn’t need to be (it actually can’t be). Many call it the “Honey Badger of Money”, but to me it is more the “Horseshoe Crab of Money”, although the phrase is not that catchy.
The Horseshoe crab survived for more than 300 million years relatively unchanged. Apparently nature got it almost perfectly right the first time. Similar like Bitcoin.
That’s not what a large part of the blockchain industry thinks, however. And since the Bitcoin protocol is so hard to change (a feature, not a bug), tens of new blockchain-based infrastructure projects have sprouted since 2009. They are all looking for the same thing — that special ingredient that will make their platforms better than Bitcoin and hopefully, even more successful.
Bitcoin is amazing, but a public, trustless blockchain could be so much more!
Since today marks the 11th Birthday of Bitcoin’s Whitepaper, I will upgrade Peter Thiel’s popular “10x” rule and engage in an educational exercise. I will list the 11 advantages that the project I joined three years ago — æternity blockchain — has over Bitcoin.
This will be very much like a comparison between your two kids — you love them both, but you are well-aware of their strengths and weaknesses.
Here we go.
1. Faster On-Chain Speed
One of the biggest challenges in the blockchain space today is scalabilty. Bitcoin suffers from scalability issues, and so does Ethereum. You simply cannot have a global payment network with a measly 7 (Bitcoin) or 15 (Ethereum) transactions per second. At the same time, you shouldn’t be compromising decentralization for speed. Decentralization is the main feature of blockchains after all!
To address this, æternity has implemented the Cornell University-developed consensus mechanism — Bitcoin-NG. It is a modification of the popular Nakamoto Consensus used in Bitcoin and allows for on-chain speeds of up to 120 tx/s.
Currently, according to data from AEknow.org, the speed of the æternity network is 116 tx/s. That is more than 16 times faster than Bitcoin and almost 8 times faster than Ethereum.
To learn more about æternity implementation of the Bitcoin-NG consensus protocol, read this freshly published blog post by the æternity crypto foundation in Liechtenstein:
2. Faster Block Time
The on-chain speed is also affected by block times — the average speed of finding new blocks. Thanks to Bitcoin-NG, there are two kinds of blocks in æternity — Key Blocks and Micro Blocks.
Transactions are verified in Micro Blocks, but in order for a transaction to become part of the blockchain, the Micro Block that verified it must be included in a Key Block.
Put differently, a Key Block is composed of Micro Blocks, which include transactions. The average time in which a Key Block is found in æternity is 3 minutes, which is a little more than 3 times faster than Bitcoin (10 minutes). Micro blocks are much faster — one of those is found every 3 seconds, which is 5 times faster than Ethereum’s block time of 15 seconds.
3. Off-Chain Scaling: State Channels > Lighting Network
On-chain scaling can only get you so far. Anything less than a four digit transaction speed per second must be regarded as insufficient for mass adoption. Since reaching that kind of performance on-chain will inevitably be done at the expense of decentralization, Bitcoin, Ethereum, and æternity are betting on off-chain scaling solutions.
In Bitcoin the solution is called the Lightning Network (LN), a Layer 2 off-chain payments network where transactions are instant and almost free. Unfortunately, despite having been in development for years now, the LN accounts for a minuscule part of all bitcoin transfers.
Currently, the total number of bitcoins inside the LN is only about 825.
And for a good reason. It is still not that hard to lose all your bitcoin in the Lighting Network. A little more than a week ago, a user on Reddit reported losing 4 BTC due to force-closing a lightning channel. Despite these issues, I am confident that the LN will prove to be a viable solution to Bitcoin’s scalability woes. It is just not clear how long it will take.
As a smart contracts platform, æternity requires global scalability beyond payment transactions.
Smart contract execution efficiency is vital to a thriving ecosystem of decentralized applications.
To achieve this, æternity is engaged is researching and developing State Channels technology. State Channels are an off-chain solution that allows transactions and smart contract calls to be moved off-chain and executed privately (between two nodes) and in parallel.
In æternity, you can have a private smart contract between two peers that exists in a state channel and relies on an oracle data feed, automating a process — for example a periodic insurance payment, or a pay-per-use music or video stream.
What is even better is that, unlike in the case of Bitcoin and Ethereum, æternity’s state channels are not implemented on Layer 2.
In æternity, State Channels are part of the core protocol itself, implemented on Layer 1. That significantly improves their efficiency and usability.
4. Next Generation Smart Contract Language and Virtual Machine
Smart contracts are an essential part of the promise of blockchain technology. They are used for storing, creating, and shuffling value around in a network, automating processes and eliminating costly intermediaries. It is a functionality originally implemented in Ethereum that empowered the ICO explosion of 2017.
Bitcoin was not designed to support smart contracts, but thanks to the work of the RSK team and their RSK Virtual Machine, Solidity smart contracts can run on a Bitcoin sidechain.
Unfortunately, since 2015, the Javascript-based Solidity smart contract language and the Ethereum Virtual Machine (EVM) proved to have significant faults related to scalability and security.
To address these issues, æternity developed its own functional smart contract language — Sophia, and the Fast æternity Transaction Engine (FATE), a virtual machine built specifically for secure and efficient execution of smart contracts on æternity. Here is a comparison with Solidity and the EVM.
A FATE contract is only 10% of the size of an EVM contract.
Smaller code size also translates into faster and cheaper smart contract execution by orders of magnitude. There are 23 different transaction types in æternity, all incorporated in the core protocol and supported by FATE.
To learn more about FATE, read this interview with Dr. Erik Stenman:
5. Integrated Oracles
Oracles provide a way to send real-world information to the blockchain, triggering smart contract execution and enabling automation. The Bitcoin protocol does not cater for oracles so those are implemented as external solutions. Currently, an MIT team is working on Bitcoin oracles as part of an initiative to develop multi-layer smart contracts that utilize the Lightning Network.
In the case of æternity, an oracle functionality is incorporated straight into the core protocol. Registering an oracle, making queries, and replying to queries are simply special types of transactions.
æternity enables developers to quickly set up an oracle service and connect it to their decentralized apps.
6. Integrated Naming System
IP addresses are hard to work with, but Bitcoin addresses are even worse. It is difficult to captivate the masses when you have something looking like this:
35ytEoyhx6f3Ec6vfXQbWpz8mmsPjKytsB
Users look at it and feel intimidated. This is real-world value they are sending, what if they get a symbol wrong (no, they don’t know about checksums)? The solution in the case of IP addresses was the Domain Name System (DNS) that associates the strings of numbers an IP is to a human-readable name like: vladisthebest.com
To date, I have not used a bitcoin wallet that allows me to send BTC to anything different than a public key looking like the one above. Actually, the first time I met Yanislav Malahov, æternity’s Founder, he was working on precisely such a solution for Bitcoin: BitAlias. Much of the logic behind it was transferred to æternity.
In æternity, you have the AENS, which allows users to participate in auctions (to be available soon) to reserve a human-friendly name (such as vlad) and associate it with the far more alienating AE account that looks like:
ak_2QkttUgEyPixKzqXkJ4LX7ugbRjwCDWPBT4p4M2r8brjxUxUYd
User-friendliness is key to mass adoption!
7. On-Chain Governance
In the blockchain space you have two types of governance approaches — an off-chain and an on-chain one.
Off-chain means that anyone is free to express an opinion on any subject in social media, by writing an article, doing a presentation, etc.
Expressing yourself on-chain, however, has more substance in my opinion. Why? Because it could mean that you have a cryptographically provable stake in the system. So, if you suggest something that is implemented and eventually turns out wrong, you will be negatively affected through the price.
In Bitcoin, on-chain governance translates into updating (or not) your node to the latest version. However, if you have bitcoins but are not running a node, you can only participate in the the off-chain governance process.
æternity is different. If you have AE tokens you can use a mobile Governance æpp to participate in polls (available in the mobile Base æpp). You can launch a poll yourself or participate in existing polls. Any question could be asked — from the protocol-specific to the trivial.
The rule is: one AE token, one vote.
Using the Governance æpp, the æternity community can quickly and objectively figure out if there is consensus on how to address important issues that have arisen in the ecosystem.
What is even better is that if you don’t want to vote yourself, you can delegate your token weight to another address, without submitting control of your AE tokens. All that in an easy-to-use mobile app!
8. Core Protocol Written in Erlang
Bitcoin core’s network is programmed in C++, a popular language in the blockchain space. Although deciding if one language is superior or inferior to another is subjective, there are certain characteristics that could tilt the scales.
æternity’s core protocol is written in Erlang, a functional programming language used for building scalable systems that are distributed over a network of computers. It has been used in the telecommunications industry for more than 30 years and currently 90% of internet traffic goes through Erlang-controlled nodes.
Erlang started to support multithreading long before any other programming language. It provides garbage collecting, uses a virtual machine, and has pattern matching, which allows for compact and clear programs.
Erlang is considered a superior language, especially when it comes to developing back-end systems that require:
- Huge amount of concurrent activity
- Real-time responses
- Non-stop operation and fault tolerance
One of Erlang’s co-founders — Robert Virding — is actually part of the æternity team. Leading me to my next point:
9. Stellar Developer Community
The developer community behind Bitcoin includes some of the brightest minds in the blockchain space including Pieter Wuille, Wladimir van der Laan, Gregory Maxwell, and Peter Todd. It also enjoys about 51 active core developers per month.
æternity actually has the same number of active developers according to Electric Capital’s Dev Report although it is currently at the other end of the spectrum of network value. But it is not only quantity that matters, quality is essential too.
As mentioned above, Robert Virding, the co-creator of Erlang is part of the æternity community. The project is also supported by:
- John Hughes — co-designer of the Haskell programming language;
- Ulf Norell — co-designer of the Agda programming language for formal verification;
- Ulf Wiger — Erlang veteran with around three decades of seniority; one of Ericsson’s OG’s, and Chief Designer of the AXD 301, arguably the most complex system ever built in Erlang;
- Erik Stenman — programming since 1980, holds a PhD, and is CTO of one of the most successful Swedish FinTech startups — Klarna;
- Thomas Arts — co-founder and CTO of Quviq, the creators of QuickCheck; holds a PhD and working as a professor in software engineering;
- Hans Svensson — one of the core developers of QuickCheck; holds a PhD in testing, model checking and verification of Erlang programs;
- Sergei Evdokimov — holds a PhD in Computer Science and a background in cryptography and machine learning;
- Tobias Lidahl — Master of Science in Engineering Physics and an academic researcher in the field of compilers, virtual machines, and static analysis;
- Sascha Hanse — formerly a software architect in the AdTech sector and an active member of the cryptocurrency community since 2011.
10. ASIC-Resistance
Bitcoin is currently minable only by ASIC devices. In the period since GPUs were replaced by specialized mining hardware, a healthy market for Bitcoin ASICs developed. Currently, there are more than 20 manufacturers that supply these devices.
Despite that, the initial introduction of an ASIC in the altcoin space could be a disruptive event for Proof-of-Work-based cryptocurrencies affected by it. It could push GPU miners out of the game, resulting in [hopefully temporary] mining centralization, and an opportunity to perform 51% attacks.
To avoid that, æternity relies on the Cuckoo Cycle mining algorithm. It is the first graph-theoretic Proof-of-Work algo, and the most memory bound, yet delivers instant verification. The best part is that:
There is no ASIC device for it yet and the best cards to mine AE tokens are still NVIDIA GTX 1080 and 1070, which are widely available.
There are currently ASICs dedicated to the Cuckatoo31+ minig algo, but those do not work for Cuckaroo29+, Cuckatoo32+, or Cuckoo Cycle. The reason behind this is that even minor tweaks of the mining algorithm could render an ASIC useless. Should fears of an upcoming ASIC dvice arise, using the on-chain Governance æpp, the æternity community could vote for/against such a tweak, resisting ASIC dominance.
11. Mobile-Friendly Blockchain Ecosystem
My final point relates to mobile-friendliness. Having in mind that half of the world’s internet traffic comes from mobile devices and that mobile is the primary way that users from developing countries access the world wide web, it is essential to have an ecosystem accessible from portable devices. There are tens of mobile Bitcoin wallets. There are even a number of mobile-friendly Bitcoin hardware wallets such as the Ledger Nano X and CoolWalletS.
æternity is a smart contract platform, so mobile devices must not only initiate transactions, but also manage smart contracts and run æpps. Enabling this on mobile devices is one of the biggest challenges that the blockchain industry faces today.
Decentralized applications are usually slow, complex, and unreliable. æternity is changing that.
The Base æpp, one of the most popular AE token account managers, features an integrated æpp browser (the “Browse” menu item on the left). There, AE token users can access a number of æpps, including the Graffiti Project, Governance, and the AENS Auctions interfaces. The first on-chain governance vote — the Block Reward Initiative — was also done through a mobile æpp inside Base.
I expect the number of æpps to continue to grow as more and more teams who are part of the Starfleet Incubator program enter the market!
That’s all! I hope you enjoyed my 11-point list of æternity advantages.
Happy 11th Birthday Bitcoin Whitepaper!
May the Bitcoin network continue to thrive for æternity! ;)
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