Fact check Gulden website
Since 1 January 2019, Gulden has had a new website on which a number of unambiguous facts are presented. In this article we will test the different facts for truthfulness.
Six specific facts are mentioned that we are investigating here.
Presented fact 1: One of the safest blockchains
In the crypto world, this claim means whether your money, assets or data entrusted to the blockchain can really be stored safely and invariably in it. In theory, any system can of course be cracked, but “secure” in the blockchain technique means that it becomes very difficult or very expensive to change or corrupt the blockchain data, let alone that it becomes profitable to do so.
The best known form of a blockchain attack is the so-called “doublespend via >50% attack”. A malicious person or group of persons will try to get more than 50% of the transaction approval capacity (in PoW’s case mining capacity) in their hands. This creates a chance of 1 in 2 that the attackers can spent a cryptocoin twice (after 1 confirmation) without the other transaction approvers being able to do anything about it or even notice anything about it.
It is often thought that people who hold >50% of the tx approval capacity can do everything they want and have full control over the network. But that is not true, because the other <50% (of the miners, for example) still participate. But the >50% owners have a 50% chance that their “doublespend” attack will succeed. The higher the percentage they have, the higher the chance that the attack will succeed.
Proof of Work (PoW)
Blockchain transactions can be approved in different ways. The best known method is PoW as used by Bitcoin. The miners are in charge of approving the transactions and security is based on the large amount of hardware and costs needed to own >50% of the miningpower. This of course only applies to the large coins. Here you will find an overview of how much it costs to perform a >50% attack during an hour through the rental of miningpower.
For Bitcoin that costs more than $300,000 according to that site but an additional problem is that it is almost impossible to buy / rent so much mininghardware. Although there is a lot of mining equipment available due to the current exchange rate drop, it seems physically impossible. So in that respect bitcoin is very safe.
A fairly large coin like Bitcoin Gold is much worse able to withstand that. Only $780 will cost you to perform a >50% attack. And there are hundreds of coins that can be attacked for less then ten dollar.
Proof of Stake (PoS)
PoS is another method of approving transactions in a blockchain network. It is not the miners but the owners of the coins who approve the transactions. If you, as the owner of the coin, “secure” your coins and leave the wallet open, you participate in the so-called “Stakes” and the number of coins and how long the coins have been fixed, takes into account how important you are in that process. Again a >50% attack is possible if you have >50% of the number of coins in your possession at that moment in the “stake process” you can also try to execute a double spend. The advantage of this method is that it is in fact more difficult to start the attack because you have to possess a considerable amount of coins.
By the way, it is not >50% of the number of coins in circulation but >50% of the coins that are currently participating in the “stake” process.
You can simply state that with PoS coins with a high marketcap the system functions safely but with coins with a low marketcap it is still possible to execute a double spend via a >50% attack but at reasonable high costs.
In general we can say that a PoS blockchain is more resistant to a >50% attack than a PoW blockchain but both systems are not strong if the coin is small to very small.
And then Gulden
Gulden uses PoW2, a proprietary transaction approval mechanism which uses a combination of PoW and the so-called “Witness” system. Transactions must be approved by the PoW miners and by the Witness accounts.
Witness accounts are accounts in which Guldens are fixed for a shorter or longer period of time. The time span is minimum 1 month to maximum 3 years. These Guldens can no longer be moved by the owner during that period and are therefore in fact put out of circulation.
All witness accounts participate in each block in a lottery and the winner may act as a “witness” when approving the transactions in the block in question. How often an account wins the lottery is determined by the “weight” of the account. The more Gulden are placed into the witness account and the longer the duration of the commit period, the heavier the account will be.
The approval of a transaction is therefore determined by two mechanisms, both PoW and Witness. In order to perform a >50% attack on the Gulden blockchain, it is necessary to attack both systems. And to get the same chance of success for a double spend as with the PoW or PoS systems it is therefore necessary not to check >50% of the miningpower (PoW system) or >50% of the number of Stake coins (PoS system) but of both systems more than 71%. (0.71 * 0.71 = 0.5 so 50% chance).
At Gulden, the PoW mining capacity is currently not very large. With a low amount, sufficient mining capacity can be rented to achieve more than 71% of the mining capacity during one hour or longer time.
But the witness system is another story. At the time of writing, approximately 72 million Gulden have been put into witness in 694 different accounts with a total witness weight of 576,000,000.
In order to get a 71% majority in witnessweight, as an attacker you will have to obtain at least a witnessweight of (1/0.71)*576.000.000=812.000.000 and spread that over (1/0.71)*694=977 accounts. This can be done for example by creating 1000 accounts in which 230,000 Gulden are fixed for 1 month. That is more than half of all Gulden in circulation.
It is also possible with less Gulden but then the attacker has to fix the Gulden longer in Witness. For example, 1000 accounts with 100,000 Guilders can be locked for 3 years. That gives the same desired total network weight.
The above shows that it is an impossible task and certainly not financially attractive to do.
Conclusion
The presented fact: one of the safest blockchains, is correct.
Presented fact 2: 0.01% of the energy usage of Bitcoin
Attention! All figures mentioned here are or fall by numbers hashrates/type miners and so on and that can change just like that. Figures are based on the data of January 6, 2019.
The “safe” PoW system of bitcoin has one big disadvantage and that is that it consumes a lot of energy in all mining activities. At the moment of writing this is about 46TWh per year according to this site which is doing thorough research into this.
Gulden now has a hashrate of 300GH/s according Dactual. If we calculate with the modern Antminers L3+ (800Watt for 500MH/s) uses that to electricity about 480 kW. That is per year about 4.2 GWh.
This 4.2 GWh is 0.0091% of the energy consumption of Bitcoin.
So it seems that the fact on the website is just made.
Conclusion
The presented fact: 0.01% of Bitcoin’s energy consumption,
is correct.
Presented fact 3: More than 100 merchants
Gulden claimed that there are at least 100 places where you can pay with Gulden. Companies register themselves or are approached by community members with the question whether they want to accept Gulden as a means of payment. The registered companies are kept on Guldenmap. Here 169 companies are listed. It is not possible for the writer to check all companies, but visiting the websites resulted in at least half of the mentioned number somehow showing on the website that they accept Gulden. Some of the webshops has only included Gulden in the payment options.
There will also be a number of companies that accept Gulden but do not specifically mention this on their Website.
There will undoubtedly also be companies that have removed the acceptance of Gulden because of a lack of customers, but it is very likely that the 100 companies mentioned are indeed present.
Conclusion
The fact presented: More than 100 merchants,
is correct.
Presented fact 4: More than 100,000 users.
This is another figure that is not easy to verify. Gulden is simply a decentralized project and nowhere is there a record kept of who uses Gulden.
Users is actually a wrong word because users means that people “use” the product. But in the crypto world this is practically not the case. At most, they buy and sell the coins and possibly hold them, the so-called “Hodlen”. But use is seldom the case. Who ever bought or paid for what with a cryptographic coin?
Crypto owner would be a better name but we will continue to use the word “Users” in the rest of the story.
Still, there is quite a lot to say about numbers of users. A survey by Kantar TNS (Dutch only) among 35,040 Dutch households showed that in August-September 2018 +/- 100,000 Dutch households owned Gulden. This number does not include foreign users because the survey only covered the Dutch territory.
From the download data of the wallet software we know that there were over 175,000 unique downloads of the Gulden wallets. The number of downloads obviously exceeds the number of users from the above study, but that is not surprising. Probably there are many users who have a mobile wallet and a desktop wallet running. Many people also download but decide not to invest anything. We also know that about 30% of the downloads come from abroad and 70% from the Netherlands.
All in all, it is quite likely that there are more than 100,000 Gulden users.
Conclusion
The presented fact: More than 100,000 users,
is correct.
Presented fact 5: 420 million Gulden in circulation.
This is an easy to check fact via the API of the Dactual explorer.
Dactual is an independent explorer.
It depends a bit on what you mean by “in circulation”. There is also a residual premine and if you add that to your calculation you arrive at 482 million.
Conclusion
The presented fact: 420 million Gulden in circulation,
is correct.
Presented fact 6: 72 million (17%) Gulden in Witness.
This is also an easy to check fact via explorer Dactual. The 17% mentioned is then calculated from the 420 million Gulden in circulation.
Conclusion
The presented fact: 72 million(17%) Gulden in Witness,
is correct.